Paradigm Biopharmaceuticals’ flagship drug Zilosul will be in Phase 3 in 2025

Paradigm Biopharmaceuticals (ASX:PAR) has been listed for nearly a decade with the goal of bringing its flagship drug pentosan polysulfate sodum (PPS) (now known as Zilosul) to market. It is still a couple of years away, but is about to make a major step towards this goal in starting a Phase 3 trial. And we could have interim results before this calendar year is done.

What is so special about Zilosul?

Zilosul is not just a symptom-relieving drug, it is a condition-easing drug. It blocks and inhibits inhibiting cartilage-degrading enzymes. These include ADAMTS-4, ADAMTS-5a MMP-13 and MMP-3b. In so doing, it prevents further cartilage damage, reduces signs and symptoms of osteoarthritis and increases blood flow.

It offer significant hope for people suffering from osteoarthritis, which is the most prevalant joint disease, impacting up to 16% of people in the developed world. Paradigm has assessed the market opportunity to be US$27bn, with the US and China accounting for nearly $17bn of this.

Although there is no shortage of existing treatments, many have shortcomings including the need for frequent administration or being opioid or steroid based. Most importantly, they just relieve symptoms as opposed to treating the underlying pathology of the disease.

Zilosul is about to enter Phase III

Zilosul is entering Phase III off the back of multiple clinical trials, with the most notable being a Phase II trial in osteoarthritis. The data was positive with key endpoints of the study being met and patients reporting improvements in pain as well as an improvement in the thickness and volume of cartilages.

Paradigm has already completed a dose selection, which was considered part of the trial. This stage determined 2mg/kg twice weekly as the ideal dose selection for Zilosul.

The trial will see 466 patients with half receiving the pre-determined dosage of Zilosul and the other half of patients receiving the chosen regimen and 233 receiving placebo. The treatment duration will be 6 weeks, with the study duration being 64 weeks. Patients will visit twice weekly during treatment and then be followed up every 4-6 weeks for the rest of the study.

The primary endpoint of the trial is a change from baseline in pain. This will be assessed by a weekly ADP (Average Daily Pain) score on the numeric scale (NRS) 11-point (0-10) scale. Secondary endpoints include pain and functional assessments at multiple timepoints up to Day 404, the Patient Global Impression of Change (PGIC) and structural changes as measured by MRI and X-Ray.

Recruitment is planned to start in Australia in the current quarter (the March quarter of 2025) with the US in the next one (the June quarter).

What next?

Given initial results will be derived at the 56-day mark, we could see interim results before Christmas. The company will need to complete all the patients before submitting to the FDA, which should be 1 year after the final patient is enrolled. Thereafter, the FDA could take up to 9 months to give an answer.

Assuming this schedule is met, this could see Zilosul commercialised in the first half of CY28. This may seem like a distant horizon, but Zilosul is closer to market than most other drugs that ASX biotechs are working on.

The company also aspires to obtain TGA approval, although its efforts to obtain approval through fast-tracked pathway (a provisional determination application) has been unsuccessful and it will need to seek approval through the conventional pathway. Although the TGA acknowledged there was sufficient evidence to support progression with the company’s clinical endeavours, the regulator could not provide a Fast-Track because minor or mild osteoarthritis is not seriously debilitating – the degree necessary to support fast-tracked approval.

Pitt Street Research just released a report on Paradigm

Our friends at Pitt Street Research cover Paradigm Biopharmaceuticals and have updated their valuation of Paradigm. Pitt Street previously valued Paradigm at $227.9m in a base case and $318.2m in a bull case. These equate to A$0.76 per share in the base case and A$1.06 per share in the bull case, based on 299.8m shares outstanding.

Now, it values PAR at $341.2m in its base case and $467.9m in its bull case. These amount to $0.87 per share and $1.19 per share based upon 391.9m diluted shares on issue. This was using a DCF model assuming on-schedule commercialisation of Zilosul. The model was updated to reflect the accelerated time frame, but also the number of shares on issue. We encourage our readers to check out the report for more information on the company.

Conclusion

Paradigm isn’t the closest ASX biotech stock to commercialisation, but it is closer than many of its peers. It is in the final clinical trial needed before regulatory approval. It is easy to disregard the company because there are existing ‘treatments’ for the condition it is treating, but Zilosul represents a substantial upgrade as it targets the condition directly and the clinical data to date has shown just that.

Paradigm is a client of Pitt Street Research.

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