PSivida, Alimera Shares Fall as FDA Rejects Eye Drug for Third Time

10/18/13Follow @benthefidler

It looks like pSivida’s (NASDAQ: PSDV) and Alimera Sciences’ (NASDAQ: ALIM) drug for an eye disorder related to diabetes will never see the light of day in the U.S.

Watertown, MA-based pSivida reported today that the FDA has rejected the drug—a treatment for diabetic macular edema (DME) sold in Europe as Iluvien that it co-developed with Alpharetta, GA-based partner Alimera—for the third time. The FDA letter wasn’t pretty. It cited “clinical and statistical deficiencies” in pSivida’s and Alimera’s application, and even problems at the manufacturing facility where the drug is produced. The news leaves it highly unlikely that the two will ever get the chance to penetrate the U.S. market, and worse for pSivida, it again means the company won’t get the $25 million payday from Alimera it would have received upon an FDA green light.

PSivida’s shares plunged nearly 50 percent in pre-market trading on Friday. Alimera’s fell about 40 percent.

The FDA said that if pSivida hopes to win approval, it has to run a new clinical trial with at least 12 months of follow-up for all the patients it enrolls. The agency rejected Iluvien in 2011 and 2012, and recommended that Alimera run two more studies before applying for approval—something Alimera decided not to do.

Further, the FDA recommended an advisory panel to help the two companies find a patient group that might be best suited to take its drug. That panel will take place on Jan. 27.

Though pSivida president and CEO Paul Ashton says that Alimera still plans to work with the FDA to see if “there is a path forward in the U.S.” for Iluvien, the company will likely have to resign itself to offshore markets to expand sales. The drug is already approved in several countries in Europe. It is currently sold in the U.K and Germany, and approved—but not available yet–in Austria, Portugal, and Spain. PSivida will begin marketing the drug in France early next year.

“Alimera believes [the drug] is well positioned for growth in Europe, irrespective of the U.S. outcome,” Ashton said in the statement.

Iluvien is an implant placed at the back of the eye that is designed to release a gradual dose of fluocinolone acetonide, a corticosteroid drug. Alimera developed the drug, while pSivida provided the drug delivery technology. The treatment is supposed to help relieve DME, a common complication of diabetes in which blood vessels leak fluid behind the retina, distorting the vision. Patients with DME can either get laser surgery, or injectable drugs bevacizumab (Avastin, Roche/Genentech) or ranibizumab (Lucentis, also Roche/Genentech). Regeneron’s (NASDAQ: REGN) aflibercept (Eylea) may also soon add competition to the market.

Alimera and pSivida, however, likely won’t see a piece of that pie in the U.S. For pSivida, that means forfeiting the $25 million licensing payment it would get if the drug were to win FDA approval. For Alimera, it’s a bigger hit on sales. Alimera gets 80 percent of the net profits from the drug’s sales under its partnership deal with pSivida. The Watertown biotech gets the remaining 20 percent.

PSivida and Alimera’s late-stage study showed that patients taking its drug demonstrated a statistically significant improvement in their vision over the course of treatment, compared to a group getting a placebo. But the FDA has been wary of its side effect profile, which included a high occurrence of cataracts, a clouding of the lens in the eye that distorts the vision, in those dosed with the drug in the study. About 41 percent of the patients that got a low dose of Iluvien and 51 percent of those with a higher dose had to have surgery to get a cataract removed.

Ben Fidler is Xconomy's Deputy Biotechnology Editor. You can e-mail him at bfidler@xconomy.com Follow @benthefidler

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