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Two Year-End FDA Run-Up Stock Plays: $PSDV $LCI

By Mike Havrilla on 09/14/2010 – 7:18 am PDTLeave a Comment

Below are two small-cap stocks with expected FDA decisions by year-end and stock prices below $5 per share that I currently own as potential run-up plays with PDUFA action goal dates in late December for pending New Drug Applications (NDAs)…

On 8/30/10, Alimera Sciences (NASDAQ:ALIM) was granted a priority (six-month) review for the ILUVIEN NDA that was filed 6/29/10 with expected FDA decision by 12/29/10, seeking approval for diabetic macular edema (DME). pSivida (NASDAQ:PSDV) is due to receive $25M upon FDA approval + 20% profit sharing. In addition a MAA was filed for EU approval 7/8/10, and ALIM expects to complete the 3-year FAME study by year-end 2010 (this data not required for NDA), also expects to file a New Drug Submission (NDS) for Health Canada approval this month.

ILUVIEN (fluocinolone intravitreal insert) (sustained eye drug delivery system designed to provide therapeutic effect for up to 2-3 years using ultra low-dose of drug and delivered by insertion device utilizing 25-gauge needle that allows for self-healing wound) was licensed by PSDV to ALIM in March 2008 for $12M in upfront cash plus $5.7M of accrued development liabilities were cancelled. Fluocinolone Acetonide (FA) is an FDA approved corticosteroid with demonstrated efficacy for DME, resulting in a significant improvement in visual acuity for DME versus the current standard of care and designed to mitigate steroid side effects by using tiny amount of drug (400,000X less FA required using ILUVIEN drug delivery technology)

DME represents a market opportunity in excess of $1 billion and is the leading cause of vision loss for Americans under 65 with over 1 million treatable cases in the US and no FDA approved drug therapy (DME is currently treated by laser surgery). DME is characterized by swelling in the back o f the eye due to poor circulation and there are an estimated 300,000+ new cases of DME to treat each year.

ALIM plans to market ILUVIEN directly to retinal specialists, which have historically been early adopters of new treatments, including VISUDYNE (2000-01 with $140M in first-year revenue), MACUGEN (2005 with $800M in first-year revenue), and LUCENTIS (2006-07 with $800M in first-year revenue). Retinal specialists treat DME and ALIM expects to have a sales force of 30 reps at a cost of $12-15M per year to cover 1,600 retinal specialists across 900 retinal centers as part of a direct to physician marketing program that will not include a retail pharmacy presence for ILUVIEN.

PSDV cash / equivalents as of 3/31/10 = $4M and the Company received $15.2M from ALIM on 4/27/10 for full re-payment of note plus interest. PSDV has guided for adequate liquidity through at least 3/31/11, which is adequate to reach a $25M milestone payment due from ALIM upon potential FDA approval. PSDV would also have adequate liquidity if there is a three-month delay by the FDA. PSDV has approx. 18.5M shares of common stock outstanding and 13M common stock warrants outstanding with an average exercise price of $7 per share.

PSDV also has a worldwide collaborative research and license agreement with Pfizer (PFE) under which PFE may develop additional ophthalmic products based on certain of our technologies. The PFE license includes an $11.5M equity investment (PFE owns 1.9M shares or approx. 10% of all PSDV common stock outstanding), R&D support, and up to $153M in potential milestone / royalty payments.

The technology systems developed by PSDV include Durasert and BioSilicon

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Tags: alimera sciences, diabetic macular edema, DME, ILUVIEN, ,

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