It is pretty easy to see that 2014 was a year of significant progress for pSivida. Perhaps most importantly, in September the FDA approved Iluvien for patients with diabetic macular edema (DME) who were previously treated with corticosteroids without a clinically significant rise in intraocular pressure. This led to a milestone payment of $25 million, which provides the company with a cash runway that can last into 2017 (and that excludes any royalties from Iluvien sales).
The EU, however, was actually the first jurisdiction to recommend approval of Iluvien for DME and it is now up to the member states to determine a reimbursement process. This has been proceeding well with 15 European Union states granting approval with two more pending. Finally, Iluvien has recently been sub-licensed in the Australian and New Zealand territories, with pSivida booking 33% of any sub-license and then 20% of the profits and/or royalties.
While investors have tended to focus on the near term story that was the Iluvien approval in the United States, this led many to miss the longer term, and perhaps more lucrative, story. While one does not want to take anything away from Iluvien, the economics to pSivida are significantly less than its wholly own asset of Medidur and any drug that will be developed from the Tethadur and Durasert platform technologies.
Medidur is the key to the next leg of the pSivida growth story. Enrollment in the phase III posterior uveitis trial is expected to be completed in March of 2015, which would place the results in the second quarter of 2016 (endpoint is recurrence of disease at 12-months). The company should receive guidance this year whether this single trial (along with data from the Iluvien trials as it uses the same design, same drug, same polymer, and same release rate) will be sufficient for approval.
Agreement on the guidance will be a significant catalyst as it shortens the time to market for a program but more importantly, this is a drug that pSivida owns the complete economics. Despite being the similarities to Iluvien, pSivida retained the worldwide rights and, thus, the long term commercial potential of Medidur is significantly more important to pSivida than Iluvien. It seems, however, that investors have missed this asset in their focus on Iluvien, which provides a nice investment opportunity as it will not remain under the radar forever.
Of course, success with Iluvien and additional success with Medidur only increases confidence in the long run potential of pSivida to develop additional drugs with the Tethadur and Durasert platform technologies. While this is not a near term process, they will be critical in generating the third, fourth, and so on legs of the story and will come more into focus in 2015 and 2016.
All of that being said, investors have a real opportunity in pSivida as Medidur becomes derisked over the next 18 months and Iluvien expands its commercial reach.