Paradigm Secures Up to A$1 Million Milestones and 20% Royalties in Veterinary Osteoarthritis Deal

• Binding term sheet signed for oral PPS + COX-2 inhibitor therapy in veterinary osteoarthritis
• AVet granted exclusive rights in Australia and New Zealand, with first refusal elsewhere except the US
• Paradigm to receive up to A$1 million in development milestones and tiered royalties up to 20%
• Agreement supports early veterinary data generation alongside Paradigm’s Phase 3 human trial
• 15-year licensing term post-registration with Australian regulatory authority

A Strategic Leap into Veterinary Medicine

Paradigm Biopharmaceuticals has taken a significant step expanding its osteoarthritis portfolio beyond human medicine by signing a binding term sheet with AVet Health. This partnership targets the development and exclusive licensing of an oral combination therapy comprising pentosan polysulfate sodium (PPS) and a COX-2 inhibitor for treating osteoarthritis in companion animals across Australia and New Zealand.

The deal positions AVet Health as the exclusive commercial partner in these territories, with a first right of refusal for other markets outside the United States. Paradigm retains the US veterinary rights, maintaining a foothold in a key global market. The agreement outlines milestone payments up to A$1 million and tiered royalties reaching 20% on net sales, reflecting the commercial potential of this novel therapy.

Innovating Osteoarthritis Treatment for Companion Animals

Osteoarthritis remains a prevalent cause of pain and mobility issues in pets, with current treatments often limited by safety concerns and administration challenges. Paradigm’s oral PPS + COX-2 inhibitor combination aims to offer a first-in-class, dual-action approach that not only reduces inflammation and pain but may also modify disease progression. This oral formulation could improve convenience and compliance compared to existing injectable options, addressing a significant unmet need in veterinary care.

The collaboration leverages AVet’s extensive regulatory and commercial expertise in the ANZ veterinary market, including access to drug master files for COX-2 inhibitors, which should streamline development and regulatory approval processes under the Australian Pesticides and Veterinary Medicines Authority (APVMA).

Balancing Veterinary and Human Health Ambitions

While advancing this veterinary program, Paradigm remains focused on its pivotal Phase 3 clinical trial for its human osteoarthritis candidate, Zilosul®. The veterinary data generated through this partnership could also support Paradigm’s broader regulatory strategy for its human pipeline, particularly for mild osteoarthritis indications.

This non-dilutive collaboration provides Paradigm with a capital-efficient pathway to progress its veterinary asset without diverting resources from its core human clinical development. It also opens a new revenue stream in the growing global veterinary analgesics market, valued at USD 2.4 billion in 2024 and expected to nearly double over the next decade.

Looking Ahead

The binding term sheet sets a clear timeline for executing a definitive licensing agreement within six months, with milestone payments tied to formulation development and regulatory registration. If successful, this partnership could establish Paradigm as a notable player in veterinary osteoarthritis treatment, complementing its human health ambitions and delivering value to shareholders through diversified market exposure.

Bottom Line?

Paradigm’s veterinary licensing deal with AVet Health marks a savvy expansion, but execution and regulatory hurdles remain key to unlocking its full potential.

Questions in the middle?

• When will the definitive licensing agreement be executed and what are the key risks to its completion?
• How will the veterinary data influence Paradigm’s human osteoarthritis regulatory submissions?
• What is the commercial outlook and competitive landscape for oral osteoarthritis therapies in the ANZ veterinary market?