* What's New - We hosted ALIM at our 2012 Healthcare Conference in NYC, and highlights from mgmt include further detail on EU commercialization plans/market dynamics, timing of discussions with the US FDA, and potential financing. We remain Neutral on ALIM as we wait for better visibility on the launch plans for Iluvien in Europe.
* Europe Launch Timing - ALIM announced EU approval of Iluvien in chronic DME on Tuesday (2/28) and is currently in a 30-day National Phase to complete label translation in each country. The marketing authorization to begin selling is expected on March 28, but mgmt is not expected to launch until the end of 2012 as distribution & reimbursement requirements need to be completed. The launch will most likely begin in Germany since the reimbursement hurdles are lower compared to other countries.
* Europe Market Dynamics - At this point mgmt remains undecided on partnering for the European opportunity but expects to make a decision over the next few months - the decision would be "all-or-none" since distributors would be unwilling to sell in only certain countries without access to the rest of Europe. Mgmt indicated that while only 7 countries have approval, 80% of the diabetics in Europe (23M people vs. 25M in the US) are in those 7 countries. The number of retina specialists is also similar to the US and would require roughly the same size sales force as the US (about 20-30 reps).
* EU DME Treatment Regimens - The treatment of DME in Europe is somewhat similar to the US. Laser photocoagulation, generic steroids, and anti-VEGF therapies are used to treat the disease. Interestingly, some injections are performed in the hospital setting which may be a consideration when determining Iluvien pricing in Europe.
* Europe Reimbursement - ALIM is working on a pricing plan for Europe and has started conducting its health economic analysis in preparation for future reimbursement meetings, including a meeting with NICE in the UK in late summer (August). Our initial thinking is that the EU pricing range will be modestly below the $5-10K range that the company was considering for the US market.
* US FDA Discussions - Mgmt has been in contact with FDA after receiving the Complete Response Letter in November and expects a meeting in 2Q to discuss a path forward to obtain US approval. As a reminder, the FDA would like ALIM to conduct two new clinical trials for Iluvien - mgmt has not yet committed to this investment.
* Financing - ALIM has $34M of cash as of the end of December 2011 and does not expect to raise capital in 2012. If ALIM chooses to commercialize via a partnership we believe there would likely be a large upfront payment by ALIM as part of the agreement, and if the company goes direct there would likely be sizeable infrastructure investments before a ramp in sales would yield P&L leverage.