Arch Therapeutics Inc (OTCMKTS:ARTH) Awaits FDA Decision

Arch Therapeutics Inc (OTCMKTS:ARTH)

Ironically, Arch Therapeutics Inc (OTCMKTS:ARTH) was trading below $0.50 a year ago before the biotech stock went north and hit a 52-week high of $0.78. Still, the medical device company is trading around double what it was trading at in early 2016. The company’s success in the market tracked the success of its AC5 surgical hemostatic device. Hemostasis is a process that causes bleeding to stop.

Arch Therapeutics Inc (OTCMKTS:ARTH) is based out of Wellesley, MA and develops surgical care products designed to stop bleeding and control leaking – amongst other benefits. AC5 is their lead product candidate and is applied directly into wounds through a spray or liquid squirt. AC5 is designed to invade the nooks and crannies of the connective tissue and build into a physical structure that ceases bleeding or the leakage of other bodily fluids. Needless to say, the market is enormous for a liquid medical product that can stop bleeding effectively.

Earlier this year, Arch Therapeutics Inc (OTCMKTS:ARTH) had a registered direct offering for over 10.1 million units. Each unit consisted of one shares of ARTH and a 0.55 of a Series F Warrant that is exercisable at $0.75 per ARTH share and have a term of five years. Each unit was sold at $0.60 and total gross proceeds are expected to be in the range around $6.1 million and around $825,000 of that total will be used to retire some debt. The company expects the raised cash to be able to fulfill operational expense demands into the 3rd quarter of 2018.

More recently, Arch Therapeutics Inc (OTCMKTS:ARTH) announced their intention to file for a 510(k) allowance with the U.S. Food and Drug Administration (FDA). Terrence Norchi, CEO of Arch Therapeutics Inc (OTCMKTS:ARTH), stated in the press release that significant benefits will come to the firm in the form of business opportunities and technological validation if the 501(k) is approved. Approval would also mean a shorter time to market for AC5. As of now, Arch Therapeutics Inc (OTCMKTS:ARTH) expects AC5 to be commercialized sometime in 2018.

YTD, Arch Therapeutics Inc (OTCMKTS:ARTH) has lost over 20% while the S&P 500 has gained around 8%.

 I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

 

Arch Therapeutics Inc. (OTCMKTS:ARTH) To Issue Corporate Update After Stellar Q1 Earnings

Arch Therapeutics Inc. (OTCMKTS:ARTH)

Arch Therapeutics Inc. (OTCMKTS:ARTH) will provide a corporate update on June 6, 2017, after reporting first-quarter earnings that met Wall Street estimates. The developer of novel liquid gel and wound care devices says it generated earnings of $0.01 a share for the first three months of the year – a figure which met analyst expectations.

Quarterly Earnings

The company did not generate any revenues in Q1 2017. Research and development expenses doubled sequentially to $709,000 from $349,000. Sales and General expenses, on the other hand, came in at $1.5 million compared to $1 million as of the fourth quarter.

Arch Therapeutics Inc. (OTCMKTS:ARTH) net income for the quarter ending March 31, 2017, stood at $1.9 million compared to $1.4 million as of December 31, 2016. The earnings report continues to elicit mixed reaction on the street, given the stock’s rating by various equity firms.

Zack’s Investment Research currently has a ‘buy’ rating on the stock having upgraded it from a ‘hold’. Roth Capital analyst, Michael Higgins, on the other hand, has a buy rating on the stock with a share price target of $3.

“Notable changes to our estimates include FDA 510(k) and CE-mark approval decisions by Q1’18, and reduced development costs related to the internal surgical trials from $8-10 million to $3-5 million. While these updates extend its runway and advance potential revenues, we reiterate our price target which is derived from a comps valuation. Potential bidding war for a partnership with Arch on the horizon As Arch does not intend to build a sales force, we expect a partnership with another company in the hemostat/sealant market within the next year,” said Mr. Higgins.

Public Offering

Early this year Arch Therapeutics Inc. (OTCMKTS:ARTH) carried a public offering of its common stock by pricing 10,166,664 units consisting of its common stock and 0.55 of its Series F Warrant. The Series F warrants came with an exercise price of $0.75 a share and is exercisable for five years.

Gross proceeds from the offering totaled $6.1 million before deduction of offering expenses. Part of the funds will be used to pay down the company’s indebtedness to the Massachusetts Life Sciences Center.

Arch Therapeutics Inc. (OTCMKTS:ARTH) finished the day at $0.485 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.