Opthea’s Phase 3 trial of its promising treatment for wet Age-related Macular Degeneration (wAMD) is nearing its halfway mark, as other competitors’ trials begin to fall away.
Given the potential size of the AMD market, estimated at US$13 billion, it is not surprising that so many new drugs are targeting angiogenic eye diseases. However, not all drugs and therapies will succeed, and we note several failures including Kodiak Science and Adverum Biotechnologies among companies whose efforts have fallen short.
The main focus of treatments in development for angiogenic eye diseases is on durability, targeting extended treatment intervals.
OPT’s treatment (OPT-302) has a primary goal of vision improvement although durability is important. Its Phase 2b wet AMD trial showed statistically significant gains in vision.
OPT-302 is a fusion protein similar to the standard of care treatment from Eylea. OPT-302 is a complementary therapy so it is being used in combination with two existing therapies – Lucentis and Eylea.
In what would be a big advantage over the competition, OPT is planning to develop a co-formulation (both drugs combined) so that patients only need a single injection.
The main aim of the Phase 3 trial is to measure the improvement in Best Corrected Visual Acuity over a 12-month period. So far, OPT-302 clinical trials of 400+ patients have not reported any serious adverse effects. A second 12-month period is required to check the safety and tolerability aspects of the treatment.
The initial results are expected to be reported in 2023. After the extended trial period for safety evaluation, a potential market entry is anticipated in 1H25f.
Investment view
OPT’s strong clinical data gives OPT-302 a better than industry chance of approval. If the Phase 3 trial is successful, the likelihood of commercialisation is high and at that point, OPT is likely to attract corporate attention.
OPT-302 also targets DME (diabetic macular edema) and together with wet AMD, these two afflictions represent more than 80% of the angiogenic eye market.
OPT has current cash of approximately US$118 million (30 June 2021) which is sufficient to fund the Phase 3 trial.
On a risk adjusted basis, we value OPT at $1.47 billion ($4.26 per share).
Risks to investment view
The COVID pandemic may impact the clinical trial enrolment. Patients may reject the need for two injections per eye. The failure to secure licensing agreements may cause OPT to raise further capital. OPT may decide to undertake the regulatory and commercialisation roles which would entail additional costs and an extended timeframe to our forecasts.
Recommendation
We have retained our Buy recommendation.
