Alimera's Commercial Steroid Implant For Diabetic Macular Edema, Explored

Initiating coverage of Alimera Sciences Inc (NASDAQ: ALIM) at a Buy rating and a $4 price target, Rodman & Renshaw said it views the company's commercialized product lluvien, which is a fluocinolone acetonide intravitreal implant, is differentiated from other corticosteroid treatment options for diabetic macular edema.

DME: The Disorder

Diabetic macular edema is an accumulation of fluid in the macula, part of the retina, due to the leaking of blood vessels in individuals with diabetic retinopathy.

Diabetic retinopathy is a disease that damages the blood vessels in the retina, resulting in vision impairment.

3-Year Effectiveness

Analyst Raghuram Selvaraju noted lluvien is the only approved drug therapy that can deliver consistent daily therapeutic levels for multiple years and mitigate the typical corticosteroid-related side effects.

The sustained therapeutic effect provided by Iluvien for up to 36 months significantly overshadows its closest competitor,
Allergan plc Ordinary Shares (NYSE: AGN)'s Ozurdex, which only lasts up to six months, the analyst said.

Rodman & Renshaw noted lluvien was approved in September 2014, commercialized in the United States and ex-U.S. countries. The firm said sales growth in recent quarters was impressive, with reported worldwide revenue of $34 million in 2016.

"With its unique advantage of eliminating frequent injections and delivering steady efficacy over three years, Iluvien should experience continuous market uptake as a second-line treatment in the $2 billion DME therapeutic market," the firm said.

Current Therapies For DME

The firm clarified that anti-VEGF agents such as Regeneron Pharmaceuticals Inc (NASDAQ: REGN)'s Eylea and Roche Holding Ltd. (ADR) (OTC: RHHBY)'s Avastin, used off label, are the current standard of care for treating DME, which affects 750,000 patients in the United States.

Highlighting the potential, the firm noted 37–56 percent of patients treated using these anti-VEGF agents have persistent edema after one year of treatment. The anti-VEGF therapy requires either monthly intravitreal injection or once every two months.

"This presents an attractive market opportunity for steroid implants, in our view, especially those that can deliver consistent long-term therapeutic effect with only one injection, such as Iluvien," the firm said of the potential.

"Of note, Iluvien® is inserted into the back of the eye in a non-surgical procedure, which allows for a selfsealing wound."

Profit Potential

The firm expects continued top-line growth in 2017, primarily from sales of Iluvien in the United States, with additional ex-U.S. launches likely to occur in 2017. Specifically, the firm expects Alimera to achieve cash flow breakeven by the end of 2017 and feels it isn't necessary for the company to raise any additional capital to achieve sustainable profitability. According to the firm, peak annual sales are likely to be $372 million in 2027.

Rodman & Renshaw also thinks Alimera may choose to develop Iluvien for retinal vein occlusion, or RVO, which would add additional upside to its price target if successful.

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