Alimera, PSivida Drop After Drug Fails to Win Approval

Alimera Sciences Inc. and PSivida Corp. dropped after the drugmakers failed to win U.S. approval for a way to treat a leading cause of vision loss in people with diabetes.

Alimera fell 8.5 percent to $2.48 at the close in New York, while PSivida plunged 24 percent to $2.87. The Food and Drug Administration said the sustained-release eye implant for chronic diabetic macular edema would need a new trial plus more follow-up data, according to company statements today.

The FDA previously had rejected Iluvien twice, most recently in 2011. While the drug is available in some European countries, the U.S. market offers the greatest sales potential. The FDA has scheduled a meeting Jan. 27 of agency advisers to help the companies identify a patient population for which the product’s benefits might outweigh the risks.

The meeting is “a theoretical positive” that “does leave the door open for something good,” Simos Simeonidis, an analyst with Cowen & Co., said today in a note to investors.

Even so, Alimera doesn’t have the capital for a new trial, Simeonidis said. He said he hadn’t expect Iluvien to gain approval in the U.S. based on the FDA’s insistence of new trials two years ago.

Path Forward

“We will continue to work with the FDA, through the advisory committee, to determine whether there is a path forward,” Dan Myers, chief executive officer of Alpharetta, Georgia-based Alimera, said in a statement.

The FDA also referred to deficiencies at the manufacturing plant in its letter denying Iluvien, which Alimera doesn’t expect to affect its European supply. Peak sales in the European Union are estimated to reach $300 million in 2021, Simeonidis said in his note.

When the FDA had last rejected the drug, in November 2011, it asked for two additional clinical trials to prove the safety and effectiveness of the medicine.

Iluvien is Alimera’s lead product candidate in the U.S. and would compete with Basel, Switzerland-based Roche Holding AG’s Lucentis injection, which was cleared in August 2012 as the first drug to treat diabetic macular edema. Regeneron Pharmaceuticals Inc. is in the final testing stages on its injectable medicine Eylea for the condition.

PSivida licensed its Durasert drug-delivery system to be used for Iluvien. PSivida, based in Watertown, Massachusetts, would receive a $25 million milestone payment if the drug is approved.

Share History

PSivida’s shares plunged the most since the last time the FDA rejected the drug Nov. 11, 2011. PSivida has more than doubled this year, while Alimera has gained 58 percent.

Diabetic macular edema is a result of damaged blood vessels that can cause fluid to leak into the macula, the part of the eye where sharp, straight-ahead vision occurs, according to the National Eye Institute.

Alimera estimates about 1 million people in the U.S. have diabetic macular edema and 300,000 new cases develop each year. People with diabetes have a 10 percent chance of developing the condition, the company said.

The most common side effects of Alimera’s treatment are cataract development and increased ocular pressure.

Iluvien is approved in the U.K. and Germany and will be available in France early next year. The drug is also approved in Austria, Portugal and Spain, Alimera said in the statement.

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