Alimera, pSivida Eye Drug Warrants FDA Approval On Third Try

NEW YORK ( TheStreet) -- Alimera ( ALIM) and pSivida ( PSDV) have an upcoming FDA drug approval decision date on Oct. 17 for the use of Iluvien to treat chronic diabetic macular edema. The FDA has already rejected Iluvien twice but the companies have a better shot with approval on this third trip through the agency. An Iluvien approval is good for both companies, obviously, but perhaps more so immediately for pSivida because it will receive a $25 million milestone payment. Right now, that equates to about 20 percent of pSivida's current market cap.

Let's review why Iluvien is more likely to be approved this time.

In its last Complete Response Letter rejecting Iluvien, FDA told Alimera that it would "need to conduct two additional clinical trials to demonstrate that the product is safe and effective for the proposed indication." Despite what seems like fairly specific guidance, Alimera did not run the requested clinical trials. Normally, ignoring FDA's advice would be disastrous, but in this case, perhaps not.

The key issue raised by the FDA about Iluvien was not the drug's efficacy. The phase III trial demonstrated that 28.7 percent (low dose Iluvien) and 27.8 percent (high dose Iluvien) of the treated diabetic macular edema (DME) patients gained more than 15 letters of vision versus 18.9 percent in control arm -- a statistically significant difference. The Iluvien benefit was even more pronounced in a pre-planned subset of patients with DME for more than 3 years. In this group, 34.0 percent (low dose Iluvien) and 28.8 percent (high dose Iluvien) gained more than 15 letters of vision versus 13.4 percent for the control arm.

The FDA's bigger concern about Iluvien focused on side effects. "The risks of adverse reactions shown for Iluvien in the FAME Study were significant and were not offset by the benefits demonstrated by Iluvien in these clinical trials," said Alimera, quoting from the FDA's Complete Response Letter. Two key adverse events tied to Iluvien caused most of the problem. 1) Cataract extraction had to be done in 41.1 percent of the low-dose patients, 50.9 percent of the high-dose patients and only 7 percent of the sham group; and 2) more Iluvien patients require intraocular pressure-reducing interventions (8.1 percent high-dose versus 3.7 percent low-dose versus 0.5 percent sham.)

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