This today from fiftyone capital.
I cant agree more with what they forecast.
Whitta.
Lastly, let’s discuss Paradigm. We are starting to get very excited about the future for this company and the COMP announcement at the end of the month now shows that Paradigm’s drug Zilosul® (PPS) stops the cartilage degenerating in patients with OA! Not only do patients get pain reduction, reduced bone marrow lesions & improved joint function; but it now also stops the degeneration of the cartilage. The feedback we have continued to hear from patients being treated is that after treatment their pain melts away, joint function improves, and they get their lives back. Not only is the drug treating the symptoms of this disease, but it’s now showing that it stops the progression of the disease as well. This all just continues to support our thesis. That thesis being that Paradigm’s Zilosul® will be the front-line treatment option for people with OA and will one day be treating over 100m people across the developed world.To be blunt: If you don’t take PPS to treat your OA, you will need a joint replacement. We recently discussed this with CEO Paul Rennie who has also been treated each year for over 8 years under the SAS program! Without treatment he confided that around 6 years ago he would have likely needed a total knee replacement. We are very excited that his vision is now coming to life and millions of others will hopefully soon be living pain free. What an amazing story it is to be part of. Given the lack of alternatives and the size of the market. We believe that the demand for treatment will be extremely high once commercialised, meaning the potential sales figures per year are truly astronomical. It sounds too good to be true, but what are the alternative treatments? People are begging to get access to Paradigm’s Zilosul® because there is nothing else that works. Those who have used it continue to want the treatment and say it is far more effective than any alternative. Pain is a huge motivator and we struggle to see how this drug doesn’t end up becoming a multi-blockbuster! How many people do you need to see treated before coming to this same conclusion? For Paul Rennie it was just 1; himself. For us, we could see the potential after the first group of SAS patients and hearing firsthand experiences. Now, incoming investors can see successful phase 2 trial results, over 500 SAS patients (soon to be over 1000) along with countless other information being released and discovered. Even today the company announced the FDA has approved their IND filing for compassionate use (a comprehensive look at the drug and a big tick for future filings). At what point do people realise the potential? The fact you can get treated and see firsthand the benefits is like looking into a crystal ball. It seems so obvious – the drug clearly works, and people want it. If you looked into a crystal ball and saw everyone with iPhones before they were launched wouldn’t you buy Apple stock? Because it’s becoming harder and harder to see a future where anyone with OA isn’t taking Zilosul®. Ultimately this means the risk for commercial development should be very low as the drug is working. That is, the company already passed the hardest part of a new drug in development (a phase 2b trial) which showed it works over and above a placebo with pain as a primary endpoint (the most subjective measure). Not only that, the follow up objective data is showing why and how it is working to treat the symptoms (BME & cartilage) – not just masking the pain. This is what really makes Zilosul® such an exciting drug and why we believe it will become the leading treatment for patients with OA. For these reasons we believe the share price will begin to re-rate towards a valuation of around $2b (around $10 per share) prior to any phase 3 trial result (potentially even more depending on potential pharma deals). Even at $2b the valuation doesn’t fit the size of the commercial opportunity relative to the low probability of clinical failure. Anyone who can’t see a share price over $100 (>$20b valuation) once commercialised, really doesn’t understand how big this market opportunity is. Gilead just paid over US$5b (AUD $7b) for a pipeline of drugs that are not as advanced or as effective as Paradigms Zilosul® for treating OA. Even vegetable burger patties imitating meat trade at over an AUD$13.5b valuation… We would argue a breakthrough for OA is probably going to be a bigger market opportunity. Should the TGA approve the drugs use in Australia under the Provisional Approvals they could be selling the treatment inside of 12 months in Australia. We would expect somewhere between 10,000 and 50,000 treatments within the first year of it being available under this scheme. This is a tiny fraction of the population who suffer from OA (around 2.2m people in Aus), yet could generate anywhere from $25m to $125m in gross revenue (would likely be done via distribution deal so conservatively could keep >50% of this revenue). This is huge yet the market seems to not even remotely understand what is happening. So, if you have OA and want to be treated under the SAS program in Australia by your doctor (before it moves to the paid provisional approval process), we are happy to provide you with some information about how to do that. We have already had several people ask about treatment now it is available under the SAS. Any doctor can make the submission for treatment on your behalf and we are happy to explain the process so you can discuss with your doctor directly. Should your doctor want to make the submission and administer the treatment, they will then deal directly with the person at Paradigm responsible, who can walk them through the process. If you are interested, please submit an enquiry through our website and we can provide the information you will need to give to your doctor: www.fiftyonecapital.com Or you can visit an existing doctor who is doing the treatments which we can also provide. Disclaimer – we are not medical doctors. Your doctor must make the case for treatment and the company safety officers needs to approve it for use, as well as the TGA. We are happy to provide information about how to seek treatment under the existing regulatory framework, but can’t make any recommendations, guarantees or nor will we accept any liability should you be unable to get treatment. Hopefully you experience will be as positive as the majority of people we have spoken to –we would love to hear the feedback regardless about the experience.
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