Arch Therapeutics Inc (OTCBB:ARTH) On The Verge Of A Breakout

Shares of Arch Therapeutics Inc (OTCBB:ARTH) have consolidated nicely since making their bull run back in March and April. After announcing some big patent news and a $3.4m private placement, investors are asking what's next. One things for sure, there's a floor on the stock with the current financing done at $.36 per share.Arch Therapeutics describes itself as “a biotechnology company developing a novel approach to stop bleeding (hemostasis) and control leaking (sealant) during surgery and trauma care. Arch is developing products based on an innovative self-assembling peptide technology platform to make surgery and interventional care faster and safer for patients. Arch’s flagship development stage product candidate, known as the AC5 Surgical Hemostatic Device, is being designed to achieve hemostasis in minimally invasive and open surgical procedures and is intended to be regulated as a medical device.”One of the main reasons that we like Arch is that the company has been steadily building its IP portfolio. In early April, the company announced that a notice of allowance from the U.S. Patent Office had been received on a broad method of use patent assigned to the Massachusetts Institute of Technology (MIT) and Versitech Limited, and which is exclusively licensed worldwide to Arch. The broad method claims of the patent cover techniques for preventing the loss or unwanted movement of body fluids, through the application of Arch's present and future potential products in development. These potential products contain peptides that self-assemble into barrier structures on tissue that inhibit or prevent the passage of bodily fluids. Examples of procedures supported by this intellectual property include the use of hemostatic agents to stop bleeding and use of sealants to stop leaks.At the end of April, Arch announced that it received a notice of allowance from the U.S. Patent Office for a broad method-of-use patent that covers systemically administering the company's self-assembling technology for treating damaged extracellular matrix and leaky tight junctions. The key here is that many disorders are associated with leakage around blood vessels and within the tight junctions between cells. Such leakage can lead to fluid invading the tissues, causing a loss in blood pressure, organ dysfunction or failure, and death. Some examples include inflammatory bowel disease, sepsis and ischemic stroke.In early May, Arch received a notice of allowance from the U.S. Patent Office for a broad composition of matter and method of use patent that covers solid forms of the company's self-assembling technology. The invention describes, among other things, a mesh that includes dehydrated or dried fibers of self-assembling peptides. The mesh may further incorporate additional therapeutic, prophylactic and/or diagnostic agents. The mesh can be used for controlling the movement of bodily substances including, for instance, blood, in order to provide hemostasis. Many clinical scenarios can lead to undesirable loss of bodily fluids as a result of injury, disease or surgery. This invention would enable Arch to use a solid form of its self-assembling peptide technology to provide mechanical support and provide a barrier to bodily fluids.Then Arch announced that the U.S. Patent Office had issued a composition of matter patent, which is assigned to the Massachusetts Institute of Technology (MIT) and Versitech Limited, and which is exclusively licensed worldwide to Arch. The broad composition claims of the patent cover products that contain non-classical peptide molecules, called peptidomimetics, which self-assemble into barrier structures on tissue that inhibit or prevent the passage of bodily fluids. The peptidomimetic molecules mimic peptide structure, have general features analogous to a parent peptide, and can have properties that are advantageous when compared to the otherwise similar peptides that they mimic. Examples of potential products covered by this patent include hemostatic agents to stop bleeding, and self-assembled barrier structures that prevent contamination and stop leaks.Currently trading with a market cap of $44 million, ARTH is an exciting story on the OTC Markets. Investors need to be impressed that the company has been able to raise money at higher levels. For the first part of this year, ARTH traded primarily between $.175 and $.20 per share. An equity raise at $.36 per share is a big deal in our opinion and is a real vote of confidence in the company and CEO Dr Terrence Norchi. We will be updating Insider Financial as soon as we know more. For continuing coverage on ARTH, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in ARTH and have not been compensated for this article.