Alimera Sciences Inc. said Friday that regulators have again refused to approve its retinal disease treatment Iluvien, and asked it to run two new clinical trials.
Shares of Alimera plunged more than 70 percent in afternoon trading, while shares of pSivida Corp., which developed the drug and licensed it to Iluvien, fell more than 40 percent.
Alimera is seeking approval for Iluvien as a treatment for diabetic macular edema, which can cause blurred vision and blindness. The company said the Food and Drug Administration did not approve Iluvien because clinical trials of the drug did not prove it is safe and effective, and its benefits weren't strong enough to overcome its side effects, which can include cataracts and increased pressure inside the eye.
Iluvien is a tube that is injected into the eye and gradually releases a corticosteroid called fluocinolone acetonid.
The Alpharetta, Ga., company said it will request a meeting with the FDA to clarify its next steps. The company said it is considering its options in the U.S. and has funds to pursue approval in the European Union. It expects EU regulators to make a decision on the drug in in first half of 2012.
Cowen and Co. analyst Simos Simeonidis said the request for new studies is "the worst-case scenario for Alimera," and wrote that the company may not run the trials.
"This news translates into: 1) a multi-year delay, and 2) a very significant investment of capital, that the company does not currently have at hand," he said.
Alimera initially asked the FDA to approve Iluvien in June 2010. In December, the FDA asked the company to report data from a third year of a clinical trial, and Alimera filed that data in May 2011. It also responded to the agency's concerns about manufacturing, packaging and sterilization of the drug. If the FDA approves the drug, Alimera will pay pSivida $25 million, and pSivida will receive 20 percent of the net profit on sales.
Watertown, Mass.-based pSivida is also working with Pfizer Inc. to develop an eye implant designed to treat ocular hypertension and glaucoma. That product uses technology similar to Iluvien.
Shares of Alimera dropped $5.47, or 72.9 percent, to $2 in afternoon trading. Shares of pSivida lost $1.75, or 44.5 percent, to $2.18.