ASX biotech share Opthea Limited (ASX: OPT) remains frozen at 60 cents apiece following a failed Phase 3 clinical trial.
In an update this week, we learned that Opthea has decided to cease development of its sozinibercept (OPT-302) treatment.
This follows the failure of its Phase 3 COAST clinical trial and bad news this week about the Phase 3 ShORe trial.
OPT-302 had been a potential treatment for wet age-related macular degeneration (wet AMD).
The ASX biotech is now in a perilous financial state, with the ASX extending its shares' trading suspension this week.
Opthea admits that "there remains material uncertainty as to Opthea's ability to continue as a going concern."
Canaccord Genuity previously had high hopes for the ASX biotech small-cap, given the promising nature of OPT-302's Phase 2 data.
Now, the broker has suspended its buy rating, noting "the potential that the stock has no value from here".
The ASX biotech advised investors on 24 March that its Phase 3 COAST clinical trial of OPT-302 had failed to meet its primary endpoint.
The trial was assessing sozinibercept (OPT-302) combined with aflibercept to treat wet AMD.
The failure of the trial raised serious financial concerns for Opthea.
The company said it would review its obligations under its Development Funding Agreement (DFA) with key investors to decide the next steps.
On Monday, Opthea issued a statement advising that it and its DFA investors have decided to discontinue the OPT-302 wet AMD trials.
This means it is terminating the Phase 3 COAST (Combination of OPT-302 with Aflibercept Study).
Not only that, it is also terminating the Phase 3 ShORe (Study of OPT-302 in combination with Ranibizumab) in patients with wet AMD.
After the failure of the COAST trial, Opthea decided to accelerate the ShORe trial topline data readout as its next step.
Here are its findings:
The global ShORe Phase 3 trial evaluated the efficacy and safety of intravitreally administered 2 mg sozinibercept every four or eight weeks in combination with 0.5 mg ranibizumab every four weeks, as per label, versus 0.5 mg ranibizumab monotherapy.
The trial did not meet its primary endpoint of mean change in best corrected visual acuity (BCVA) from baseline to week 52.
Opthea CEO Frederic Guerard said:
We are disappointed that COAST and ShORe did not demonstrate the improvements in vision with sozinibercept combination therapy compared to standard of care that we had hoped for.
As previously disclosed, the Company has certain obligations under the DFA. In light of the Phase 3 clinical trial results, the Company and the DFA Investors will continue to discuss this matter in good faith, and we will provide updates on this matter in the future.
Importantly, Opthea and its DFA investors have agreed that ceasing both trials does not constitute a 'termination event' under the DFA.
This means Opthea does not need to repay its investors anything for the moment.
Previously, Opthea had flagged that the COAST trial's failure meant it may have to pay hundreds of millions of dollars to its DFA investors.
As of 31 March, Opthea had about US$100 million in cash and cash equivalents, so a DFA repayment trigger would threaten its solvency.
But the risk isn't over. There is still a chance the DFA could be terminated altogether, which would require a payment.
Opthea said: "In light of these matters, there remains material uncertainty as to Opthea's ability to continue as a going concern."
Opthea is continuing discussions with the DFA investors and remains reliant on 'safe harbour' provisions under the Corporations Act.
Last month, Opthea requested a voluntary suspension in trading until it could make its next announcement, which came on Monday.
The ASX has now formally extended the biotech share's suspension due to the company's precarious financial position.
In a statement, the ASX said:
ASX has determined that OPT's financial condition is not adequate to warrant the continued quotation of its securities and therefore is in breach of Listing Rule 12.2.
The suspension will continue until ASX is satisfied that OPT is in compliance with the Listing Rules …
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