Alimera outlines EU commercial strategy and raises $40m to market Iluvien

Alimera Sciences will raise $40 million from the sale stock plus warrants to finance commercialization of Iluvien (fluocinolone acetonide) for the treatment of vision impairment associated with chronic diabetic macular edema (DME) in Europe, where the company intends to focus its marketing efforts while US FDA approval remains elusive.

With the recent receipt of marketing approval in France, Atlanta, Georgia-based Alimera will kick off EU sales in Germany, the UK and France using a dedicated sales force hired by a third-party contractor and managed by a five-employee Alimera corporate office in Europe. The company expects Iluvien to generate $400 million in annual sales by 2017 in its first four EU markets, including Austria.

Iluvien is a sustained-release implant inserted in the back of the patient's eye that provides a therapeutic effect for up to three years. The product is approved in the UK, Portugal, Austria and France with final approval in Germany anticipated soon (scripintelligence.com, 7 June 2012).

"The focus right now is to build up the European enterprise. There's a lot of value there," Alimera chief operating officer and chief financial officer Rick Eiswirth told Scrip.

While Alimera initially anticipated approval in the US before the EU, the FDA has twice responded to the company's new drug application (NDA) with a complete response letter.

Alimera president and CEO Dan Myers told equity analysts gathered for an update on the company's operations on 18 July that Alimera met with the FDA during the second quarter of 2012 to discuss what must be done to satisfy the agency's Iluvien NDA concerns.

Mr Myers said he cannot provide an update on Alimera's plans to revise its NDA until the company receives official minutes from the FDA meeting and gets clarity on certain issues. Alimera may provide an update when it reports second quarter earnings in August.

Without a US launch date on the horizon, the company is focused on the EU. It is working to finalize pricing and reimbursement in Northern Europe, win marketing approvals in Spain and Italy, and assess opportunities in the Nordic and Benelux regions.

Alimera has estimated pricing at €5,700 to €7,000 per unit in France, Germany, Italy, Spain, the UK, Austria and Portugal. That price range is consistent with or below the prices for Allergan's Ozurdex (dexamethasone intravitreal implant) for retinal vein occlusion and noninfectious posterior segment uveitis as well as Genentech's biologic for wet age-related macular degeneration Lucentis (ranibizumab injection) in all seven markets, except for the UK.

Alimera anticipates that it will have final pricing in time to launch Iluvien in Germany in February 2013, in the UK in April 2012, and in France in September 2013. Sales launches in Italy, Spain and Portugal are anticipated in November 2013, with 2014 launches expected in Austria and the Benelux and Nordic regions. Those 13 countries represent a 630,000-patient market.

The company plans to sell Iluvien in the first three countries with about 30 contracted sales representatives who will promote nothing but Alimera's drug. Based on the sales process in those countries and revenue generated in its first few months of EU sales, Alimera will decide whether to continue marketing Iluvien on its own or engage a partner.

"We had initially talked about finding a partner to do a licensing arrangement. But with the resources we have available, since we don't have approval in the US, we can focus on commercializing it ourselves," Mr Eiswirth said.

Alimera had $27.6 million in cash as of 31 March, down from $33.1 million at 31 December 2011, with a very modest spend rate of $4.1 million in first quarter 2012 operating expenses.

But clearly the company's expenses will rise rapidly as it prepares to commercialize Iluvien in the EU, a cost estimated at $18-$20 million in annual expenses.

Mr Eiswirth said a Series A convertible preferred stock sale was Alimera's best opportunity to raise money at attractive terms compared to a typical common stock offering considering the current "choppy" stock market conditions.

The Series A financing was led by Palo Alto Investors with Sofinnova Ventures and New Enterprise Associates – all are existing shareholders. The transaction is expected to close in September if a majority of shareholders approve it, but 56% of voting shareholders already have pledged their support.

The purchase agreement covers the sale of 1 million Series A preferred shares and warrants to purchase another 300,000 Series A preferred shares. The Series A investors have agreed to pay $40 for each Series A share plus a warrant to buy 30% of a Series A share.

Each of those preferred shares can be converted to approximately 13.75 shares of Alimera common stock priced at $2.91 per share. The warrants are exercisable upon issuance at $44 per Series A share.

When the Series A transaction closes in the fall, Alimera's board of directors will expand to 9 members with Dr Garheng Kong, a managing member of Sofinnova Venture Partners, elected to fill a new Board seat.