Paradigm Biopharmaceuticals has entered voluntary administration. The Melbourne drug developer made the move after an interim result halted its Phase 3 trial, and now hopes to restructure its debts while assessing what the trial data can still offer.
The company told investors that its board had appointed Hayden White and Chris Pattinson of FTI Consulting as voluntary administrators. The appointment took effect on 29 September under section 436A of the Corporations Act 2001.
The board said it acted with the support of Obsidian Global GP, LLC, and that the decision followed talks with Obsidian about "the financial implications of the interim clinical trial outcome and potential restructuring options."
Paradigm has already said its Phase 3 PARA_OA_012 trial "will not proceed as planned" because the interim efficacy result fell below the threshold required to continue. The board said Paradigm needs time to resolve "the mismatch between current liabilities payable in the short term and the inherent long-term value of the intellectual property portfolio."
The company said the board plans to work with the administrators, Obsidian and other stakeholders on a proposal for a deed of company arrangement. A deed of this kind is an agreement between a company and its creditors that sets out how it will deal with its affairs and debts. The company said the aim is "to restructure the Company's liabilities, preserve its intellectual property and available clinical data, and assess a viable path forward for the business."
Creditors would have to approve any deed, and it would also need to be signed and any other approvals obtained. The company was clear about the uncertainty. "There is no certainty that a DOCA will be approved or implemented, or what the outcome will be for shareholders and creditors," it said.
The administrators will independently assess its finances and report to creditors on the options available. The directors' powers are suspended for the duration of the administration, although the board will help with the assessment and with any restructuring proposals. Paradigm's shares were already suspended from trading and are expected to remain so until the administration ends.
Paradigm said it intends to keep analysing the study data and reviewing its clinical program. It said the work is meant "to improve understanding of the interim outcome, including the impact of missing data, and inform the assessment of future development and commercial options."
Paradigm expects the clinical review and restructuring to take at least eight weeks from the administrators' appointment. It warned that "the process may take longer."
The directors thanked employees and consultants for "their tireless work in advancing the clinical program and supporting the Company through these difficult circumstances." They also acknowledged the cost to others. "The Board recognises the impact of this outcome on shareholders, employees, creditors and clinical trial participants, and appreciates their support," the company said.
