The Opthea Ltd (ASX: OPT) share price has been one of the best performers on the All Ordinaries in 2019.
Since the start of the year the shares of the developer of novel biologic therapies for the treatment of eye diseases have gained a massive 365%.
This means they trail only the suspended iSignthis Ltd (ASX: AVH) and global regenerative medicine company Avita Medical Ltd (ASX: AVH). Their shares are up 590% and 572%, respectively, in 2019.
Why is the Opthea share price up 365% in 2019?
The catalyst for this strong gain was the result of a study related to its OPT-302 combination therapy for treatment-naïve patients with wet age-related macular degeneration (AMD).
The study revealed that the OPT-302 (2.0 mg) combination therapy showed statistical superiority for the most accepted and sensitive primary efficacy outcome.
This is a big positive for the company as the current standard of care treatments for wet AMD generated sales of US$3.7 billion in 2018.
Based on its promising study results, investors appear to believe the OPT-302 combination therapy could become the new standard of care in the future.
But it isn't just wet AMD that the company has its eyes on. Management notes that there is potential for the therapy to be used for Diabetic Macular Edema (DME) as well.
This is an even more lucrative market where the current standard of care currently generates sales of US$6.2 billion per annum.
Opthea raises $50 million.
The strong potential of OPT-302 recently allowed Opthea to raise A$50 million via a private placement to sophisticated and institutional investors.
The proceeds from the placement will be used to fund further activities relating to the OPT-302 product.
One broker that was pleased with the capital raising was Goldman Sachs. A note out of the investment bank earlier this month shows that it has reiterated its conviction buy rating and $5.20 price target.
Goldman said: "the new funding de-risks the next 12-18 months of operations and strengthens OPT's negotiating position in any discussions with potential partner candidates."
And while it still expects another ~$50 million capital raising to fund its phase 3 trial, it has priced this into its valuation and doesn't expect there to be any issues gaining additional funding.
"We believe the market has not yet adequately reflected the improved probability of clinical success that these new data would suggest and, as such, we would expect strong demand for any future round of financing, which appears to have been the case with this one," the broker added.
So, although its shares are up 365% in 2019, Goldman Sachs appears confident that they can still run notably higher from here over the next 12 months. I agree and feel it could be worth considering a small patient investment in its shares.
