Just over a week after terminating its phase 3 wet age-related macular degeneration (AMD) program, Opthea Limited announced it will reduce its workforce by approximately 65%.
Let’s start with the big question: Why?
The main reason: To preserve its cash for the company’s investors.
Let us explain: Determined by the company’s Board, the decision was made in an effort to reduce Opthea’s cost base following the failure of its phase 3 program evaluating sozinibercept for the treatment of wet AMD.
- Click here for a rundown on sozinibercept.
- Notably: Opthea referred to it as the first and only drug with strong clinical evidence demonstrating visual acuity superiority when used in combination with an anti-vascular endothelial growth factor (VEGF)-A therapy for wet AMD.
Give me some background on what happened with that.
As we reported at the end of last month:
When releasing topline data from one of two pivotal phase 3 studies in its wet AMD program—the Combination OPT-302 with Aflibercept Study Trial (COAST) study (NCT04757636)— Opthea subsequently announced that the trial had failed to meet its primary endpoint.
- That goal: Achieving a mean change in best-corrected visual acuity (BCVA) from baseline to Week 52.
Yikes. Go on …
In reporting this lackluster news, the company also shared that it was looking into its rights and obligations based on its development funding agreement (DFA).
- About DFAs: This contract dictates the terms and conditions for financing a development project with investors in sozinibercept’s clinical development.
Among its potential options: At the time, Opthea stated it may need to repay its investors up to “four multiples of the amounts paid to the company” as compensation for the funding they provided to develop sozinibercept.
- See here for the four scenarios the company laid out for what may necessitate this repayment.
Okay, so what happened after that?
The company followed that news up just a few days later with the decision to discontinue its sozinibercept retinal program.
Coupled with this was Opthea’s subsequent release of accelerated topline data from the second phase 3 trial in that wet AMD program: ShORe (Study of OPT-302 in combination with Ranibizumab [NCT04757610]).
- The bad news: That study failed to meet its primary endpoint as well (details here).
And in light of this: The company also foreshadowed that there was material uncertainty as to Opthea’s ability to continue as a going concern.
Which brings us to these layoffs.
Indeed. This move is reportedly “in the best interest of [Opthea’s] investors to conserve cash,” according to CEO Fred Guerard, PharmD.
- And while no specifics were provided as to the positions or exact number that will be affected, reports have noted the company employed 33 employees as of June 2024.
With this reduction: The company stated that “a limited number of employees will remain in place” to:
- Ensure its clinical program activities are terminated
- Oversee administrative operations
So when will this take effect?
May 1.
And this is supposed to help alleviate the company’s overall costs?
Apparently so. Opthea shared that, as a result of these cuts, its “one-off costs” will total an estimated $4.5 million and eventually lead to a reduction in monthly employee costs of around $1 million.
To note: As of March 2025, the company estimated its cash and cash equivalents at $100 million.
Wow. What about those investors? Does Opthea need to pay them back?
That’s still to be determined.
As of April 10, the company continues to be “in active negotiations” with them as they explore potential options for “the best outcome” for each stakeholder (both the company and the investors).
- As we mentioned earlier, the Opthea reiterated “material uncertainty” regarding its ability to continue operations.
In the meantime: The company has suspended trading until “Opthea is in a position to provide an announcement to the market providing more clarity on these issues and the impact on Opthea’s financial position.”
Take a look at its stock history here.