) -- For the third time, the FDA has rejected Iluvien, a drug to treat diabetic macular edema developed by

Alimera Sciences ( (ALIM) - Get Report)

, the company announced Friday.  

U.S. regulators informed Alimera that Iluvien would be considered for approval again after the company conducts a new clinical trial with a minimum of 12 months of patient data. The FDA has also scheduled an advisory panel meeting for January, 27, 2014 to help Alimera better identify patients who might benefit from Iluvien.

Alimera shares fell 42% to $1.55 in early Friday trading. 

pSivida ( (PSDV) ) was also negatively affected by Iluvien rejection, with shares falling 55% to $1.71. pSivida is entitled to cash milestone payment from Alimera upon Iluvien's approval.

Iluvien is designed to be implanted behind the eye to treat vision loss caused by chronic diabetic macular edema. The FDA previously rejected Iluvien in December 2010 and November 2011 and requested new clinical trials, which Alimera chose not to conduct.

"The FDA's decision not to approve Iluvien at this time is disappointing not only to us, but also to retinal specialists and DME patients in the U.S., but we will continue to work with the FDA, through the advisory committee, to determine whether there is a path forward in the U.S. for ILUVIEN," said Alimera CEO Dan Myers, in a statement.

Iluvien is approved in Europe.

-- Reported by Adam Feuerstein in Boston.

Follow @AdamFeuerstein

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

click here

to send him an email.