Paradigm Biopharmaceuetical posted its 4Q20 cashflow report with the most significant item being an uptick in R&D expenses, according to Morgans.
These expenses of -$4.7m were incurred as a number of studies and regulatory submissions are imminent.
The broker is concerned about a number of issues including large management and founder selling of shares and the sudden departure of the chairman. The analyst also sees risk to the viability of the drug, named Ph2b, as a commercial asset with its low IP value and heading into an expensive Phase 3 trial.
Morgans also suggests delays are likely to occur to clinical timelines as a result of covid-19. Additionally, the analyst sees downside risk ahead of filing the investigational new drug (IND) application for the Phase 3 trial by the end of CY20.
All this, combined with recent share price strength, has led Morgans to downgrade the recommendation to Reduce from Hold. The target price is maintained at $1.74.
Sector: Pharmaceuticals, Biotechnology & Life Sciences.
Target price is $1.74.Current Price is $3.24. Difference: ($1.50) – (brackets indicate current price is over target). If PAR meets the Morgans target it will return approximately -86% (excluding dividends, fees and charges – negative figures indicate an expected loss).