Psivida Licensee Set For European Launch By Year's End

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Armed with a favorable decision in February that its ILUVIEN sustained-release implant is approvable in the European Union to treat diabetic macular edema (DME), pSivida (PSDV) expects sales of the device to begin by the end of the year.

"The formal review process has finished, and the next step is for our marketing partner, Alimera Sciences, to secure national licenses in Spain, Portugal, Germany, France, the U.K., Austria and Italy," pSivida CEO Paul Ashton says in an interview with "The commercial rollout will probably start in Germany and the U.K."

In a recent 8K filing with the SEC, pSivida said it believes it will take longer than originally anticipated to obtain marketing authorizations for ILUVIEN in the seven countries. National clearances are designed to be made within 30 days of closing the approval process. Alimera now believes these authorizations likely will be issued in the second and third quarters of 2012, although it concedes that one or more countries could take longer.

ILUVIEN is expected to be the first sustained-release pharmaceutical in the EU to treat DME, which is a leading cause of vision loss in people aged 25 to 74. The device is an injectable, intravitreal implant that releases sub-microgram levels of fluocinolone acetonide (FAC) for up to 36 months.

The International Diabetes Federation estimates that 22.1 million people are currently living with diabetes in the seven European countries alone. And Alimera estimates that 1.2 million people suffer from DME within those countries.

In the U.S., however, ILUVIEN's prospects were damped last November when the FDA declined to approve the implant, saying Alimera's new drug application did not provide sufficient data to support the claim that ILUVIEN is safe and effective in the treatment of patients with DME. The news sent pSivida's stock price tumbling from $4 to about $1.25.

The FDA said the risks of adverse reactions shown for ILUVIEN were "significant and were not offset by the benefits" demonstrated by ILUVIEN in its clinical trials. The FDA also instructed Alimera to conduct two additional clinical trials to demonstrate that the product is safe and effective for the proposed indication.

"When people ask me why the Europeans would approve it when the FDA didn't, my answer is that the two groups are independent and they evaluate products on different criteria," Dr. Ashton says. Alimera is planning to meet with the FDA in the second quarter of this year "to understand what the path forward might be," he adds.

pSivida has received some $30 million in payments from Alimera to date and is in line to receive 20% of Alimera's ILUVIEN profits and 33% of any non-royalty payments that Alimera receives.

While pSivida is the industry leader in the back-of-the-eye drug delivery space, many other companies are now entering the field, recognizing the importance of the space.

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Back of the Eye Diseases

In addition to DME, diseases of the back of the eye include age-related macular degeneration (AMD), glaucoma, uveitis and cytomegalovirus retinitis (CMV retinitis). More than 20 million Americans suffer from back-of-the-eye diseases.

"The reasons people go blind are not related to the front of the eye, because we can treat those eye diseases pretty well," Dr. Ashton says. "All of the problems are associated with diseases of the back of the eye. Eye drops simply don't penetrate to the back of the eye. Systemic medications will get there, but they have side effects. So, the current state-of-the-art treatment for back- of-the-eye diseases is an injection of medication directly into the eye."

While intravitreal injections provide the most direct method of delivering drugs to the back-of-the-eye, the approach has numerous issues associated with it, including the high cost and frequency of those injections, patient discomfort and potential side effects such as retinal detachment-all of which opens the door for pSivida's miniaturized, sustained-released implants.

Its Vitrasert implant was approved in 1996 for CMV retinitis, which affects about 30% of patients with a compromised immune system. It was followed in 2005 by the Retisert implant to treat uveitis. Both products are distributed by Bausch & Lomb. pSivida's big breakthrough came with the development of three tiny bio-erodible implants: ILUVIEN, Durasert and Medidur.

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pSivida's Product Pipeline

pSivida is currently developing the Durasert and Medidure implants to treat the dry version of AMD, glaucoma and posterior uveitis. Also in early-stage development is a fourth generation Tethadur platform that relies on nano-structuring, with the potential for sustained delivery of proteins and antibodies using a highly porous, bio-erodible material to accommodate different molecule sizes to treat multiple diseases.

Last month, pSivida signed a technology evaluation agreement to study whether its Durasert device can deliver a drug being developed by Neuron Systems to treat dry AMD. "Right now, I think they have one of the more promising drugs under investigation for dry AMD," Dr. Ashton says.

AMD affects 28% of people aged 65 to 74 and 46% of those 75 and older. It's estimated that there are 15 million older Americans with all forms of AMD today, about 13 million or between 85% and 90% have the dry form of the disease.

There are no approved drugs for dry AMD. Genentech's Lucentis and Regeneron Pharmaceuticals' (NASDAQ:REGN) recently approved Eylea treat a $1.5 billion a year market for wet AMD. "So, that gives you some idea of the potential market for dry AMD," Dr. Ashton says.

[Editor's Note: As reported on last week, closely held MacuCLEAR is in final preparations to launch a Phase IIIa human efficacy study of its Dry AMD treatment.]

pSivida is also adapting its Durasert implant to treat glaucoma in collaboration with Pfizer (NYSE:PFE). To date, pSivida has received a $2.3 million license fee and $7 million in R&D support from Pfizer. The implant is now in a dose-ranging study, which would be followed by a Phase 2b clinical trial.

At the end of Phase II, Pfizer can exercise an option on the implant for a $20 million immediate payment, $145 million in development milestones and double-digit royalties on future sales. Pfizer would also pay for a pivotal trial and receive a tech transfer license to manufacture the device. "If Pfizer doesn't exercise the option, we get a Phase III-ready product for effectively no cost," Dr. Ashton adds.

Various topical drug treatments are available to treat glaucoma, but multiple side effects and inconvenience lead to poor compliance mostly by seniors. pSivida's implant would be injected into the white of the eye, just under the lower eyelid, where it would release a drug for about six months. "So, rather than the physician asking you to take an eye drop, the physician would give you one of these inserts and take compliance out of the picture," Dr. Ashton contends.

As a next generation follow-up to its early Retisert implant for uveitis, pSivida has developed the Medidur implant to treat posterior uveitis. It affects some 175,000 Americans and is the third largest cause of blindness in the country.

"It's a nasty disease," Dr. Ashton says. "It's normally treated with systemic steroids, which have significant side effects, and to mitigate the side effects, people take immune modulating drugs, which also have significant side effects."

He notes that the Medidur device delivers the same drug, but less of it, as the ILUVIEN device for DME, with the same duration of about 30 months. Under pSivida's agreement with Alimera, the company can use data from the one thousand-odd patients in Alimera's DME trials as it develops the Medidur device.

"So, we can potentially do a far smaller Phase III clinical trial in posterior uveitis, using the exact same device, with a dramatic saving in time and money," he adds. The company has met with the FDA and expects to start a Phase 3 clinical trial later this year.

pSivida also expects to be in the clinic by the end of 2012 with its fourth generation Tethadur technology to study safety and pharmacokinetics, as well as dosage stability in people.

"This is a very high-tech porous bio-silicon product that represents a huge opportunity for the company," Dr. Ashton says, explaining that "it's very difficult to deliver proteins, which are very fragile, and they don't behave like ordinary drugs, making them hard to control."

In ophthalmology, the technology could lead to a controlled and sustained release of drugs like Lucentis and Eylea, which now have to be injected into the eye every four to eight weeks.

Beyond ophthalmology, with many drugs coming off patent, generic drug companies could use the technology to develop sustained delivery of biologic drugs, a burgeoning field in biotech. By the same token, drug companies about to lose patent protection could make an existing product better and stave off generic competition.

Dr. Ashton says pSivida plans to develop its own ophthalmology products with the Tethadur platform. "On the other hand, the technology has many uses beyond ophthalmology, so it's something we would consider licensing out to other players."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.