PAO Group, Inc. (OTC: PAOG) is expanding its development agreement with Puration to pursue tissue culture technology for its pharmaceutical-grade cannabis cultivation initiative. A recent announcement by peer company Pharmagreen Biotech, Inc. (OTC Pink: PHBI) spurred the interest.
The new focus expands an agreement already in place to build an extraction lab and pharmaceutical-grade cultivation facility as part of the Farmersville Hemp Brand facilities under construction in Farmersville, Texas. PAOG suggests that the facility will be an ideal fit for the new project and are optimistic a tissue culture technology can add considerable value to their overall extract and cultivation initiative.
If so, current share price levels may be a gift, which is timely for the season.
New Deal Adds Value
In fact, with PAOG consolidating at the $0.004 level, technicals indicate the stock is in a somewhat bullish mood. The churning at current levels appears to have established a well-fortified base. And that could be excellent news for shareholders ahead of an already busy Q4 and all of 2022.
Moreover, the bulls are getting anxious for news after PAOG commercialized two CBD-based nutraceuticals through its distribution partner North American Cannabis Holdings (OTC Pink: USMJ). Even better, they are expecting to launch a third. Not only that, on Monday, PAOG said it's adding bioidentical synthetic CBD to its overall research initiative. In doing so, PAOG is looking to penetrate a massive CBD extracted from hemp market. And as hemp legalization continues to gain national and global traction, so do the opportunities for its use to develop novel CBD therapies. The secret has been out for a while. CBD works and is helping millions of people.
There's even better news on the valuation front. PAOG not only has two products on the market and an expanded partnership with PURA, but they are also planning to close a potentially transformative acquisition in December. Thus, another catalyst is more than on the front burner; it could create a revenue-generating tsunami later in 2022.
CBD Opportunities Expanding Through Partnerships
Its recent move into the bioidentical CBD research is also a value kicker. Better still, it puts potential CBD pharmaceuticals into its product mix and adds value to its nutraceutical initiatives. But beyond that, PAOG is showing it can leverage its IP to create shareholder value. Keep in mind that the pharmaceutical side of the sector can be enormous. And Jazz Pharmaceuticals' purchase of GW Pharma for $7.2 billion earlier this year highlighted the power of owning IP.
And PAOG is showing that owning IP has plenty of value. In fact, it led to PAOG announcing it's on track to introduce a third CBD nutraceutical product by year-end. That one will follow the launch of its first two CBD nutraceutical products, RelaxRX CBD, a sleep aid, and RehabRX CBD, a salve. By the way, the launch was met with solid demand. PAOG noted a sell-out of its first run, creating the need for a second round of production. The products are available at www.USMJ.com.
The best news for investors, though, is that revenues are now in play. Moreover, with at least three products generating the flow, it could become substantial over time. Keep in mind, an update on revenues should come soon, and with an initial sell-out of its first run of nutraceuticals, investors may be in for a December surprise. Not only that, if PAOG can stock the shelves, revenues have the potential to soar. Thus, PAOG is in an excellent position to transform itself from sub-penny status to perhaps pennies higher. That would be a great s
Even better, PAOG isn't slowing down. They have also entered into or expanded agreements with Alkame Holdings (OTC Pink: ALKM) to develop a CBD-based line of women's health products in the quarter. Alkame can deliver packaging and logistical support to the initiative. There's still more in the pipeline.
Synthetic CBD Alternatives
PAOG is also evaluating how to leverage its IP to create a synthetic CBD. The research is focused on the many common over-the-counter supplements such as vitamin C and D, which are not organic compounds but instead synthetically produced in a lab. Even though they are not derived from natural resources such as fruit, they are nevertheless bioidentical to the natural compounds. PAOG is following the same concept. In fact, they expect to produce Synthetic CBD in the same way.
But, interestingly, PAOG's method of producing the synthetic CBD may be better, noting that its planned version of synthetic CBD has the potential of being more "pure" by having fewer contaminants from the extraction process and less presence of other and conflicting cannabinoids. PAOG highlighted that it will rely on a technique that provides a more consistent CBD structure.
And keep in mind, that program adds to an already impressive stable of products. So, by adding new pharmaceutical products to their development pipeline in addition to the ongoing development of its RespRx CBD pharmaceutical for the treatment of Chronic Obstructive Pulmonary Disease (COPD), PAOG is indeed positioned to create and deliver shareholder value. By the way, PAOG said it's conducting an in-depth review of its current RespRx CBD pharmaceutical development project with its CRO partner, industry consultants, and pharmaceutical firms to explore options and opportunities to accelerate and diversify development processes.
That review could lead to additional partnership opportunities intending to accelerate the development of its RespRx CBD. Notably, that review has already helped PAOG identify derivative opportunities that could instigate the development and launch of additional pharmaceutical product development projects. The most excellent news is that PAOG plans to pursue development programs that have fast-track potential with the chance of a pharmaceutical product reaching the market before RespRx. Hence, the remainder of 2021 and 2022 can be a period of transformational growth for the company.
And these opportunities are targeting a massive and growing CBD market.
Multi-Billion Dollar CBD Market
In 2021, the CBD market surges as patients migrate away from narcotics, especially opioids, and instead embrace CBD for its effectiveness over addictive drugs known to cause severe unintended side effects. That migration has changed the CBD nutraceuticals space from relatively obscure only a few years ago to a more than $5.2 billion market today. Moreover, it's expected to potentially double over the next five years. Thus, with PAOG bringing products to market during the industry's initial growth, they have an excellent opportunity to earn market share ahead of those late to the game.
Best of all, PAOG has other business interests, including a potentially significant interest in a hemp business in Texas. But, as those develop, focusing on its current marketing opportunities may be best. After all, they are the revenue drivers contributing to what could be a record-setting Q4.
Momentum Into Q4 And 2022
Is it time to put on the PAOG rally caps? Indeed. After all, PAOG is transforming itself from a development stage company to a commercialization one. Better yet, it's gone from two nutraceuticals on the market to having a third in the queue. And if that wasn't enough, PAOG has set expectations for more products to follow, partnerships, and a potentially ground-breaking new product to add value in the coming quarters.
Thus, combining the sum of its parts, PAOG is positioned for multiple revenue-generating wins. And with diversification to mitigate risk on the production and distribution side and revenues growing, a perfect storm of opportunity may be developing. Better yet, with PAOG focusing on new opportunities to leverage the power of its IP portfolio, an additional revenue source could be added to the mix sooner than later.
Thus, while two October surprises sent share prices higher, more news in November and potential revenue surprises in December could be a catalyst to drive share prices higher. If so, considering the stock ahead of the news may be a wise consideration.
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