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Paradigm share price tanks despite positive clinical trial update

The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is down 7% to $1.95 today, despite the biotech researcher today telling the market that its first ‘investigational new drug’ (IND) application had been approved by the US healthcare regulator the FDA.

This does not mean the FDA has approved a Paradigm drug for potential commercialisation, but rather means the FDA has approved the drug’s safety data and potential use to meet “an unmet clinical need”. In other words Paradigm now has the green light or ‘seal of approval’ to conduct further trials, but there’s no guarantee these will be successful.

As the real challenge of designing successful Phase III clinical trials to meet the FDA’s approval for the commercialisation of a new drug is still ahead of it.

Paradigm flagged that it intends to meet the FDA in the future to launch other NDAs for the treatment of osteoarthritis and “the rare disease mucopolysaccharidosis”. It also plans to meet with the Australian healthcare regulator the TGA to seek provisional approval for undefined products.

At a $1.95 share price it has a market value around $375 million based on 192.2 million shares on issue. As such we can see shareholders are confident this could turn out to be a rare biotech success story. 

Other more speculative biotech businesses heavily backed include Mesoblast limited (ASX: MSB) and Next Science Ltd (ASX: NXS).

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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