Opthea Limited reported a 26% reduction in net loss for FY2025 despite discontinuing its wet AMD drug after failed Phase III trials. The company settled its Development Funding Agreement with investors, securing liquidity and planning a strategic pivot.
- Revenue up 57.9% to US$5.56 million
- Net loss narrowed 26% to US$162.8 million
- Discontinued sozinibercept development after negative Phase III results
- Settled Development Funding Agreement with US$20 million payment and 9.99% equity issuance
- Strategic review underway focusing on reformulating drug candidates for new indications
Financial Highlights and Trial Setbacks
Opthea Limited has released its preliminary final report for the year ended June 30, 2025, revealing a mixed financial and operational picture. The company’s revenues increased by 57.9% to US$5.56 million, primarily from royalty income unrelated to its core drug development activities. More notably, Opthea reduced its net loss by 26% to US$162.8 million, reflecting lower research and development expenses following the termination of costly Phase III clinical trials.
These trials, focused on sozinibercept for wet age-related macular degeneration (wet AMD), failed to meet their primary endpoints in two separate studies; the COAST and ShORe Phase III trials. The disappointing results led Opthea to discontinue development of sozinibercept for wet AMD, triggering a significant strategic shift.
Funding Agreement Settlement and Operational Streamlining
Following the trial failures, Opthea negotiated a settlement with its Development Funding Agreement (DFA) investors, including Ocelot SPV LP and Sanba II Investment Group. The settlement involved a one-off cash payment of US$20 million and issuance of equity representing 9.99% of the company’s fully diluted share capital. This agreement terminated the DFA and released liens on the company’s assets, alleviating a major financial overhang.
Operationally, Opthea has drastically reduced its workforce by over 80% and halved its board size, exiting all contracts related to the wet AMD clinical trials. These measures aim to conserve cash and refocus resources amid the company’s new strategic direction.
Strategic Review and Future Outlook
With the wet AMD program discontinued, Opthea is undertaking a comprehensive strategic review to explore reformulating its drug candidates, including OPT-302, for alternative delivery methods and indications beyond eye diseases. The first phase of this review is budgeted at up to US$10 million, with a second phase potentially costing an additional US$5–8 million, depending on reformulation success and clinical trial scope.
The company’s cash reserves stood at US$48.4 million as of June 30, 2025, expected to fund operations into the fourth quarter of 2026, including the strategic review. However, Opthea acknowledges the possibility of needing additional capital, with no committed external funding sources currently secured.
Governance and Market Implications
Post-reporting period, Opthea announced key management departures, including CEO Dr Fred Guerard and CFO Tom Reilly, signaling a leadership transition aligned with the company’s new phase. The ongoing trading suspension on ASX and Nasdaq remains a critical factor for investor sentiment.
While the settlement of the DFA removes a significant financial risk, the company faces material uncertainty regarding its ability to successfully reformulate drug candidates and secure future funding. The next 12 to 18 months will be pivotal in determining Opthea’s viability and strategic direction.
Bottom Line?
Opthea’s pivot from wet AMD trials to reformulation and strategic review marks a critical juncture, with funding and clinical success key to its future.
Questions in the middle?
- Will Opthea secure additional funding to support reformulation and new clinical trials?
- Can the reformulated drug candidates demonstrate efficacy in new indications?
- How will leadership changes impact the company’s strategic execution and investor confidence?