Arch Therapeutics Inc (ARTH)

[LaddyMan]

Just FYI: From today:

http://cnafinance.com/penny-ante-arch-therapeutics-arth-seals-the-deal/12078


Arch Therapeutics (ARTH) Seals The Deal

The world of penny stocks is a unique place, attracting both the down and outer's as well as the emerging gems of the future, and trying to distinguish between the two is not always an easy task. Arch Therapeutics, however, is proving to be an exception to that dilemma, and is drawing investors a road map that defines the path for ARTH to become a winner.

Not all stocks are destined to live in the land of copper for eternity, many are emerging companies that need time and an inexpensive public listing to gain traction and resources. Once discovered, though, these emerging gems can offer investors ground floor opportunities to a compelling investment opportunity. One of these prizes is Arch Therapeutics, ARTH, and they have set themselves up to move substantially higher in the coming months.

ARTH Has Already Developed A Novel Hemostasis Device

It's relatively easy to make the case for Arch Therapeutics being titled my Penny Ante stock of the week. In fact, the company has already done most of the legwork for me. Unlike many companies that remain mired on the penny exchange without any real strategic vision, ARTH is executing on its strategic mission and has already developed a novel medical device that has been tested in human trials. Trial data for the AC5 device is proving to be a superior and novel method to cause hemostasis, which is the clotting of blood.

While ARTH has been developing the AC5 medical device for several years, the fruits of the labor finally became public in August of 2015. It was then that ARTH announced the top line results from its first in human trial of its AC5 Topical Hemostatic Device.

Investors were delighted to hear that the AC5 had met both its primary and secondary endpoints with statistical significance, recording a p<.001 score using the Wilcoxin model, suggesting that the likelihood to repeat the trial results in the future will be highly probable. I'll get to the results in a bit.

What Is The AC5?

First, let me briefly explain what the AC5 is and also the significance of ARTH having the device classified as a "medical device" for trial purposes.

The AC5 is a dynamic medical device that utilizes a synthetic peptide that is comprised of naturally occurring amino acids. The way that ARTH has harnessed the power of these peptides has led to a discovery that provides significant benefits over existing treatments to both control and arrest bleeding during surgical or traumatic situations. Obviously, the ability to control bleeding is of utmost importance in many situations, whether it be during surgery, during a triage situation of for the direct benefit of treating hemophilia in an everyday setting. The AC5 successfully addresses each and every situation that requires the cessation of bleeding.

In surgical procedures, the AC5 allows a surgeon to control both the flow of blood as well as liquids, creating a quick and incisable seal to a particular area of interest. The sealing peptide is clear, similar to a pliable urethane band-aid, that can be used intermittently during a procedure and can also be quickly cut away at appropriate times. The AC5 peptide naturally dissolves within a few days, thus, no need for a visit to the physician to have the stitches removed. The AC5 peptide can be an acceptable alternative for both internal and external sutures.

Beyond trauma and surgical situations, the AC5 has shown additional applications in being used to provide a sealant for procedures such as colonoscopy biopsy, device implantation and a host of other procedures that require an intentional opening in the body or the need to provide a controlled bleed in the patient.

ARTH Demonstrates Clear Advantages With The AC5

The results that were reported in August demonstrated both safety as well as efficacy. The AC5 met both the primary and secondary endpoints with no adverse safety issues or unexpected responses from patients. The AC5 trial was a controlled study that used an untreated control group to measure safety, and no discernible difference was detected between the two groups.

The secondary endpoint assessed the performance of the AC5 device when measured against time to hemostasis, which is stopping the flow of blood. ARTH reported that the median time to hemostasis of wounds treated by the AC5 performed 41% faster than patients that were in the control group. The data was supported by a p<.001 score on the Wilcoxin scale.

Additionally, ARTH analyzed the healing of wounds measured against the ASEPSIS wound score at intervals of both 5 and 7 days, respectively. Arch reported no evidence of adverse side effects when the AC5 device was used to treat the wound and that the ASEPSIS score remained at "0" in both the treated and untreated wounds during the follow up evaluation periods. The company further reported that all of the wounds treated healed satisfactorily and well within the normal range and biological function expected.

The study design included 46 patients, including ten that were prescribed antiplatelet monotherapy. The study analyzed wounds created as a result of an intentional incision in at least two skin regions, under local anesthetic and in the same medical setting. The trial was randomized, with one of the lesions receiving treatment from the AC5 and the second lesion receiving a standard method of treatment and a placebo. All patients received follow-up treatments on scheduled intervals with Day 30 marking the end of the subject study.

The results of the trial were summarized by Jack Kelly, MD., Principal Investigator of the study. Dr. Kelly stated, "These study results indicate significant potential for AC5 in the treatment of bleeding skin wounds. The safety and efficacy outcomes for AC5 in this study were impressive and reassuring. While possessing a safety profile at least as good as that of the control group, AC5 was associated with a clinically significant improvement in time to hemostasis. We are encouraged by how patients responded to the unique formulation of AC5 and how easy it was for a clinician to use."

ARTH Releases Additional Trial Results In October

While investors responded well to the news, with ARTH stock rising over 50% since the initial data release, investors were still anxious to hear the results related to the effectiveness of the device with patients being treated with antiplatelet therapy. The results did not disappoint, demonstrating the ability for the AC5 device to effectively treat this patient population, an extremely important component to the potential application of the device.

On October 31, 2016, ARTH released the data relevant to the antiplatelet group. In the release, ARTH reported additional positive data from its recently completed single center, randomized clinical trial. The new data was significant.

ARTH reported that the analysis of patients who are prescribed antiplatelet medications (blood thinners), had indicated that the AC5 device had similar and positive effects for that subgroup of patients.

In particular, ARTH reported that both the primary and secondary endpoints were reached in this subgroup as well, with a shorted time to hemostasis. These results appear to indicate that the AC5 treatment is not affected by a patients use of blood thinners, a potential cause of concern in trauma situations. The median time to hemostasis for the subgroup was less than 30 seconds, 41% faster than the control group.

Jack Kelly, MD., provided additional commentary on the results, "We have been impressed with how patients in this study responded to treatment and how easy AC5 was to use. The favorable safety and efficacy profile of AC5 in the overall study was supported when looking at the subset of patients taking anti platelet therapy, which is particularly noteworthy. Many patients have perturbed hemostasis pathways, whether from natural disease or the use of prescribed or over the counter blood thinners, therefore we always have a concern about more bleeding in these patients. AC5 may provide their care providers a valuable tool to address those challenges."

What Now For ARTH

At this point, ARTH has eliminated much of the potential headline risk associated with the AC5 device. The regulatory pathway for ARTH, with the AC5 being classified as a "medical device" for trial purposes, enjoys an expedited approval process, saving valuable time and resources. FDA processes were enhanced in 2011 that allows for breakthrough medical devices, such as the AC5, to qualify for expedited approval under its Innovative Pathway initiative.

ARTH plans to submit the trial data for peer review and will include all of the data in its regulatory filings expected to occur by the end of the year. Additionally, ARTH will be filing for its CE mark prior to year end. The CE mark is important in that it indicates that EU regulators have accepted the device in whole, meeting all applicable requirements of EU directive, MDD, IVDD and ensures active implantable medical device conformity as it specifically applies to the device or product.

Further, the company is comfortable from a balance sheet perspective. However, investors have been eager to hear the company comment on potential licensing and partnership deals. ARTH has close associations with Johnson & Johnson , and the two would make a strong fit as either partners or through a licensing collaboration. Although ARTH is comfortable at the moment financially, the cost of developing and marketing the device on their own would be an extraordinary task. For that reason, management would be wise to consider all options available to the company.

ARTH Is Cheap!

With the AC5 already delivering statistically significant results related to the trial endpoints, much of the share price risk is muted. With the stock trading at just .61 cents, the opportunity is ripe for the early adopter. ARTH has traded up to the .90 cent level during a volatile three months of trading, however, the .60 cent range appears to be a magnet as of late. The stock has been extremely resilient to bounce higher from levels below .60 cents.

Daily average volume for the shares has been roughly 461K shares per day and the stock tends to react positively to volume in excess of 750K shares per day. The RSI is sitting at roughly 51, putting the stock in a position to rally on renewed interest.

I have followed Arch for a considerable amount of time and find the company to be extremely undervalued and under appreciated at these levels. The device has broad and meaningful applications and has already cleared the highest hurdles. With ARTH trading on the BB exchange, the stock has been whipped around in both directions, lacking the comfort provided by a larger group of market makers and participants.

With the data released in August, fortified by the news in October, ARTH should be trading much higher, in my humblest of opinions. However, being that it is not allows them to become a focus one stock for Penny Ante coverage. It also allows investors a great opportunity.

Arch Therapeutics is a strong company with solid management and now has a device proven to be effective and simple to use. It's only a matter of time before ARTH gets the exposure they deserve. And, once discovered, investors can expect a reasonable move higher, certainly high enough to move them up to Dollarsville, a place where they will be well received.