INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income F-2 Condensed Consolidated Statements of Financial Position F-3 Condensed Conso

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Half-Year ended December 31, 2021, and 2020

The above condensed consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. All amounts presented in respect of prior periods have been restated to reflect the change in presentation currency as set out in the accounting policies.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31, 2021, and June 30, 2021

The above condensed consolidated statements of financial position should be read in conjunction with the accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Half -Year ended December 31, 2021, and 2020

The above condensed consolidated statements of changes in equity should be read in conjunction with the accompanying notes. All amounts presented in respect of prior periods have been restated to reflect the change in presentation currency as set out in the accounting policies.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Half -Year ended December 31, 2021, and 2020

The above condensed consolidated statements of cash flows should be read in conjunction with the accompanying notes. All amounts presented in respect of prior periods have been restated to reflect the change in presentation currency as set out in the accounting policies.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Corporate Information

Opthea Limited (the parent) is a company limited by shares incorporated in Australia whose ordinary shares are publicly traded on the Australian Securities Exchange ("ASX

") and whose American Depository Shares ("ADSs

") are listed on the Nasdaq Global Select Market.

The principal activity of Opthea limited is to develop and commercialize therapies primarily for eye disease. Opthea's lead asset, OPT-302, is a soluble form of VEGFR-3 in clinical development as a novel therapy for wet (neovascular) age-related macular degeneration and diabetic macular edema (DME). Wet AMD and DME are leading causes of blindness in the elderly and diabetic populations respectively and are increasing in prevalence worldwide.

The condensed consolidated financial report of Opthea Limited (the "Group

") for the six months period ended December 31, 2021 and 2020 was authorized for issue in accordance with a resolution of the directors on March 30, 2022.

Significant changes in the current reporting period:

For the six months period ended Decemb

er 31, 2021, the Company's net loss before tax attributable to members is $40,629,360 (December 31, 2020: $28,277,254). The increased loss compared to the prior period is mainly due to the increase in research and development (R&D) spending, which can be attributed to the manufacturing of OPT-302

and ramp up of the Phase 3 clinical trials of OPT-302

Set out below are other factors affecting financial performance:

Note 2. Adoption of New and Revised Accounting Standards

These condensed consolidated interim financial statements as of December 31, 2021 and for the half-year reporting period ended December 31, 2021 and 2020 (the "half-year condensed consolidated financial statements

") have been prepared in accordance with International Accounting Standard ("IAS

") 34 Interim Financial Reporting

under International Financial Reporting Standards ("IFRS

The half-year condensed consolidated financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, they are to be read in conjunction with the consolidated statements of financial position of the Group as of June 30, 2021, and 2020, the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for each of the three years in the period ended June 30, 2021, and the related notes (collectively referred to as the "annual financial report

The half-year condensed consolidated financial statements have been prepared using the same accounting policies as used in the annual financial report.

There were no changes in accounting policy during the half-year December 31, 2021, nor did the introduction of new accounting standard lead to any changes in measurement or disclosure in these half-year condensed consolidated financial statements.

The Group has not adopted any accounting standard that are issued by not yet effective. We have considered the applicability and impact of all recently issued accounting pronouncements and have determined that they were either not applicable or were not expected to have a material impact on our interim report.

Significant accounting policies that summarize the measurement basis used and are relevant to an understanding of the financial statements are provided in the annual financial report.

Note 3. Significant Accounting Policies

Basis of preparation

These half-year condensed consolidated financial statements have been prepared on the basis of historical cost, except for the investments classified as financial assets, which have been measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in United States dollars, unless otherwise noted. The Interim Financial Statements have been prepared on a going concern basis, which assumes the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.

Notes to Condensed Consolidated Financial Statements - Continued

Change in presentation and functional currencies

An entity's functional currency is the currency of the primary economic environment in which the entity operates. During the year ended June 30, 2021, the Group's operations have continued to move further towards being US$ denominated and several other factors during the period have also contributed to the Group changing its functional currency, such as the completion of U.S. initial public offering (IPO) and the Nasdaq listing in October 2020, opening a US subsidiary in May 2021 for a planned expansion into the US, and expanding the Board of Directors with the appointment of four US based Directors. A significant element in the Group's assessment to change the functional currency resulted from the significant increase in expenses denominated in US dollars relating to advanced clinical trials since the commencement of Phase 3 trials in March 2021. These changes, as well as the fact that the Group's principal source of financing is now the U.S. capital market and all of the Group's budgeting and planning is conducted solely in dollars led to the Company determining that the U.S. dollar (US$) best represents the currency of the primary economic environment in which the entity now operates. Accordingly, the Group changed its functional currency from Australian dollar (A$) to U.S. dollar (US$) effective January 1, 2021.

The change in functional currency has been applied prospectively with effect from January 1, 2021 in accordance with the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates

. To give effect in functional currency, the assets and liabilities of the Group were converted into U.S. dollars at a fixed exchange rate of

Presentation Currency

Following the change in functional currency, the Group changed its presentation currency from Australian dollars (A$) to US$. The change in presentation currency is to better reflect the Group's business activities and to enhance access to U.S. capital markets. Prior to the change, the Group reported its financial statements in Australian dollars (A$).

A change in presentation currency is a change in accounting policy which is accounted for retrospectively, including the restatement of 2019 Balance Sheet. In making this change in presentation currency, the Group followed the requirements set out in IAS 21 The Effects of Changes in Foreign Exchange Rates. As required by IAS 21, the consolidated statements of profit or loss and other comprehensive income and the consolidated statements of cash flows for each period have been translated into the presentation currency using the average exchange rates prevailing during each reporting period. All assets and liabilities have been translated using the exchange rates prevailing at the consolidated statements of financial position dates. Shareholders' equity transactions have been translated using the rates of exchange in effect as of the dates of various capital transactions. All resulting exchange differences arising from the translation are included as a separate component of other comprehensive income. All comparative financial information has been restated to reflect the Group's results as if they had been historically reported in US$ and the effect on the consolidated financial statements resulted in an addition to the foreign currency translation reserve of

US$14.3 million at December 31, 2020.

Research and development costs

Research costs are expensed as incurred. An intangible asset arising from the development expenditure on an internal project will only be recognized when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development.

As of December 31, 2021 and June 30, 2021, the Group is in the research phase and has not capitalized any development costs to date.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period's taxable income.

The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Research and development tax incentive

The Research and Development (R&D) Tax Incentive Scheme is an Australian Federal Government program under which eligible companies with annual aggregated revenue of less than A$20 million can receive cash amounts equal to 43.5

% of eligible research and development expenditures from the Australian Taxation Office (ATO). The R&D Tax Incentive Scheme incentive relates to eligible expenditure incurred in Australia and, under certain circumstances, overseas on the development of the Group's lead candidate, OPT-302.

The R&D tax incentive is applied annually to eligible expenditure incurred during the Group's financial year following annual application to AusIndustry, an Australian governmental agency, and subsequent filing of its Income Tax Return with the ATO after the financial year end.

Notes to Condensed Consolidated Financial Statements - Continued

The Group estimates the amount of R&D tax incentive after the completion of the financial year based on eligible Australia and overseas expenditures incurred during that year.

The Group has presented incentives in respect of the R&D Tax Incentive Scheme within income tax benefit in the Statements of Profit or Loss and Other Comprehensive Income by analogizing with IAS 12 "Income Taxes

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group applies a single recognition and measurement approach for all leases, except for short-term

leases and leases of low-value

assets. The Group recognizes lease liabilities to make lease payments and right-of-use

assets representing the right to use the underlying assets.

assets are recognized at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use

assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use

assets include the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use

assets are depreciated on a straight-line

basis over the shorter of the lease terms and the estimated useful lives of the assets.

Lease liabilities are recognized at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance

fixed payments) less any lease incentives receivable.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate is determined using market yields on bonds with similar terms to maturity. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate).

leases (lease term of 12 months or less) and leases of low-value

assets (such as photo copiers and telephones), the Group has opted to recognize a lease expense on a straight-line

basis as permitted by IFRS 16. This expense is presented within "administrative expenses" in the consolidated statements of profit or loss and other comprehensive income.

The comparative condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows have been restated due to the change in presentation currency described above. Movement schedules in the notes to condensed consolidated financial statements for the comparative period covers the twelve months from July 1, 2020 to June 30, 2021.

Note 4. Operating Segment

The Group operates in

industry which is the biotechnology and healthcare industry. Additionally, the Group operates in two geographical areas being Australia and the United States of America.

Notes to Condensed Consolidated Financial Statements - Continued

The Group is focused primarily on developing a novel therapy for the treatment of highly prevalent and progressive retinal diseases.

The chief executive officer regularly reviews entity wide information that is compliant with IFRS.

There is only one segment for segment reporting purposes, and the information reviewed by the chief executive officer for the purpose of resources allocation and performance assessment is the same as the information presented in the consolidated financial statements.

The Group's only revenue stream in the current and previous six months period is royalty income generated from licenses granted in respect of the Group's intellectual property that are unrelated to the Group's core business and the development of OPT-302 and that are not under development. These licenses are primarily used by third-party licensees for research purposes. All of the royalty income for the half year ended December 31, 2021 of US$

45,048 (December 31, 2020: US$31,288) was generated from customers based outside of Australia. The Group does not have any major customers. All property, plant and equipment are located in Australia.

Note 5. Critical Accounting Judgments and Key Sources of Estimation Uncertainty

In applying the Group's accounting policies, management continually evaluates judgments, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgments, estimates and assumptions.

Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

Critical judgements in applying accounting policies

Research and development costs

The majority of Opthea's expenditure is incurred as a result of clinical investigation of OPT-302. During the year ended June 30, 2021 Opthea completed the Company's Phase 1b/2a diabetic macular edema (DME) trial and progressed planning of the Phase 3 registrational trials for OPT-302 in wet AMD.

In the six months ended December 31, 2021 Opthea progressed regulatory interactions and patient recruitment into the Company's global Phase 3 registrational clinical trials of OPT-302 for wet age-related macular degeneration. A key measure of Opthea's performance is the level of expenditure incurred on the research of OPT-302.

Judgment is required in relation to:

The directors have determined that the Group is still in a research phase and accordingly, no development costs have been capitalized as of December 31, 2021, and June 30, 2021.