As fears surrounding the Coronavirus drive the markets down, one ASX-listed pot stock could triumph amid the COVID-19 crisis.
The Coronavirus, now known as COVID-19, emerged from Wuhan in China last December and has since sent shockwaves throughout the globe. Over 80,000 cases of Corona have been confirmed worldwide, with the number of infected people rising daily.
Most recently, Italy has seen a surge in the number of infected, with 400 cases confirmed as of the 26th of February, representing a 25% surge in just 24 hours.
As of yet, no vaccine currently exists for COVID-19, and fears are rising around the continued spread of the disease, causing serious downturns on the stock market.
Since the emergence of COVID-19, US markets have suffered their worst week since the global financial crisis of 2008.
According to the BBC "the three main US indexes ended the week down 10% or more from last Friday, despite a last-minute rally in prices. Earlier, the main European markets fell sharply, with London's FTSE 100 index down 3.2% for the day."
Global investor sentiment has been severely dampened by COVID-19, and it's looking like this will continue for some time until further clarity emerges around the global Coronavirus crisis.
How Will Coronavirus Affect Pot Stocks?
Pot stocks have been experiencing a downturn for the latter half of 2019 and this has continued into 2020. Given that pot stocks don't exist in a vacuum, you can be pretty certain that the ongoing corona crisis isn't going to do any favours for the already struggling global cannabis market.
By that same token, in order to best wade through the current uncertainty regarding COVID-19 and how it relates to pot stocks, it helps to look toward the broader global market to see which stocks are weathering the current storm. One such stock is ASX-listed Zoono, (ASX:ZNO), which produces antimicrobial products.
Disclaimer: Past performance is not an indicator of future performance.
Zoono shares skyrocketed after the company stated that its Z71 Microbe Shield surface sanitizer was highly effective against the bovine Coronavirus in 2014, achieving 99.99% efficacy in just five minutes.
"Given the successful test results in 2014 and since Zoono is very confident that both products will have a level of efficacy against the current strain of the Coronavirus similar to that achieved previously," the company stated.
With many believing that Zoono's technology will be effective against the Coronavirus, investors flocked to the company and the share price climbed more than 23% last Thursday, ending at $0.815.
Great, but what's the connection to pot stocks?
Botanix Pharmaceutical's Antimicrobial Asset
When looking at a phenomenon like Coronavirus, we're reminded of the growing frequency of bacterial diseases and how they're becoming increasingly immune to current treatments.
Due to the overuse of medication, bacteria have developed significant resistance to current antibiotic treatments. On top of this, antibiotics are said to remove more drug-sensitive forms of bacteria, leaving the more resilient forms to propagate.
This overuse of medication is occurring primarily because in many cases, they are being incorrectly prescribed. Studies show that antibiotic therapy is incorrect in 30% to 50% of cases. This alone can cause unnecessary antibacterial resistance and many fear this is precisely what will occur with regards to COVID-19.
Similarly to Zoono, studies revealed that Botanix's drug, BTX 1801, was capable of tackling a range of different bacteria, among both humans and animals. Additionally, the synthetic CBD in Botanix's product kills bacteria within three hours and was shown to lessen the bacteria's ability to develop resistance to the antibiotics.
The cannabis-derived drug has so far proved effective against two superbugs, staphylococcus (staph infections) and methicillin-resistant staph Aureus (MRSA).
We've got our eyes on Botanix Pharma for a number of reasons, but with regards to the current Coronavirus climate, positive results around BTX 1801 are likely to stimulate a lot of investor enthusiasm.
In order to progress BTX 1801 trials, the company received a $50,000 grant from the Federal Government, and Botanix will be beginning phase 2 of the trials in late Q1 of 2020.
Should the results of Botanix's trial be positive, we may see cannabinoid formulas become a staple in addressing future bacterial diseases – and you can expect stock prices to rise at the same time.
Though Botanix isn't resting solely upon this formula either, as the company has several ongoing trials occurring, each targeting enormous addressable markets such as atopic dermatitis, acne, and rosacea. 2020 will see the progression of many of these trials and should any one of these formulas show promise, Botanix may be looking down the barrel of a billion-dollar formula.
This could be one of the best investing opportunities of 2020
Legislative changes are blowing through the US, and with it, an ever-increasing number of states legalising cannabis for recreational use.
With the success seen in Illinois, which legalised for adult-use on January 1 and saw products moving off the shelf at an unprecedented rate, this company is primed to take advantage of the booming US recreational market.
They have secured partnerships with the biggest cannabis companies in the US, and their portfolio is second to none.
And with the sector-wide pullback of 2019, this company is now at a bargain-basement price.
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