Australia’s Opthea cuts 80% staff, key executives to exit in deal to avert bankruptcy

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(Reuters) -Australian biopharmaceutical firm Opthea on Tuesday announced the reduction of 80% of its workforce and the departure of its top bosses after reaching an agreement with two significant investors to avoid bankruptcy.

The company, which produces novel therapies to treat highly progressive retinal diseases, said it has laid off 80% of its total workforce. However, Opthea’s latest employee count was not immediately clear from its exchange filings or website.

The company has not yet provided the information when contacted by Reuters.

Chief Executive Fred Guerard and Finance Chief Tom Reilly will step down next month, Opthea added, following the termination of a development funding agreement signed in March.

The firm had also warned in March that if the deal were terminated following its negative clinical trial results, Opthea could be liable to pay investors up to $680 million.

“In light of these matters, there was material uncertainty as to Opthea’s ability to continue as a going concern and trading of Opthea’s stock on ASX and NASDAQ was suspended,” the company reiterated in statement.

Under the settlement, investors will now receive a one-time payment of $20 million, resulting in Opthea remaining solvent with estimated unaudited cash and cash equivalents of around $20 million.

The Melbourne-based firm said that it will assess a full strategic review over the next six months, while Chairman Jeremy Levin will fulfil the roles of the outgoing CEO with effect from September 1.

(Reporting by Shivangi Lahiri in Bengaluru; Editing by Mohammed Safi Shamsi and Sherry Jacob-Phillips)