Notably the report predicts a less than 1% risk of failure for Paradigm’s upcoming OA phase-2b clinical trial.
It also anticipates share prices of over $30 a share and a market capitalisation around $5 billion if Paradigm successfully signs licencing deals or commercialises all three of its indications.
READ: Paradigm Biopharmaceuticals’ positive trial results potentially transformational, says Morgans research
The following is an extract from the report:
Testing the thesis
We feel that not many others have undertaken the same level of due diligence that we have done for Paradigm and therefore they do not understand what they own.
So when we hear comments like “the risk is that they fail the clinical trial”, we instantly recognise these investors probably haven’t adequately valued this business or weighted this risk with a probability.
Not only is Paradigm likely to see success in their upcoming clinical trial for OA but given the safety and quality of the data being released, investors should ask themselves the question – what other indications that have inflammatory issues as a symptom could also be treated using iPPS?
Should Paradigm see success in their upcoming phase-2b clinical trials (OA and Ross River) they could potentially develop a whole suite of drugs to treat any disease with associated inflammation.
The data released under Paradigm’s special access scheme (SAS) has seen an average pain reduction of 51.2% in 145 patients.
We believe that the results of the upcoming trial will exceed those from the 145 patients treated under the SAS program.
The clinical trial has very specific eligibility criteria – it requires a different dosage regimen than those in the SAS program.
The current phase-2b clinical trial will only treat 55 patients with Zilosul, with the remaining 55 patients receiving a placebo.
To further demonstrate our confidence in a successful result, a previous study done by Peter Ghosh in 2005 to test if iPPS (the major ingredient within Zilosul) was effective in treating OA, showed a statistical significance and would have passed a clinical trial.
Not only was that trial significant, but the difference between the Ghosh trial and Paradigm’s trial (and SAS results) are that patients now receive double the dosage of iPPS.
As you would expect, the results being released from Paradigm are significantly better than from the Ghosh study.
Zilosul will become the standard first-line treatment for OA once commercialised.
As demonstrated, we consider the risk of failure in Paradigm’s phase-2b OA clinical trial as less than 1% when you compare the results already being seen via the SAS data.
Compare them against our prior trials with placebo control and against other nerve growth factor (NGF) drugs, its’s starting to look like Paradigm are going to have the best OA product in the foreseeable future.
When this trial is successful, we believe the negotiations from big pharma will result in a deal too good to refuse.
This deal size will likely need to exceed US$2 billion in order to be reflective of the anti-NGF deals done.
We see upside risk to the size of this deal given the competitive tension that is likely to result as big pharma understand that Zilosul should become the preferred treatment of OA around the world.
To put this into perspective, in terms of Paradigm’s share price, a US$2-billion deal on the current issued capital would result in an Australian Dollar-equivalent price of $19.80 a share.