Paradigm Biopharmaceuticals (ASX: PAR) has entered a binding agreement with AVet Health for the co-development and licensing of an oral osteoarthritis therapy combining pentosan polysulfate sodium (PPS) with a COX-2 inhibitor for companion animals. The Paradigm AVet Veterinary OA Deal provides a non-dilutive pathway to advance the veterinary asset whilst maintaining full focus on the company’s pivotal Phase 3 human trial.
Paradigm secures veterinary licensing deal for oral osteoarthritis therapy
Under the binding term sheet signed on 9 February 2026, AVet Health receives exclusive commercialisation rights for Australia and New Zealand, with first right of refusal for all other territories excluding the United States. Paradigm retains full rights to the US veterinary market, preserving optionality in the world’s largest animal health market.
The agreement establishes dual revenue streams for Paradigm. AVet will pay up to A$1 million in development milestone payments, structured across three stages. Following successful product registration with the Australian Pesticides and Veterinary Medicines Authority (APVMA), Paradigm will receive tiered royalties on net sales: 10% on sales up to A$10 million, escalating to 20% on sales exceeding that threshold.
The licensing agreement, once executed, will run for 15 years post-registration with the APVMA. The parties have committed to executing a definitive licensing agreement within six months of the binding term sheet.
This structure allows Paradigm to advance its veterinary osteoarthritis programme without diluting existing shareholders, whilst maintaining full capital allocation towards its Phase 3 PARAOA012 clinical trial of Zilosul® for moderate-to-severe knee osteoarthritis in humans.
What is a PPS + COX-2 inhibitor combination therapy?
The oral formulation combines two complementary mechanisms to address osteoarthritis in companion animals. PPS, a compound with potential disease-modifying properties, is paired with a COX-2 inhibitor that reduces inflammation and pain.
This represents a first-in-class oral approach. Existing injectable PPS products are already marketed in the veterinary space, but require clinic-based administration. The oral format enables at-home treatment, addressing compliance challenges in long-term companion animal care.
The combination may allow for lower NSAID doses compared to standard COX-2 inhibitor monotherapy. This dosing strategy could reduce the risk of gastrointestinal, renal, and cardiovascular complications associated with prolonged NSAID use in dogs. The therapy is designed to address both chronic osteoarthritis pain and acute flare-ups.
Deal structure and milestone payments
Paradigm will fund the veterinary development programme through a multi-stage Development Plan, with Stage 1 activities estimated to cost approximately A$1.0 million. AVet will contribute in-kind resources including project management, scientific oversight, and access to the Drug Master File of commonly used COX-2 inhibitors.
| Milestone | Payment | Trigger Event |
|---|---|---|
| Binding term sheet/definitive agreement | A$200,000 | Earlier of execution or one year from signing |
| Stage 1 formulation completion | A$300,000 | Successful completion of formulation development |
| APVMA registration | A$500,000 | Product approval by regulatory authority |
AVet Health brings substantial regulatory and commercialisation capabilities to the partnership. The company has registered over 95 products with the APVMA, including COX-2 inhibitors such as meloxicam, and maintains access to supporting Drug Master Files. This regulatory infrastructure positions AVet to streamline formulation development and filing processes under APVMA standards.
Paradigm retains control over manufacturing and will act as the supply partner under the licensing agreement. This vertical integration preserves manufacturing margins and quality oversight.
Market opportunity in veterinary osteoarthritis
The global veterinary analgesics and anti-inflammatory market was valued at approximately USD 2.4 billion in 2024. The market is projected to reach USD 4.6 billion by 2034, representing an approximate 6.5% compound annual growth rate over the forecast period.
Companion animals, particularly dogs, represent a significant segment of unmet need in osteoarthritis care. Existing NSAID treatments carry long-term safety risks and are limited in their ability to address underlying disease processes.
AVet’s internal market assessment suggests the oral PPS + COX-2 inhibitor combination may generate in excess of A$10 million per annum in Australia and New Zealand alone. This assessment factors in the addressable population of dogs with osteoarthritis in the ANZ region and the competitive landscape of existing pain management products.
Animal data generated through this collaboration may be incorporated into Paradigm’s broader regulatory package for its human osteoarthritis pipeline, particularly for indications such as mild knee OA and hand OA. This cross-application of veterinary safety and efficacy data could support regulatory submissions in human health markets.
Strategic fit with Paradigm’s OA pipeline
The veterinary agreement complements Paradigm’s broader strategy of addressing the full osteoarthritis spectrum, from early-stage intervention to late-stage disease management. The company’s human pipeline includes:
- Zilosul® (injectable PPS): targeting moderate-to-severe knee OA, currently in global Phase 3 trial
- Pentacoxib™ (oral PPS + COX-2 inhibitor): targeting mild OA in human trials and veterinary applications
- Data generation from the veterinary programme may support regulatory submissions for human applications
The veterinary licensing deal builds non-dilutive shareholder value whilst preserving cash for the pivotal Phase 3 human trial. Paradigm expects interim analysis data from its Phase 3 trial during CY2026, with final readouts anticipated in CY2027.
Paul Rennie, Managing Director
“This agreement enables early generation of formulation and preclinical data that could support both a faster veterinary regulatory pathway via the APVMA and also provide data for our longer-term regulatory package in humans. Importantly, this is being done in a capital-efficient manner, allowing Paradigm to remain fully focused on our pivotal Phase 3 clinical trial of Zilosul® and ongoing commercial interest as we prepare for the interim analysis.”
The partnership with AVet Health creates commercial optionality ahead of key human data readouts whilst advancing a complementary veterinary asset. Paradigm will provide further updates on the veterinary development programme and any additional milestones achieved under the agreement.
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