Shares of FSD Pharma (NASDAQ:HUGE) surged more than 50% in Wednesday’s pre-market trading after the firm said it had entered into a license agreement for gastrointestinal veterinary treatments for dogs and cats. The big move in HUGE stock could reverse a 25.8% drop in the share price over the last 12 months.
FSD said that it has entered into a license agreement with Innovet Italia which has granted a license for FSD to use the Italian company’s technology to develop U.S. Food and Drug Administration-approved veterinary drugs for the treatment of gastrointestinal diseases in dogs and cats.
CEO Dr. Raza Bokhari called the pact with Innovet to evaluate the use of ultra-micro PEA (ultramicronized-palmitoylethanolamide) as a veterinary anti-inflammatory prescription drug, “an exciting opportunity for the company to enter into a new and untapped market.”
He said “with a balance sheet that is stronger today than it was when we began our journey nearly three years ago, we are actively exploring other M&A and licensing opportunities to expand our drug development pipeline.” The agreement grants FSD an exclusive, worldwide license outside of Italy to research, manufacture and commercialize products.
FSD Stock Thesis May Have a Familiar Story
If FSD stock’s thesis of gastrointestinal veterinary treatments for dogs and cats sounds familiar, it’s likely that you are already aware of the opportunity from your due diligence on Zomedica (NYSEMKT:ZOM).
That company’s very first commercial product, Truforma, is seen as a potential game changer in tests for gastrointestinal conditions – currently the most common insurance claim for dog owners. Despite ZOM stock’s volatility, the share price has increased 880% this year as the pet care market has boomed during the novel coronavirus pandemic.
InvestorPlace contributors have run hot and cold on ZOM stock, while acknowledging the size of the market opportunity with canine and feline illnesses. A close look at FSD Pharma may reveal similar characteristics in the broader pet segment that’s seen huge gains, including from pet supplies provider Chewy (NYSE:CHWY), up nearly 240% in the past 12 months.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.