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Wednesday, October 21, 2020

Arch Therapeutics Inc (OTCMKTS:ARTH) Holds its Ground

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Arch Therapeutics Inc (OTCMKTS:ARTH) is a penny play that has been back and forth in a wide range for the past 4 months, but always on the radar for most OTC traders. The Company is still pre-revenue, but appears to be acting with confidence and has not abused investors on its path to its current status.

The narrative here is an easy one to get excited about: This company developed a novel approach to stop bleeding and control leaking during surgery and trauma care. For a sense of the opportunity in this niche, consider that well over half a million people die each year in surgery in the US alone. The most common cause is blood loss. ARTH has developed the AC5 Surgical Hemostatic Device, which has been proven to stop bleeding in an average of 10 seconds.

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.

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The Company has taken to the road of late to show off its goods at two different high-profile conference presentation spots in the last couple weeks. In that time, we’ve witnessed continued consolidated activity but a clear bid off key support in the $0.55 area. Market participants may want to pay attention to this stock for a few reasons right now.

ARTH has a track record that includes a number of dramatic bounces and it’s a strong performer in the micro-cap space this year, with strong gains of over 200% year-to-date. It’s IP has passed some critical milestones and is on track for commercialization over time in a market space clocking at about $133 bln in 2016.

The stock is also interesting simply for the fact that ARTH has seen some clear promotional activity and investor awareness campaigns this year but has not really given back those gains and we have not seen any reverse splits covering up a process of stealth dilution. The balance sheet looks strong and we see some “stickiness” in the narrative.

The Company also recently reported successful results from its initial study of safety and efficacy for the flagship product. The primary endpoint was safety throughout the surgical procedure and until the end of a 30-day follow-up period post procedure. The primary objective was met, as the safety outcomes of both the AC5 treatment group and the control group were similar. No serious adverse events were reported.

A secondary endpoint was performance as assessed by time to hemostasis. The median time to hemostasis of wounds in the AC5 treatment group was 41% faster than for those in the control group. This result was statistically significant. An additional secondary endpoint of healing of treated wounds was assessed as measured by the ASEPSIS wound score at Days 7 and 30. All AC5-treated wounds healed satisfactorily as per wound healing scoring criteria.

Terrence W. Norchi, MD, President and CEO of Arch Therapeutics, said, “As we had anticipated, these top-line data support the idea that AC5 was safe and performed as expected in the patients enrolled in this study throughout the completion of the patient assessments post-treatment and as supported in the subsequent statistical analysis. These successful results mark a significant milestone in the development of AC5 and we are grateful to all of those involved in the process. We look forward to further advancing our self-assembling peptide technology platform for this and other applications, including through conducting additional studies.”

Now commanding a market cap of $81.3M, ARTH has a significant war chest ($5.75M) of cash on the books, with total assets exceeding $5.9M, which must be weighed relative to an appreciable load ($975.12k) of total accumulated debt. So, this is a fiscally responsible name, as far as we can see. There is also a narrative here that has some undeniable potential, and plenty of cash on hand to press the issue. For continuing coverage on $ARTH and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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