The Opthea Ltd (ASX: OPT) share price has been one of the biggest movers on the All Ordinaries index on Wednesday.
The shares of the developer of novel biologic therapies for the treatment of eye diseases raced a massive 21% higher to an all-time high of $3.21 this morning.
When Opthea's shares hit that level, it stretched their year to date gain to a remarkable 470%.
Why is the Opthea share price on fire today?
Investors have been scrambling to buy the company's shares today after it was the subject of a very positive broker note out of Goldman Sachs.
According to the note, the broker believes Opthea has extremely strong growth potential thanks to its OPT-302 product and has initiated coverage on the company with a conviction buy rating and $4.90 price target.
This price target implies potential upside of over 81% from its last close price.
Though, it is worth noting that Goldman believes its shares could climb even higher than this if OPT-302 is approved for both wet age-related macular degeneration (AMD) and diabetic macular edema (DME) treatments in the U.S. and the rest of the world.
In this best case scenario the broker believes it shares would be worth $11.00, which was more than three times the last close price.
What is OPT-302?
OPT-302 is currently under evaluation as a treatment for AMD and Diabetic Macular Edema, which were markets worth over US$10 billion in 2018. Recent trial data has been positive and appears to show that it works very effectively in combination with current treatments.
Goldman commented: "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, the broker has "forecast 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)."
It added: "With several drugs in late-stage development, and existing patents expiring from 2020-23, we see several motivated partner candidates who could view OPT as low-cost optionality on lifecycle management and/or market expansion for multi-billion dollar opthalmology franchises. We believe a licensing agreement is the likely path to commercialisation."
Overall, I have been very impressed with Opthea's progress and agree that it could be a good long-term investment. Though, it is a high risk one and may be unsuitable for some investors.
Two other shares that Goldman has recently given buy ratings to include Adairs Ltd (ASX: ADH) and HUB24 Ltd (ASX: HUB).
