Investors should take a look at PAO Group, Inc. (USOTC: PAOG) as weakness in the penny-cap sector may have unwittingly included PAOG in its declines. Last week, PAOG released details on its nutraceutical developments initiative following its addition of CBD RELAX-RX to existing CBD RespRx development programs. The update puts a potential catalyst in play.
Specifically, PAOG expects to deliver on a September 2021 “go-to-market” target goal for at least one of its nutraceutical products. Expediting that launch is support by Alkame Holdings, Inc. (OTC Pink: ALKM) and North American Cannabis Holdings, Inc. (OTC Pink: USMJ), which are slated to provide logistical and marketing expertise.
In play is the product launch. However, the lead-up to the launch, supported by company updates, could ignite a rally in the stock and send shares back toward highs set earlier this year. From current levels, that could mean an increase of 85%. Year to date, shares are higher by approximately 280%.
Investors could expect more.
PAOG Could Break Higher
The gains are justified. Despite being a “penny stock” in price, PAOG is building a comprehensive CBD nutraceuticals program that could deliver substantial long-term rewards. In fact, its current investment and research into developing pharmaceutical and nutraceuticals products may produce near-term gains as well, with the company expecting to post revenue this year. Its 2020 acquisition of RespRx could accelerate those sales.
In what is considered a transformative acquisition, PAOG acquired RespRx from Kali-Extracts, Inc. (OTC Pink: KALY), a development-stage CBD-based treatment for Chronic Obstructive Pulmonary Disorder (COPD). Importantly, RespRx utilizes a potent CBD extract derived from a patented cannabis extraction method – U.S. Patent No. 9,199,960. That market protection could be valuable.
In fact, it positions PAOG to introduce its first two CBD nutraceutical products in September of this year. The first is a CBD nutraceutical product targeting the COPD market, and the second is designed to treat anxiety and depression. The great news is that both markets offer significant revenue-generating opportunities. And with CBD showing itself to be a safer alternative to prescribed pharmaceuticals, PAOG could be positioned to capitalize on opportunities in these two markets.
Better still, to help expedite the development and planned approvals, PAOG is leveraging its relationship with the Puerto Rico Consortium for Clinical Investigation (PRCCI) and says it expects to announce an additional research partnership soon. The company noted that each deal accelerates and expands its CBD developments initiative.
Moreover, they could add to the revenue streams already in place.
Creating Revenue Is A Defining PAOG Difference
We noted PAOG’s advantage over most of its nano-cap peers in prior coverage- they are generating revenues. Earlier this year, the company said it expects to generate $300,000 in sales from its cannabis cultivation subsidiary. That income could allow PAOG to increase its exposure in other areas of the booming CBD-based therapeutics and nutraceutical sector. But, for now, keep COPD in focus.
That debilitating disease affects more than 60 million people and has an addressable treatment market that surpassed $10 billion in 2016. It’s the third leading cause of death worldwide, and the market is expected to surge to a $14.1 billion treatment opportunity by 2025. And just because PAOG is small, don’t overly discount their chance to seize a share of a lucrative opportunity.
Remember, given time to develop its product portfolio, PAOG has as good a chance as any to maximize its assets. Moreover, taking GW Pharma (NASDAQ: GWPH) as an example, they took years to develop a product, had massive swings in share price, and endured years of shareholder scrutiny. But that was then. Now, CBD-based therapeutics are widely accepted and sold across the country, with patients embracing the value of even over-the-counter strength CBD-based therapeutics. And that’s great news for PAOG.
Rewards Of HODL
Better still, to those that were patient holding their GW Pharma stock, they were rewarded from Jazz Pharmaceuticals’ purchase of the company for $7.2 billion earlier this year. And, with a patented and highly regarded extraction process in hand, PAOG could follow in those value-creating footsteps and become a worthy products-based contender in its respected markets.
Thus, its roughly 280% year-to-date gains, although extremely impressive, could be the start to a more substantial move higher. Of course, additional partnerships and program updates could undoubtedly contribute to that cause, making the sum of the parts a compelling reason to buy on weakness.
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