Regal Partners digests impact of Opthea failure
The failure of a clinical trial by biotech firm Opthea has caused shares in its backer Regal Partners to decline 52 per cent year-to-date, while funds under management (FUM) declined in the last quarter.
Shares in biotech Opthea were suspended at $0.60 on 19 March, which remains in place, having traded at $1.15 earlier in the year.
The plunge was caused by an announcement from Opthea that its latest clinical trial had failed to meet objectives and the trial would be discontinued. The cessation of the trial could mean the firm was required to pay a multiple of the funding provided to it for the trial to its Development Funding Agreement investors.
This would have a “material adverse impact on the solvency of the company” which could bring into question whether the firm could continue trading as a going concern, it said.
The listed Regal Investment Fund is the largest shareholder in the company and its own shares are down 17 per cent since the start of the year, while the wider Regal Partners shares are down 52 per cent compared to losses of 9 per cent by the ASX 200.
The associated impact of the Opthea trial on Regal meant its funds under management fell from $18.2 billion to $17.9 billion in the three months to 31 March, representing an 8.3 per cent quarterly decrease.
This compared to a gain from $17.2 billion to $18 billion for the December 2024 quarter.
Explaining the FUM movement in an ASX statement, it said: “The change in the FUM over the quarter includes negative investment performance of -$540 million, which reflected weaker market conditions. It also included a writedown to zero of an equity investment performance in Opthea which was held in a number of Regal Funds’ long/short equity strategies.
“Net FUM flows in the quarter of $149 million, which were driven by a wide range of funds and asset classes, including the PM Capital global long/short and enhanced yield strategies; Regal Funds’ small caps and resources royalties strategies, Taurus’ royalties fund and the unlisted multistrategy Regal Partners Private Fund.
“A change of -$1,101 million within ‘Other’, which was due to a variety of items including distributions, dividends, buybacks, and adverse foreign exchange movements from a stronger Australian dollar. It also includes the impact of a reclassification of two items relating to Taurus Funds Management.”
The two items regarding Taurus were a restructure of a private markets fund and a change in commitments for its closed-end Taurus Mining Finance Fund II which saw them move to a second phase where fees were calculated based on invested or reserved capital rather than committed capital.
It has flagged that a third Taurus Mining Finance Fund III is set to be launched in December 2025.
AUTHOR
Laura Dew
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