Over the last 12 months the Opthea Ltd (ASX: OPT) share price has been one of the best performers on the All Ordinaries index.
During this time the shares of the developer of novel biologic therapies for the treatment of eye diseases have risen a whopping 370%.
Why has the Opthea share price almost quintupled in 12 months?
Investors have been scrambling to buy the company's shares following the release of the results of a key study in August.
That study related to its OPT-302 combination therapy for treatment-naïve patients with wet age-related macular degeneration (AMD).
As you might have guessed from the share price reaction, OPT-302 (2.0 mg) combination therapy showed statistical superiority for the most accepted and sensitive primary efficacy outcome.
Whilst it remains early days, the results are pointing to a bright future for OPT-302. After all, the current standard of care treatments for wet AMD generated sales of US$3.7 billion in 2018.
But it doesn't stop there. Opthea also has its eyes on the Diabetic Macular Edema (DME) market. Management notes that there is potential for the therapy to be used for DME, which is an even more lucrative market.
According to the company, the current standard of care generates sales of US$6.2 billion per annum at present. Combined, this gives OPT-302 a market opportunity of almost US$10 billion.
Is Opthea a buy?
Given the success of its study and its massive market opportunity, I think Opthea could be a great option for investors that have a high tolerance for risk.
I'm not alone with this view. A note out of Goldman Sachs late last year reveals that its analysts have the company on their conviction buy list with a $5.20 price target. This compares to its current share price of $3.10.
Goldman Sachs believes that "OPT-302 has multi-billion dollar potential."
Its analysts said: "As successful as current treatments have been, they only inhibit up to two of the factors responsible for the disease (VEGF-A/B). Over half of patients do not achieve significant vision gains, and a quarter experience continued vision loss. OPT-302 is intended for use in combination with these treatments, blocking a further two factors (VEGF-C/D), hence targeting improved outcomes via a more complete blockade."
In light of this, it has suggested that in the future it could achieve "non-risk-adjusted peak sales of US$5.0bn (US$2.0bn risk-adjusted), of which US$3.4bn relates to wAMD (US$1.7bn)."
In addition to Opthea, I think industry peers Next Science Ltd (ASX: NXS) and Paradigm Biopharmaceuticals Ltd (ASX: PAR) would also be worth watching very closely in 2020.
