Opthea IPO: What Investors Should Know About The Genentech, Regeneron Challenger

Opthea, an Australian clinical stage biotech company, is going public to help fund its Phase 3 trials and take on two large biotech companies.

About Opthea: The main area of focus for Opthea Ltd OPT is wet age-related macular degeneration, commonly referred to as AMD, and other retinal diseases.

The company's OPT-302, is a "biologic designed to inhibit VEGF-C and VEGF-D to complement VEGF-A inhibitors for the treatment of ophthalmic diseases."

Anti-VEGF-A therapies are the standard of care for wet AMD. Many patients do not respond to these treatments.

OPT-302 is the only biologic inhibitor of VEGF-C and VEGF-D in clinical development.

Opthea is planning to launch two Phase 3 trials for wet AMD in combination with anti-VEGF-A therapies compared to the anti-VEGF-A therapy on their own. Top line results are expected in 2023.

The company is also targeting diabetic macular edema — DME — with a Phase 1b/2a trial.

Opthea recently named Jeremy Levin as its chairman. Levin is the chairman of the Biotechnology Innovation Organization, the largest trade organization worldwide for the biotechnology industry.

Levin has previously worked as the president and CEO of Teva Pharmaceuticals TEVA and held roles with Bristol-Myers Squibb BMY and Novartis NVS.

The Opthea Offering: Opthea, which is listed on the Australian Stock Exchange, plans on selling 9.3 million ADSs at a price point of around $17.26. Each ADS will represent eight common shares.

The funds from the offering will be used to advance the two Phase 3 trials of OPT-302 and push the trial targeting DME further.

Opthea has $42.6 million in cash prior to the offering. With the offering, it believes it can fund operations through the third quarter of 2023. 

The AMD Market: Opthea believes there is a significant market opportunity for wet AMD that will grow with an aging population. Wet AMD is a rapidly progressing disease that affects the loss of central vision.

There are an estimated 1 million people with wet AMD in the United States and 2.5 million in the European Union.

Opthea also believes its OPT-302 can beat already approved treatment options on the market.

"The potential to lead to sales greater than the combined annual sales of ranibizumab and aflibercept," Opthea said in an SEC filing. 

Lucentis (ranibizumab) and Eylea (aflibercept) are the top two treatment options available for wet AMD and had combined sales of $11.9 billion in 2019 for the U.S. market.

Lucentis is sold by Genentech, a Roche Holding RHHBY company. Eylea is sold by Regeneron Pharmaceuticals REGN.

Eylea had sales of $8.1 billion in 2019. The treatment has passed Lucentis due to the fewer injections involved for patients.

Plans for Growth: Opthea's goal is to become a leader in retinal diseases treatments. With the help of this offering, the company expects to:

• Advance OPT-302 through two Phase 3 trials for the treatment of wet AMD
• Expand clinical development of OPT-302 in other retinal diseases like DME
• Maximize the commercial potential of OPT-302 through commercialization independently or through collaborations with other companies

Opthea has worldwide commercial rights to all of its clinical trial treatments.