For investors, trading in biotech and drug development companies takes patience. The review processes can be slow, clinical trial data take time to evaluate, and even logistical problems this year have wreaked havoc on companies getting supplies. Still, while patience can be a virtue, the rewards can be lucrative. And if PAO Group (OTC Pink: PAOG) gets its way, it may be able to deliver substantial rewards to shareholders by the end of this year. Better still, those gains could come as early as this quarter.
Last month, PAOG reiterated its plan to launch its line of CBD Nutraceuticals by the end of this year. If they stay on track, they will target a massive industry that in 2020 was estimated to be a $5.2 billion market opportunity. Still, while it's big now, analysts predict the CBD nutraceuticals market will grow by more than 200% toward $16.4 billion by 2027. The news gets better for PAOG, with the company's programs targeting the right indications at the right time. And they are letting investors know of the promise ahead.
Its update in June highlighted the contributions of their partners Alkame Holdings, Inc. (ALKM) and North American Cannabis Holdings, Inc. (USMJ) toward a collaborative effort to develop innovative CBD-based therapeutics to capitalize on several treatment opportunities. In addition, PAOG provided additional detail about its planned stock distribution to PURA (OTC Pink: PURA) shareholders connected with PAOG's acquisition of PURA's cannabis cultivation operation. According to the update, final approvals continue to make their way through the FINRA processes. PAOG will provide further updates as the process winds toward its distribution date.
As that paperwork travels through the processes, the more excellent news is that on the operations front, PAOG is better positioned than ever to create substantial value during the remainder of 2021.
A $15B CBD Offers PAOG Substantial Opportunities
In particular, PAOG's June update provided details on its developments to bring its CBD-based nutraceutical products line to market. The better news is that PAOG reaffirmed that these therapeutics remain on track to be released commercially by the end of 2021 and target high-value indications.
The first CBD Nutraceutical under development is CBD RELAX-RX, targeting patient treatment in the multi-billion dollar anxiety and depression market. The great news there is that an increasing number of patient subsets continue to turn toward CBD-based treatments over pharmaceutical options to treat often debilitating conditions due to depression and anxiety.
Meeting that demand, PAOG intends to leverage its specially formulated CBD RELAX-RX to provide a best-in-class solution. Its extraction process adds credibility to that expectation. Some in the sector say that RELAX-RX uses an extract comparable to GW Pharma's, which was sold to Jazz Pharmaceuticals (NASDAQ: JAZZ) for roughly $7 billion last year.
Its other program, RespRx, targets CBD-based therapeutics to treat chronic obstructive pulmonary disease (COPD). Like the depression and anxiety treatment markets, this one also targets a multi-billion dollar opportunity. The good news for this program is that PAOG is leveraging data from studies conducted in 2015 suggesting that CBD could help open the bronchial passages, is well tolerated, and lacks the often severe side effects associated with current standards of care.
In fact, many believe that once an effective CBD-based alternative comes to market, it can earn a substantial market share. PAOG intends to win its share of that prize. Thus, the prize can come sooner rather than later in the race for a natural therapeutic CBD alternative. Best of all, there will be multiple winners.
By the way, its RespRX therapeutic is showing promise. The CBD-based treatment is derived from a patented process of extracting cannabidiol - "METHOD AND APPARATUS FOR PROCESSING HERBACEOUS PLANT MATERIALS INCLUDING THE CANNABIS PLANT" (US Patent No. 9,199,960) that produces an extract said to rival the quality of one of the industry's pioneers, GW Pharma. The better news is that PAOG could leverage value from that IP by monetizing the RespRX platform and extraction process through licensing agreements.
Best case, PAOG could generate potentially substantial revenues through third-party agreements. They could then use that money to fund additional product development, license them, and develop multiple cash-cow operations. However, while that could be an option, if either of its therapeutics emerges from the clinic showing substantial benefit, PAOG won't have too hard an issue finding investors to back full development and marketing of the product.
More to Like At PAOG
Although its CBD therapeutics program earns most of the attention these days, its EVERx CBD Sports Water, in collaboration with Puration, Inc., can also be a near-term value driver. The CBD-based water capitalizes on market trends that demonstrate increased interest in CBD and lesser carbonated beverage consumption. The water combines the best of both worlds- non-carbonated CBD. And to support that product, PAOG recently announced the development of a sugar-free version of EVERx CBD Sports Water, opening the market opportunity to a broad-based audience. PAOG expects to accelerate the development and distribution of both products this year.
Combining its CBD therapeutics programs with its EVERx CBD Sports water, the rest of 2021 can be promising to PAOG and lucrative to investors.
Looking Forward To 2H 2021
Indeed, heading into the back half of this year, both near and long-term catalysts are in focus. And that merits investment consideration no matter one's investment threshold. Still, with PAOG nearing some potentially company-changing news, making an investment consideration could be more beneficial before the company publishes news. After all, at less than a penny a share, investors can potentially gobble up stock by the millions, sending the PAOG share price substantially higher in the process.
Keep in mind, too, national news can help push the stock higher as well. Already, the loosening of regulations related to cannabis, hemp, and CBD is allowing PAOG to expand its operations into new sectors. Surprisingly, that value is not yet priced into PAOG stock. But it may soon be.
Moreover, more amenable approval processes will help PAOG and its partners get products to market quicker and potentially help them attract new collaborative opportunities from businesses previously wary of working in the sector.
Keep this in mind, too- PAOG isn't going it alone. PAOG hired Veristat, a premier contract research organization (CRO) that can accelerate program development and assist PAOG's products in earning regulatory approval more quickly. The engagement is a critical milestone reached that can have substantial positive implications and already validates its underlying research. Thus, if Veristat is willing to support and represent the programs, investors may be wise to do so as well.
Bottom line: On many fronts, PAOG is positioned for a breakout during the back half of this year. And as it nears the planned release of its CBD nutraceuticals, the share price could move considerably higher. And deservedly so if they stay on pace. Moreover, the value from its long-term development plan, including its CBD sports water, engagement with a CRO, partnerships, and potential licensing of assets, make the investment proposition more compelling than ever.
Thus, at current levels, adding PAOG to a risk-balanced portfolio may be a wise and timely decision.
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