Paradigm Biopharmaceuticals Ltd (PAR)

Update on OA

PAR has released the latest set of results from its current trial using injectable pentosan polysulfate sodium (iPPS) for patients suffering from painful osteoarthritis. Patients experienced a dramatic reduction in pain after taking PPS. The results bode well for the Phase 2 clinical trial of PPS for the treatment of OA later in the year.

Key Highlights of the Company Announcement:

  • Paradigm reports a 50% reduction in pain (on average), from 45 patients with osteoarthritis after treatment with the injectable Pentosan Polysulfate Sodium (PPS).
  • In the 45 patients treated, 84.4% responded with both a reduction in joint pain and an improvement in knee function.
  • 50% reduction in pain scores observed with PPS is considered superior than the typical 15% pain reduction scores reported for opioid treatments for chronic pain in OA of the knee and hip.
  • These patients were treated under a similar dosing regimen as Paradigm’s current Phase 2b Osteoarthritis randomised double-blind, placebo-controlled, clinical trial, which is expected to release results in Q4 CY 2018.
  • PAR describe OA as a blockbuster indication, a condition with a significant unmet medical need: therapeutic market size is US$5bn p.a., whilst the total economic burden in the US alone, is estimated to be US$128bn.

Our view

The results from the treatment program, under the Theraputic Goods Administration’s (TGA) Special Access Scheme (SAS), involved patients self-reporting changes in pain after using PPS on painful knee osteoarthritis (OA) conditions.

The 50% reduction in pain experienced compares to just a 15% average pain reduction score using a current opioid treatment. The testing program therefore indicates a significant improvement in pain relief for this condition over treatments currently available. PAR is on schedule to complete their Phase 2b trial in late 2018. The company commented that:

These patient-reported outcomes from 45 patients precedes the read-out from Paradigm’s Phase 2b randomised, double-blind, placebo-controlled, multicentre, clinical trial, which is expected in Q4 CY 2018. By Q4 CY2018 the Phase 2b clinical trial data (n=100) will be supplemented with an additional 150 RWE (Real World Evidence) patients.

We continue to believe that 2018 will be a pivotal year for PAR given the number of Phase 2 trials being carried out and the early positive signs from the current testing programs. In comparison to other ASX-listed biopharmaceutical companies also in Phase 2 trials, PAR looks cheap but the failure of the Allergic Rhinitis trial last year, related to the delivery system of PPS, dented confidence.

We reiterate our Speculative Buy recommendation on PAR with a price target in a range between $0.35 and $0.45 per share. A positive Phase 2 trial result will likely see the stock trade well beyond this range towards our LT risked valuation of $1.32 per share.

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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.