Opthea (ASX:OPT) has announced that its lead drug candidate sozinibercept has failed to meet primary endpoints in a phase 3 trial, raising serious concerns about the company’s future viability and its ability to continue as a going concern.
The trial, named COAST, involved nearly 1,000 patients with wet age-related macular degeneration (wet AMD) and tested sozinibercept in combination with aflibercept, a standard-of-care drug. The study failed to demonstrate any improvement over aflibercept alone, with patients receiving the combination therapy gaining 13.2 to 13.5 letters on an eye chart compared to 13.7 letters with aflibercept alone.
Opthea said the data had been thoroughly reviewed for accuracy and integrity, but “no anomalies were identified through this process that would cause the board to adopt an alternative view.”
The disappointing result is a major blow for the Melbourne-based biotech, which has positioned sozinibercept as a potential blockbuster in a $15bn global market dominated by drugs such as Lucentis, Eylea, and Vabysmo.
The company had been running two concurrent phase 3 trials — COAST and SHORE — with the latter due to report mid-year. The SHORE trial uses a different standard-of-care comparator, and Opthea said it is considering whether to accelerate or unmask those results early. No decisions have been made on whether to continue development of either trial.
As of 28 February, Opthea had US$113.8m in cash. However, its ability to remain solvent has been thrown into question due to obligations under a 2022 Development Funding Agreement (DFA), which provided the company with US$170m in non-equity capital. Under that agreement, certain events — including failure to fund development costs, insolvency, or disputes with investors — could trigger repayments of up to US$680m.
Opthea acknowledged that, depending on the outcome of current discussions with DFA investors, these obligations could have a material adverse impact on the company’s solvency. The investors under the agreement also hold security over all of Opthea’s assets, restricting the company’s ability to raise further debt or dispose of key assets without their consent.
The company has requested that its trading suspension on both the ASX and Nasdaq remain in place until 31 March or until it can provide further clarity. Opthea is currently relying on the safe harbour provisions under section 588GA of the Corporations Act, which provides temporary protection for companies at risk of insolvency while they pursue recovery plans.
Shares in Opthea last traded at $0.60, down nearly 50% from a 52-week high of $1.16 reached in early February. The company had a market capitalisation of $739m prior to the trading halt.
A second chance now rests with the SHORE trial, but the company’s near-term future depends heavily on negotiations with its creditors.
