Dr Boreham’s Crucible: Paradigm Biopharmaceuticals

Small Caps | Nov 06 2023

Tim Boreham highlights the success of Paradigm Biopharmaceuticals' joint pain drug ahead of a capital raising.

by Tim Boreham

ASX code: ((PAR))

Share price: 41.5c

Shares on issue: 281,756,625 (pre capital raise)

Market cap: $116.9 m

Executive chair: Paul Rennie

Board: Mr Rennie, Dr Donna Skerrett (chief medical officer), Amos Meltzer, Helen Fisher (John Gaffney resigned on October 20, 2023)

Financials (year to June 30 2023): revenue from continuing operations $46,760 (down -41%), loss of $51.9m (previous deficit -$39.2m), cash $69.4m (proforma, post capital raising excluding options exercise).

Identifiable major holders: Paul Rennie and related entities 7.3%.

The golden rule of biotech is never to waste a positive announcement - let alone two of them - by shunning the opportunity to fill the coffers.

On October 10, Paradigm released a clinical update that confirmed the efficacy of its repurposed wonder drug Zilosul (pentosan polysulphate sodium) for dodgy knees and joints.

A week later the company released data from magnetic resonance imaging (MRI) scans that suggests Zilosul results in “functional” improvement to the joints - an outcome well beyond the previous known effects of relieving pain and improving function.

The key findings were that cartilage reduction had not just been halted but the volume of this connective tissue had increased, with bone lesion damage reducing.

Okay, the study was based on a small active cohort of 15 patients, but it marks the first time that any drug has been shown to have such an effect.

Before you could say “trick or treat”, on October 30 the company was doing the rounds for $30m by way of a placement and underwritten entitlement issue.

Spooky, eh?

The MRI results could pave the way for earlier provisional approval from Australia’s Therapeutic Goods Administration (TGA), bearing in mind that more than 600 patients have been treated under the agency’s special access scheme (SAS).

In 2018, the FDA knocked back the company’s approval application and demanded a phase III trial.

There are more than 530m osteo-arthritis (OA) sufferers worldwide, including 30m in the US.

It’s a dog’s life

PPS is an anti-inflammatory, heparin-like compound made from beechwood hemicellulose and has been used as to treat a bladder condition and deep-vein thrombosis.

The manufacturing involves not just chucking bark in a vat, but a complex process to produce the final formulation.

Currently, osteoarthritis commonly is treated with non-steroidal anti-inflammatory drugs or opioid-based painkillers, which are either ineffectual or undesirable.

Janssen Pharmaceuticals (Johnson & Johnson) sells an oral formulation of PPS under the name Elmiron, to treat a painful bladder disease called interstitial cystitis.

Paradigm has an exclusive 25-year exclusive supply deal with the only approved PPS maker, Germany’s Bene Pharmachem.

Paradigm also has relevant patents.

The deal pertains to human osteoarthritis (OA) applications and not veterinary purposes.

Paradigm shifts

Paradigm was founded by Paul Rennie and Graeme Kaufman and listed on the ASX on August 18, 2015, having raised $8m at 35c apiece.

Mr Rennie was Mesoblast’s ((MSB)) head of product development. Mr Kaufman was CSL’s chief financial officer through the plasma behemoth’s privatization and was Mesoblast’s vice prez.

Mr Kaufman stepped down as a Paradigm director (and chair) in June 2020 for health reasons.

In November 2021, Mr Rennie ceded his chief executive role and continued as chair. But in November last year he returned to the CEO role while continuing as (now executive) chair.

Mr Rennie replaced US-based healthcare exec Marco Polizzi, who came on as CEO in July last year but didn’t last the gestation period, having clocked off on February 20 this year.

Where’s the evidence?

Paradigm’s evidence so far consists of two phase II trials - Para 005 and Para OA 008 - and the 600 “real world” patients. Many of the latter are former footballers, including Paradigm’s investor relations guy Simon White.

Ten former US National Football League players have also been treated under a US special access scheme.

Para 005 achieved a primary endpoint of reduction in pain and improved function among its 121 subjects.

Covering 61 patients, Para 008 kicked off in 2021 with the remit of measuring the change in the synovial fluid biomarkers associated with pain, inflammation and osteo-arthritis disease, relative to placebo.

Having tabled positive results at days 56 and 168, Paradigm last month reported “clinically meaningful outcomes” at 365 days compared to placebo.

These included significant pain reduction and functional improvements and durable improvements in stiffness, as measured by the Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) questionnaire.

The company also reported reduced use of pain medication, with the placebo group resorting to paracetamol (or such) five times more than the treated group.

The participants received two milligrams per kilograms of bodyweight, twice weekly for six weeks and the company now believes this regimen is ideal.

Moving to phase III

The first phase III program, Para-OA-002 is designed to maximise the potential of PPS for osteoarthritis pain.

Granted FDA fast-track approval, the trial recruited 468 healthy volunteers for the first dosing stage, now completed, across 120 sites in seven countries.

In early 2024, the company expects to confirm the 2.0mg/kg dosing as optimal.

The trial then moves to a pivotal stage, covering 900 patients with a top-line data readout expected in mid-2025.

The program then moves to a confirmatory trial, dubbed - you guessed it - Para-OA-003 with enrolment starting by July 2024.

The company is eyeing a new drug application to the FDA by the end of 2025.

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