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Investing in the Age of Coronavirus (INO, APT, CODX, SGMD, IBIO, AYTU)

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The market is crashing almost every day right now. If you own the SPY, or a basket of large-cap leadership stocks that have defined this bull market for years, you’re getting destroyed over the past three weeks.

But there is an answer. A small group of stocks has been rallying precisely because of the impact of this terrible pandemic outbreak. The stocks in this group are driven by one of two core themes: either they represent companies vying to help solve the crisis, or they have operations that will be positively impacted by the behavioral adjustments that the outbreak is causing.

We have compiled a list of some of the most essential versions of these themes. Two of them are trying to help solve it medically (INO, IBIO). Two of them are working to supply us with the tools to weather it (CODX, APT). And one of them is primed to benefit from how people are being changed by coping with it (SGMD).

We will take a closer look at each of them in turn: Inovio Pharmaceuticals Inc (NASDAQ:INO), Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT), Co-Diagnostics Inc (NASDAQ:CODX), Sugarmade Inc (OTCMKTS:SGMD), Ibio Inc (NYSEAMERICAN:IBIO), and Aytu Bioscience Inc (NASDAQ:AYTU).

 

Inovio Pharmaceuticals Inc (NASDAQ:INO) trumpets itself as a clinical stage biopharmaceutical company that develops active DNA immunotherapies and vaccines to prevent and treat cancers and infectious diseases.

The company is working on a vaccine for the novel coronavirus disease. In that vein, the company recently announced that it was accelerating the timeline for its experimental COVID-19 vaccine, INO-4800, and expects to begin a phase 1 study in humans in April.

This isn’t new for INO. At this point, the company is actually the only name out there with a vaccine for preventing a coronavirus in phase 2 testing, although the targeted disease, in this case, is MERS rather than COVID-19. But that still represents a meaningful edge in the all-important race now confronting the world.

The company’s lead candidate, though, is VGX-3100. Inovio expects to report preliminary results later this year from a late-stage study of the immunotherapy in treating cervical high-grade squamous intraepithelial lesions (HSIL) caused by human papillomavirus (HPV). The biotech is also conducting phase 2 studies of VGX-3100 for treating vulvar HSIL and anal HSIL.

Its SynCon immunotherapy design has the ability to break the immune system’s tolerance of cancerous cells, as well as is intended to facilitate cross-strain protection against known, as well as new unmatched strains of pathogens, such as influenza.

The company is involved in conducting and planning clinical programs of its proprietary SynCon immunotherapies for HPV-caused pre-cancers and cancers; prostate, breast, lung, and pancreatic cancers; hepatitis C virus; hepatitis B virus; human immunodeficiency virus; Ebola virus; middle east respiratory syndrome; and Zika virus.

The context right now for the stock is a bit of a bid, with shares acting well over the past five days, up about 4% in that timeframe.

Inovio Pharmaceuticals Inc (NASDAQ:INO) pulled in sales of $867K in its last reported quarterly financials, representing top line growth of -56.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($93.8M against $19.5M).

 

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) engages in developing, manufacturing, and marketing a line of disposable protective apparel, building supply products, and infection control products in the United States and internationally.

The big idea powering the stock lately is its products of masks capable of helping to prevent the spread of COVID-19.

The company operates through three segments: Building Supply, Disposable Protective Apparel, and Infection Control. The Building Supply segment offers construction weatherization products, such as house wrap, synthetic roof underlayment, and other woven materials.

The Disposable Protective Apparel segment provides shoe covers, bouffant caps, gowns, coveralls, lab coats, hoods, frocks, and other miscellaneous products.

The Infection Control segment offers face masks and eye shields. The company provides its products under the Alpha Pro Tech brand name, as well as under private labels. Its products are used primarily in cleanrooms; industrial safety manufacturing environments; health care facilities, such as hospitals, laboratories, and dental offices; pharmaceutical markets; and building and re-roofing sites.

The company distributes its products through a network of purchasing groups, distributors, and independent sales representatives, as well as through its sales and marketing force.

APT has had a rough past week of trading action, with shares sinking something like -29% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. On a larger timeframe, the stock has been a juggernaut in the wake of news surrounding the COVID-19 outbreak, up as much as 1000% in the past 2 months.

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) managed to rope in revenues totaling $10.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -0.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($6.9M against $2.3M).

 

Co-Diagnostics Inc (NASDAQ:CODX) promulgates itself as a molecular diagnostics company that intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules. It also intends to sell diagnostic equipment from other manufacturers as self-contained lab systems.

The stock has been on a rampage for a simple reason: it has an inside track as a key distributor in the extremely important process of testing for COVID-19 infections in the US and international markets. As the outbreak expands, which it will, testing will be as important as anything else in regaining control.

And the stock has been acting well over recent days, up something like 10% in that time.

Co-Diagnostics Inc (NASDAQ:CODX) generated sales of $41K, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -32.7% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.5M against $308K).

 

Sugarmade Inc (OTCMKTS:SGMD) is especially interesting here because of the nesting trend among consumers. SGMD recently took a major stake in BudCars, with the contractual option to gain a controlling interest in the leading California cannabis delivery business.

This morning, the company announced a sharp rise in demand for its cannabis delivery service, driving an associated 10% week-over-week rise in total sales, over the past two weeks. According to the release, the company believes this dynamic is being driven by the stay-at-home trend that has emerged in many communities around the world in response to the global pandemic outbreak of the COVID-19 disease.

BudCars is undertaking an expansion in headcount to meet the current and anticipated sharp expansion in demand. SGMD now anticipates the upward shift in sales growth to help solidify its $15 million 2020 revenue target as a conservative target for sales this year.

“The Coronavirus pandemic is undeniably a game-changer for consumer behavior patterns that will likely have long-term implications as it drives new habits into place,” commented Jimmy Chan, CEO of Sugarmade, who recently announced a large stake in BudCars with an option for a controlling stake. “As a growing mobile ecommerce and delivery service in one of the fastest growing commercial markets, BudCars is extremely well-positioned for this dynamic. It’s already very clear: people are showing an overwhelming preference toward delivery as nesting takes hold. That applies to cannabis as much as anything else. We are fully prepared for a continuous ramp in demand for our delivery services over coming months and beyond.”

On this basis, the stock appears massively underpriced because it hasn’t yet made the dramatic jump that other stocks in this list have already displayed.

With the stay-at-home dynamic now taking a vice-grip on consumers, and cannabis demand unlikely to wane in the process, SGMD could be poised for dramatic gains once the crowd finds it.

 

Ibio Inc (NYSEAMERICAN:IBIO) bills itself as a biotechnology company that provides product development and manufacturing services to clients, collaborators, and third-party customers in the United States and internationally.

The company’s services cover the stages of pre-clinical development, regulatory approval, commercial product launch, and on-going commercial phase requirements. Its lead therapeutic candidate is IBIO-CFB03 for the treatment of systemic scleroderma, idiopathic pulmonary fibrosis, and other fibrotic diseases.

The company is also developing vaccine candidates for third parties. It has a license agreement with the University of Natural Resources and Life Sciences, Vienna; a strategic relationship with Beijing CC-Pharming Ltd.; and collaboration agreements with AzarGen Biotechnologies (Pty) Ltd, The Texas A&M University System, and Fraunhofer Center for Molecular Biotechnology.

In addition, the company offers a range of product and process development, analytical, and manufacturing services.

The stock has suffered a bit of late, with shares of IBIO taking a hit in recent action, down about -27% over the past week. But that move comes in the context of a 400% rally as the market fuels companies potentially instrumental in the battle against the COVID-19 threat.

Ibio Inc (NYSEAMERICAN:IBIO) pulled in sales of $314K in its last reported quarterly financials, representing top line growth of -51.8%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3.6M against $4.7M, respectively).

 

Aytu Bioscience Inc (NASDAQ:AYTU) bills itself as a specialty pharmaceutical company that focuses on developing and commercializing novel products in the field of hypogonadism (low testosterone), cough and upper respiratory symptoms, insomnia, and male infertility in the United States and internationally.

The company markets Natesto, a nasal gel for the treatment of hypogonadism (low testosterone) in men; and Tuzistra XR, a prescription antitussive consisting of codeine polistirex and chlorpheniramine polistirex in an oral suspension. It also offers ZolpiMist, an oral spray for the treatment of insomnia; and MiOXSYS, an in vitro diagnostic semen analysis test that is used in the measurement of static oxidation reduction potential in human semen.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. AYTU shares have been moving higher over the past week overall, pushing about 127% to the upside on above average trading volume.

Aytu Bioscience Inc (NASDAQ:AYTU) pulled in sales of $3.2M in its last reported quarterly financials, representing top line growth of 76.9%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($5.5M against $15.9M, respectively).

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Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) Forms CW Labs To Strengthen Development Of Innovative High-Quality Hemp Derived Products And Delivery Systems

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Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) has formed a new division Charlotte’s Web Labs (CW Labs) to develop innovative high-quality products and delivery systems. It is an expansion of Charlotte’s efforts that focuses on hemp-derived terpenes, phytocannabinoids, and flavonoid compounds.

Tim Orr to head CW Labs

Tim Orr, who is recently hired by Charlotte as Senior Vice President, will head the CW Labs team of internal and external research specialists located in Boulder, Colorado, and Buffalo, New York.

Orr brings three decades of experience

Mr. Orr brings over three decades of experience in product development and commercial roles in life sciences, diagnostics, and medical device industries. His previous stints include management and top executive positions at Abbott Laboratories and Johnson & Johnson.

Mr. Orr said he is pleased to support the scientific discovery and innovation of Charlotte’s by leading CW Labs. The newly formed R&D lab will engage in the development of innovative delivery systems and high-quality products to the trusted and loyal customers of Charlotte. Science is driving the development of new formulations and improving their efficiencies.

Trusted hemp extracts

Charlotte is engaged in the production of trusted hemp extracts in the world. The company advances the science of full-spectrum extracts derived from hemp to express cannabinol (CBN), cannabigerol (CBG), cannabidiolic acid (CBDA), cannabichromine (CBC), cannabidiol (CBD), and other hemp-derived compounds.

CW Labs will help Charlotte in advancing the product line through science-based innovation and facilitates clinical trials. It is already engaged in placebo-controlled and double-blinded human clinical trials involving hemp-derived solutions for the needy in several states. Chief Executive Officer of Charlotte, Deanie Elsner said the formation of CW Labs improves the reach of Charlotte into the safety, efficiency and the science of hemp plant compounds. Deanie further said the launch of CW Labs shows its commitment to lead the innovation and introduce cutting edge solutions using hemp.

Charlotte has completed the audit of the hemp harvest for 2019. Deanie said the company is excited with 2019 harvest, potency and yield levels. It shows the tremendous expertise gained by the company in hemp cultivation over the past six years.

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HempAmericana Inc (OTCMKTS:HMPQ) is a Turnaround Prospect

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Turnaround stories are widely sought and difficult to find, which is why we want to cast a focus on HempAmericana Inc (OTCMKTS:HMPQ) today, as the company positions itself as a long-term beneficiary of the CBD-based products boom – something that has gone undercover so far in 2020 even though it remains possibly one of the most reliably potent large timeframe success stories of the coming decade, according to many prominent analysts.

The big idea here is still unquestionably that of a “mainstreaming” process – the CBD products marketplace is defined by a “small to big” dynamic that is all about a niche product crowd growing into a very widely accepted household goods market. The CBD growth trend that many investors have heard about over the past several years is simply about discovery.

But, even as that process plays out in empirically visible ways, stocks in the space have been carved up due to over-competition.

That said, the sweeping bear market that has ravaged the space has driven many of the less well-founded names into oblivion. Naturally, that’s the point of a bear market: to burn up the excess fat, leaving a leaner, meaner industry to more efficiently monetize the total base of industrial and intellectual capital. It’s the essence of a market-based system.

In this case, HempAmericana Inc (OTCMKTS:HMPQ) is one of the survivors.

As is always the case in such circumstances, the survivors are very deeply undervalued at this point – they’ve been through the ravages of the bear. They’ve been stripped down to nothing. But, at the same time, they’ve also survived to tell the tale. That alone makes them worth a very serious measure of attention. The survivors of a focused bear market in a specific sector often historically represent some of the most powerful opportunities. They are the babies that almost, but not quite, got thrown out with the bathwater. And those are some underpriced babies.

HMPQ belongs to that thematic group right now. The stock is trading at bargain-basement levels in sub-penny territory. But it has real operations and a first-class extraction and production facility in Maine, with ramping resources and a path of very likely tangible top-line growth over the coming period of months. While shareholders of the company may have heard that sentiment before, there are reasons to see this moment as different – as more urgently promising.

 

Spring is in the Air

In HMPQ’s case, business is picking back up, and the company has reportedly stored up an inventory of top-tier products that is ready to be monetized. The company has also just launched its new ecommerce platform to help with that process, complete with an active payment processor capable of taking major credit and debit cards seamlessly, which is a major accomplishment.

“The new website has been designed to offer the ultimate user-friendly experience with an improved ease of use and functionality while allowing customers to see the wide variety of full-spectrum CBD oils the Company offers. We upgraded the website with our customers in mind, the site includes more information about our products such as our COAs, to help buyers find the right CBD product they need, and to instill better Confidence in this age of uncertainty,” stated Company CEO Sal Rosillo.

Note, according to its most recent release, the company wasn’t able to process orders due to a change in Policy with the PayPal Platform not allowing Hemp related product sales. The company has retained an Industry-leading payment processor that accepts payment for Hemp products. The company is very pleased to have been approved to accept credit cards through First Direct Financial.

That’s an enormous plus. The company’s web presence is live and active, and first-rate. And it has the capacity to do business with customers in convenient terms. In this case, that’s a biggie.

HempAmericana Inc (OTCMKTS:HMPQ) bills itself as an emerging player in the hemp-based CBD marketplace. The company also researches, develops and sells products made of industrial hemp, in addition to carrying out other non-hemp based products but intends to focus primarily on the potential for hemp.

In essence, anything that can be made with plastic can be made with industrial hemp and HempAmericana plans to fill the growing need and demand for hemp-based products within the United States. The company also intends to explore other possible business avenues relating to the legal use of the Cannabis plant.

But the big one right now is clearly about establishing scaling growth in its CBD-based products segment. There is every reason to believe we may be witnessing the roots of that right now, and in concert with the roots taking hold for an overall bottoming of the cannabis, hemp, and CBD market as a whole.

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Acreage Holdings Inc (OTCMKTS:ACRGF) Inaugurates A Medical Dispensary – The Botanist In Spring Hill, Florida: Larissa Herda Resigns From The Board of Acreage

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Acreage Holdings Inc (OTCMKTS:ACRGF) inaugurated The Botanist in the Spring Hill, Florida. It is the first medical cannabis dispensary of Acreage in the state. The company now holds consulting and management services and other accords that include pending takeovers for thirty-two operational dispensaries in thirteen states that comprise fourteen The Botanist branded dispensaries. Acreage invests in cannabis industries.

The Botanist Brand

The Botanist Brand, which is developed by Acreage, is a product and retail brand with deep roots in wellness and health. It helps individuals to maintain healthy lifestyles using the holistic power of cannabis. The Botanist provides a wide gamut of products derived from cannabis. It also features a retail design – the science meets nature, which is reminiscent of the nineteenth-century botanist laboratory. The Botanist in the Spring Hill boasts its signature green foliage wall and a private consultation room and provides an environment for enthusiasts like you to know about the healing properties of cannabis plants from the trained specialists in patient-care.

Larissa Herda resigns from the board

According to a communiqué from Acreage, Larissa Herda has relinquished as a member of the board. Kevin Murphy, Chief Executive Officer and Chair of Acreage said the company conveyed thanks for her exceptional services all along its journey since joining the board in November 2018 and wished success in her future endeavors.

Closes previously announced credit facility

Acreage has successfully closed the previously announced credit facility of $100 million. It has drawn $21 million from this credit facility. The subsidiary of Acreage – IP Borrower has also borrowed $22 million from IP Investment Company LLC.

Acreage has agreed to make monthly payments at an annual interest of 3.55% on the first advance, 1.85% on the second advance, and 1.55% for the third advance for the first year. It will negotiate interest rates for the second year. IP Borrower provides a guarantee for the credit facility. It will also provide security of $22 million from the loan transaction. The amount of $22 million will be blocked in the account as a safety to the Institutional lender.

The Borrower needs to provide cash collateral to draw the balance amount of $78 million. However, the institutional lender will not hold any security in the subsidiaries of Acreage or Acreage.

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