PAO Group Inc. (OTC Pink: PAOG) investors have been patiently waiting for a transformational moment in its history. News released in July may bring that moment closer than ever to happening.
That update indicated that PAOG is nearing the completion of several key development and review milestones, positioning the company closer toward launching its first CBD-based nutraceutical. Once it does, PAOG will immediately become a player in the multi-billion dollar CBD therapeutics market. The excellent news... PAOG's products are close to being fully developed. And they both target substantial market opportunities.
PAOG's updates have been informative. And investors are taking notice. In June, PAOG reiterated that the first of its CBD Nutraceuticals is on track to be released by the end of 2021. Considering that the CBD nutraceuticals market is expected to grow by more than 200% to $16.4 billion by 2027, the company's current share price could skyrocket following a successful launch. Moreover, they have the infrastructure in place to get their products to consumers. That's a value driver in and of itself.
Two companies are involved- Alkame Holdings, Inc. (ALKM) and North American Cannabis Holdings, Inc. (USMJ). Both are working with PAOG to design, develop, package, and distribute the final developed CBD-based therapeutics, both of which target specific and chronic medical conditions. And, because PAOG is already ahead of the game by completing its necessary logistical infrastructure, they stand positioned to capture a significant share of its targeted markets.
Two CBD Nutraceuticals In-Play
PAOG has two products in the works, both utilizing a proprietary CBD extraction process. The company's initial product launch is expected to be CBD RELAX-RX, targeting the multi-billion-dollar anxiety and depression treatment market. Not only has this market continued to increase in size over the years, but patients are increasingly turning toward safer alternative treatments over existing pharmaceuticals. CBD is a leading choice.
And PAOG intends to seize the moment, highlighting how its specially formulated CBD RELAX-RX could potentially provide these patients with a best-in-class treatment. The treatment's strength is from its proprietary extraction process, which some have said is comparable to GW Pharma's, which Jazz Pharmaceuticals (NASDAQ: JAZZ) purchased for roughly $7 billion last year.
Notably, while the launch of CBD RELAX-RX could be a significant catalyst for PAOG, it's only one of two products in development that could drive significant value in the back half of this year.
Its second potentially transformational product is RespRx, PAOG's late-stage CBD-based therapeutic intended to relieve the often debilitating symptoms of chronic obstructive pulmonary disease (COPD). Similar to the depression and anxiety treatment markets, this product also targets a multi-billion-dollar opportunity. The promise behind the program involves a 2015 study that suggested CBD could help open the bronchial passages, and PAOG believes they could utilize that therapeutic power to develop an industry-leading CBD-based treatment. Not only did the studies show that the treatment could be effective, but just as important, CBD is also well-tolerated and lacks the severe side effects associated with current standards of care.
Patent Protected IP
Another factor driving the investment proposition in PAOG is the strong IP held by the company. PAOG's CBD-based treatments are 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) - which produces an extract said to rival the quality of one of the industry's pioneers, GW Pharma. This creates a significant opportunity for PAOG to maximize the value of the IP by monetizing the RespRx platform and extraction process through licensing agreements. This money could then be used to fund the development and licensing of additional products, resulting in multiple cash-cow operations for the company.
In other words, PAOG could potentially generate record-breaking revenues simply by licensing its intellectual property. And, if the technology proves as compelling as its development trials are indicating, this surge in revenues could happen sooner rather than later.
Prepare To Launch
And that should translate to share price appreciation. Moreover, with PAOG guiding to a Q4 launch, trading ahead of that date could be a wise consideration. After all, at about a penny a share, investors have an opportunity to load up on shares by the millions. And if PAOG follows through on its launch, that investment could be transformative financially to many. For investors that keep high risk/high reward stocks in their portfolios, PAOG could be the perfect play.
Still, despite its current price, know that PAOG is in a stronger position than ever to bring valuable products to market ahead of its competitors. Additionally, as legislation continues to recognize the benefits of CBD-based medicine, PAOG's launch may help to attract new collaborative opportunities from companies that have previously been wary of working in the sector.
And with credibility being an issue, PAOG has that too. The company recently engaged with Veristat, a premier contract research organization (CRO) that can accelerate program development and assist PAOG's products in earning regulatory approval. The engagement is a significant asset that could bring far-reaching benefits as Veristat works to validate the research behind PAOG's products. Moreover, knowing that respected CRO Veristat sees the potential and is backing its products, investors may be wise to follow suit.
Indeed, many long-time investors believe PAOG is ready to break higher. And that's based on a long-term development plan that has been reaching measured milestones. And with the company continuing to guide for a year-end product launch, their patience may be rewarded.
Most of all, they at least want the value inherent to the stock. PAOG has excellent assets, compelling IP, logistical partnerships, and a CRO often hard to get. And while its assets are clearly worth more than its current share price, the icing on the cake will be its first product launch.
With that expected to happen in the next quarter, a little more patience and less daily micro-managing may be in order. After all, according to PAOG, it's nearly showtime. Stay tuned.
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