Alimera Sciences Inc  (NASDAQ:ALIM) and pSivida Corp. (NASDAQ:PSDV)

pSivida And Alimera, Waiting For November 11, 2011

I will be talking about Alimera Sciences Inc  (NASDAQ:ALIM) and pSivida Corp.  (NASDAQ:PSDV) together because the two companies have their destiny bundled so closely.

The core advantage of pSivida is its drug delivery technology. The firm has three primary technologies: Durasert, Biosilicon and CODRUG. Durasert system utilizes one or more surrounding polymer layers to the core drug and can control the rate and duration of drug release by design of layers. Two drugs have already been approved by the FDA based on this technology. Vitrasert that is used to treat CMV retinitis was approved in 1996 and Retisert, which is used to treat posterior uveitis, was approved in 2005.

Iluvien, which was developed on third-generation of Durasert technology, with fluocinolone acetonide (“FA”) as core drug, is used to treat diabetic macular edema (DME). DME is a major cause of vision loss in diabetics. The Wisconsin Epidemiologic Study of Diabetic Retinopathy found that over a ten-year period approximately 19% of diabetics studied were diagnosed with DME. Meanwhile, according to the Centers for Disease Control and Prevention (CDC), the number of Americans diagnosed with diabetes had increased from approximately 8.1 million people in 1994 to approximately 18.8 million people in 2010. So, the market for this drug, if approved, is way much larger than the other two that already have approved.

Drug delivery often plays an important role in treating ophthalmic and oncological diseases. With the possession of drug delivery technology, pSivida has established license cooperation with many big firms on these two areas.

Alimera Sciences is a crucial partner with pSivida regarding to Iluvien. On March 14, 2008, the two parties amended their agreement, upon which, $12.0 million was received by pSivida as per the execution of the agreement, $25 million milestone payment could be expected if the FDA approved Iluvien.

pSivida has more products than Iluvien on the roll. It has Tethadur drug delivery system that is heat and radiation stable, which can be used to deliver large biologic molecules. The other product that is developed by Psivida has the same micro insert to treat posterior uveitis. pSivida cooperated with Pfizer to develop ophthalmic drugs with its proprietary drug delivery intellectual property. Pfizer became the largest shareholder of pSivida with 9.0% of shares in the firm as of August 31, 2011.

While pSivida’s core advantage is on the technology, what is the core advantage of Alimera?

Alimera’s management team are experts on ophthalmological industry, they have the sharp eye on what products have huge market potential and the complicated procedure of obtaining approval from the FDA. The team has the good track record in raising capital and successfully launching Soothe, an over-the-counter (OTC) product and gaining FDA approval for Alaway. Led by CEO Dan Myers, the management now is putting their bet on Iluvien, for which, they’ve completed all phase 3 trials and submitted New Drug Application (NDA) in June 2010. One month later, they submitted Marketing Authorization Application to the Medicines and Healthcare Products Regulatory Agency (MHRA) in the United Kingdom and to other regulatory authorities in Europe.

However, in December, 2010, the FDA sent them the Complete Response Letter (CRL), in which , the FDA asked for analyses of safety and efficacy data through month 36 of the FAME Study, including exploratory analyses in addition to those previously submitted in the NDA, to further assess the relative benefits and risks of  Iluvien. The FDA also expressed concerns on good manufacturing practices (cGMP) during facility inspections of two of Alimera’s third-party manufacturers.

Why the FDA is not satisfied with the 24-month data and requests 36-month data for more evidence on efficacy and risk evaluation? Alimera resubmitted in May 2011, did they address the concern sufficiently?

To answer this question, we’ll take a deep technical view into the detail of the two clinical trials. The data shows that the statistical significance was lost when the experiment extended to month 36. And personally, I am concerned on the procedure complexity of inserting the implant too. If the benefit is just on the brink of statistical significance, the FDA’s concern is understandable. The FDA assigned class 2 for this resubmission, combined with the 36-month new clinical trial data, I don’t think there is big chance that the Iluvien would be approved.

Even though It could be approved, the fierce competitor Allergan, Inc.  (NYSE:AGN), with similar products in pipeline, is threatening Alimera. They are Ozurdex (Dexamethasone Intravitreal Implant and Trivaris (Triamcinolone), both are in phase 3 stages now.

So I think the prospect of Alimera is quite nervous while Psivida is relatively safe.

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