Don't let PAO Group, Inc.'s (USOTC: PAOG) stock price fool you. PAOG should be worth far more than its sub-penny share price. In fact, PAOG may be doing more than many of its mid-cap competitors in the race to find an effective non-pharmaceutical treatment for COPD. And with its RespRx acquisition combined with other programs, PAOG is indeed on pace to accelerate CBD-based studies that could bring needed therapeutic relief to millions of COPD patients.
Moreover, PAOG is a revenue-generating company after securing an 18-month deal expected to deliver $300,000 in new revenues from its cannabis cultivation subsidiary. The first receivable may be highlighted when the company provides a Q4 update. Other deals should also help drive shareholder value higher.
In February, PAOG announced an expansion of its CBD nutraceutical operations. That initiative, highlighted in a multimedia presentation, details PAOG's CBD nutraceutical development expansion plans and explained how strategic engagements with Puration, Inc. (USOTC: PURA), North American Cannabis Holdings, Inc. (USOTC: USMJ), and Alkame Holdings, Inc. (USOTC: ALKM) can accelerate growth in multiple directions.
In fact, the breadth of news is keeping investors interested in the stock, and despite recent sector-wide weakness, PAOG has been able to hold its roughly 300% share price increase since the start of the year.
The trend higher is likely to continue when risk makes its way back into the markets. At current share prices, the opportunity may be significant.
Video Link: https://www.youtube.com/embed/p48PfDlIABQ
Targeting COPD With CBD-Based Therapeutics
The bullish trend started after PAOG announced accelerating its initiatives to develop CBD alternatives to treat patients with symptoms associated with Chronic Obstructive Pulmonary Disorder (COPD). Investor interest spiked appreciably after PAOG announced its potentially transformative acquisition of RespRx from Kali-Extracts, Inc. That asset is a good one, and more importantly, can be commercialized to target multiple indications where a better and safer standard of care is needed.
And not only does RespRx add substantial value to its product pipeline arsenal, but it also positions PAOG to soon monetize its opportunities through commercialization, licensing, or partnerships. Each option can add substantial value.
Keep in mind, too, the acquisition of RespRx does more than position PAOG as a viable competitor in the medical-grade cannabis treatment sector to treat COPD. It also allows them to leverage a patented cannabis extraction method that could be useful across many diseases. Thus, near-term revenue creation could be achieved through a licensing strategy.
Moving into 2021, its COPD initiatives may be taking the lead, but PAOG is far from being a one-shot company. In fact, PAOG has positioned itself for multiple shots on goal by advancing a nutraceutical product line that they believe will compete effectively against already marketed, higher-priced brands. During 2020, PAOG entered into several deals designed to monetize assets in the coming quarters.
Nutraceuticals Can Be A Significant Opportunity
To strengthen PAOG's development-stage program intending to deliver a pharmaceutical-grade nutraceutical COPD treatment to market, PAOG recently announced engaging with the Puerto Rico Consortium for Clinical Investigation (PRCCI) to assist with developing its proprietary Cannabidiol (CBD) extract into a nutraceutical product. The excellent news for PAOG is that the agreement not only adds credibility and sector expertise to the initiative it can help expedite approval if the two successfully develop an effective CBD-based treatment to target COPD's debilitating effects.
Moreover, with PAOG's CBD-based treatment having the potential to replace addictive and often harmful prescription drugs, the company hopes that after proving its therapeutic value can earn fast-track approval processes through regulatory agencies accepting CBD and cannabinoid compounds as viable and effective treatment options. And don't think that "big pharma" is not paying attention to the encroachment. Earlier this year, Jazz Pharmaceuticals' (NASDAQ: JAZZ) purchased GW Pharma (NASDAQ: GWPH) for $7.2 billion and set the stage for further industry consolidation. And who are the attractive targets? Small companies with compelling assets...and PAOG meets that standard.
In addition to its assets, patents, and active programs, PAOG has something that most micro-cap companies can't claim- REVENUES. And effective management of revenues can lead to even more.
Maximizing Revenues For Growth
As noted, PAO Group is doing what most of its peers are not doing...generating revenues. And if the company can maximize that income by capitalizing on new opportunities to expand its product portfolio, the $300,000 deal may pale compared to future engagements. Progress is already showing.
PAO Group recently announced a deal with Alkame Holdings Inc. (OTC PINK: ALKM) to develop and distribute its CBD nutraceuticals. Alkame adds strength to development-stage companies by adding expertise on the essential logistical side of the operations. In other words, PAOG is banking on successful product development and is putting its distribution infrastructure in place now.
That deal does more than help push revenues toward the bottom line. It also introduced PAOG to North American Cannabis Holdings, Inc. (OTC Pink: USMJ), which is expected to take on the distributor's role. The read-between-the-lines moment is that in reasonably quick succession, PAOG aligned itself with two other sector companies that add a specific skill set. Moreover, with all three actively making deals to expand their own market presence, consolidation and additional value-generating agreements among the three is likely over the coming quarters.
Thus, a sum of the parts analysis indicates on almost any measure that this emerging develop-stage company is substantially undervalued. And with shares trading at sub-penny prices per share, there are justifiable reasons for investors to take an interest in the stock.
In particular, increasing revenues, accretive deals, and access to a patented CBD extraction technology each add an independent layer of value. Stocks trading 10X higher lack the assets at PAOG, and most have far less in development. But, being under-the-radar has its drawbacks, and PAOG is hard at work to change that view.
Growth In 2021 Is Happening Already
Updates from PAOG tell a story of growth and program development. They are making strategic deals with industry companies to help expedite their near-term plans, they are generating revenues, and are positioned to leverage its patented CBD extraction process to capitalize on substantial market opportunities.
Therefore, from any valuation model, the current share price does not fairly reflect the inherent value in the PAOG product portfolio or pipeline. Moreover, by factoring in what the company can do in the next 3-12 months, inclusive of its deal with PRCCI that can accelerate product commercialization, PAOG is fueled and ready to create shareholder value.
Thus, the coming quarters can produce transformative value-creation at PAOG. And for the high-risk, high-reward investor, taking a position in PAO Group at these levels may also help transform one's investment portfolio.
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