Health Check: Opthea investors have $80m less to fight for after cash-burning quarter

Opthea investors are fighting over a smaller pool of residual cash after the failed drug developer reported $80 million of June quarter outflows.

Opthea investors already were toast, but $80 million of June quarter cash burn compounds their losses. Pic via Getty.

• Eye drug developer Opthea’s cash balance has more than halved as the company wraps up its failed trials

• Poynovo shares gain 10% after a cracker full-year result

• Microx leads today's sector gains after a US deal with a mystery party 

The financial fallout from Opthea's (ASX:OPT) two failed eye disease trials has become starkly apparent.

Despite ceasing its two pivotal phase III trials, Opthea recorded US$53.5 million ($82 million) of outflows in the June quarter.

This takes residual cash to US$48.4 million, from US$101.4 million as at the end of March.

The costs mainly related to the winding down of the Coast and Shore trials, for wet age-related macular degeneration.

Each of them enrolled close to 1000 patients, so they were meaty studies.

Following the March 24 trial bombshell, in April the company shed its workforce by 65%. In June four directors – half the board – departed.

Future uncertain

Under the terms of a development funding agreement (DFA), Opthea could owe investors somewhere between nothing and US$680 million.

Given Opthea has US$170 million of debt, any bumper return would be hypothetical.

Opthea “remains in active negotiations with its DFA investors to deliver an outcome that is in the best interests of the company and its shareholders”.

Opthea shares have not traded since the March disaster, so any passer-by from Mars would think they are still valued at 60 cents for a $738 million market cap.

The only bright note is the company earned US$700,000 of interest.

Microx shares surge on US deal

Microx shares this morning went on a 33% share romp after the device maker announced a US customer for its Rover mobile X-ray units.

The customer has requested anonymity, but it's a "top tier US healthcare group" that runs 700 hospitals.

The company says the three year deal is subject to normal commercial conditions, but it does not quantify the expected revenue.

Given the share surge, investors presume it's kinda, like, material.

Polynovo shakes off The Troubles  

Wound repair house PolyNovo (ASX:PNV) has shrugged off corporate governance issues by reporting a strong recovery in revenue and profits.

At its full-year results later next month, Polynovo should report sales of $118.6 million for the year to June 2025, up 30% year on year.

Second (June) half cash flow swung to a positive $15.7 million, compared with a $12.5 million deficit in the first half.

Management expects full-year earnings before interest tax depreciation and amortisation of $11.2-12.4 million.

This compares with the previous year’s $3.6 million.

Of the revenue, $88.4 million derived from the US, up 29%.

The company gleaned most of its sales from its flagship product, Novosorb BTM.

“I like to review the year and the go-forward from a high level and all I see is growth and opportunity,” chairman David Williams chirps.

In mid-March the company said CEO Swami Raote would depart, amid claims of  bullying and inappropriate behaviour against Williams.

The board engaged independent lawyers to probe the claims.

It also bought in former Westpac chairman Lindsay Maxsted to advise the board on governance matters.

The unashamedly outspoken Williams denies any wrongdoing and like the Irish, The Troubles seem to be forgotten.

Macquarie Equities similarly is enthused, ascribing a $2.45 per share valuation relative to yesterday’s closing value of $1.22.

“We see several near-term positive catalysts for Polynovo, with a significant longer-term opportunity in additional indications.”

Yesterday, peer Kiwi wound repair house Aroa Biosurgery (ASX:ARX) also found investor favour after reporting its third successive quarter of positive cash flow, of NZ$1.7 million.

Aroa has guided to revenue of NZ$92-100 million for the year to March 2026, with normalised underlying earnings of NZ$5-8 million.

Emvision’s Emu trial is in full stride…

Portable brain (stroke) detection device maker EMvision Medical Devices (ASX:EMV) says its pivotal trial to support FDA approval is “progressing well”.

Pertaining to the company’s lightweight bedside unit Emu, the trial is recruiting up to 300 stroke patients across four US and two Australian high-volume stroke centres.

A variant for road and air ambulances, First Responder has been trialled by the Royal Flying Doctor Service. A Melbourne stroke ambulance has also had a look-see.

Emvision recorded June quarter outflows of $2 million, taking cash to $10.5 million.

But the company will benefit from a non-dilutive $5 million grant from the Industry Growth Program, to develop First Responder.

The aforementioned Microx is also developing a portable head CT scanner to diagnose strokes.

… while Actinogen’s trial recruitment passes halfway mark

Actinogen Medical (ASX:ACW) reports that its keenly anticipated phase 2b/3 Alzheimer’s disease study has enrolled 123 of the targeted 220 patients.

Dubbed Xanamia, the trial has recruited across 20 US and 15 Australian sites, targeting patients with mild to moderate progressive Alzheimer’s.

Actinogen’s compound Xanamem targets elevated levels of a protein called pTau181. The novel mechanism of action inhibits production of cortisol, which is toxic to the brain in excessive amounts.

Having recruited its 100^th patient, Xanamia is subject to an interim ‘futility’ review next January. This will determine whether the trial is worth continuing.

With Xanamia hotting up, Actinogen disclosed June quarter cash outflows of $5.1 million, leaving June-end cash of $16.5 million.

The company also has access to a $3 million loan, the first component of a $13.8 million advance of expected research and development tax incentives.

Often a supplement to equity raisings, R&D loans have become increasingly popular with biotechs seeking to bring forward cash flow.

Ozempic maker's fat profits become thinner

The fate of Europe’s biggest drug maker shows that boom conditions in the drug-making game rarely last – even with miracle fat-busting drugs.

The maker of the anti-obesity and diabetes drugs Ozempic and Wegovy, Denmark’s Novo Nordisk overnight issued a profit warning that sent the shares tumbling up to 28% on the Nasdaq Copenhagen exchange.

The company slashed its outlook for 2025 sales growth to between 8-14%, from between 13-21% previously.

According to Reuters, sales have been affected by custom-made compounded drugs that emulate the branded versions.

The US bars pharmacies from replicating approved drugs, but allows ‘compounding’ for patients needing custom doses or formulations.

Dial 'L' for loophole.

The company also faces turmoil from the abrupt removal in May of CEO Lars Fruergaard Jorgensen. The board replaced him with veteran insider Maziar Mike Doustdar.

Slowing fat drug sales aside, Doustdar also faces the prospect of a 15% tariff on goods imported into the US.

“We need to increase the sense of urgency and execute differently,” Doustdar told investors.

Sounds about right.