So now we have the details of the raising @GazD and @Slomo I find myself with mixed emotions once again re Paradigm.

As a general rule I am always disappointed when companies go placement only and don't offer their retail shareholders a crack.

That said, looking at this one it seems like they only need a small amount of cash now to get the Phase 3 started, as they had the capacity to raise about $35 million after the AGM resolution. My guess is they are very confident that the 65c options will be in the money in the next 12 months, so they can raise another $50 million plus is a less dilutive way. And/or the potential partner deals are pretty close and they will have enough funds from them to get Zilosul to market.

Still a few things that could go wrong. It's no certainty yet. BUT...I find myself feeling more confident now about multi bagging from here over the next 12 to 24 months and the risks are certainly lower than when I first invested in this opportunity.

Will continue to watch closely and cross the zeros on my current tax losses, holding this to date!

Agreed @Karmast this does look a little more attractive... Such a mind&@^# because I've followed this business (and held it) for > 5 years.

Trying to distil my thoughts:

• I have always believed in the science and I think the trial is likely to demonstrate a clinically effective drug with respect to pain, function and probably even some degree of disease modification. An approved, effective medication for OA is likely to be incredibly valuable.

• I've been incredibly frustrated with the cashburn to this point and the frequent capital raises at increasingly lower price points whilst management were paid salaries ~ 10 times the average income in Australia. This frustration I believe is based on some degree of mismanagement which warrants caution going forward but I'm also trying to be rational and not miss an opportunity because I'm so jaded.
• My main concern with the business as it stood prior to this raising was around actually getting the funds to do the phase 3. Personally, I would have liked to see them raise funds enough to see the study through but then again that would have been even more dilutive so perhaps I'm wrong there. It is likely that the SP might respond to some milestones with regards to the pivotal clinical trial which would open up options and/or provide leverage for partnering.
• What to do:
• I hold far less shares than I did before. Would I like an option on more shares if things progress well. Yes. Am I prepared to put down more cash now for that opportunity... Undecided but leaning towards yes... Wouldn't exceed a 1% weighting in my portfolio though.

Interested in your thoughts also @Slomo and anybody else following this business.

@Karmast and @GazD, my PAR strategy worked perfectly except for one fatal flaw - no $30k SPP for retail...

I would have taken the full $30k @ $0.40 for a 34%, $10k paper profit at today's close.

That is kind of what I had in mind, but no SPP, so no easy arb paper profit.

And no cheap access to a de-risked high potential outcome.

So this is still a very small (less than 0.5%) holding for me.

My plan from here is to keep holding and see where this all goes.

I'm expecting to get the 1 for 4 loyalty options ($0.65 strike w expiry @ end Jan-26).

If the price breaches $0.65 I will then exercise to get the 1 for 2 piggy back options ($1.00 strike w expiry @ end Jan-28).

The only question I have now is do I increase my holding prior to end Jan-25 (Record date) to get exposure to more options.

My default is no at current price but if the price falls and I do enough work to get comfortable with the risk reward at prevailing prices I might top up...

Disc: Held

@GazD , @Slomo and @Karmast I have followed this business for the last 5 years, mostly because I am a physio and anything that can help OA as much as this is reported could do would be a goldmine as the TAM is massive. In that 5 years it has had a -80%, not dissimilar to many other potentially huge biotechs. Fortunately for me while I was researching it, it fell from about $4 to $1.50, so I never got in on the dream it was going to be a game changer. 5 years and they are only just starting phase 3. Could get exciting but could also be painful. Maybe the hype of results about to come out could make it a trade for me. I do keep a tiny amount of my portfolio for things like this but it is fully taken for now. Good luck and keep us all posted with trail results!

Nessy

@nessy yes it’s hard not to see the potential when you see patients with OA all the time… I’ll definitely be looking at trial results so if @Slomo ot @Karmast dont get there first you’ll get them from me!!

Thanks @GazD and agreed @Slomo and I have the same view/plan re the options and piggybacks. I bought some more last week at 50c so won't be adding anymore. Would have preferred an SPP discount instead but not to be.

And mgt are overpaid for what they have delivered in the past few years and I have been voting against the rem and LTI etc for a few years now. This year, not enough others voted against though so the rem and LTI sailed through, sending a message to Paul Rennie that it's OK sadly...

This business is hard to value of course but if you look at most of the other Aussie biotechs, that are in phase 3 trials, most have a market cap of $500 million +. That's at least 2.5 times where PAR currently sits. And most of these are for much smaller opportunities than OA. So it's not hard to see a re-rating over the next 12 months, if we get a deal or two onboard and the preliminary phase 3 results support what has been seen to date.

I've had another look at the structure of this Raise.

PAR claim they need an estimated US$50-60m to run Phase 3 trials over an estimated 2 years.

Call this AU$80-95m (@ USD FX rate of $0.63).

If they end up needing < $100m and Phase 3 takes < 2 years, this will be a welcome turn in form from over promising and under delivering (including dangerously miscalculating their cash requirements).

This ignores the costs of commercialisation if successful, but I think that is appropriate as they will have no shortage of suitors at that stage, so it will likely be someone else taking the approved drug to market.

Plus they need to keep the lights on, pay staff, keep the R&D going on the other indication, etc

They had AU$13m at the last App 4C (Sep-24). Without Phase 3 Trial expenses, I estimate that would last them 6-9 months.

Cap Raise

They just raised $16m via placement of 40m shares at $0.40.

This gives them $29m before raise costs.

This is clearly not enough and at the AGM last month they said they were focused on finding a non-dilutive funding solution.

As I mentioned here, they were hoping for trial partners to take 5-6% of eventual revenues, or similar arrangement.

That is probably still their hope and expectation.

Convertible Notes issuance was also flagged, as they were approached with this pitch.

Options

The hope seems to be that their current $29m will give them time to start the trial and pump the price to ... over $0.65.

390m Shares on Issue post raise will be eligible for (1 for 4) Loyalty Options at Jun-25 Record Date, with Strike of $0.65 and 12 month expiry @ Jan-26.

If exercised, these would raise $63m at about the time they would otherwise run out of cash (mid 2025).

Still not enough but should get them halfway or more in terms of time (keeping the lights on) and trial costs.

This would likely coincide with trial read outs and other milestones to be announced along the way to hopefully pump the price over $1.00, because...

If Loyalty Options are exercised, they would also trigger (1 for 2) piggy back options with strike of $1.00 and expiry @ Jan-28.

If piggy back options are all exercised, this would raise another $49m hopefully before they need it.

If all goes well, this total of $127m being raised would see them through to Phase 3 success and FDA Approval with a soaring share price and offers from big pharma looking to add approved drugs to their distribution networks.

Opportunity

Paul (CEO & Exec Chair) is clearly an optimist (he needs to be), has a sense of humour (gallows mainly) and evangelises the faithful well at times (the promised land is just over that horizon).

This $127m raise if he pulls it off staggered as 12% @ $0.40, 50% @ $0.65 and 38% @ $1.00 will increase shares on issue by more than 50%.

He has been suffering through dilution more than most but remains the largest shareholder with just 6%.

If he can pull this off, I expect he has a big payday coming.

Avoiding further unnecessary dilution is key to that.

I expect the structure of this raise is designed to achieve this - or at least to improve his bargaining position when negotiating with trial partners.

Paul didn't seem to participate in the placement (was not disclosed in any case), but that was just 12% of the total targeted raise and he will participate in the remaining 88% of the raise via his ITM options should they get triggered.

Getting the share price above $0.65 between Jan and Jun-25 is a ticket to PAR steering their own ship for a little while longer.

This is a 20% increase from last nights close @ $0.535.

I expect that he will be doing everything in his power to make that happen...

Agree with all from you both @Karmast and @Slomo .

noting the share price surpassing 65 cents to ensure funding… how did they manage to increase the price from ~20 cents to the raise price?? Most of that rise occurred with no announcements…

@GazD We will never know for sure but the share price started moving up from the 20c range a week or so before the FDA approval announcement came out. Maybe it was pure coincidence! Or maybe a few folks knew in advance and a few fundies knew too...

Once the announcement was public that was an obvious catalyst for further support of the share price. Most days over this couple of week period, there were 3 to 4 times as many buy orders as sell orders whenever I looked.

Still remember selling at $2 and taking a small loss. Wonder if we will see those levels again

There's also the question on how quickly the recruitment of Phase III completes.