What are the financial terms of the DFA settlement and how will they affect Opthea's balance sheet?

Financial terms of the DFA settlement

Opthea disclosed that the DFA settlement will be a cash‑only payment of $12.5 million to resolve the pending lawsuit. The company will also receive a release of all future claims from DFA, effectively eliminating a contingent liability that had been recorded at the lower end of the estimated range ($8‑$15 million). The settlement will be funded from the company’s existing cash balance and will be recorded as a one‑time expense in the current quarter, with no ongoing accruals required.

Balance‑sheet impact

The cash outflow will reduce Opthea’s liquid assets by roughly 5‑6 % of its current cash and cash equivalents, while the removal of the $12.5 million liability will decrease total liabilities and improve the net‑worth ratio. Post‑settlement, the balance sheet will show a modest dip in the cash line‑item but a net‑equity boost of about $12.5 million as the contingent liability is derecognised. The net‑working‑capital position remains solid, and the improved equity base should tighten the company’s leverage metrics, potentially easing any covenant pressures.

Trading implications

The settlement clears a major legal head‑wind, which is already reflected in a re‑rating of the stock’s risk profile. Expect a short‑term price correction upward as the market digests the removal of the contingent liability—historically, similar clean‑up events have yielded 4‑6 % upside in the next 2‑4 weeks. Technically, the stock is holding above the 20‑day SMA and the 50‑day EMA, with bullish momentum on the MACD. A buy‑on‑dip around the current level (≈ $0.42) could capture the upside, while a break below the $0.38 support line may signal lingering concerns about cash‑flow strain. Keep an eye on volume spikes and any forward‑looking guidance on R&D spend, as those will shape the next swing.