Alimera Sciences: A Sleeping Giant

| About: Alimera Sciences, (ALIM)

I believe Alimera Sciences (NASDAQ:ALIM) could re-test all-time highs this year. Alimera's lead product Iluvien is a sustained release flucinolone ocular implant, with clinical effectiveness for up to 36 months. It is indicated for the treatment of Diabetic Macular Edema (DME) which can lead to many serious ocular problems, such as complete vision loss. DME affects over 1 million people in the U.S. at any one time. Currently this market has unmet needs. Alimera and its Iluvien intend to fill this gap.

It would be naïve to say that Alimera is without risks. In the United States it has already received two Complete Response Letters (CRL) from the FDA concerning Iluvien; the first on December 23, 2010 and another on November 11, 2011. Each CRL caused Alimera's share price to plummet drastically. In the first CRL the FDA requested safety and efficacy data for 36 months instead of the 24 months which they had included. Data from the 36 months of the FAME study was presented at the 2011 AAO annual meeting on October 12, 2011. In the second CRL the FDA requested that Alimera will need to conduct two additional clinical trials to demonstrate that the product is safe and effective for the proposed indication and that the benefits outweigh the risks. After the second CRL the company issued this statement in its PR:

We are surprised and disappointed with the FDA's decision on our application to market ILUVIEN in the U.S. to patients with this devastating disease. Based on extensive research with U.S. retinal physicians, we have learned that ILUVIEN's long-term sustained delivery treatment benefit is desired and that ILUVIEN has a manageable risk to benefit ratio. We continue to believe in ILUVIEN as a long-term effective treatment option for DME. We are committed to, and have the funds for, pursuing approval in Europe and for evaluating our options in the U.S.," said Dan Myers, president and chief executive officer of Alimera.

In the midst of the struggle with the FDA's approval process, Alimera was seeking approval in the European Union. As of Feb 10th, 2013, Alimera has received marketing authorization in 6 out of 7 EU countries it has applied in; Austria, the United Kingdom, Portugal, France, Spain and Germany. It is currently awaiting approval in Italy. Alimera signed a European marketing agreement with Quintiles for the European commercial launch and is now ready to start commercialization in the EU, starting in Germany in the first quarter of 2013. The United Kingdom's National Institute for Health and Clinical Excellence (NICE) has published final guidance indicating that ILUVIEN is not cost effective for the treatment of chronic diabetic macular edema (DME) considered insufficiently responsive to available therapies. Alimera plans to quickly tackle this hurdle by coming up with a subsidized patient access scheme. The PAS is currently under review by the Patient Access Schemes Liaison Unit (PASLU) at NICE and, if approved by the Department of Health, will be available to the Appraisal Committee for review and consideration.

Alimera plans to re-submit its NDA for Iluvien to the FDA for the third time in the first quarter of 2013. I really feel that this time the FDA will be under pressure to approve Iluvien since it is already approved in parts of the EU. The EMA is generally considered strict when compared to the FDA.

On October 2nd 2012, Alimera raised $40 million in financing and now has enough cash on hand for at least a year. Sales from the EU should start rolling in as 2013 progresses.

Recently a report was published that a competitor drug, Lucentis (developed by Genetech, a division of Roche (OTCQX:RHHBY)) could not establish a significant benefit vs. placebo in patients with vitreous hemorrhage caused by diabetes. The news was a significant positive for Alimera and sent the shares flying up as much as 45% in one day before receding for a 20% gain.

Currently, ALIM is trading at $2.28 (as of Feb 10th, 2013) and has a market capitalization of $72 million. With over 1 million people in the United States affected by DME at anyone one time, I believe that the market capitalization of Alimera Sciences has the potential to double or even triple in the near term (6 months). Before the previous CRL on November 11, 2011 Alimera's price per share was north of $8. Which is why I believe this stock is a sleeping giant.

In summary the upcoming catalysts are:

  1. Commercial launch of Iluvien in Germany, UK, etc.
  2. NDA Resubmission to the FDA
  3. Sales of Iluvien in the EU
  4. Marketing authorization in Italy
  5. PDUFA Q3 2013
  6. Possible Iluvien launch in the US Q4 2013

These are my opinions and my beliefs. I am currently long Alimera Sciences and have no plans to change within the next 72 hours. However, I may or may not sell or add to my position based on changing market conditions.

Disclosure: I am long ALIM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.