Here's Why Rich Pharmaceuticals (OTCMKTS:RCHA) Is Running Up Right Now

It has been 18 months since we first highlighted Rich Pharmaceuticals (OTCMKTS:RCHA) as being a biotech stock to keep an eye on and the company has finally validated our thesis. During the session on Wednesday, Rich Pharmaceuticals ran up to the tune of 156% on its announcing of a support and collaboration type deal that will see it team up with another player in the space (a company called Hypgen) in an attempt to bring a Parkinson's disease drug to market. The arrangement seems – at a glance, at least – pretty strong from Rich's perspective and, while exact terms are yet to be reported, shareholders seem to be in line to pick up a decent portion of the overall pie as and when the collaboration completes.Here is a look at what just happened and how it plays into our long-term thesis for this company.First, for those new to Rich Pharmaceuticals, the company is a development stage biotechnology entity that is working to bring assets to market that treat blood and cancer-related diseases. Its lead asset right now (outside of the latest collaboration with Hypgen, this is) is called RP-323. The drug is under development as a potential therapy treat blood cancer type-diseases through outpatient facilities.In the oncology space outpatient treatment is the gold standard and, if the company can get a drug to market that is able to offer effective and safe treatment in this setting, it could be a real winner. Looking at this one specifically, RP-323 is what's called a phorbol ester, which is a class of drug that works across a host of different mechanisms. Primarily, it induces differentiation and/or apoptosis (also known as programmed cell death) in multiple cell lines and primary cells. Additionally, however, it also activates protein kinase C (PKC), and, in doing so, modulates the activity of multiple downstream cell signaling pathways, including mitogen-activated protein kinase (MAPK) pathways.That's pretty jargony, but it basically means that the drug kills cancer cells and – at the same time – stops them from replicating.An IND for this asset is with the FDA and the company is about to move into a phase 1/2 investigative clinical trial designed to establish safety and to pave the way for a mid-stage trial investigating efficacy. This program lends itself to the reporting of number of catalysts over the next 12 months, and – now this company has started to pick up some speculative attention – these catalysts could serve to induce some upside momentum into the stock as and when they hit press.So that is the in-house operation, what about the Hypgen deal?Well, as mentioned, its primary focus is a Parkinson's disease drug and the collaboration will see Rich provide data, raw materials, and advisory support to Hypgen to assist the latter towards the end game of approval. In return, Hypgen will pay Rich $100,000 and issue the company 15 million shares of Hypgen common stock.Interestingly, and what is playing a key role in the momentum we are seeing in the stock right now, 5 million of these 15 million shares will be issued to shareholders as part of a special dividend as and when the deal closes. This means that as well as holding an exposure to a drug that is about to enter the clinic in a blood cancer indication, Rich shareholders also control a stake in an asset that should enter the clinic late this year, or early next year, in Parkinson's disease. These are both billion-dollar indications if the assets in question prove effective along their respective development pathways, making Rich a high reward play at current prices.This isn't a risk-free exposure, of course. Not only are these early stage programs in very tough target indications, but both companies are going to need capital to execute on their operational efforts and any raise is going to be dilutive to shareholders that are already in or taking a position on the back of the latest development.With the long line of catalysts now teed up across the next 12 months, however, any dilution should negate long-term on the back of upside evaluation – assuming the catalysts hit press as positive.We will be updating our subscribers as soon as we know more. For the latest updates on RCHA, sign up below!Image courtesy of Mooganic via FlickrDisclosure: We have no position in RCHA and have not been compensated for this article.