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Why the Zelda Therapeutics Ltd share price rocketed 20% higher today

The Zelda Therapeutics Ltd (ASX: ZLD) share price has been one of the biggest movers on the market today.

At the time of writing the medicinal cannabis company’s shares are up 20% to 8.9 cents.

What happened?

This morning Zelda announced that it has entered into a strategic manufacturing and distribution agreement with Chile-based Knop Laboratorios.

According to the release management believes the agreement will form an important part of Zelda’s Chilean activities.

As well as locking in a high quality supply of Zelda’s formulated medicinal-cannabis medicines for its planned clinical trials, the agreement secures a scalable and GMP-grade source of commercial quantities following product registration.

Furthermore, as Knop operates a chain of pharmacies throughout Chile, it could potentially become a key distribution channel for Zelda’s products following the completion of its clinical trials.

Zelda’s trials are focused on insomnia, eczema and autism. Results for its insomnia and eczema trials are expected to be released by the end of the year. If all goes to plan the company could be generating sales in the not so distant future.

Should you invest?

Like its peers Creso Pharma Ltd (ASX: CPH) and Auscann Group Holdings Ltd (ASX: AC8), I think Zelda has significant growth potential.

However, there is still a long road ahead and many challenges to overcome. For this reason I will continue to watch on from the sidelines with a keen interest.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.