Alimera: Less Than 2 Weeks Until PDUFA Date of December 30

Apparently, there will be no Advisory Committee meeting for Alimera's Iluvien retinal insert treatment for diabetic macular edema, the leading cause of blindness among diabetes sufferers. This is encouraging for approval by the full FDA on December 30th.

The fact that Alimera's application was granted "Priority Review" status on August 30th, shortening the review period by 4 months (from 10 months to 6 months) is encouraging for approval.

The fact that Bausch & Lomb already has gained approval for Retisert, a retinal insert using the same steroidal treatment in the same dose as Ilubien for a related condition, uveitis, provides additional comfort that Iluvien will gain approval from the full FDA on December 30th.

According to the company, 50% of people that suffer DME need treatment bilaterally (i.e. both eyes). The company estimates that about 250,000 diabetes patients per year in the United States alone develop DME.

Analysts at CS estimate that treatment with Iluvien will be priced at approximately $6,000 per eye.

If Alimera's Iluvien can capture a 20% share of a 250,000/year market that's 50,000 patients per year needing 75,000 procedures per year (remember, half the people need both eyes treated). At $6,000 per treatment, then Illuvien can generate $450 million annually in revenue.

Assuming an 85% gross margin, ALIM would earn $382.5 million in gross profit. After deducting $62.5 million for SG&A expenses, ALIM would be left with $320 million in "operating profits."

As best as I can determine, ALIM's technology source, NASDAQ-traded Psivida (PSDV) is entitled to 20% of ALIM's pretax profitability. The scenario noted above would divert about $64 million per year from ALIM to PSDV, leaving ALIM with $256 million in pretax income. That leaves ALIM with about $70 million in after-tax income.

Currently, ALIM's market capitalization is less than 2x this potential level if profitability.

PSDV's $100 million market cap also is less than 2x its potential pretax royalty stream.

Apparently, the market believes either that the probability of approval is low or that the product is unlikely to gain wide acceptance by retina specialists and patients in the process of losing their vision.

Am I missing something?