An Update On Arch Therapeutics Inc (OTCMKTS:ARTH)

Arch Therapeutics Inc (OTCMKTS:ARTH) has been of our top biotech picks for 2016. The latest news from the company just reaffirms our conviction. Arch successfully met the objectives of its recently completed single-center, randomized, single-blind prospective clinical study (NCT 02704104) of the AC5 Topical Hemostatic Device in skin lesion patients with bleeding wounds. This was the first study assessing the safety and performance of AC5 in humans. While the markets reaction was muted, there were plenty of buyers on the bid and we feel that a licensing deal/partnership is just around the corner.First off, a little background on the company. Arch Therapeutics, Inc. is a MEDICAL DEVICE 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 surgical procedures.The clinical study enrolled 46 patients, including 10 who were taking antiplatelet monotherapy. Each patient had bleeding wounds created as a result of the excision of at least two skin lesions under local anesthetic in the same setting. On a randomized basis, one lesion received AC5 and the other(s) received a control treatment consisting of standard therapy plus a sham. Each subject was followed-up for safety assessment both on Day 7 and again on Day 30, which marked the end of the subject's participation in the clinical study.

The objectives of the study were to evaluate the safety and performance of AC5 in patients scheduled to undergo excision of skin lesions on their trunk or upper limbs. The primary endpoint was safety throughout the surgical procedure and until the end of a 30-day follow-up period post procedure. Safety of the clinical investigation device was determined by monitoring for treatment related adverse events. 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 (p < 0.001, Wilcoxon signed rank test).

An additional secondary endpoint of healing of treated wounds was assessed as measured by the ASEPSIS wound score at Days 7 and 30. There was no evidence, at either follow-up day, of an adverse effect of AC5 treatment on the wound ASEPSIS score. The ASEPSIS score did not appear to be compromised, as the majority of patients had an ASEPSIS score of 0 in both wounds at Days 7 and 30. All AC5-treated wounds healed satisfactorily as per wound healing scoring criteria.

Arch's clinical advisory committee has deemed the study results to be clinically significant and have recommended submitting a manuscript to a peer-reviewed medical journal for publication. The company also plans to include data from this trial in a CE mark application for AC5, which is currently anticipated to be filed at the earliest by the end of this year. Arch is currently planning its next clinical-regulatory steps for both the EU and the US. Arch CEO Dr Terrence Norchi said:

"As we had anticipated, these top-line data support 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. These results demonstrate significant improvement in efficacy without compromising patient safety. We believe that AC5 represents a unique technology that will provide both rapid and sustained hemostasis and important differentiable clinical benefits."

Currently trading with a market cap of $86 million, ARTH remains a favorite of ours. You can read more about our recent coverage here and here. We believe it's only a matter of time before Dr Norchi signs a deal with Johnson & Johnson or another big pharma player for the AC5. We can't stress enough that in an operating room or ER, being able to stop the bleeding 41% faster, is the difference between a patient living or dying. Seconds count and this is not something the market has not fully realized yet. This mispricing creates an opportunity for smart investors. It's only a matter of time before ARTH is able to up-list and institutions will be able to purchase shares. Until then, take advantage of this tremendous opportunity with Arch Therapeutics. We will be updating our subscribers as soon as we know more. For the latest updates on ARTH, sign up below!

Disclosure: We are LONG shares of ARTH. We have NOT been compensated for this article.