Fifty One Capital updated report, page-34

Yes Morgans have a "reduce" today on PAR:

Paradigm BiopharmaceuticalA win already priced in

■ PAR is a clinical stage biopharmaceutical company focused on the treatment oforthopaedic and viral arthritis through its repurposed drug pentosane polysulfatesodium (iPPS).

■ The outcome of the OA trial before EOCY18 is expected to generate significantinterest as a non-opioid and non-steroid based treatment.

■ Strong SAS results to date have spurred a rally in the share price over the last 12months, and we believe high levels of trial success are already priced in.

■ We initiate coverage on PAR with a Reduce recommendation and valuation rangeof A$0.16 to A$2.10 and price target of A$0.89. We note an investment in PAR isappropriate for investors with a higher risk profile.

Valuation range reflects binary natureWe have run a number of scenarios assuming different outcomes including: low (trialfailure), current state (Ph2 pending), current state (Ph2 success), and a high case(unrisked) scenario. The valuation range between scenarios reflects the binary nature ofthe asset and consequently the large risk/reward profile it presents. Based on thesuccesses of the SAS program to date and subsequent rally in the share price, webelieve the market is already factoring in a high chance of success of the OA trial.

Investment view – taking profits ahead of binary eventWe initiate coverage on PAR with a risked valuation range of A$0.16 (Ph2 failure) toA$2.10 (unrisked commercialised). While it isn’t often investors get a significant readthroughinto the potential efficacy of a drug going through a double-blind trial, the rallyover the last 12 months has increased potential risks to the downside if success is notachieved. We ultimately view trial success as the most likely scenario based on thestrong SAS outcomes to date, although set our price target on a risk-weighted basis of38% high case and 62% low case of which the high case weight representing theaverage success rate of success in Phase 2 trials. With significant value resting onmany unknowns including size and scale of potential partnership and milestone details,we advocate investors to take profits into the recent rally and await further clarity posttop-line results before reviewing and de-risking further. Risks to the upside relate tohigher than forecast partnership deal terms. Due to the risks associated with regulatoryclearance of pharmaceutical drugs, we initiate with a Reduce recommendation andA$0.89 target price. We note this investment is appropriate for investors with a higherrisk-profile.