This came out prior to market open today:SMALL STOCK...

This came out prior to market open today:

SMALL STOCK FOCUS

Paradigm Bio (PAR) – Market Cap $653m

PAR is a late stage biotech looking to repurpose Pentosan Polysulfate Sodium (PPS) to treat Osteoarthritis (OA). It’s a big market to address.

• Repurposing existing drugs is big business now. Just because a drug works well on one aspect does not preclude it from being used on others illnesses and conditions. PPS is one of these , branded under the name ZILOSUL.
• In the US there are 31m sufferers of OA.
• PAR has been granted FDA approval under the Expanded Access Program (EAP) to treat 10 patients all ex-NFL players. The treatments begin in December.
• Locally the company is seeking TGA approval for its Phase 3 trial with revenue to follow as early as Q3 2020.
• PPS has been used for more than 60 years. It is sold by J&J under the brand name Elmiron. For the treatment of cystitis.
• PAR has patents to use PPS for new treatments.

• It has a secured supply agreement with a private German company PharmaChem which makes the only FDA approved form of PPS. It is not an easy thing to produce. It is a semi-synthetic drug manufactured from beech-wood hemicellulose.
• No brilliant treatments for OA. 31 m in US and 3m in Australia. The condition ranks as the 10th leading contributor to global disability according to the Osteoarthritis Research Society International
• Big Pharma is very interested in OA.

Here are some of the recent transactions.

Repurposing is huge business.

• Viagra was a repurposed drug (US$2bn in sales). Originally used to treat angina.
• Ketamine was originally an anaesthetic and is now being used for resistant depression.

The company has $75m in cash. Always good.

In the latest presentation the company has highlighted a number of achievements.

• Mechanism of Action established and peer reviewed in scientific journal
• Release of exploratory endpoints from phase 2b trial –reduction in key OA biomarkers.
• FDA approval for Expanded Access Scheme to treat 10 patients

Catalysts:

• Results of meeting for provisional approval of Zilosul with TGA –end 2019
• 10 ex-NFL players with OA treated with Zilosul in the US–end 2019
• Results to be released in mid -2020
• Potential for significant media attention.
• Ongoing partnering discussions with big pharma

Clearly there is a lot of excitement about the upcoming trials on the footballers. It is high profile and likely to gather some good media coverage. The shares have been on a huge run recently. With the trials coming up, there is no reason to think that the run will end any time soon. Usually capital raisings kill a share run. With money in the bank from the last raising (May 2019 at 150c) and the upcoming FDA meeting in December, there is enough news flow to keep the bulls happy.

2020 could be a big year. Plenty to like about this one. Repurposing takes away a huge part of the risk. The NFL player study is a focal point and we could see the stock drive higher into the end of the year.

SPECULATIVE BUY