If the first half of 2021 serves to indicate how PAO Group (OTC Pink: PAOG) plans to attack the back half of the year, expect PAOG to create substantial shareholder value. In fact, they may have set the stage for its best two quarters in history.
In its latest shareholder update, PAOG confirmed its plan to launch its line of CBD Nutraceuticals by the end of this year. If so, they target a massive industry that in 2020 was estimated to be a $5.2 billion market opportunity. However, it gets better from there, with analysts predicting the CBD nutraceuticals market to increase toward $16.4 billion by 2027.
The excellent news for PAOG and its investors is that it targets the right market at the right time. And they are letting investors know.
Last month, PAOG published an update highlighting 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.
Targeting the $15B CBD Industry with Novel Solutions
In fact, PAOG's most recent update provided details on its initiatives and advancements 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. Better still, its initial products target massive treatment opportunities.
Considered its lead 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. Better still, this treatment is leveraging 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 the right CBD-based alternative comes to market, it can earn a substantial market share. PAOG intends to win its share of that prize.
Already, it's 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 (JAZZ). 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 significant revenues through third-party agreements. They could then use that money to fund additional product development. That is a win-win scenario. However, if either of its therapeutics emerges from the clinic showing substantial benefit, expect PAOG to find investors and go it alone. That's the best-case scenario.
Another program, CBD RELAX-RX, targets patient treatment in the $15 billion anxiety and depression market. Its promise comes as an increasing subset of consumers continues to turn toward CBD-based treatments over pharmaceutical options to treat often debilitating conditions due to depression and anxiety. PAOG believes that its specially formulated CBD RELAX-RX could provide a best-in-class solution. Indeed, its extraction process adds credibility to that expectation.
Also, its EVERx CBD Sports Water, in collaboration with Puration, Inc. (OTC Pink: PURA), 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. Better still, a sugar-free version of EVERx CBD Sports Water will enhance the offering and is expected to accelerate its expansion across store shelves nationwide.
The best news is that its CBD-based products are expected to generate significant revenues after their release, and following PAOG guidance, that may happen as soon as the end of this year. If so, expect these current share price levels to become extinct.
Looking Forward To 2H 2021
Heading into the back half of this year, both near and long-term catalysts are in focus. Thus, investment consideration is warranted no matter one's investment threshold. Still, investors should pay attention to company updates to keep track of anticipated product launch scheduling. As many investors in the biotech sector know, trials take twists and turns. However, PAOG's affirmation of its timeline reassures that a near-term milestone will soon be reached.
Keep in mind, too, that continued loosening of regulations related to the production of cannabis, hemp, and CBD is allowing PAOG to expand its operations into new sectors. 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.
Here's the better news. Although the pandemic may have caused new economic challenges, the markets for an effective alternative treatment for severe medical conditions remain a priority. On that front, PAOG's latest developments have investors optimistic about its long-term potential.
In fact, PAOG's hiring of Veristat, a premier contract research organization (CRO), could accelerate program development and assist PAOG's products in earning regulatory approval more quickly. Indeed, that collaboration is a critical milestone met in the development of RespRX and validated its underlying research. It also shows that Veristat is willing to support a product they believe can be brought to market. That's big news as well.
Bottom line: PAOG is poised for a breakout in 2021 as it nears the planned release of its CBD Nutraceuticals. And when that launch nears, share prices will likely soar as investors position ahead of that market introduction. Moreover, the value from its long-term development plan, engagement with a CRO, partnerships, and potential licensing of assets make the investment proposition even more appealing.
Thus, as its share price consolidates, the investment consideration at these levels may be timely.
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