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Why this ASX healthcare share has risen over 200% in the past year

The ASX healthcare sector continues to be one of the top performers on the ASX in terms of share price rises over the past 12 months, despite all the strong market correction.

While most Australians are likely familiar with healthcare companies such as Cochlear Limited (ASX: COH) and CSL Limited (ASX: CSL), there are a number of fast rising healthcare shares that have been emerging over the past few years that will play an increasingly important position on our share market over the next decade.

Opthea Ltd (ASX: OPT) – a biotechnology company focused on the development of new drugs for the treatment of eye diseases – is one such share. Below, we take a closer look at the company’s background and what’s behind its share price growth.

Opthea announces breakthrough clinical trial results

After see its share price trading more or less sideways for around a decade, last August Opthea announced positive results from its phase 2b clinical trial of its core medical product, OPT-302.

The results of the trial indicated that OPT-302 was capable of delivering a significant vision benefit as a combination therapy for patients suffering from wet age-related macular degeneration (wet AMD), and halting the progression of the disease. Wet AMD results in vision loss due to the degeneration of the central portion of retina in the eye’s macula. This is a growing medical condition worldwide and is the leading cause of blindness in people over the age of 50 across the developed world.

This positive result in the clinical trial was a seen as a major milestone for the company on the way to commercialising treatment for OPT-302.

Opthea’s share price rises dramatically

The breakthrough trial saw a dramatic rise in the Opthea share price, peaking at the end of last August. Since then, its share price has held fairly firm but has lost some ground in the current market correction, although its losses have been much less than other emerging healthcare shares such as Medical Developments International Ltd (ASX: MVP) and Paradigm Biopharmaceuticals Ltd (ASX: PAR). Opthea’s share price is still up by more than 200% over the last 12 months.

Since the trial last August, the company has undertaken recruitment for a further clinical trial of OPT-302 for the treatment of diabetic macular edema (DME), which impacts people who suffer from Type 1 and Type 2 diabetes. 

The company is still very much in an early stage of its evolution, so still requires capital investment to stay afloat and for this reason remains a highly risky investment. It recorded losses of around $21 million for the 2019 financial year, however this type of loss is not uncommon for emerging biotech companies.

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Phil Harpur owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., and Medical Developments International Limited. The Motley Fool Australia has recommended Cochlear Ltd. and Medical Developments International Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.