Wednesday, June 29, 2022

Momentum Building on Arch Therapeutics Inc (OTCMKTS:ARTH)

Arch Therapeutics Inc (OTCMKTS:ARTH) is a micro-cap name that has started to draw some eyes of late once again as ARTH starts to put together the vestiges of an upward trend after a long period of consolidation. For those who recall, this was quite a hot stock last year, ripping over 300% in a steady, strong trend over about 4 months as the company got its message across through a strong roadshow approach.

ARTH has been consolidating in a sideways range for about the past year, but has recently begun to show some real momentum again. The stock has really been on the move since it presented a corporate update at the LD Micro Invitational at the Luxe Sunset Boulevard Hotel in Los Angeles, California. That presentation has been followed by about a 33% rip over the past three weeks.

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, ARTH shares have recently been alive and kicking once again, rising off an announcement of the company’s corporate update at the LD Micro Invitational LA last month.

“This has been an exciting period for Arch,” said Terrence W. Norchi, President and CEO of Arch Therapeutics, Inc. “As previously announced, we expect to file for a 510(k) allowance mid-year for AC5 designed for external use. If the 510(k) filing is allowed by the FDA, we expect that the benefit will be significant in terms of business opportunity and technology validation. We have invested significant time and effort into accelerating our plans for this regulatory application in the US, and we continue to concentrate resources on this objective. We are currently working to scale up production while evaluating and developing further indications. We expect to have commercial product available in 2018.”

Note that section 510(k) of the Food, Drug and Cosmetic Act requires device manufacturers who must register, to notify FDA of their intent to market a medical device at least 90 days in advance. This is known as Premarket Notification – also called PMN or 510(k). This allows FDA to determine whether the device is equivalent to a device already placed into one of the three classification categories.

Hence, devices that are not in commercial distribution prior to May 28, 1976 that have not been classified can be properly identified.

As we understand it, medical device manufacturers are required to submit a premarket notification “if they intend to introduce a device into commercial distribution for the first time or reintroduce a device that will be significantly changed or modified to the extent that its safety or effectiveness could be affected.”

That suggests the company is moving toward the release of a new device that will represent a key change to the available distribution of medical devices currently on the market.

We’ve witnessed 16% added to share values of the company over the past month of action, but that move comes in the context of a larger bearish trend. Market participants may want to pay attention to this stock. ARTH is a stock who’s past is littered with sudden rips. Furthermore, the stock has registered increased average transaction volume recently, with the past month seeing 45% beyond its prior sustained average level.

Earning a current market cap value of $95.7M, ARTH has a significant war chest ($7.2M) of cash on the books, which compares with virtually no total current liabilities. The company is pre-revenue at this point. This is an exciting story, and we look forward to a follow-up chapter as events transpire. For continuing coverage on shares of $ARTH stock, as well as our other breakout picks, sign up for our free newsletter today and get our next hot stock 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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