This is the summary at the start of the (33 page) report:OPT.AX...

This is the summary at the start of the (33 page) report:

OPT.AX 12m Price Target: A$4.90 Price: A$2.70 Upside: 81.5%

Targeting the leading cause of vision loss. OPT is a clinical-stagebiotech focused on eye disease. The company is evaluatingOPT-302, a drug for the treatment of Age-related MacularDegeneration (AMD) and Diabetic Macular Edema (DME); marketsworth >US$10bn in 2018. In Aug-2019, OPT reported positive PhaseIIB data in AMD, and we expect progression into Phase III in 2H20.

OPT-302 has multi-billion dollar potential. As successful ascurrent treatments have been, they only inhibit up to two of thefactors responsible for the disease (VEGF-A/B). Over half of patientsdo not achieve significant vision gains, and a quarter experiencecontinued vision loss. OPT-302 is intended for use in combinationwith these treatments, blocking a further two factors (VEGF-C/D),hence targeting improved outcomes via a more complete blockade.We forecast non-risk-adjusted peak sales of US$5.0bn (US$2.0bnrisk-adjusted), of which US$3.4bn relates to wAMD (US$1.7bn).

Several stages of upside ahead of binary Phase III data.Risk-adjusting for development and commercial hurdles implies aTarget Price of A$4.9 (market cap: US$760m). With several drugs inlate-stage development, and existing patents expiring from 2020-23,we see several motivated partner candidates who could view OPTas low-cost optionality on lifecycle management and/or marketexpansion for multi-billion dollar opthalmology franchises. Webelieve a licensing agreement is the likely path tocommercialisation, and we estimate a global deal could add A$1.2 toOPT shares (+45%). OPT expects Phase IIA data for DME in early2020, for which a positive outcome could add A$0.6 (+22%). IfOPT-302 is ultimately approved for both wAMD and DME in US andRoW, we estimate a further A$5 of upside to A$11 (+320% upside).

We initiate with a Buy rating (add to Conviction List).