Broker Upgrades: Canaccord says disease specialist Opthea could triple if Phase III trial passes muster

Canaccord rates Opthea a buy with a $1.25 price target. But the broker thinks it could shoot as high as $3 if a key trial succeeds.

Opthea’s stock price could triple if its Phase III trial makes the grade, says Canaccord. Pic: Getty Images

• Canaccord rates Opthea a buy with target of $1.25 – $3 if Phase III trial is successful

• Opthea’s lead drug shows strong promise in eye disease trials

• Positive phase III results could lead to big gains for Opthea

Canaccord Genuity has initiated coverage on Opthea (ASX:OPT), and is giving the stock a BUY rating and a target price of $1.25 a share.

But the broker said that with a successful Phase III trial, that price could shoot up to $3 or more. At the moment, OPT is trading at $1.03.

Opthea is a biopharma company that's focused on developing new treatments for serious eye diseases like wet age-related macular degeneration (AMD) and diabetic macular edema (DME).

In simple terms, wet AMD is a condition that can lead to blindness, and DME is a complication of diabetes that also affects vision.

Right now, there’s a big gap in treatment options for some of these patients, and Opthea’s lead drug, OPT-302, is a new therapy designed to treat these eye conditions.

It works by targeting a specific pathway (called VEGF-C and VEGF-D) that other treatments don’t fully address. This could offer people with AMD and DME better results, especially those who don’t respond well to current treatments.

Opthea is currently testing OPT-302 in Phase III trials, and it’s looking promising.

The results so far

OPT-302 is being trialled alongside standard-care treatments (like Eylea and Lucentis) to provide a more complete approach to treating wet AMD.

The company’s Phase II results have already shown solid improvements in vision for patients who are hard to treat – those that don’t respond well to the usual therapies.

For these patients, OPT-302 has shown some eye-popping results, like a +5.7 letter gain in vision (compared to a standard therapy). This is a significant improvement, especially for the tough cases.

If the Phase III trials, set to read out in mid-2025, go well, the drug could be ready to launch in 2027.

The market for these therapies is huge, with wet AMD alone affecting around 1.5 million people in the US and 45% of those don’t respond well to current drugs.

This gives Opthea a massive opportunity if OPT-302 proves itself, said Canaccord.

Why Canaccord is excited

First, Canaccord says OPT-302 tackles a different part of the problem than current treatments.

By blocking VEGF-C and VEGF-D (which are responsible for the worst symptoms), it aims to stop disease progression in a more complete way.

Second, there’s a big market potential. If successful, OPT-302 could treat around 500,000 people in the US alone. With peak sales estimates of $1.2 billion by 2035, Opthea could be sitting on a big payday.

And third, the Phase II results have shown promising improvements in tough-to-treat patients, which gives Canaccord confidence that the Phase III trials will deliver similar results.

Plus, the drug’s safety profile is strong, which is crucial for FDA approval.

What’s next for Opthea?

Looking ahead, Opthea's Phase III trials are key, said Canaccord.

There are two big studies, COAST and ShORe, with data expected in 2025. If these come through with positive results, Opthea could file for approval with the FDA as early as 2026, making the drug available by 2027.

Opthea has also got its ducks in a row financially, Canaccord said.

With funding secured for the Phase III trials, the company’s got enough cash to see it through the finish line. A strong partnership or licensing deal could also add a nice cushion if the company decides to take that route.

The big picture, according to Canaccord, is that Opthea is working on something game-changing.

If OPT-302 works as expected, it could become a key treatment for wet AMD and DME, helping a large population of patients who don’t have many other options.

The stock’s trading at a reasonable level, but the upside potential is huge if the drug gets approval and finds a foothold in the market.

The views, information, or opinions expressed in this article are solely those of the broker and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

Originally published as Broker Upgrades: Canaccord says disease specialist Opthea could triple if Phase III trial passes muster