Excellent analysis @GCMG. Thanks for laying out the framework,...

Excellent analysis @GCMG. Thanks for laying out the framework, so we can consider the assumptions explicitly. So let me offer my thoughts on a few of the inputs and steps.

1. Non-OA indications ignored. Very reasonable and I agree. However I believe that PPS offers a fat and deep pipeline which will emerge down the track, with some visibility in the later part of your timeframe, with impact on P/E and then revenue. But quite right to discount it to zero right now.

7. Royalty 20%. I do feel this is generous, but happy to use it as a conservative number.

9. Probability of achieving NDA 60%, based on Phase III peers. This one I disagree with because I do not believe the sample of Phase III drugs (even non-onco) is the correct sample to assess PPS Phase III risk. This has been part of my investment thesis from the beginning: that analysts were pricing risk according to an average risk for Phase II peers, and now Phase III peers, and that methodology is not a correct risk assessment for PPS, and that the risk is therefore substantially mispriced, and that mispriced risk presents my buying opportunity. The very reason PAR describes itself as a "drug repurposing company" is that repurposing drugs removes some risk. In our case we have a long history of use across many mammalian species demonstrating success on our clinical endpoints, as well as a clean safety profile, as well as the human studies to date that give strong reason for confidence in getting our NDA. Other Phase I/II/III candidates we are comparing to simply do not have that base, so nasty suprises are much more likely, and they are not a representative sample for PPS. There remains some risk but I believe 90% chance is a fair assumption, 80% very conservative.

10. No DMOAD. A reasonable stance but I think too conservative. We have good reason to believe a number of prior studies that show the biomarker endpoints we are looking for will be recapitulated in PAR 008. Personally I enjoy looking at my own MRI's and feeling the way I feel to give me confidence here. I think a 50% chance of success is conservative. So the weighted expectation value for price of treatment becomes ~USD 4000, not 1500.

13. P/E 30. Fine, but see (1).

Step 1. Add 2 years to company guidance. I think this is too pessimistic - I'd add just 1 year, to give some margin for delay. I think the company has been quite unreasonably excoriated for delays on this board. Investors are impatient and seeing the road bumps through to Phase III approval I think generated a narrative around delays that was quite unreasonable. My view through watching that period was "that's annoying but completely normal back & forth with the regulator" and mirrors my own experience achieving chemical registrations. The other large delay related to a change in strategy rather than management incompetence. To me the strategy looks settled, the trial designs look good, and adding a two year delay to guidance "just because" seems unduly pessimistic.

Step 2. What are the assumptions here around the repeat schedule? Are our patients having a course of treatment every year? If the assumptions derive from Humira, what is Humira's repeat schedule, and will PPS be different? My own experience was I started to feel like a second course at 9 months after the first, and got course 2 at ~12 months. I'm about 6 months down the track from the second course right now, and I do not feel any arthritis symptoms. Maybe at 12 months I will, and maybe not. We have seen reports I think of some people who have had extended relief over years. On the other hand there may be people who experience relief and then in 6 months want to run another course. So we have some assumptions about treatment frequency that need to be made explicit.

Step 2. KOA vs all arthritis. I think you have just accounted KOA. As soon as this is approved for KOA, its going to be used for all OA.

Thanks again for setting out all the input assumptions so we can test and refine our understanding.