In trading and investing, it's important to understand price action. Good news is typically bullish for a stock and it goes up. Likewise is true with bad news and a stock goes down. What's perplexing for investors is when a stock has bullish news and it goes down. Usually that is not supposed to happen. When that happens, investors and traders need to step back and ask why.This is what happened with Rich Pharmaceuticals (OTCMKTS:RCHA). RCHA announced that they had received FDA approval for a phase 1/2 study in AML and MDS. While on the surface it sounds like good news, the market was looking for more. As you can see, shares of RCHA have been in a downtrend all year.The announcement said:
"The Company has received approval from the U.S. Food and Drug Administration (FDA) to commence its Phase 1/2 clinical for the treatment of Acute Myelocytic Leukemia (AML) and Myelodysplastic Syndrome (MDS) patients. The FDA has approved the Company's Investigational New Drug (IND) application and has approved the Company's commencement of a clinical program titled "A Phase 1/2, Evaluation of the Safety and Efficacy of RP-323 in Combination with all-trans-Retinoic Acid, Sodium Butyrate, and 1α, 25-dihydroxyvitamin D3 in Subjects with Relapsed or Refractory Acute Myeloid Leukemia (AML) or Myelodysplastic Syndromes (MDS)". This approval gives the Company an immediate go ahead to start patient enrollment for a Phase 1/2 study using Rich Pharmaceuticals' lead compound RP-323 in clinical trials."
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The good news is that there's not much further shares can fall. However, the problem is that there are 4.42 billion shares outstanding. One billion of which changed hands on December 29 when the FDA press release came out. Most of this volume was selling and hitting the bid as some investors chose to get out while the volume was there and take their losses.
The interesting thing with RCHA is that there is potential. AML, also known as Acute Myelogenous Leukemia, is the most common acute leukemia type that affects mostly adults. AML is an aggressive form of cancer of the blood and the bone marrow, characterized by the rapid growth of abnormal white blood cells that accumulate in the bone marrow and interfere with the production of normal white blood cells. In the U.S., over 20,000 new cases of AML are diagnosed annually.
MDS, or myelodysplastic syndrome, occurs when the blood-forming cells in the bone marrow are damaged which leads to low numbers of one or more types of blood cells. In MDS, some of the cells in the bone marrow are damaged and have problems making new blood cells. Many of the blood cells that are made by these damaged cells are not normal. The abnormal blood cells die sooner than normal cells, leaving the person without enough normal blood cells and with low blood counts. MDS can turn into a fast-growing cancer of bone marrow cells called acute myelocytic leukemia and occurs in about 1 out of 3 people with MDS.
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RCHA's primary development stage product candidate, RP-323, is being designed to treat blood and cancer related diseases through non-evasive outpatient facilities. RP-323 is a phorbol ester, which induces differentiation and/or apoptosis in multiple cell lines and primary cells, activates protein kinase C (PKC), and modulates the activity of multiple downstream cell signaling pathways, including mitogen-activated protein kinase (MAPK) pathways. RP-323 induces PKC to produce NF kappa, which then produces NF kappa B that has the ability to regulate cellular responses by entering into the nucleus of cells. NF kappa B binds to DNA and changes the nature of the cell and (1) induces differentiation; (2) induces proliferation; (3) cytokine induction; (4) and/or apoptosis.
The biggest concern that we have with RCHA is that the company keeps issuing new shares to fund existing operations. There are risks if the company can remain in business. However, if there is some new developments from RCHA, the stock could pop quite a bit. We saw that back in February when the stock ran to almost $.02 a share. Don't miss out on the next move in shares of RCHA. Sign up for the latest updates and find out when RCHA is going to run again.
Disclosure: We own no shares of RCHA and have not been compensated for this article.
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