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Paradigm reports “ground-breaking” osteoarthritis discovery: Is it the real deal?

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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price could hit a record high this morning after the medical researcher boasted of a “ground breaking” discovery for its drug designed to treat osteoarthritis in the knees. 

According to the company its patented drug Zilosul has been shown to inhibit ‘nerve growth factor’ (NGF) in bone cells in knee osteoarthritis patients and thus reduce pain. It reports that its research has been peer reviewed and published in the international scientific journal PLoS One.

The research also supports Paradigm’s conclusions from its recent Phase II clinical trial into the treatment of pain and cartilage degeneration in knees and supports its regulatory submissions to the U.S. healthcare regulator the FDA. 

Paradigm will need to run a far larger, more expensive, and clinically comprehensive clinical trial into the drug in order to persuade the FDA of its clinical efficacy. 

The biotech also claimed the drug offered a “very attractive commercial opportunity” for ‘big pharma’ to partner with it in funding research and commercialisation. In part it claimed this is because the drug could help meet the need to treat the “opiate addiction” crisis in the US. 

If it can strike a partnership deal with “big pharma” this is likely to be a major positive for the business and stock. 

All this sounds exciting and Paradigm already has a market value around $488 million despite having no material revenues and expensive drug trials ahead of it. Thankfully it did have around $72 million cash on hand as at June 30, 2019. 

As we’re not far from Melbourne Cup Day, Paradigm could be considered one of the ‘favourites’ amongst a field of speccy ASX biotechs looking for eternal glory.

Others include Mesoblast limited (ASX: MSB), Opthea Limited (ASX: OPH), Next Science Ltd (ASX: NXS) and Bionomics Ltd (ASX: BNO). The first three already posting sales and looking worthy of more research for anyone seeking the next biotech blockbuster. 

However, as a word of warning biotech businesses’ share prices can rise for a long time on the rumour or speculation before tumbling spectacularly on the fact.

Along the way different forces are jockeying for position often in possession of different information to turn profits, with any insider selling or unusual volume something to keenly watch for. 

If you’ve done your research on Paradigm then it might be worth a small punt, although I am not a buyer of shares myself. 

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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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