Cellect Biotechnology Ltd – ADR Stock (NASDAQ: APOP), a nano-cap biotech, are went up 46% on Wednesday. APOP reported it has entered into a commercial binding Letter of Intent (LOI) with Cannadoc, a medical cannabis company, to purchase all rights to the use of Cannadoc products. The products licensed include those for the reduction of opioid usage, data, and those in trials.
Also, Cellect has developed a med-tech called ApoGraft that picks stem cells to improve the safety and efficiency of regenerative medicine and cell therapy.
“Opioid painkillers have become a major healthcare challenge in the US and globally. Canndoc has gained extensive experience throughout its 12 years of development and treatment of patients with medical cannabis. We believe that joining forces with Cellect Biotechnology can bring relief to communities around the world,” commented Ehud Barak, former Israeli Prime Minister and Chairman of the Canndoc Board of Directors.
According to the agreement, Cannadoc will provide Cellect a minimum of six tons of GMP pharma-grade cannabis products valued at $18 million in the next five years. The contract can be extended renew for five years until 2029.
Apart from the contract, both companies have also signed a non-binding LOI for a full merger.
In the merger, Cellect will purchase all outstanding Cannadoc stock from its parent InterCure Ltd (OTC: IRCLF), in exchange for additional Cellect ADRs, which will represent about 95%.
The proposed merger is subject to a definitive agreement, board approval and customary closing conditions, including approval by the Israeli Medical Cannabis Agency and Cellect’s shareholders.
Cellect shares were rising 44% to $32.97 at the time of publication.
Should Investors Buy Cellect Stock APOP?
Cellect stock is one of those high-risk stocks that many investors should consider buying because of the potential upside. With the recent agreement with Cannadoc, it now has greater distribution, which directly translates to more revenue.
Also, investors should be excited about the advances they have made in treating opioid. The “opioid crisis” is very public and likely to gain government funding. Again, more revenue. Another positive is the management of the Cellect, which I believe is first class. The downside is the trading volume and volatility.
The bottom line, I like Cellect and have added it to my stock watchlist.
The Stock Market Today
The main negative factor for the dollar remains the spread of coronavirus, which increases the risks of an economic slowdown.
- Stocks Rally as Volatility Remains a Major Factor in the Market
- Initial Rally has Retraced 50% of the Decline
- Breadth Metrics Improve But are Not at Healthy Levels
- Small Caps Lagging, Will Support Hold
- Futures Point to a Lower Open Today
In total, there are more than 150 cases of infection in the United States, and in California, a state of emergency has even been declared. Yesterday, the House of Representatives of Congress approved the allocation of USD 8.3 billion to fight the virus.
The funds are supposed to be used to prevent the spread of the virus and develop a vaccine. The Fed’s Beige Book report released yesterday also confirmed the concern of American business about the development of the disease.
The document states that economic activity continues to grow at a moderate pace; however, in some regions, there is a fear of supply disruption in the coming weeks. Besides, there are signs of a contraction in the US tourism sector.
Economic data published yesterday have been ambiguous. The ADP Nonfarm Payrolls fell from 209K to 183K. Business activity in the service sector, on the contrary, grew from 55.5 to 57.3 points.
Different factors influence the euro. On the one hand, it is supported by the allocation of USD 50 billion by the IMF to combat the outbreak of coronavirus. On the other side, the epidemic in the Eurozone countries is pressing on it.
The most challenging situation is now in Italy, where there are more than 3,000 cases, and in Germany, where there are more than 300. The Italian authorities said that the country could begin to seek a suspension of the EU fiscal rule since it needs additional funds to fight the virus. It is planned that the amount allocated to the fight against the disease in Italy will be increased from 3.6 to 5 billion euros.
Investors are focusing on the comments of senior British government officials. Yesterday, the future head of the Bank of England, Andrew Bailey, said that the regulator has limited opportunities to support the economy by reducing the key rate since it is already close to a record low level (0.75%).
He suggests delaying this decision and collecting additional information to assess the consequences of the spread of coronavirus. Today, Prime Minister Boris Johnson noted that the government would provide the necessary assistance to business and the economy. He called on investors to pay attention to the state budget published next week, which includes several supportive measures.
Crude Oil Prices
Oil quotes have ambiguous dynamics today: growth attempts replaced morning decline.
The EIA report published yesterday recorded an increase in US oil reserves by 0.785 million barrels, which put pressure on prices. Still, now investors are waiting for decisions from the OPEC+ meeting.
The countries of the cartel agreed today to reduce oil production by another 1.5 million barrels per day in Q2 2020. However, Russia has not yet given consent to this. It is known that Russian representatives were opposed to additional reductions and were suggesting that 2.1 million barrels per day of production be maintained in Q2. However, the market believes that a compromise is still possible.
Evidence-based financial writer with 9 years of experience specializing in earnings, economic data coverage, and bond markets. I combine fundamentals, technicals, and macro to identify low-risk, asymmetric opportunities.