Investors following Opthea Ltd (ASX: OPT) shares will want to know about the latest update from the business.
Last month, Opthea described itself as a clinical stage biopharmaceutical company developing novel therapies to treat highly prevalent and progressive retinal diseases, including wet age-related macular degeneration (AMD).
Last month, the company announced negative results for its trial. which “did not meet its primary endpoint of mean change in best corrected visual acuity (BCVA) from baseline to week 52.”
The company essentially said the trial didn’t demonstrate the improvements in vision it had hoped for. So, it ended its development of sozinibercept in wet AMD immediately.
However, under its development funding agreement (DFA), after a termination of the DFA, it could be required to pay a multiple of the amount funded by the DFA investors that would “have a material adverse impact on the solvency of the company”. One of the things that could trigger a termination is insolvency.
Could cost cuts help Opthea shares?
The company announced to the ASX today that it has decided to take steps to cut costs after the negative trial results.
One of the main moves is to reduce the workforce by approximately 65%. A limited number of employees will remain in place to ensure the compliant termination of clinical trial activities and oversee administration operations.
In consultation with the company’s DFA investors, the company decided it’s in the best interests of investors to conserve cash.
The workforce reduction will be effective from 1 May 2025. The one-off cost of reducing the workforce will be approximately US$4.5 million, but it’s expected to save monthly employee costs of approximately US$1 million.
Opthea estimated it has cash of around US$100 million at the end of March 2025.
It remains in active negotiations with DFA investors, exploring options to deliver the best outcome for the company and its shareholders.
The company said there is still uncertainty of whether it can continue to operate (as a ‘going concern’).
Opthea said trading in Opthea shares will be suspended until it can provide an announcement providing more clarity on these issues and the impact on its financial position.
Time will tell whether the company is able to return to trading and what its future will look like.
