In the wake of failed late-stage clinical trials last month for its novel retinal disease therapy, Melbourne-headquartered biotech Opthea (ASX: OPT) will fire 65 per cent of its workforce to save approximately US$10 million in annual costs.
The announcement, which based on Opthea's most recent annual report implies around 22 staff will be let go, comes as the biopharmaceutical company's shares are suspended from trading while it negotiates its future with development funding investors from Carlyle and its life sciences franchise Abingworth.
If Opthea's development funding agreement (DFA) is terminated it may have to stump up "several multiples" of the US$170 million it procured from its partners in FY23.
The group entered a trading halt on 17 March and then a voluntary suspension two days later, in the lead-up to revealing its Phase 3 clinical trial in patients with wet age-related macular degeneration (wet AMD) yielded "no numerical difference" in the effects of its treatment combining the medications sozinibercept and aflibercept.
Within a week of reporting the negative results, on 31 March Opthea made the call to discontinue its COAST (Combination of OPT-302 with Aflibercept Study) and ShORe (Study of OPT-302 in combination with Ranibizumab) trials for treating wet AMD.
"We are disappointed that COAST and ShORe did not demonstrate the improvements in vision with sozinibercept combination therapy compared to standard of care that we had hoped for," Opthea CEO Frederic Guerard, PharmD, said at the time.
Cash conservation is the objective of today's announcement to retain a "limited number of employees" to ensure the compliant termination of clinical trial activities and oversee administration operations.
"Following the negative Phase 3 trial results, and in consultation with the Company’s Development Funding Agreement (DFA) Investors, the Board has concluded that it is in the best interest of our investors to conserve cash," Guerard said this morning.
"We are grateful for the numerous contributions of our colleagues leaving Opthea and wish them the best for their future endeavours."
The company expects the workforce reduction to be effective from 1 May, resulting in expected one-off costs of US$4.5 million but a reduction in monthly employee costs of approximately US$1 million.
Opthea, which since August 2022 raised approximately US$342 million, had US$100 million in cash and cash equivalents at the end of March this year. For the December half it reported net cash outflows from operating activities of US$72.6 million.
The company told the market today that it remained in active negotiations with its DFA investors to "explore possible options to deliver the best outcome for the Company and its shareholders".
In light of these issues, Opthea confirms that there remains a material uncertainty as to its ability to continue as a going concern.
Opthea is currently relying on the "safe harbour" provisions in section 588GA of the Corporations Act 2001 in Australia.
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