Thursday, July 7, 2022

Arch Therapeutics Inc (OTCMKTS:ARTH) Struggles After FDA Announcement

Arch Therapeutics Inc (OTCMKTS:ARTH) shares disappeared from upper range reaches this week in a sharp downward gapping move that was accompanied by very high volume. The catalyst? Management just announced that the Company has withdrawn its 510(k) notification for its medical device AC5 Topical Gel, from the Food and Drug Administration (FDA) with plans to submit a new 510(k) as soon as possible following further discussion with the FDA.
The result, as noted, was a dive leading to a major gap lower for ARTH shares. The big question for shareholders at this point is… what next? This story has been in many ways defined by this 510(k). The story first broke early this summer and sent shares launching higher. Given the circumstances, the fact that shares didn’t close more in the red off the news this week should likely be viewed as somewhat of a positive.
Arch Therapeutics Inc (OTCMKTS:ARTH) bills itself as a company that operates as a life science medical device maker. The company focuses on developing products based on a novel technology to stop bleeding and control leaking during surgery and trauma care.
Its lead product candidate is AC5 Surgical Hemostatic Device, a biocompatible synthetic peptide comprising naturally occurring amino acids to achieve hemostasis in minimally invasive and open surgical procedures. It’s an innovative self-assembling peptide technology platform but is still in development at this point.
The company was founded in 2006 and is based in Framingham, Massachusetts.
According to company materials, “Arch Therapeutics, Inc. is a biotechnology company developing a novel approach to stop bleeding (hemostasis), control leaking (sealant) and manage wounds during surgery, trauma and interventional care. Arch is developing products based on an innovative self-assembling materials technology platform with the goal of making care faster and safer for patients. Arch’s initial development stage product candidates are the AC5 Surgical Hemostatic Device and AC5 Topical Hemostatic Device.”
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As noted above, shares of ARTH broke lower in a deep gap-down on Monday in response to the company’s announcement that it was withdrawing 510(k) notification. Shares did manage to power back higher during the course of the day, but still gave up nearly 30%.
Terrence Norchi, MD, President & Chief Executive Officer of Arch, commented, “We have been involved in productive and positive interactions with the FDA, and the agency has been very engaging. Unfortunately, the FDA requested certain additional information that was not feasible to provide within the congressionally mandated MDUFA deadlines, and so we withdrew our application to provide additional opportunities to resolve the issues raised by the FDA. We remain confident in the data package that we submitted, and that after working further with the FDA, we will be able to submit another 510(k) that is supportive of clearance for AC5 Topical Gel.”
As the company’s release suggests, while Arch still anticipates obtaining marketing clearance in 2018, commercialization of AC5 Topical Gel is expected to be delayed by approximately one to two quarters until the first half of 2019 based on the information currently available to the Company.
The 510(k) submission for AC5 Topical Gel, which was first submitted back in July of this year and accompanied a major breakout for shares of the stock, is the first step in a more comprehensive regulatory strategy for this product and the AC5 platform, including internal surgical applications. Plans for additional submissions continue in line with expanding commercial potential.
Dr. Norchi concluded, “Arch remains focused on manufacturing scale-up, clinical regulatory strategy, and developing commercial partnerships, and execution of operating plans.  We are still awaiting further interactions with the FDA, and expect to provide additional updates as we learn more.”
Earning a current market cap value of $75.4M, ARTH has a significant war chest ($6M) of cash on the books, which stands against virtually no total current liabilities. The company is pre-revenue at this point. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $ARTH stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ARTH, either long or short, and we have not been compensated for this article.

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