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Is Paradigm Biopharmaceuticals the share market’s next huge winner?

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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has rocketed over 2019 as excitement mounts over the biotech researcher’s potential to commercialise drugs designed to treat inflammatory conditions such as osteoarthritis.

On September 10 2019 it told investors that its ‘investigational new drug’ (IND) application has been cleared by the US healthcare regulator the FDA.

In effect it now has the green light to proceed with Phase III trials that could provide the clinical evidence needed to commercialise its pentosan polysulfate sodium-based drug to treat osteoarthritis.

According to Paradigm bulls or evangelists its pentosan polysulfate sodium-based drug has more than 1,000 possible indications in treating common human medical conditions. So in theory the company has some eye-watering potential.

As at 30 June 2019 it had $73.2 million cash on hand to show it’s a credible operator that the market has now bid up to a value around $491 million based on a $2.55 share price and around 192.5 million shares issue.

It also has the option to partner with big pharma to shoulder some of the high costs of Phase III and other clinical trials. Any partnership would be in return for some sort of financial or equity-related interest. 

The company has no sales as yet and remains a speculative bet only suitable for experienced investors confident in their research.

As a final disclaimer it’s also worth remembering these kind of stocks can often rise on excitement before crashing on reality, as such they can fall into the ‘buy the rumour, sell the news’ category. 

Other speccy biotechs for the punters include Mesoblast Limited (ASX: MSB) and Next Science Ltd (ASX: NXS).

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As of 2.11.2020

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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