Opthea Limited

OPT Details

Opthea Limited (ASX: OPT) is a biotechnology company, developing OPT-302, a novel biologic inhibitor of VEGF-C and VEGF-D, for use in combination with VEGF-A inhibitors for the treatment of wet age-related macular degeneration (wet AMD) and diabetic macular edema (DME).

Result Performance – For the First Half Ended 31 December 2020 – (H1FY21)

For the first half ended 31 December 2020, revenues from ordinary activities were reported at $314,295, up 15% YOY. Further, loss before tax was reported at $38.5 million versus $11.5 million in H1FY20, primarily due to the increase in research and development (R&D) spending, because of manufacturing of OPT-302 and planning of Phase 3 clinical trials of OPT-302 in wet AMD. Accordingly, loss from ordinary activities after tax attributable to members was reported at ~$35.0 million versus $7.6 million in H1FY20.

Key Data (Source: Company Reports)

Recent Updates

• As per the release dated 6 July 2021, the company announced that the U.S. Food and Drug Administration (FDA) has approved Fast Track designation for the company’s VEGF-C/-D ‘trap’ inhibitor, OPT-302, in combination with anti-VEGFA therapy to cure patients with neovascular (wet) age-related macular degeneration (AMD).

Key Risks:

The company is closely monitoring how the COVID-19 situation is leaving an impact on employees, business, preclinical studies, and clinical trials. The disruptions caused by the COVID-19 pandemic could result in difficulties or delays in initiating, enrolling, conducting, or completing future clinical trials that would also cost the company accordingly. Further, the company is exposed to key financial risks, including the interest rate and currency risk in accordance with financial risk management practices.

Outlook:

The company continues to process the clinical development of OPT-302 to key commercial milestones through the accomplishment of manufacturing, regulatory engagement, and planning for Phase 3 pivotal trials in wet AMD. The key objectives of the company over the next 12 months since the release of annual report 2020 comprised of (i) complete the manufacture of cGMP, clinical-grade OPT-302 for Phase 3 clinical trials, (ii) open Phase 3 ShORe and COAST clinical trial sites globally (USA, Europe, Asia Pacific), (iii) commence patient recruitment into the company’s Phase 3 clinical trials for wet AMD, (iv) progress development of a co-formulation of OPT-302 with a biosimilar VEGF-A inhibitor, and (v) publish outcomes of the Phase 2b wet AMD trial in a peer-reviewed journal.

Meanwhile, the Fast Track designation for OPT-302 and the regulatory support have provided the required boost to the company to advance this promising novel treatment to patients sooner.

Technical Overview:

Daily Chart:

Source: REFINITIV 

OPT's prices are finding support at the current levels after experiencing a gradual decline for the past few weeks. The RSI (14-period) is currently trading at ~46.80 levels and forming positive divergence with the price action, indicating the possibility of an upward reversal from hereon. The prices are forming a congestion pattern which may eventually lead to an upside breakout till the near-term resistance of $1.505, once accompanied by strong volumes. A further move above $1.505 may extend buying in the stock to the $1.575 level.

Stock Recommendation:

The stock has witnessed a fall of ~55.96% in 9 months and ~34.4% in 6 months. It has made a 52-week low and high of $1.240 and $3.280, respectively. Meanwhile, the cash position, as of 31 December 2020, stood at $202.5 million versus $62.0 million as of 30 June 2020.

Considering the aforesaid facts, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.330 per share, down by 5.001% on 7^th July 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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