All eyes on Opthea investors amid fresh blowCameron England,...

All eyes on Opthea investors amid fresh blow

Cameron England, Valerina Changarathil

Melbourne biopharma Opthea will abandon a second major clinical trial into the treatment of wet, age-related macular degeneration, a week after revealing a trial into its flagship compound sozinibercept had failed.

The company last week said the COAST trial, which was evaluating the efficacy of the compound in combination with another drug, aflibercept, over the course of a year, had failed to show that the treatment worked.

The company on Monday said it had subsequently accelerated the topline results from its other trial – called ShORe – which revealed that it too showed no benefits.

On the upside, the company told the ASX that it had spoken with its US investors and determined that the decision to terminate the trials “did not constitute a termination event” under its investment agreement, which could have triggered payments to the investors of more than $1bn.

“Following the negative results of the COAST and ShORe trials, Opthea and the Development Funding Agreement (DFA) investors agreed to discontinue the development of sozinibercept in wet AMD with immediate effect, and that this decision did not constitute a termination event under the DFA resulting in any amount payable by Opthea,” it told investors.

“It remains possible that under the DFA, in certain circumstances upon or following termination of the DFA, Opthea could become required to pay a multiple of the amount funded by the DFA investors that would have a material adverse impact on the solvency of the company.

“As previously disclosed, termination can be triggered by a range of events, including, among other things, Opthea’s insolvency, in which case Opthea will be obligated to pay a multiple of the amounts funded by the DFA investors.”

Opthea said on Monday it estimated it had $US100m in cash and cash equivalents at the end of March.
“In light of these matters, there remains material uncertainty as to Opthea’s ability to continue as a going concern,” Opthea told the ASX.

The DFA investors – including New York-based Carlyle Group – invested $US170m into Opthea in August 2022.

Opthea shares last changed hands at 60c, valuing the company at about $740m. Trading in Opthea’s listed securities will remain suspended now under ASX’s Listing Rule 17.3 until it is in a position to provide more clarity on these issues and the impact on its financial position.

Regal Partners (RPL) subsidiary Regal Funds Management funds has a 30 per cent stake in Opthea through its Regal Investment Fund (RF1) and Regal Asian Investments (RG8) fund. Last week, Opthea’s valuation as part of Regal’s portfolio was slashed to 20c per share, but still subject to positive results from the second trial.

Shares in RPL are down 5 per cent to $2.25; RF1 is 2.8 per cent lower at $2.80 while RG8 is off 2.6 per cent to $1.86.

Opthea investor Hearts and Minds Investments (HM1), with a 2.4 per cent holding, is down 3.6 per cent to $2.94. It had also revalued its holding to 20c, but still hoping for a positive second trial readout.

Pengana Capital (PCG), which holds a 5.8 per cent position in Opthea, last week temporarily suspended applications and redemptions in the Pengana High Conviction Equities Fund, but was hopeful for a different outcome in the ShORe results compared to the “particularly surprising” result in the COAST study. Shares are flat at 88.5c.