Paradigm Secures $27M to Drive Phase 3 Knee Osteoarthritis Breakthrough

Funding Milestone for Paradigm’s Phase 3 Knee Osteoarthritis Trial

Paradigm Biopharmaceuticals Ltd (ASX – PAR) has secured a significant USD $27 million (AUD $41.2 million) convertible note facility from New York-based Obsidian Global Partners, marking a critical step in advancing its global Phase 3 clinical trial of injectable pentosan polysulfate sodium (iPPS) for knee osteoarthritis. This funding is designed to underpin the company’s clinical execution through key milestones, including full site activation across Australia and the United States, complete patient recruitment, and an interim data readout expected by mid-2026.

The initial tranche of USD $7 million has already been drawn down, providing immediate capital to support patient recruitment, trial operations, and regulatory activities. Paradigm’s Managing Director, Paul Rennie, emphasised the strategic value of the facility, highlighting its flexibility and relatively low cost of capital compared to other funding options. This financial backing ensures Paradigm can maintain momentum without compromising future capital raising strategies.

Convertible Note Terms and Strategic Flexibility

The convertible note facility is structured with a 24-month maturity and conversion prices linked closely to Paradigm’s market share price, offering Obsidian the option to convert notes into ordinary shares at predetermined prices. The agreement includes safeguards such as shareholding caps and restrictions on share sales to mitigate dilution risks. Additionally, Paradigm has issued 8 million placement shares to Obsidian as collateral, which can offset future share issuances, further aligning interests.

Obsidian Global Partners brings a track record of supporting growth-stage biotech companies, and its investment signals confidence in Paradigm’s late-stage development program and commercial strategy. Ari Morris, Managing Partner at Obsidian, noted the potential of iPPS in addressing a large, underserved market for osteoarthritis and chronic pain.

Clinical Progress and Upcoming Milestones

The PARA_OA_012 Phase 3 trial is a multi-national, randomized, double-blind, placebo-controlled study enrolling 466 participants with moderate-to-severe knee osteoarthritis. The primary endpoint focuses on pain reduction at Day 112, with secondary measures including function scores and joint structural assessments. Paradigm is on track to complete patient recruitment within 12 months, supported by a clinical research organisation with robust data management capabilities.

The mid-2026 interim analysis represents a pivotal event for Paradigm. Positive interim data could significantly de-risk the program and enhance investor confidence, potentially driving a re-rating of the company’s valuation. However, the company acknowledges that even if interim results are less supportive, achieving the primary endpoints by trial completion remains possible.

Looking Ahead

Paradigm will continue to update the market on site activations and patient enrolments, with an investor webinar scheduled to discuss the funding and recent corporate developments. The convertible note facility not only secures the company’s immediate funding needs but also preserves strategic optionality for future capital raises or commercial partnerships, positioning Paradigm to navigate the critical final stages of its Phase 3 program with confidence.