Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Since launching , YIG has published articles relating to commodities (Cobalt) and Tech companies. Now, YIG has a new and exciting list of companies that will be assessed, to give our members an advantage in the market. We are talking about the Pharmaceutical and Biotechnological stock industry . Today we discuss the potential future of Paradigm Bio-Pharmaceutical (PAR).
PAR focuses on repurposing old drugs, such as Pentosan polysulfate sodium (PPS) to improve medical treatment for osteoarthritis (OA). The complexity, financial investment, and timeline behind approving repurposed drugs are substantially shorter than new medicines. Primarily, because of the drugs historical safety, existing manufacturing processes, and market results.
Repurposing drugs involves the following process:
Stage 1: Researchers propose a repurposed drug
Stage 2: Preclinical research
- Researchers obtain funding to validate that their repurposed drug will satisfy an unmet medical need
Stage 3: Clinical research
- The drug is tested on humans to measure its safety
Stage 4: FDA Approval
- FDA approval means the drug is safe and effective in treating the unmet medical need
PAR is currently at $2.52 per share (24/09/2019). Around the same time, last year PAR was trading at 0.88 cents a share (25/09/2019). Instead of just looking at the increase over the year, it is more important to understand why the be stock has spiked at certain points within the year .
During May 2019 PAR launched a phased 2 clinical trial of their OA drug Zilosul. Of the 205 patients treated, PAR found that Zilosul reduced pain by over 50% for patients with knee OA. Paradigms promising results provided real-world evidence that Zilosul is a safe and effective drug that reduces OA pain. In turn, these clinical results increased investor confidence in PAR, causing the share price to increase.
Furthermore, in August, PAR’s clinical trial demonstrated how Zilosul could also slow cartilage degradation. What is cartilage degradation? Well, it is when the cushiony lubricant between bones (cartilage) wears away, causing inflammation as the bones directly contact. Cartilage degradation is an effect of osteoarthritis. Therefore, these results illustrated how Zilosul not only reduces pain for OA patients but also protects cartilage from progressive deterioration.
Just this month, Zilosul received clearance from the US Food and Drug Administration (FDA). FDA clearance is a critical hurdle to overcome in the process of repurposing a drug. Primarily, because FDA clearance validates both drug safety and that it successfully responds to the unmet medical need. The unmet medical need is the unavailability of registered treatments to reduce osteoarthritis .Therefore, FDA clearance on Zilosul increased investor confidence that Paradigm, will be able to bring the drug to the market. In turn, the FDA clearance increased both the demand for the PAR and the share price.
So, where to from now?
The increase in share price (2018-2019) was a mirrored response to the significant medical progress of Zilosul. However, now that the FDA approval is still in a 30-day review, we can expect some levelling off or slight decrease in the share price. PAR did report a $2.45 million operating cash loss for 2ndquarter of 2019. However, high costs and minimal cash is the nature of this industry as the development of the drug initially requires significant capital outlay.
If Paradigm can bring Zilosul to market, then investors could instantly see some eye watering returns. Primarily because the OA market represents 13% of the world’s population with an American market size of $5 billion US a year.
Furthermore, Paradigms main OA competitor Tanezumab, has experienced mixed results from their clinical trials. Tanezumab’s delay could allow Paradigm to gain the first market foothold.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Asscoiate of YIG