[NASDAD:ALQA]: Alliqua Biomedica Inc. continues to dominate the markets in gains, in a rally that started on the 27th of November. Today, the company’s stock is up by over 15%. This follows news that the company will spin off its subsidiary that handles manufacturing of high water content. The spun off subsidiary will be merged with TO pharmaceutical LLC. They will then form a new publicly traded bio-pharma company in which, Alliqua BioMedical Inc. [ALQA] shareholders will have a minority stake. The new company will primarily be focused on cannabis-based theurapeutics in FDA regulated clinical indications
The cannabis connection seems to have excited the market, and for good reason. The Canabis market has been on a growth path for sometime now. As more countries continue to legalize the use of Canabis and Canabis related products, the market for Canabis focused companies will continue to grow.
According to a report by Grand View Research, the Canabis market will be worth about $146 billion by the year 2025. This adds up to a compound annual growth rate of 34.6% in the next 7 years. Therefore, by making forays into this market, investors expect this company to have a share of the revenues that will come off this industry in the future.
The excitement in this stock is also based on the fact that the new company will be focused on FDA regulated clinical indications proprietary canabis products. The proprietary aspect to it means that if the company comes up with breakthrough products, its revenue streams will be stable and consistent, and as a consequence, drive up its value in the long-run. This aspect to Alliqua is drawing in investors and could see this bullish sentiment sustain into Q1 of 2019, with the expectation of superior returns. Given that TO pharmaceutical LLC is highly experienced in the Canabis market, there is a high probability that this merger will result in superior results for investors, hence the increased demand for this stock at current prices.
Investor interest in this stock could also be coming from the prevailing market conditions. After close to ten years in a bull market, the prevailing sentiment is that a correction is imminent. This sentiment is given strength by the fact that the international trade environment is getting more uncertain due to increased protectionism in the market. As such, investors are scouting for recession proof stocks in the market.
One sector that is largely expected to do well even in a recession is healthcare. People will always have a need to take care of their health, irrespective of how the economy is performing. As such, by pivoting towards the development of novel theurapetic products, this company is expected to come up with products that would drive revenues under any market conditions.
Backed by such fundamentals, bullish sentiment in Alliqua BioMedical Inc [ALQA] could continue to grow going into 2019. The bull rally that this stock has experienced in the last 72-hours could possibly mark the beginning of a bull run.