Why is Aerie Pharmaceuticals (AERI) stock soaring today?

Aerie Pharmaceuticals, Inc. (NASDAQ: AERI) gained momentum on Tuesday, August 23, as it surged over 35 per cent in its price.

Now, what could be the possible reason behind its recent surge? Let's explore the company with Kalkine Media® and look into the recent developments of the pharmaceutical firm before exploring its recent stock performance.

Why is AERI stock rising?

The surge in AERI followed the announcement of Aerie Pharmaceuticals and Alcon Inc. (NYSE: ALC) that they had entered into a definitive merger agreement, under which the latter firm would acquire Aerie Pharmaceuticals.

Alcon is a Geneva, Switzerland-based healthcare firm specializing in eye care products. The ALC stock traded at US$ 68.82 at 10:26 AM ET on Tuesday, up 1.30 per cent from its previous closing price.

According to the announcement, the merger transaction would affirm Alcon's focus in the ophthalmic pharmaceutical area. In addition, it is anticipated that the merger deal would add more research and development capabilities to Alcon's present commercial space, helping it to widen its diversified portfolio.

Alcon would add several commercial products, including Rocklatan, Rhopressa, etc., through the merger.

The announcement marked Alcon's focus to expand in the ophthalmic pharmaceutical area, which follows the acquisition of exclusive US commercialization rights for Simbrinza from Novartis in April 2021.

The transaction value at which Alcon would acquire Aerie is US$ 15.25, a premium of 37 per cent of AERI's last closing price. This price represents an equity value of about US$ 770 million.

Notably, the transaction was approved by the board of directors of both companies.

Source: ©Kalkine Media®; © Canva via Canva.com

Financial highlights:

The Bedminster, New Jersey-based pharmaceutical firm posted total revenue of US$ 33.31 million in Q2 FY22, a surge of 23 per cent from US$ 27.18 million in the year-ago quarter.

Aerie's net loss was US$ 19.37 million, or US$ 0.41 per share in Q2 FY22, improved from a loss of US$ 38.68 million, or US$ 0.84 apiece in Q2 FY21.

During its Q2 FY22 earnings release, Aerie said that it expects its glaucoma franchise net product revenue to be between US$ 130 million and US$ 140 million, reflecting a jump of 16 per cent and 25 per cent year-over-year (YoY), respectively.

Meanwhile, through the merger, it is expected to help in Alcon's growth in its core diluted EPS in 2024, the companies said.

Bottom line:

The price of the AERI stock soared 35.25 per cent to trade at US$ 15.08 at 10:17 am ET on August 23, while its trading volume was about 13.92 million. The US$ 731.77 million market cap firm returned gains of about 93 per cent in the last 30 days. On a year-to-date (YTD) basis, its price rocketed over 101 per cent.