If you have a high tolerance for risk and are looking for big investment returns, then read on.
That's because analysts at Bell Potter have just picked out one speculative ASX stock that they believe could rise materially from current levels.
Which speculative ASX stock?
The stock in question is Opthea Ltd (ASX: OPT).
It is a biopharmaceutical company focused on developing novel therapies to address the unmet need in the treatment of highly prevalent and progressive retinal diseases. This includes wet age-related macular degeneration (wet AMD) and diabetic macular edema (DME).
Opthea's lead product candidate is sozinibercept. It is being evaluated in two pivotal phase 3 clinical trials for use in combination with standard-of-care anti-VEGF-A monotherapies to improve overall efficacy and deliver superior vision gains compared to the current standard of care.
Bell Potter notes that this speculative ASX stock has a huge market opportunity if sozinibercept is approved. It commented:
Wet AMD is the leading cause of vision loss for older adults, with over a million older Americans currently living with wet AMD and a further ~200k diagnosed each year as the population ages. The wet AMD market is lucrative and well-established: four treatments are widely used and together generate >US$5b of annual sales in the US. However, each of these treatments provide essentially the same level of vision improvement with differentiation solely based on dosing frequency.
It also highlights that sozinibercept would be the first drug in a long time to deliver improved vision outcomes in wet AMD. The broker adds:
Sozinibercept differs from these treatments by targeting a novel pathway in the retina (targeting VEGF-C/D as opposed to VEGF-A). Combining sozinibercept and existing standard-of-care treatment is intended to provide superior vision outcomes compared to standard-of-care treatment alone. If successful, sozinibercept would become the first drug in >15 years to improve vision outcomes in wet AMD.
2025 could be a big year
After years of trials, the broker notes that it won't be long until we finally get a decision on sozinibercept. And given how previous trials have been statistically significant, it is optimistic that a good readout is coming next year. It adds:
In a randomised Phase 2b trial (n=366) completed in 2019, the combination of sozinibercept and Lucentis demonstrated statistically significant improvements in vision outcomes compared to Lucentis alone (p=0.01). Following on from these positive results, OPT initiated two large-scale Phase 3 trials (each in ~990 wet AMD patients) to support global approval of sozinibercept in wet AMD. Both Phase 3 trials have been fully recruited, and the all-important topline readouts are effectively locked in for early Q2 CY25 (COAST trial) and mid-CY25 (SHORE trial).
'Blockbuster opportunity'
In light of the above, this morning Bell Potter has initiated coverage on this ASX stock with a speculative buy rating and 70 cents price target.
Based on its current share price of 40.5 cents, this implies potential upside of 73% for investors over the next 12 months. It concludes:
We initiate coverage with a speculative BUY recommendation and $0.70 valuation. OPT is financed through to what will be one of the biggest Phase 3 readouts for an ASX-listed biotech in recent years. Success in the upcoming readouts will be a huge value-inflection event and majorly de-risk sozinibercept and its blockbuster opportunity.
