Long-term vision for Intersouth-backed Alimera Sciences could be cloudy
Mon., Nov. 9 2009 8:11AM
My Notes:
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-- “As of September 30, 2009, we had $9.9 million in cash
--sufficient to fund our operations through January 2010, but not beyond January 2010.
--Alimera says it believes commercialization could take place as “early as the first quarter of 2011.”
--“However,” the company adds, “we cannot be sure that this offering will be completed, that Iluvien will be approved by the FDA in the fourth quarter of 2010 or that
Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – Is time running out for Intersouth-backed Alimera Sciences?
The developer of ophthalmic drugs, which is based in Alpharetta, Ga., re-filed plans for an initial public offering last week. After cancelling an IPO announced last year that targeted a $75 million raise, Alimera upped its target to $80 million, according to the filing it made with the Securities and Exchange Commission.
However, Alimera noted that its cash and cash equivalents are down to less than $10 million from $26.6 million as of a year earlier. And its prospectus is gloomy, to say the least.
The company’s future rests on a treatment for diabetic macular edema (DME) called Illuvien, which is currently involved in late-stage clinical trials. Crucial data is expected in December.
“There are no ophthalmic drug therapies approved by the U.S. Food and Drug Administration (FDA) for the treatment of DME.,” Alimera said in its filing. “We believe that Iluvien will be the first ophthalmic drug therapy approved by the FDA for the treatment of DME.”
However, that optimism is countered by fiscal reality.
A look at the cash levels, the clinical trial data timeline and the hoped-for IPO clearly reveals why Alimera said the following in the SEC document:
“We may need additional financing in the event that we do not receive regulatory approval for Iluvien or the approval is delayed or, if approved, the future sales of Iluvien do not generate sufficient revenues to fund our operations. This financing may be difficult to obtain. …
“As of September 30, 2009, we had $9.9 million in cash and cash equivalents which we believe is sufficient to fund our operations through January 2010, but not beyond January 2010.
Our need for additional financing, and current lack of a commercial product raise substantial doubt about our ability to continue as a going concern.”
Of course, any prospectus has to warn investors about the risks involved in buying stock. Alimera has been strong enough to convince Durham-based Intersouth and other venture firms to pour some $90 million into its coffers since a launch in 2003.
In fact, just a few months before the initial IPO announcement last year, Alimera closed on $30 million.
Even if the results are strong for Iluvein and the FDA grants approval, Alimera acknowledges there are no guarantees the drug will be a financial success.
Alimera says it believes commercialization could take place as “early as the first quarter of 2011.”
“However,” the company adds, “we cannot be sure that this offering will be completed, that Iluvien will be approved by the FDA in the fourth quarter of 2010 or that, if approved, future sales of Iluvien will generate revenues sufficient to fund our operations beyond the first quarter of 2011, or ever.
In the event additional financing is needed, we may seek to fund our operations through the sale of equity securities, strategic collaboration agreements and debt financing.
We cannot be sure that additional financing from any of these sources will be available when needed or that, if available, the additional financing will be obtained on terms favorable to us or our stockholders.
If we raise additional funds by issuing equity securities, substantial dilution to existing stockholders would likely result and the terms of any new equity securities may have a preference over our common stock.
If we attempt to raise additional funds through strategic collaboration agreements and debt financing, we may not be successful in obtaining collaboration agreements, or in receiving milestone or royalty payments under those agreements, or the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to commercialize our product candidates or operate as a business.”
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Tags: Biotech & Life Science, Venture & Innovation, Intersouth
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