Opthea Announces Major Layoffs Following Phase 3 Trial Failures

Opthea, a biotechnology company focused on developing treatments for eye diseases, has announced significant workforce reductions following recent clinical trial setbacks. The company plans to lay off 65% of its staff as it grapples with the failure of its lead drug candidate, sozinibercept, in two pivotal phase 3 trials.

Clinical Trial Disappointments

Opthea's troubles began last month when sozinibercept, an inhibitor of vascular endothelial growth factors C and D, failed to meet its primary endpoints in two separate phase 3 trials. The first trial compared sozinibercept to Regeneron's blockbuster drug Eylea, while the second pitted it against Lucentis, another established treatment for wet age-related macular degeneration (AMD).

These back-to-back failures prompted Opthea to accelerate the readout of the second trial, hoping for better results. However, the rapid succession of negative outcomes has dealt a severe blow to the company's development pipeline and future prospects.

Workforce Reduction and Financial Implications

In response to these setbacks, Opthea has announced a drastic reduction in its workforce. The company, which had 34 full-time employees as of June, plans to lay off 65% of its staff by May 1. This move is aimed at reducing expenses and preserving cash reserves.

Following the layoffs, Opthea will retain only a skeleton crew to oversee the compliant termination of clinical trial activities and manage administrative operations. The company estimates that it had approximately $100 million in cash reserves at the end of March.

Uncertain Future and Investor Concerns

Opthea's ability to continue as a going concern remains uncertain. The company has been in discussions with investors since the first trial failure and is exploring options to deliver the best outcome for the company and its shareholders.

Adding to the company's challenges, a 2023 funding agreement with investors included a clause allowing them to terminate the agreement if the phase 3 trials missed their primary endpoints. With sozinibercept featuring in all programs in Opthea's public pipeline, the company's future now hangs in the balance.

As Opthea navigates these turbulent waters, the biotech industry watches closely to see how this once-promising company will weather the storm of clinical disappointments and financial pressures.