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RenovaCare Inc (OTCMKTS:RCAR) Is A Sleeping Giant

RenovaCare Inc (OTCMKTS:RCAR) Is A Sleeping Giant
Written by
Chris Sandburg
Published on
May 10, 2017
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RenovaCare Inc (OTCMKTS:RCAR) has been a roller coaster of a stock across the last six months. The company went for less than a dollar a share as recently as November 2016, before hitting highs of $5.5 a share mid-February. This more than 450% run preceded a correction back down to in and around $2.6 a share during April, which in turn preceded a run back up to $4.75 a share at the start of this week. During yesterday's session, however, RenovaCare gave back around 15% and currently, trades for $4.05 apiece. That's still not a bad return on the above-mentioned November pricing, and the date we saw over the last month or so likely came on the back of shorter-term operators pulling profits off the table.For those holding a position, however, or anyone looking to pick up an exposure this price, the question is, what's next?Let's take a look.Some reading might already be aware that this company is a biotechnology play, with a lead target of treating burn-related wounds. Its primary asset is called the CellMist System, which comprises two individual assets – SkinGun and the CellMist Solution. The way these assets fit into one another is that physicians use the SkinGun to spray a liquid suspension of a patient’s stem cells – the CellMist Solution – onto wounds. The idea is that these stem cells will then reproduce and convert into healthy skin cells, aiding the healing of the burn-induced wound. It's not that different in concept to the current standard of care treatment, a skin graft, but it requires far fewer skin cells (generally around a 2" x 2" piece of skin) and based on early-stage evidence, can result in a far more aesthetically pleasing outcome for the patient.The thing to recognize with this company, and the technology outlined above, is that it's very early stage. Aside from a batch of preclinical evidence collected before the company even acquired the device from its university-based developer, there is very little in the way of certified data to support its efficacy. We are not saying it doesn't work, the data that is in place is remarkable. Just recently, RenovaCare put out a summary (and some pictures; warning: graphic) that illustrates the quick and effective treatment of burn victims across a wide range of burn types, and this summary reinforces the above-discussed data. Also notable is the fact that the data referenced above resulted in a shift to using the technology as a standard care therapy in the University Hospital in which he was being tested. The following is a quote taken from RenovaCare's latest filing:

"The same researchers concluded that, “We refuse to perform a prospective randomized study with groups in which traditional skin grafting and/or wound healing are still applied for the therapy for deep dermal burns due to the excellent results in our study. The method of CEA spray application has become our standard of care for these indications. The faster wound closure, the promotion of spontaneous wound healing by keratinocyte application, as well as the preservation of donor sites are further advantages of the method.”

The problem is, however, even with evidence like this in place, the company is going to have to carry the drug through a standard drug and device development process, and this brings with it the risk and dilution commonly associated with stocks at this end of the healthcare space. It also, however, brings with it the potential for upside that we see in companies of this nature, and the above-discussed data somewhat mitigates the risk of backing the regenerative asset, as compared to, say, a preclinical small molecule type drug.So what's next?Well, as we noted earlier in the year, it's all about getting the development pathway underway, and we expect management to do just that before the end of 2017. Cash on hand right now will reportedly last through July this year, meaning we are going to see some degree of dilution over the next month or so. On the back of any raise, however, we are looking for an announcement as to exactly what the company intends to do from a timeline perspective in terms of getting this one up and running in the clinic. Once we see said announcement, and the strategy gets underway, the catalysts should start rolling in.Management stated in the latest filing that investor communications expenses decreased during the first three months of this year as compared to the first three months of last year, and we think this is likely symptomatic of the volatility we have seen in share price – or at least, that is, the company's inability to put forward a sustained upside run. In the same filing, however, management also noted that the company expects research and development expenses to increase during the second half of 2017, indicating to us that it plans to get the ball rolling on the above-mentioned pathway.Bottom line, we've not heard anything new from this company for a while, but that doesn't mean there is nothing going on behind the curtain. As RenovaCare shifts up a gear and starts the research and development process for the CellMist System, milestones and catalysts should line up for traders to load up ahead of.We will be updating our subscribers as soon as we know more. For the latest updates on RCAR, sign up below!Disclosure: We have no position in RCAR and have not been compensated for this article.

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