Good evening and welcome to the Opthea Limited Corporate Update Webcast. At this time, all attendees are in a listen-only mode. A question and answer session will follow the formal presentations. If you'd like to submit a question, you may do so by using the Q&A text box at the bottom of the webcast player. I'd now like to turn the call over to Dr. Jeremy Levin, Chairman of the Board at Opthea Limited. Please go ahead, Dr. Levin.
Thank you very much. Hello, everybody. Thank you very much for joining us. For those in the U.S., good afternoon, good evening. For those in Australia, good morning. We'd like to just make one note before we start, and that is, can we please note that this is a public entity. Some of the information we're going to be putting to you today is forward-looking. Before you note that, let me just move to some important considerations. We're going to today take you through a brief introduction. Then we're going to walk you through the results of our phase III trials. Fred will do that. Following which, I'm going to turn to Tom, the CFO, and ask him to walk you through the Development Funding Agreement negotiations and the successful outcomes from that.
At the end, I'll walk you through the current state of the company, and we'll deal with what we see in the near and immediate future and potentially a path forward. At the end, we will most certainly deal with a Q&A, and if you have questions, please either send them in written or there'll be an opportunity then to ask them. Let me start with a few words. Obviously, and with great disappointment, our phase III program did not meet their primary endpoints. Like you, management, the board, and indeed many of the physicians who were involved with us were deeply disappointed. This is not unusual in biotech, but in our case, we were very surprised and very disappointed. That's in the past.
In a short few minutes, we'll ask Fred to walk you through the data itself so that you can appreciate the rigor and the thoughtfulness that was put into this trial. I want to take a moment here to thank both Fred and Tom, our CEO and CFO's efforts. We have completed successfully the negotiations with the Development Funding Agreement investors. This provides clarity on the available resources and is indeed a successful outcome for our shareholders. This also allows us the opportunity to begin to think about what we can do for the future. Speaking on behalf of the directors and myself, we will take that with great seriousness. That's why we're talking to you today, just as we begin that process, knowing exactly where we stand. Firstly, the purpose of this presentation is to share the clinical results directly with you.
Then we'll walk you through the DFA outcomes. What we will then do is to outline the potential future opportunities for the company. In many ways, while there have been very severe challenges, this is a new chapter for the company, and it's been made possible by the successful completion of the Development Funding Agreement. Now we, together with you, our shareholders, have an opportunity to look to the future. With that, I'd like to hand over to Fred and to ask him to walk through the results of our phase III trial.
Thank you very much, Jeremy. This is an opportunity for us to present today the results of our two pivotal trials, COAST and ShORe , in a bit more detail than what we had done previously in our different press releases. If you remember well, the design of these two trials was very similar. In the case of COAST, we were using Aflibercept or Eylea as a comparator. In the case of ShORe, we are using Lucentis as a comparator. These two trials were comparing these comparators as a standalone therapy or given in combination with our drug, sozinibercept, given either every four weeks or every eight weeks after a loading phase. These trials were two-year duration with a primary efficacy endpoint at week 52. The primary endpoint was the mean change in best-corrected visual acuity from baseline to week 52.
There were a series of secondary endpoints, which were basically functional and anatomical endpoints. You can see the list of them here. Focusing on COAST first, which was the first trial that read out. The baseline characteristics of the trial were very well balanced across the different arms. There were no differences between the populations enrolled in these trials at the beginning or in the different arms of this trial at the beginning. You can see we had a very standard proportion of male versus female, different ethnicities of the patients. The baseline best-corrected visual acuity was similar across the arms, around 52 letters, with a result of the inclusion criteria set for these trials. The lesion area was the same across the arms, and so on. Basically, no imbalance between the different arms at the beginning. That's probably because the trials were very large.
We had around 300 patients per arm, so statistically well balanced from the beginning. The first statistical analysis on the primary endpoint was done on a minimally classic and occult lesion patient population. You can see here that the control arm in gray provided a 13.75 letter improvement versus baseline at week 52. The combination therapy with sozinibercept, whether it was administered every four weeks or every eight weeks after a loading phase, did not provide a higher visual improvement from baseline. There's no statistical difference on the primary endpoint. We failed that statistical test here. If you look at the overall population, which was the second statistical test on this primary endpoint, you can see same results here. The control arm and the combination arms resulted in similar visual acuity improvement versus baseline. No efficacy detected for the drug here.
When you look at secondary endpoints, here we have the proportion of patients gaining three lines of vision or 15 letters, or gaining two lines of vision or 10 letters, same results. The control arm and the combination arms delivered the same improvements. Central Subfield Thickness is always interesting to look at. This is basically the amount of fluid accumulating in the back of the eye. You can see here for all arms a drastic reduction after 12 weeks of treatment. What you can see as well is that there was no difference at any time point between the monotherapy and the combination arms all the way to week 52. All patients basically did very well on all these endpoints. There was no difference between the combo and the monotherapy. Looking now at the mean change in Choroidal Neovascularization Area , you can see the same here.
No statistical difference between the monotherapy and the combination arms. Looking at safety, very similar rates of adverse events across all arms. Sozinibercept was actually well tolerated and had a very similar safety profile to Aflibercept or Eylea given alone. For serious ocular adverse events, same thing, similar safety profiles across different dosages of sozinibercept and Eylea given alone. There was a slight trend for a bit more inflammation with sozinibercept. You can see here it was almost dose-dependent. We had a bit more inflammation when sozinibercept was given every eight weeks and a bit more when it was given every four weeks. Otherwise, the drug was well tolerated across the different arms. Moving to ShORe, ShORe is the very similar story. You can see here on the primary endpoint of ShORe on the minimally classic and occult lesion patient population. That was the first statistical test on the primary endpoint.
Same results as for COAST. The monotherapy arm and the two combination arms showed no statistical difference at week 52 in terms of improvement in vision. The same was observed in the overall patient population. If you remember, the ShORe trial was unmasked before the trial was all the patients had reached week 52. That was because when we saw the COAST data, we wanted to make sure in a cash preservation strategy, we wanted to make sure to look at ShORe as quickly as possible. Not all patients had reached week 52 at the time of the readout. As you can see here, the conclusion is the same as for COAST. There was no statistical difference between any of the arms.
When you look at the change in CST, same story here, a dramatic reduction of the CST thickness all the way to week 12 and then maintained over 52 weeks, but no statistical difference between the arms. You can see here numerically the monotherapy and the combination treatments delivered the same functional, sorry, anatomical improvement for the patients. To summarize, the key takeaways are COAST and ShORe did not meet the primary endpoint of superiority in best-corrected visual acuity from baseline to week 52 in both the biomarker positive or minimally classic and occult patient population and overall patient population. There was no statistically significant difference in key anatomical endpoints between the treatment arms at any time point. The combination therapy of sozinibercept with Lucentis and Eylea was well tolerated over these 52 weeks.
In this large global phase III program, the VEGFC and VEGFD inhibition provided by sozinibercept did not provide additional functional benefit or anatomical benefit beyond the standard of care anti-VEGF therapy in these wet AMD patients. Thank you. I will hand over to Tom, who will detail the outcomes of the negotiation with our Development Funding Agreement investors.
Thanks a lot, Fred. Before getting to the successful outcome, I just want to step back and go through what the original terms of the Development Funding Agreement were. In August 2022, the company entered into a Development Funding Agreement known as the DFA with Ocelot, who provided $120 million of funding for us to support the development of the sozinibercept trial and the treatment for wet AMD. Following that, in December 2023, we entered into an amended and restated DFA with Ocelot as a collateral agent, where a new co-investor provided an additional $50 million funding to bring the total funding up to $170 million to support sozinibercept in the development for wet AMD. Based off those terms, if sozinibercept was approved, the company would have a repayment back to the DFA investors of 4x t he investment, so $680 million US dollars.
With the terms of the DFA, the DFA investors held a security over the assets of Opthea in the form of an all-assets lien. Within the DFA contractual terms, there are clauses which involve repayments ranging from $0 million up to $680 million, depending on those clauses. Those were the original terms of the DFA. Turning to the next slide, happy to say that we have successful DFA negotiations, which allows for the company to remain solvent, which is a better outcome for the shareholders. Following the negative top-line data of the COAST trial, Opthea's management and the Board of Directors began to have discussions with the DFA investors related to the next steps of the sozinibercept wet AMD program.
In consultation with the DFA investors, Opthea determined the most appropriate course of action for the wet AMD patients, Opthea shareholders, and other stakeholders was to accelerate the timing of the ShORe trial top-line data. Following the negative top-line data of the COAST and the ShORe trial, and in consultation with the DFA investors, we determined to terminate the sozinibercept wet AMD program. We thought this was in the best interests of all the shareholders and the best way to preserve the cash of the company. Since these negative phase III results, we've taken dramatic steps where we reduced the workforce by over 80%. We've reduced the Board of Directors by 50%. We've been able to successfully negotiate all contracts related to the clinical trials, and we've had active discussions with the DFA investors to settle the DFA arrangements.
Yesterday, we announced that we came to a settlement with the investors, with the DFA investors, where we paid a cash payment of $20 million and provided a 9.99% equity stake in the company, which is equivalent to 137 million common shares. These settlement arrangements include termination of the DFA and all liens. As of August 19th or as of today, after the payment of the $20 million to the DFA investors, the company has approximately $20 million of cash on hand. With the new equity shares to the DFA investors, approximately 1.4 billion common shares outstanding. Very successful DFA negotiations and collaborations with the DFA investors, very much appreciated. With that, I'm going to turn the presentation over to Jeremy, who can walk us through the current state of the company.
Thank you, Tom. I think you've all had the chance to see the details of both the unfortunate results, but the very well-managed clinical trial, and subsequently, the excellent negotiations. While this is not what any of us wanted, we are where we are today. I want to thank again Tom and Fred for their partnership as we've gone down this difficult path. However, we now have a positive outcome, and I believe this is a positive outcome for shareholders. Let's take a look at this for a minute. Bottom line is we've settled arrangements with the DFA investors. That removes the financial uncertainty of the liens, which could have changed this trajectory completely. What we have in hand is quite clear. There's a significant cash position. We do not have any debt. There are no liens, and we have a dual-listed company.
Trading in the listed securities remains suspended by ASX under the ASX listing rule 17.3. We are currently engaging with the ASX regarding this matter. In addition to these aspects, it's important to understand that this company has a significant amount of clinical, preclinical, and scientific knowledge, and indeed assets and IP related to a very interesting area, VEGFC and VEGFD. Many years of work have gone into this, and many and large amounts of capital have ensured that these assets are in place. In addition to which, in light of the fact that we were running a clinical trial with full expectation to be able to launch a drug, we had significant existing API and materials which could allow for potential new investigations. What we then also did, knowing that we were facing a very, very important inflection, was a dramatic streamlining of operations, and it has been accomplished.
We have only three employees who will remain as of September 15th. In addition to that, I want to thank the board of directors, over half of whom have stepped down, and our colleague Sujal Shah will step down as of September 15th. As we announced to the market on August 19th, given the settlement of the DFA arrangement, Opthea is no longer relying on the safe harbors of provisions in section 588(g)(A) of the Corporations Act of 2001. This represents a very positive result for shareholders. It also offers the opportunity for us now to chart a path forward. We are going to do that. First of all, let's talk about governance. The board of directors at the stage that we are consists of myself, Kathy Connell, Lawrence Gosland, and Sujal Shah. As I mentioned, Sujal will step down as of September 15th.
My three colleagues and I, Kathy, Lawrence, we know exactly where we're going with this. Our executives, including Fred and Tom, will step down sequentially on the 1st of September and the 15th. We will retain Karen Adams, our Corporate Secretary, until November 1st. While we've implemented a streamlining, cost-efficient structure that aligns with the company's current scale and our strategic priorities, we nevertheless are actively engaging at all levels. Our board is experienced. We know exactly what we want to do. The deep experience includes science, business development, finance, commercial operations, and investment. That expertise will be fully leveraged to ensure effective governance and operational oversight. Effectively, we have a plan to deal exactly with what we are now and what we could be in the future. What we will do is ask one question: how do we maximize shareholder return?
The board will continue to focus on that question and will assess the following. Firstly, over the next several months, possibly as long as six months, we will undertake a full strategic view. We can do that now because we know exactly how much capital we have at hand. Secondly, we will target very carefully an understanding of our internal development capabilities. What do we have? What can we do with it? What will it return to shareholders? We will assess strategic partnerships or potential business development and licensing where appropriate. Finally, we will consider the return of capital to shareholders where appropriate. I want to emphasize one point, though. Our goal is to maximize shareholder return, and our focus is unremitting in that respect. We are now operating, as we've done, but in a different environment with a significant focus on accountability.
This transition has got clear priorities and will undertake this in a very steady and thoughtful fashion. We will undertake this comprehensive business and asset review as we've already started it. Now, with the knowledge of exactly how much capital is on our hands, it makes the path much clearer. The board is focused on delivering long-term shareholder value. During the period as we do this, we'll provide additional support directly to the company, rolling up our sleeves during this transitional stage. We fully expect to provide shareholders with a further update in the fourth quarter of this year and look forward to doing that. Lastly, let me just round us off before we go to questions and answers. We know that shareholders invest, and we know that they invest in the hope that something will come out of it.
Yes, we want to thank you for your continued trust and support as we go through this process and very much look forward to talking to you at the other side when we come back to you with the specifics of our plan. Thank you again, not just for today, but for your trust and support over the years that we've built the program that you've heard about today. We look forward to the future with optimism and certainly determination to come back with a strategic plan that you will support. Let's turn now to questions and answers.
Great. Thank you, Jeremy. At this time, we'll be hosting a question and answer session with our speakers. To those on the webcast, if you'd like to submit a question, please use the Q&A text box at the bottom of the webcast player. Please hold for a brief moment while we pull for questions. Our first question comes from Matt Caulfield at H.C. Wainwright. Please go ahead, Matt.
Hi, and thanks, guys, for taking our questions. I was curious, what's the best current thinking around what most impacted the COAST, ShORe trial outcomes, especially when we think back to the successful phase II-B trial results? Separately, what are your thoughts on the overall implications for the VEGF-C/D trap mechanism? Just looking forward to prospective partnership or licensing opportunities. Thanks again.
Thanks, Matt, for your question. A lot of things we don't know, obviously. What may have been a factor is the duration of the trial. If you remember when the phase II-B was a six-month duration trial, and here we have 52-week data with COAST and ShORe. The FDA requires approval in wet AMD primary endpoint at any time between month after month nine. The reason for it is there are some statistical variations between month, whatever, three and all the way to month nine and 10. It is possible that the phase II-B might have been too short to fully inform the phase III outcomes. The inclusion criteria were very similar between phase II and phase III, but we excluded the RAP lesion patients. It doesn't seem to have been a factor in the results of COAST and ShORe because we looked at it.
The patients, even if you exclude the RAP, if you, sorry, exclude the RAP lesion patients from the phase II-B, the data was a lot better than it was in phase III. That exclusion in phase III was not clearly not a factor. To your question, I think it may have been a combination of taking patients with a lower vision than the other trials done in wet AMD these days and having a longer trial. That could be a factor. On the future of VEGFC and inhibition, it's very hard to answer because, as you know, we were the only company working directly on a TRAP and a very potent and very selective VEGFC inhibition. There are a number of companies working on pan-VEGF inhibition or working on some sort of RNAi VEGFC inhibition. We don't know what our data means for these companies.
I mean, they will come up with their own data on time. Some of these readouts are coming very soon. We hope they will be successful because patients, as you know, need better drugs. We don't necessarily think our data is necessarily telling much about what will come up from these different programs. They have all different modalities and different types of molecules going after these pathways. Outside of the eye, there is certainly evidence that these pathways play a role. Therefore, I think that might be interesting to explore the science beyond ophthalmology indications.
Fred, let me just chip in there. Matt, very good question. VEGFC and VEGFD are both, for those who don't know, both members of the vascular endothelial growth factor family. They have very specific and distinct roles compared to VEGFA. We know that their primary functions center on lymphangiogenesis, which is the formation of lymphatic vessels. The science around these two vascular endothelial growth factors has grown tremendously since Opthea was founded. The good news is that Opthea is a foundational scientific repository of knowledge about this. We will fully examine that with the intent both to understand if there is a role that they can play in other therapeutic areas and if we have the assets and capabilities to prosecute those. In that case, we will certainly return with the information. Be assured that the science of these two growth factors is essentially very well understood now.
That science leads us to believe that there may possibly be opportunity there, but we need to really prosecute a fundamental evaluation of it before we make any comments that commit us one way or the other.
Understood. Thank you very much, guys. Appreciate it.
Thanks, Matt.
Thanks, Matt.
Our next question comes from Dan Hurren at MST Access. Please go ahead, Dan.
Good morning. Thanks very much for taking my question. I guess more focused on the future, just the cash balance. In our original model, we had a fairly substantial R&D tax credit coming through over the next four months. I was wondering if that's still variable. If so, does that include the 20% cash balance that was in place yesterday?
Dan, this is Tom. Thanks for the question. It's related to the R&D tax credit. The balance that we are quoted today is the $20 million as of today is left with the company. The company will submit for an R&D tax credit, but it has not been received yet. We will, in the future, be submitting for that.
Thanks very much.
Thanks for the question, Dan. Our next question comes from Debanjana Chatterjee at Jones Research. Please go ahead, Debanjana.
Hi. Thanks for taking my question. The first one I have is a kind of a follow-up on what Matt was asking on the clinical side. I was curious to see that the Aflibercept arm seems to have significantly overperformed compared to all historic precedents I came across, especially considering the proportion of minimally classic and occult patients. Any thoughts on what could have driven that?
Yeah, thank you very much for your question, Debanjana. We think the selection of patients that had a lower vision at baseline may have artificially selected super responders to anti-VEGFA. That could have driven not only Aflibercept, but also Lucentis. When you look at the Lucentis alone arm in the short trial, you see that they also gained well over 10 letters, which was the historical high mark for these molecules. This is what we know from published trials, but there may have been other trials that were unpublished where these molecules actually did better than what was published. You're right, they did extremely well. I mean, patients did all extremely well in our trials, which on one hand was very good, but did not show any difference between the arms for the combination with sozinibercept.
We think it's maybe the patient selection that drove this very high response to anti-VEGFA.
Okay. I have a quick follow-up. Considering the current cash position and your stated intent to pursue potential strategic partnerships, VD licensing, or even targeted internal development, could you elaborate on the types of assets or therapeutic areas that you might potentially prioritize? Will the focus remain on the retinal disease space or adjacent assets to leverage existing capabilities, or is there a broader scope being considered?
Thank you for the question. I think it's a little early and premature to look at what the assets are. That being said, a couple of things should be clear. The biotechnology environment speaks extremely well to opportunities. We will start first by looking within ourselves. Do we have something there? If so, what do we have? What can we do with it? Realistically, what kind of significant return can we get? At the same time, we will, without a doubt, look externally and ask the question, what assets are there that may fit with the company? What can you do with the tremendous assets and responsibility that we've been given? Recall, we have a publicly traded stock. We have a significant amount of capital. We have assets, both scientific and scientific knowledge. Each one of these represents something which is unusual and certainly holds potential for the future.
The other aspect to this is that around the table today are members of the board who've done literally tens, if not potentially hundreds, of transactions over the years. That means we won't dismiss the opportunity to look at assets on the outside. Particularly now, we have the opportunity to do so. As I said, we start looking inward and then we look outward. The one thing that we will do is make sure that every decision we make on business development and internal assessment is focused on one objective, shareholder return. Be assured that as we do this, it's being done in a very, very systematic fashion. Thank you for the question. I look forward to answering that in greater depth later in the quarter, next quarter, actually.
Thank you.
Great. Thank you, Debanjana. We have a few questions from the webcast. The first one's for you, Fred. Has manufacturing and potency analysis been done to confirm this was not a source of trial failure? What objective evidence do you have?
Yes. Very good question. As you can imagine, when we unmasked the COAST data and saw the data, we looked at all sorts of different sources to explain the results. Manufacturing was an obvious one. We looked at all the testing done on the drug that was shipped to the sites and the patients. There was no discrepancy on any spec. The drug was the right drug at the right dose administered to the right patients. Manufacturing is not an explanation, not something we can blame for the data.
Our statement that the clinical trials were well managed is because when we went back and looked at cleaning the data, doing all the checks, not only on manufacturing, but also on the data collection for every patient, the way the drug was administered, stored in the clinics, we haven't found any significant deviation that could explain the data we've seen here. We can say that from a fact-based perspective that the trials were conducted with the highest level of integrity and professionalism from hundreds of clinicians around the world in over 30 countries.
Great. Our next question is for you as well. Is there any news on secondary endpoints, and could these still be met?
The approval process for a drug in wet AMD is on functional endpoints. A number of these are acceptable for the FDA. The one that was selected for the COAST and ShORe trial was the mean change in best-corrected visual acuity from baseline to week 52. You can also look at the number of patients gaining three lines of vision or losing three lines of vision. The fact is on all of these endpoints, we didn't detect a signal in the two trials that would indicate that we could win on these functional endpoints. The answer is no. We don't think there is any hope to change the endpoint and rerun a trial. It would probably be very futile at this stage of the asset. Now we have the answer.
Great. Thanks, Fred. It looks like this is our last question. This one's for you, Tom. Can you clarify if the three employees left are the remaining Board of Directors? If there are any others, what roles are left?
Okay, great. Thanks for the question. The three employees who remain are not the Board of Directors. They will be focusing on Corporate Secretary work, governance of the company, and financial operations. I think it's also important to go back to what Jeremy said. There will be three Board of Directors remaining and have deep expertise in scientific business development, finance, and commercial operations. In addition, from a capital preservation perspective, the company will be looking to hire or not hire, to bring in consultants with expertise in specific areas to help move the company forward. Again, very keen on what's been happening since the trial results came to us. Capital preservation, focusing on that, ensuring we have the right expertise to move the company forward.
Great. Thanks, Tom. This concludes our Q&A session. I'd like to thank everyone for asking questions. I'll now turn it over to Jeremy for closing remarks.
Thank you very much for attending today. We do appreciate your spending the time. Of course, we look forward to engaging with you in the future. This is Opthea 2.0, and that's the way we're looking at it. I hope you'll join us in this journey. I believe it's going to be interesting, exciting, and hopefully we'll deliver exactly what we said, shareholder value, and at the same time, value for patients. Thank you so much. Good night. Good morning. Goodbye.