Ann: Opthea's OPT-302 Granted Fast-Track for wet AMD, page-57

Valuation: Reduce TP to A$2.50; off Conviction List, reiterate Buy
We continue to believe that OPT-302 is under-valued and remain positive on the longer-term investment view, but with Ph3 studies now underway, we expect few incremental catalysts ahead of top-line data in 2023, and hence remove from ANZ Conviction List.

Since we added OPT to the Conviction List on 27 Aug 2019, the stock is down 52% vs. S&P/ASX 200 up 15%, with the under performance in our view largely reflecting a lack of clinical catalysts and a dilutive secondary listing during this period.

We update our forecasts to reflect: 1) marking-to-market of latest comparator drug revenues (Luncentis, Eylea and our assumption of Avastin for retinal disease indications); 2) modest clinical delays vs. our previous expectations (c.6 months); and 3) a shallower adoption profile, primarily to reflect competitor progress (now assuming 30% of implied biosimilar adoption at peak, from 50% prior).

In doing so, we reduce risk-adjusted peak sales from US$2.3bn to US$1.5bn in 2030E (our probability of success remains unchanged at 55% in wAMD, 20% in DME).

These changes to our forecasts reduce our 12-month TP to A$2.50 (from A$4.70), still based 70% on our DCF valuation of A$2.30 (from A$4.70), and 30% from our M&A valuation of A$2.90 (from A$4.70; calculated by applying a multiple of 2x to risk-adjusted peak sales, multiple unchanged).
Key risks: Replicability of positive data in larger Ph3 studies; pipeline setback; regulatory approval; potential changes in competitive dynamic; pricing, reimbursement and market access.