Alimera Sciences Inc.
This article was originally published in Start Up
Executive Summary
The team that established CIBA Vision Ophthalmics and later worked together at Novartis Ophthalmics has launched specialty ophthalmologic pharma Alimera Sciences Inc. Alimera has moved its first OTC eye care product to market, and plans to begin development of prescription ophthalmic drugs.
An experienced team for specialty ophthalmologic pharmaceuticals
6120 Windward Parkway, Suite 290
Alpharetta, GA 30005
Phone: (678) 990-5740
Fax: (678) 990-5744
Web Site: www.alimerasciences.com
Contact: Dan Myers, President & CEO
Industry Segment: Pharmaceuticals, OTC Products
Business: Specialty drug discovery & development
Founded: 2003
Founders: Dan Myers; Daniel White, CFO & VP, Corporate Development; Mark Testerman, VP, Sales; Dave Holland, VP, Marketing
Employees: 22
Financing to Date: $28.7 million
Investors: BA Venture Partners; Domain Associates; Polaris Venture Partners; Intersouth Partners; C&B Capital
Board of Directors: Mark Brooks (BA Venture Partners); Brian Halak (Domain Associates); Steve Martin, (Hi Tech Partners); Terry McGuire (Polaris Venture Partners); Calvin Roberts, MD (Weill Medical College of Cornell University); Phil Tracy (Intersouth Partners)
What went on in the huddle made a big difference in Dan Myers' teams' success on the football field when he played quarterback for Georgia Tech in the 1970s. After Novartis AG decided to consolidate its eye care unit, Novartis Ophthalmics, in 2003, Myers, president of the division, huddled with a few of his Novartis associates. During their time at the company, they had seen plenty of ophthalmic product opportunities that didn't reach the company's high portfolio threshold. They came out of the huddle in the basement of his Atlanta home determined to launch a specialty ophthalmic pharmaceutical company. With a $27 million first-round raise, the largest in Georgia history, Alimera Sciences Inc. , licensed in an OTC eye care formulation and in just nine months put its first product on the market. [See Deal] Myers' team expects that breakneck pace to continue as they move more OTC products to market and begin development of prescription therapeutics.
Myers, together with Mark Testerman, Alimera's VP, sales and Dave Holland, VP, marketing, were part of a team that had established CIBA Vision Ophthalmics, the start-up pharmaceutical arm of CIBA Vision Corporation, in 1991. Dan White, CFO and VP corporate development, joined CIBA a few years later. They grew sales at the company—which became part of Novartis in 2000—to approximately $250 million annually, creating the fourth largest ophthalmic pharmaceutical company in the US, with a 10.4% market share. During that time, the management team successfully launched five OTC and seven prescription drugs, including verteporfin (Visudyne) for wet age-related macular degeneration, the fastest ophthalmic drug in US history to reach $100 million in sales.
Big Pharma companies have largely avoided the specialty eye care market, creating an opportunity for Alimera in the fast growing pharmaceutical field. Not that Big Pharma does not recognize the potential in eye disease care. Pfizer Inc. 's December 2004 payment of $105 million to Eyetech Pharmaceuticals Inc. , upon FDA approval of pegaptanib (Macugen) for treating wet age-related macular degeneration (AMD)—in addition to an initial $100 million up-front payment plus royalties for sales—indicated that Big Pharma can be highly receptive to the right product. [See Deal]
In 2003, after Novartis decided to cut much of Myers' 225-member division, he accepted a severance package and huddled together with his three longtime former associates over his business plan for Alimera. He convinced them to help him raise money to acquire some of the types of products they had passed on at Novartis. Starting off with $1.7 million in seed money from friends and family, they hit the road. Their timing could not have been better. VCs were looking for start-ups with quick pathways to revenue and low-risk growth strategies in areas with unmet needs. The specialty market for ophthalmic drugs—an area tied closely to the aging of the population—seemed ripe. Barriers for entry to the OTC market are low and the need for better therapies remains high. The leadership team could put a substantial sales and marketing team in the field in short order and offered exceptional knowledge of the eye care landscape. "Nothing like that could be found in ophthalmology," says Myers. The results from a financial standpoint were spectacular. "The fundraising exceeded our wildest hopes."
With that $27 million Series A round—led by InterSouth Partners—Alimera licensed its first product from Ocular Research of Boston in January 2004. The product, an emollient eye drop sold OTC as Soothe, relieves dry eye for as long as eight hours. It contains a lipid restorative agent, Restoryl, a combination of two highly refined mineral oils, Drakeol-15 and Drakeol-35, which, unlike other artificial tear products, reestablishes the lipid layer of the eye to keep moisture on the cornea by reducing tear evaporation. The company says about 12 million Americans, 70% of them older women, suffer from the disorder.
Unlike most widely available OTC products, many ophthalmic brands are detailed and marketed like prescription drugs. Expensive TV advertising campaigns are not necessary. "Patients who see a physician are very motivated," says Myers. "Compliance is very high if the physician says, ‘Use this product.'" To market through doctors, Alimera reached a co-promotion and marketing agreement in October with the pharmaceuticals side of Vistakon LLC (Johnson & Johnson Inc.'s ophthalmics business, which makes contact lenses and consumer eye care products) [See Deal]. With the support of Alimera's own four inside sales reps, Vistakon now has 63 reps calling on ophthalmologists and attending trade shows.
Just nine months after its in-licensing by Alimera, Soothe went on sale in almost every major national chain drugstore and supermarket. This year, Myers anticipates sales of $2-2.5 million.
That revenue gets split with Vistakon for the two years that the companies' agreement runs. That period gives Alimera time to hire and train its own 30-rep sales force that the company plans to deploy in the spring of 2006.
By that time, Myers also expects to have two additional OTC products for his reps to detail. In the spring, the company will launch its second OTC product, this one for enhancing refractive (LASIK) eye surgery post-operative care. Later that fall, Alimera will bring out an unidentified allergy product. According to Myers, those three products—all in growth areas—will eventually generate $40 million in revenue from OTC sales.
With that revenue, Myers also plans to pursue the more challenging but potentially much higher returns of developing prescription ophthalmic products, with the launch of Alimera's first prescription product projected within the next three years. In February, Alimera licensed in its second prescription product, a new treatment for diabetic macular edema (DME is a major cause of vision loss in people suffering from diabetic retinopathy) based on a novel delivery platform with a corticosteroid, through an agreement with Control Delivery Systems Inc. , (CDS) [See Deal]. CDS possesses a patented, slow-release drug-delivery device called Medidur. Alimera Sciences also has the option to develop up to three additional products using CDS' drug delivery technology.
Alimera Sciences and CDS are in discussions with the FDA to initiate clinical trials to determine the effectiveness of injecting this implantable form of CDS' technology into the vitreous of the eye to treat DME. The miniscule implant is small enough to be injected into the eye via a 25-gauge needle and is expected to provide delivery of the drug to the back of the eye for up to three years.
DME is a common complication of diabetic retinopathy caused by fluid build-up in the central vision portion of the retina. Out of about 18.2 million diabetics in the US, one third has diabetic retinopathy and 10% of those will progress to DME. There are 75,000 new cases annually. "That's a market as attractive as AMD," says Myers.
Currently, the only approved method for treating DME involves laser photocoagulation therapy, which can leave irreversible blind spots. Many systemic compounds will not produce a therapeutic effect in the back of the eye and require frequent injections.
Alimera plans to begin clinical trials for the DME treatment later this year. These trials will consist of two Phase II studies designed to establish the safety and efficacy of Medidur for the treatment of DME. Each trial will have a duration of three years and enroll 450 patients. Alimera targets a registration filing by 2009.
Myers also thinks the CDS system could be developed for treating AMD. "An implant," he says, "would be a more attractive alternative to injections" which both Macugen and Genentech Inc. 's promising ranibizumab (Lucentis), now in Phase III testing, require. Alimera does not have an AMD compound of its own yet, but is looking to in-license one.
The large number of products Alimera has in-licensed for development has resulted in a faster burn rate than Myers originally anticipated. He says the company has enough capital and revenues to carry it well into 2006. However, he intends to begin raising a Series B round starting late this fall. Before he does, he'll likely huddle once again with his team and then charge ahead fast. "People," he says, "are already excited about the Series B."—Marc Wortman