Bell Potter says this ASX biotech stock could rocket 80%

Investors with a high tolerance for risk may want to check out this stock.

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Paradigm Biopharmaceuticals Ltd (ASX: PAR) shares could have huge upside potential.

That's the view of analysts at Bell Potter, which believe the ASX biotech stock could be a great option for investors with a high tolerance for risk.

What is Paradigm Biopharmaceuticals?

Paradigm Biopharmaceuticals is a biotechnology company focused on repurposing Pentosan Polysulfate Sodium (PPS) for the treatment of osteoarthritis (OA) in the knee.

Bell Potter believes that the global market for a safe, effective treatment that provides superior patient outcomes compared to the standard of care is a "multiple blockbuster."

In fact, it has suggested that market estimates of US$10 billion in annual revenues are likely conservative.

The good news is that the company's recently completed phase II study produced some highly encouraging results, which are worthy of further clinical trials.

What is the broker saying about this ASX biotech stock?

Bell Potter notes that the coming weeks will be pivotal for this ASX biotech stock. This is because it is expecting to receive feedback from the US FDA in relation to its pathway for its treatment. It said:

PAR has a major short term catalyst within weeks being FDA feedback from its recent meeting to discuss the pathway for iPPS. A key discussion point was the design of the proposed phase 3 and confirmatory study for iPPS in osteoarthritis (OA) including the minimal effective dose (2mg twice weekly for 6 weeks). Recent studies in lower doses proved ineffective in the management of pain, hence there is no alternative to this optimal dose. Other than efficacy, the key considerations are toxicity and safety.

The data from several hundred patients treated in various clinical studies, the Special Access Scheme in Australia and non-clinical studies has shown iPPS at the optimal dose to be exceptionally safe with no serious adverse events. Accordingly, we are confident the FDA will approve the minimal effective dose and the proposed trial design.

In light of the above, this morning the broker has reaffirmed its speculative buy rating on the company's shares with a 47 cents price target. Based on its current share price, this implies over 80% upside for investors over the next 12 months.

Though, it is worth remembering that Bell Potter's speculative rating means this is a high risk play. So, investors with a low or normal risk tolerance may want to stay well clear of the ASX biotech stock and focus on more appropriate investment options.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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