Updated from 1:48 p.m. EDT

Alcon

( ACL) has joined the list of companies vying to treat the eyesight-stealing disease wet age-related macular degeneration, saying Tuesday night that it received conditional regulatory approval for the drug Retaane.

Already this week,

Genentech

( DNA) has said preliminary results of a clinical trial show most patients with wet age-related macular degeneration, or wet AMD, were able to maintain or improve their vision with its experimental drug Lucentis.

That sparked a meltdown in shares of

Eyetech Pharmaceuticals

( EYET), the maker of another drug for wet AMD. The Genentech test results also prompted Eyetech's chief executive to issue a defense of its drug, Macugen, which has been available in the U.S. since January. Macugen enables patients to reduce the rate of decline in their vision.

Now comes Alcon with word that it received conditional approval from the Food and Drug Administration for Retaane to treat wet AMD. The disease, which primarily afflicts people age 50 and over, causes a decline in the eye's central vision. If wet AMD attacks both eyes, it can lead to legal blindness.

Alcon declined to provide details on the conditions imposed by the FDA for approval of Retaane. "We believe that Retaane has a positive impact on the vision of patients with AMD," said Stella Robertson, vice president of ophthalmology research and development, in a prepared statement issued Tuesday night.

Different Deliveries

Alcon said it will meet with the FDA to discuss the conditional approval letter, whose details were not made public. It also will discuss the clinical studies submitted with its application "and other ongoing studies to determine the steps necessary to gain final approval."

Conditional approval letters can seek anything from clarification of a company's application to expensive and time-consuming additional clinical trials. On Wednesday, Doug MacHatton, a company spokesman, said only that Alcon "needs full clarification on the next steps for final approval."

Alcon is entering a field that is attracting intense competition for a disease that is caused by the growth of unwanted blood vessels in the eye. These unwanted vessels leak blood and fluid, which puts pressure on a part of the eye called the macula. This eventually leads to vision loss.

Retaane works by inhibiting the growth of these blood vessels. The drug is delivered via a small tube behind the eye without puncturing the eyeball. Retaane's method of action of different than

the two other blood vessel-thwarting drugs, Macugen and Lucentis.

Part of Alcon's potential sales pitch for patients and physicians is Retaane's relative convenience vs. Macugen and Lucentis, both of which require injections into the eyeball. Retaane is administered twice a year, while Macguen is injected every six weeks and Lucentis is injected every four weeks.

"This method of delivery avoids the risk of intraocular infection and retinal detachment, the most common side effects associated with injecting therapeutics agents directly into the eye," Alcon said Tuesday.

Another wet AMD treatment is Visudyne from

QLT

(QLTI)

TST Recommends

. Visudyne has been on the U.S. market since mid-2000.

Visudyne is injected intravenously. Visudyne chemically sensitizes the eye, which is then exposed to infrared light. This treatment, called photodynamic therapy, stops blood vessels from leaking; but it doesn't stop new blood vessels from developing. Photodynamic treatments are given on average of 2.7 times a year over a course of two years.

QLT's partner is

Novartis

(NVS) - Get Report

, which also has also has teamed up with Genentech to market Lucentis.

Pfizer

(PFE) - Get Report

is Eyetech's marketing partner.

Alcon, whose market capitalization is over $31 billion, is an ophthalmology giant which had $3.9 billion in sales last year. Its products include eye disease drugs, surgical equipment and devices, and other vision care products. The company is based in Switzerland, and Swiss food conglomerate Nestle owns about 75% of its common stock.

Regulatory Uncertainty

Retaane's path to the FDA has not been a smooth one. In October, Alcon reported that a key clinical test showed no difference between Retaane and the photodynamic therapy that includes Visudyne.

But Alcon vowed to seek FDA approval, saying at the time that the agency should consider the "entire package of efficacy and safety data" that the company would submit.

The Retaane vs. photodynamic therapy test showed no statistically significant differences for patients after 12 months of treatments. However, another 12-month clinical trial showed 79% of wet AMD patients taking Retaane maintained their vision vs. 53% who received a placebo.

At the time it reported the clinical trial setback, Alcon said "there were controllable factors" that hampered the final results. The company filed its application with the FDA in December.

Analysts didn't seem surprised at Retaane's conditional approval. The FDA had "several different issues," says Marc Goodman, of Morgan Stanley, in a Wednesday research note. "Right now, the company is uncertain as to its next steps until it sits down with the FDA ... which will probably be sometime in July." He expects Retaane to be approved in 2007, adding that Genentech's Lucentis could reach the U.S. market by mid-2006 "and could take significant market share."

Goodman has an equal weight rating on Alcon. He doesn't own shares; his firm has an investment banking relationship.

Uncertainty was the theme of several investment banking reports on Wednesday, including one from Ken Kulju of Credit Suisse First Boston. Maintaining an outperform rating on Alcon, he says two-year test results on Retaane should be available in September. Results of a Latin America clinical trial should be ready in early 2006, and data from a Europe clinical trial should be available by the end of next year.

Kulju says he is pushing back any sales expectations for 2006 -- he was expecting $36 million -- until 2007. But he hasn't changed any earnings predictions. He doesn't own shares, and his firm has an investment banking relationship.

On Wednesday Alcon's shares lost $1.78, or 1.7%, to $102.83. Given its size and diverse product portfolio, Alcon can better absorb delay and disappointment than can Eyetech, whose wet AMD drug is its only product.

Eyetech experienced a second day a frantic trading as more than 26 million shares traded, or more than 20 times the average daily volume. On Wednesday, the stock was up $1.68, or 13%, to $14.63.

On Tuesday, the stock dropped $11.02, or 46%, on volume of 43.1 million shares.

Eyetech has announced a press conference for Thursday to "reiterate its confidence" in Macugen. The company's CEO David R. Guyer defended his product Tuesday morning at a UBS health care investing conference, and the company issued a statement Tuesday afternoon reprising many of his comments.