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.


Disclosure Disclaimer

RCAN1468

This Research report, accurately expresses the personal view of the Author.

DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. The analyst who wrote this report does hold securities in Paradigm BioPharmaceuticals Ltd. DJ Carmichael Pty Ltd provided corporate advice to Paradigm BioPharmaceuticals Ltd in 2016 and was paid a fee for these services. DJ Carmichael Pty Ltd acted as Co-Lead Manager in a capital raising for Paradigm BioPharmaceuticals Ltd in 2016 and was paid a fee for these services.

The analyst owns an insignificant number of shares in Paradigm BioPharmaceuticals Ltd.

The Author of this Research Report did not make contact with Paradigm BioPharmaceuticals Ltd for assistance with verification of facts, admittance to business sites, access to industry/company information. No inducements have been offered or accepted by the company.

DJ Carmichael Pty Ltd is a wholly owned subsidiary of DJ Carmichael Group Pty Ltd ACN 114 921 247. In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advises this email contains general financial advice only. In preparing this document DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its Directors employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. DJ Carmichael Pty Limited believes that the advice herein is accurate. However, no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited.

The recommendation made in this report is valid for four weeks from the stated date of issue. If in the event another report has been constructed and released on the company which is the subject of this report, the new recommendation supersedes this and therefore the recommendation in this report will become null and void.

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.

To elect not to receive any further direct marketing communications from us, please reply to this email and type 'opt out ' in the subject line. Please allow two weeks for request to be processed.

© 2018 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.

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.