PAO Group, Inc. (USOTC: PAOG) stock surged Wednesday by 28% and closed at its highest level since March 12th. Investors took interest earlier in the week following an update by the company that highlighted its plans to expand its CBD-based therapeutics and nutraceuticals program. Two treatment candidates are making their way through the development process. The first is RespRx, an asset acquired last year that targets the treatment of COPD. The second is CBD RELAX-RX, a nutraceutical designed to treat anxiety and depression. Combined, the two assets target a massive market opportunity expected to grow to $25 billion within five years.
Helping to expedite the planned commercialization of each, PAOG engaged Veristat, a contract research organization (CRO) dedicated to the clinical advance of therapies and treatments through regulatory approval. They noted that Veristat is making substantial progress in validating and supplementing the underlying research behind RespRx. The progress toward bringing at least one of these potentially lucrative products to market has generated investor interest. Moreover, a move higher through current resistance at $0.009 could lead to the stock returning to its February highs, representing a more than 83% increase from current levels.
Adding to the momentum, PAOG is expecting to close on a deal that could expedite the commercialization of its products and provide a stake in a valuable extraction process.
Video Link: https://www.youtube.com/embed/mlG8HDv06uk
PAO Group Sets Stage For Another Acquisition
That good news came in April with PAOG announcing its expectation to close on a deal that would provide new research funding and a 25% interest in a cannabis extraction patent. There, PAOG said it is final negotiations to enter into a partnership to conduct a CBD In Vivo Histological Research Study to accelerate RespRx through regulatory approval. In addition to funding, PAOG would gain a 25% interest in the underlying patented cannabis extraction technology through which the RespRx formula is derived. Longer-term, PAOG could have the opportunity to purchase the patent outright, which inherently brings numerous strategic options to monetize that asset.
Even better, the partnership interest in the underlying cannabis extraction process would immediately help expand PAOG's pharmaceutical development reach beyond RespRx and CBD RELAX-RX.
Keep in mind, the patent could be an enormous revenue-generating asset. In a previous update, PAOG noted that industry professionals believe the extraction process provides an extract comparable to GW Pharma (NASDAQ: GWPH), the pioneer in CBD-based treatment. Better still, that value could be monetized through licensing and partnerships, making it possible for PAOG to reap windfalls without having to bring any product to market. That could be in the plans, noting that GW Pharma was purchased by Jazz Pharmaceuticals (NASDAQ: JAZZ) for $7.2 billion earlier this year. Don't think that PAOG is unaware of that intrinsic value.
Other deals are earning attention as well.
Additional Partnerships Bring Value
If investors take a longer-term approach to an investment in PAOG, the rewards could be substantial. Following guidance from a March update, PAOG said that its CBD Nutraceutical Development Program could deliver its first product to market before the end of the year. They noted that the logistical side of the rollout is in place, with Alkame Holdings, Inc. (USOTC: ALKM) and North American Cannabis Holdings, Inc. (USOTC: USMJ) supporting the marketing and co-packing requirements for the launch.
The convergence of positive news appears to be making its way to the share price. Moreover, with Veristat helping to expedite approvals, investors may be wise to position ahead of near-term milestones. Many longer-term investors in the company reflect back to February when shares traded sharply higher on substantial volume. Following a similar pattern, the 28% surge on Wednesday was accompanied by the second-highest daily trading volume since March. The highest day, which saw 47 million shares trade hands sent the stock higher by 21%. Comparing the two days could show that overhead resistance could be weakening.
YTD Increase Of 361%
At the close on Wednesday, PAOG shares are higher by more than 361% year-to-date. And while the 28% surge helped push that percentage higher, it's notable to mention that the stock is substantially higher before that day. It's not a stretch to think that more gains will come.
With two therapeutics in play and a planned expansion of its research programs, PAOG is ideally positioned to create shareholder value in the coming weeks and quarters. In fact, with its drugs targeting billion-dollar markets, an announcement that puts commercialization in specific terms could generate a move higher of exponential proportion.
And with multiple shots on goal, an agreement with a CRO to expedite planned approvals, and partnerships and acquisitions that add substantial value, PAOG could have a massive year ahead. If all goes as planned, this company could be a portfolio valuation game-changer.
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