Is The Third Time The Charm For ILUVIEN?

Includes: ALIM, EYPT
by: David Sobek

Iluvien (marketed by Alimera Sciences (NASDAQ:ALIM) and licensed from pSivida (PSDV)) has recently been resubmitted to the FDA for marketing approval for the treatment of chronic diabetic macular edema (DME). Iluvien was previously rejected in 2010 and 2011, so the recent submission represents the third attempt for approval. In fact, it is a third attempt with the same data even though in the 2011 rejection the FDA "indicated that Alimera will need to conduct two additional clinical trials to demonstrate that the product is safe and effective for the proposed indication." So why would Alimera resubmit Iluvien with the same data and why would it even be possible that the FDA might actually accept it this third time? Before answering those questions, some background on DME and the trial results are needed.

Diabetic macular edema (DME) is one of the most common causes of sight loss (and obviously most frequent in individuals with type II diabetes). In fact, Haritoglu et al. (2013) noted that after a duration of diabetes mellitus of 15 years 78% of individuals develop DME making it the most common cause of blindness among adults in the developed world. Laser photocoagulation has often been used to treat focal DME but a number of intraocular injections have been quite effective. The most common direct injections are of anti-VEGF treatments such as Macugen (marketed by PFE), Lucentis, and Avastin (both marketed by Roche). In addition, Iluvien is approved for use in Europe but obviously has yet to see similar success with the FDA.

Unlike the anti-VEGF treatments that require repeated injections, Iluvien uses a 25-gauge needle to implant a device that lasts up to 36 months delivering corticosteroid Fluocinolone acetonide (NYSE:FAC). In the FAME (Fluocinolone Acetonide in Diabetic Macular Edema) study, at 36 months the percentage of patients who gained ≥15 in letter score was 28.7% (low dose Iluvien) and 27.8% (high dose Iluvien) versus 18.9% in control arm (a statistically significant difference). In a pre-planned subset of patient who have had DME for more than 3 years, the benefit was more pronounced. In this subset, the 36 months success rate was 34.0% (low dose Iluvien) and 28.8% (high dose Iluvien) versus 13.4% for the control group. The drug seems clearly efficacious and requires fewer injections that the anti-VEGF treatments, so what was the issue? Side effects.

Despite being an effective treatment, the FDA was worried about the risks associated with Iluvien. In particular, Alimera noted that after the second CRL "the FDA stated that 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." In particular, treatment with Iluvien led to dramatic increases in cataracts, where "cataract extraction was performed in 41.1% of patients on the low-dose insert group, 50.9% on the high-dose insert group, and 7% of the sham group." In addition, the treatment led to increases in intraocular pressure, where "intraocular pressure-lowering procedures were performed, such as incisional glaucoma surgery in 8.1% of the high-dose insert group, 3.7% in the low-dose insert group, and 0.5% in the sham group." So clearly there were costs associated with efficacy of the treatment and the FDA believed that the benefits did not outweigh the risks.

While it makes sense that the side effects would concern a regulatory body, what explains the difference between the United States and Europe? If you look at the approval in the EU it is clear that the indication is chronic DME that is insufficiently responsive to other treatments (see release). The original submission to the FDA did not specify either chronic DME or insufficiently responsive (see here and here for wording of first two submissions). In this newest round, however, the wording appears slightly different in that it specifically notes the indication is "chronic" DME (see release). While I may be reading into the wording too much, I believe this belies the underlying strategy for getting approval without having to run new trials. In addition, if you look at slide 15, Alimera is clearly trying to make the case that the relevance of side effects diminishes the more severe (or chronic) the DME. As I read it, it seems like Alimera is going for a more restrictive label (similar to the EU, which is only for chronic and unresponsive DME) in the US as a way to get approval without having to run new trials. In other words, if the benefits did not outweigh risks in a healthier group of DME patients, then perhaps they would in a sicker group of DME patients.

So the question is, will this strategy work? I do not think Alimera would submit unless it got some guidance that it is possible but I clearly would not assume that then means it is going to be approved. If you looked at the wording in the 2011 rejection, it talks about the risk/benefit "for the proposed indication," which also signals that another indication could provide a different risk/benefit balance. There is clearly risks involved with a treatment that has been twice rejected but if Alimera is going for a more severe population, then the risk/benefit likely changes in favor of Iluvien. If you believe that the third time will be the charm, then I am not convinced that Alimera is the best way to play approval in that pSivida gets a $25 million milestone payment (page 9) if there is U.S. approval as well as royalties on sale. That milestone is just under 50% of pSivida current market capitalization so it could lead to an outsized move in share price as compared to Alimera. In addition, with pSivida you are getting a platform technology that has the potential to put addition products on the market as was shown by the recent agreement with an unnamed pharmaceutical company.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.