(Reuters) - Biopharmaceutical company Alimera Sciences Inc said the Austrian health regulator approved its experimental drug for retinal swelling, raising hopes for the company's most advanced treatment, which has been twice rejected in the United States.

Seven European countries -- United Kingdom, Austria, France, Germany, Italy, Portugal and Spain -- had found Iluvien to be "approvable" in a "Final Assessment Report" in late February, sending its stock up as much as 84 percent.

Alimera shares, which have shed about 32 percent since then, made up those losses on Tuesday morning. The stock rose as much as 35 percent to $3.63, making them one of the top percentage gainers on the Nasdaq.

With the drug now approved in one territory, Alimera has to decide whether to sell Iluvien on its own, partner Iluvien with an EU or global biopharma company, or sell itself, Cowen and Co analyst Simos Simeonidis said in a note to clients.

Alimera had said in a regulatory filing in November that it planned to market Iluvien on its own in the United States and would look for a partner to commercialize it outside North America.

However, Simeonidis kept his neutral rating on Alimera's stock "given the uncertainty and risk around Iluvien's commercialization."

(Reporting by Shailesh Kuber in Bangalore; Editing by Roshni Menon)