IGC Stock is a name that we are quite familiar with here at Insider Financial. The last time we covered IGC stock was February 2019, which you can read what happened here. Before that, we covered the company before when it was trading at $.47 a share before it’s run to $14, which you can read here. Now, IGC stock is spiking again and we take a closer look at what’s happening.
First up, here’s a little background info for those not familiar with IGC stock. India Globalization Capital, Inc. purchases and resells physical infrastructure commodities. The company operates through two segments, Infrastructure Business, and Life Sciences.
It buys and sells infrastructure commodities, such as steel, wooden doors, marble, and tiles; rents heavy construction equipment, including motor grader, transit mixers and rollers; and undertakes highway construction contracts.
The company also develops cannabinoid-based products and therapies, such as Hyalolex for the treatment of patients from anxiety, agitation, dementia, depression, and sleep disorder diseases; and Serosapse for the treatment of Parkinson’s disease.
In addition, it offers offer extraction, distillation, tolling, and white labeling services under the Holi Hemp brand; and hemp crude extracts, hemp isolates, and hemp distillates.
The company operates in the United States, India, and Hong Kong. India Globalization Capital, Inc. was founded in 2005 and is based in Potomac, Maryland.
What Caused The 300% Spike?
Yesterday, IGC stock released the news that on July 30, 2020, the U.S. FDA notified IGC that it has authorized the Company to initiate a Phase 1 human trial study for the Company’s investigational cannabinoid formulation for the treatment of patients suffering from mild to severe dementia due to Alzheimer’s disease.
After the completion of administrative tasks, the Company plans to begin enrolling patients suffering from Alzheimer’s-related dementia for a 12-subject safety Multiple Ascending Dose (MAD) Study. Ram Mukunda, CEO of IGC said:
“Our strategy with IGC-AD1 is to initially conduct trials that establish the efficacy of IGC-AD1 on the Behavioral and Psychological Symptoms of Dementia (BPSD). Patients with moderate Alzheimer’s suffer from BPSD that includes among other symptoms delusions, agitation, aggression, depression, anxiety, apathy, and sleep disorder. Eventually, we expect to evaluate the efficacy of IGC-AD1 on plaques and tangles, the hallmarks of Alzheimer’s disease. We are excited about the progress made and that the FDA will allow the Company to initiate trial testing on human subjects using natural organic cannabis extracts. We believe that this a first human trial of this sort.”
The Company believes that the FDA’s approval of the initiation of the Phase 1 trial is a significant next step in IGC’s efforts to develop a potential therapy for treating patients suffering from a devastating disease.
Why Is This A Big Deal?
The treatment of Alzheimer’s is a big deal as there is no known cure. Alzheimer’s disease is a progressive disorder that causes brain cells to waste away (degenerate) and die. Alzheimer’s disease is the most common cause of dementia — a continuous decline in thinking, behavioral, and social skills that disrupts a person’s ability to function independently.
There is no treatment that cures Alzheimer’s disease or alters the disease process in the brain. In advanced stages of the disease, complications from severe loss of brain function — such as dehydration, malnutrition, or infection — result in death.
The Alzheimer’s Association estimates that 5.8 million Americans 65 and older are living with the disease, as of 2020. As more and more of the baby boomer generation reaches that age, the number of Americans with the disease will increase to a projected 7.1 million people by 2025, an increase of nearly 22%.
With these statistics, effective treatment is worth hundreds of billions of dollars.
IGC Stock Technicals
IGC spiked because any treatment for Alzheimer’s is a really big deal. There are also a lot of favorable technical factors that can keep the momentum going in IGC stock.
- The current market cap is just $100 million.
- The float is very small at just 33 million.
- Yesterday’s volume was 320 million. The float turned over nearly 10 times as day traders piled in.
- Over 5% of the float has been borrowed by shorts. That figure is likely higher as new data has yet to be reported. A further spike will cause the shorts to cover and drive IGC stock higher.
What’s The Right Strategy?
As we said at the beginning of this article, we are quite familiar with IGC stock. The company has a history of over-promising and under-delivering. However, IGC stock has a low float and a heavy short position. The stock looks set to keep running as the shorts get squeezed and day traders pile in. Looking at the long-term chart, you can see that IGC stock has a history of price spikes and then falling back down.
IGC Stock Bottom Line
Trade it, but don’t hold it. IGC stock has burned long-term holders in the past. Ride the momentum while it lasts.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NYSEMKT:IGC or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.