Opthea Limited

OPT Details

FY21 Financial and Operational Performance: Opthea Limited (ASX: OPT) is a clinical-stage biotech firm developing drugs and innovative, biology-based therapies to treat eye disease

• OPT treated patients suffering from wet age-related macular degeneration (AMD)/retinal disease in Canada and the US for the Phase 3 trial of OPT-302.
• OPT will enroll patients for two simultaneous Phase 3 registrational trials-COAST (Combination OPT-302 with Aflibercept Study) and ShORe (Study of OPT-302 in combination with Ranibizumab) in Canada.
• The company also obtained an initial Pediatric Study Plan (iPSP) waiver from the U.S. FDA for OPT-302.
• The company also appointed Dr. Jeremy Levin as Chairman and Dr. Julia Haller and Ms. Judith Robertson as non-executive directors of OPT
• The company posted a decrease of 18.3% YoY in revenue to US$440,615 in FY21.
• OPT reported a net loss of US$45.3 million after-tax attributable to shareholders in FY21, up by 307.7% YoY. The higher net loss is because of the increased R&D spend on the manufacturing of OPT-302 and the Phase 3 clinical trials’ planning for OPT-302 in wet AMD.
• OPT held US$118.2 million cash as of 30 June 2021 versus US$202.54 million as of 31 December 2020

Cash Balance (Analysis by Kalkine Group)

Key Risks: The company faces changes in regulations in sanction from various authorities in different geographies.  Its operations are also dependent on the success of clinical trials. Thus, delay or failure in the preclinical studies/trials due to the COVID-19 pandemic might impact its bottom line. 

Outlook: Looking ahead, the company remains on track to continue executing its Phase 3 pivotal program for OPT-302 in wet AMD. OPT is also progressing for regulatory approvals from other countries in Europe, South America, and the Asia Pacific, to expand the geographical reach of its OPT-302 Phase 3 program.

Stock Recommendation: The stock of OPT gave a negative return of 18.75% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $1.210 - $3.280. On a TTM basis, the stock of OPT is trading at a price-to-book value multiple of 3.6x, lower than the industry (Biotechnology & Medical Research) median of 4.6x, thus seems undervalued. Considering the current trading levels, expansion of OPT-302 Phase 3 trial in Canada and other geographies, valuation on TTM basis, and key risks associated with the business, we give a ‘Speculative Buy’ rating on the stock at the current market price of $1.36 as on 13 September 2021, down ~2.509%.

OPT Daily Technical Chart, Data Source: REFINITIV 

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.