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Investors take note of Opthea’s potential

Australian biotech company Opthea has reported a solid cash position to further advance clinical trials of its lead drug candidate OPT-302 in FY20, as it moves closer to imposing itself on the macular disease market.

The Melbourne firm has released its full-year preliminary financial results for FY19, reporting net revenue of $914,000, down 20% on the year prior.It also posted a $20.9 million loss, 23% more than FY18, as it progresses clinical trials of OPT-302 – a VEGF C/D inhibitor – for neovascular age-related macular degeneration (nAMD) and diabetic macular oda (DME).

Direct R&D expenditure in FY19 amounted to $31.3 million across both trials, which also included sourcing of anti-VEGF-A agents such as Lucentis (ranibizumab). The loss will be softened by a $14.6 million income tax benefit that is expected before the end of the year.

Opthea shares have been in high demand during the past month, following the positive read out of its Phase IIb clinical trial in nAMD patients on 7 August. It showed patients treated with OPT-302, in conjunction with Lucentis, had superior visual acuity compared with those who received Lucentis alone, which is the current standard of care.

The results have fuelled significant investor interest in the company, reflected by its share price on the Australian Securities Exchange that rose to an all time high of $4.15 on 2 September. This stretched its year-to-date gain to around 600%, momentarily taking the company’s market capitalisation above $1 billion.

Opthea CEO Dr Megan Baldwin said the results, in combination with the robust nature of the nAMD trial, were a major milestone for the company. The randomised controlled trial of 366 patients was double masked and involved hundreds of trial investigators across sites worldwide.

“We were able to demonstrate a superior vision gain in those patients who received our drug together with the standard of care – Lucentis – compared to patients who only received the standard of care,” she said.

“The fact they have vision improvent is critically important for their quality of life and really establishes OPT-302 as a drug with large commercial potential in a disease for which there’s not many other treatments, and a very large unmet clinical need.

“We are the only company that we are aware of targeting VEGF C/D in this way. We are also the only company that has demonstrated statistically significant added benefit with a new drug, targeting a new pathway over and above the existing standard of care treatment for the disease.

“This positions us well, relative to other companies, to be able to pursue strategic discussions with a lot of other companies that are interested in this space.”

Opthea has also expanded the clinical development program to test its drug candidate on DME patients. This Phase IIa trial is aiming to recruit 108 patients and examine the effectiveness of OPT-302 combination therapy with Eylea, compared to Eylea monotherapy. Results are expected early next year.

Baldwin said the company had emerged from its latest clinical trial phase in a strong cash position. Consolidated cash balances were $21 million at the end of June, and Opthea is fully funded through the raining nAMD trial activities, as well as completion of the ongoing DME Phase IIa study. It also has sufficient capital to prepare for registrational Phase III activities for a larger nAMD trial.

Its cash position can be attributed to capital raising of $45 million in April 2017 in an oversubscribed fundraising, supported by global healthcare institutional investors. Additionally, in October 2018, Opthea received a $12 million R&D tax credit, with a further $14.6 million expected this year. Funds were also raised through the exercise of quoted options issued in Novber 2014. Its annual revenue – $914,000 in FY19 – is mainly generated by bank interest.

To advance its OPT-302 to the final stages before market approval in either nAMD or DME, the company now needs to consider whether it will raise additional capital itself or explore strategic partnerships opportunities, such as partnerships or licensing agreents, with larger pharmaceutical companies.Baldwin said that Opthea had spent many years establishing a respected shareholder base, including institutional investors from Australia, Europe, the US and Israel.

“With that sort of shareholder base, consisting of healthcare specialists, we believe we have been in a very strong position to be able to finance the company, but also explore other financing options,” she said.

“So we are in a strong position no matter which way we look at it in terms of either funding it ourselves or doing that in conjunction with one of the larger pharmaceutical companies in this space.”

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