Paradigm Biopharmaceuticals Ltd (ASX:PAR) offers substantial share price catalysts as the company pursues a pivotal Phase 3 trial to investigate Zilosul or injectable pentosan polysulfate sodium (iPPS) as a treatment for knee osteoarthritis (kOA), according to an initiation report by Edison Investment Research.
In making the case for Paradigm, Edison’s analysts wrote that kOA is a globally prevalent condition with a large commercial potential with the iPPS known to have a safety profile that de-risks development somewhat.
The US Centers for Disease Control and Prevention (CDC) estimates that more than 32.5 million individuals in the United States are living with some form of the disease, a number that is expected to increase driven by an ageing population and rising obesity levels.
“To increase the likelihood of iPPS approval in osteoarthritis (OA), Paradigm has constructed a comprehensive late-stage clinical program, which is supported by previous human clinical and real-world evidence and is intended to identify the acute and chronic clinical impact of the drug,” Edison’s analysts wrote in the report.
“As a result, we expect many share price catalysts over CY23-25,” they added.
Paradigm is currently running a randomised, triple-blind Phase 3 trial and a corresponding duration of treatment effect extension study, which began in October 2022.
The company intends to initiate a separate Phase 3 confirmatory trial, which will also be followed by its own extension study in 2023. A separate retreatment trial is also planned to assess the feasibility of multiple treatment regimens of iPPS.
A Phase 2 biomarker study, which met its primary endpoints in October 2022, is currently in the follow-up stage. In addition, the company is conducting supportive canine model studies and also plans a separate human study to investigate the possibility of effectiveness in hip OA.
Paradigm expects this clinical programme to support a New Drug Application (NDA) filing with the US Food and Drug Administration at the end of 2025.
Following are the excerpts from Edison’s initiation report:
Development supported by ample clinical data
Paradigm’s development program in kOA is supported by data from several Phase 2 studies, the most recent of which demonstrated a clinically relevant change in synovial joint biomarkers associated with pain, inflammation and cartilage degradation, and patient reported pain and function scores. We see this as encouraging support for iPPS’s utility; however, long-term efficacy and safety data from Phase 3 will be crucial in fully establishing the drug’s impact.
Disease modification would maximise impact
In our view, the key to maximising Zilosul’s commercial success will be the demonstration of a disease-modifying profile in kOA, which we believe is the primary design of the clinical program. If no disease modification is observed, iPPS could still form an important part of OA treatment regimens as a symptomatic treatment for pain and stiffness. Altogether, management estimates the opportunity for iPPS in knee and hip OA could be over US$10 billion per annum.
R&D expenses to increase; funded into 2024
R&D expenditure constitutes over 80% of Paradigm’s total operating expenses, resulting in an operating cash burn of $32.2 million in FY22. Management expects higher cash burn in future as the company progress its Phase 3 program. Considering the current run-rate and recent equity financing, management estimates a cash runway into Q1 2024; however, the company is actively pursuing an out-licensing partnership, payments from which could extend this runway.