Paradigm BioPharmaceuticals Ltd (PAR)

No endpoint from Phase2a Clinical Hay-fever Trial

Paradigm is an ASX listed biopharmaceutical company focused on repurposing the historic drug pentosan polysulphate sodium (PPS). PPS has non-steroidal anti-inflammatory properties and has potential for its novel use in the treatment of many inflammatory diseases such as Allergic Rhinitis (AR) (hay fever). PAR has announced that the Phase2a trial did not meet its primary endpoints, with the company speculating that the formulation of the drug needs optimising. This is an unexpected and disappointing result. However, the actual results of the trial have not yet been received and an independent expert will be brought in to assess the results and the likely next steps. We reduce our short-term price target to $0.35-$0.45, consistent with the price prior to the Phase 2a AR trial, but our risked valuation of $1.32 is currently maintained pending clarification of future progress in the AR trial. We place a Hold recommendation on PAR over the short term.

Key Points

  • PAR suggest a formulation issue or dose issue. PAR has announced that the muchanticipated Phase 2a allergic rhinitis (AR) clinical trial did not meet its endpoints via an intranasal delivery system - those being a total nasal symptom score and a peak nasal respiratory flow, using the current formulation. PAR suggest that the formulation used to deliver the drug PPS to the target tissues may need optimising. PAR also suggest that the dosage may require optimisation. This will inevitably delay the development of the AR program.
  • The inference is that it is not a drug efficacy or safety issue. The results of the trial are not yet known. We assume the timing on the release of the actual trial results remains within previous guidance, at around the end of June. PAR will engage an independent expert, as well as conduct its own analysis, to determine the next steps in the development of its allergic rhinitis program. Importantly, the company suggests that the safety of the potential drug is not in question and follows a successful, peer-reviewed pre-clinical study, demonstrating that PPS is a potent Th2 antagonist with a statistically significant outcome compared with the commercially available budesonide.
  • Other trials continue unaffected. PAR also announced that the results from the AR trial do not affect the other PPS-related programs proceeding as planned. PAR has received ethics approval for its Ross River Virus trial and is scheduled to enrol its first subjects during Q3 2017. Currently, PAR is recruiting subjects for its Phase 2a bone marrow lesion clinical study, which is scheduled for a read-out also in Q3. These trials will be utilising well established routes of administration, being subcutaneous or intra-muscular injection.
  • The next two trials already have human data. The two current programs, on bone marrow oedema and Ross River virus, already have human data signalling the efficacy of PPS for the next two trials. PAR believe these will provide significant value milestones for the company.
  • Recommendation and Valuation: The AR trial outcome is disappointing but it’s not yet over for PPS in the AR program. We reduce our short-term price target from $0.82 to between $0.35 and $0.45, being the price range prior to the start of the AR Phase 2 trial. We currently maintain our risked valuation at $1.32 pending clarification of the Phase 2 AR trial progress and change our Speculative Buy recommendation to Hold in the short-term.



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Recommendation Definitions

SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months. 

Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

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Paul Adams

Head of Research

Paul joined DJ Carmichael in 2006 as a Resource Analyst. Paul has an honours degree in Geology, is a member of the Australian Institute of Mining and Metallurgy and has 16 years experience in the mining industry in exploration, open pit, underground and operational roles, both in Australia and overseas. Before joining the company, he was Chief Geologist and Evaluations Manager at Placer Dome's Granny Smith mine. Paul has a Graduate Diploma in Applied Finance and Investment, fromthe Financial Services Institute of Australasia.