Roth starts Arch Therapeutics at buy

Roth Capital Partners initiated coverage of Arch Therapeutics (OTC:ARTH) with a ‘buy” rating and $3 price target. The stock closed at 66 cents on Feb. 13.

Arch is developing an innovative product that produces a faster cessation of bleeding (hemostasis) and greater surgical control of fluid leakage (sealant) than currently available treatments.

“The $3-billion global hemostat market, which we believe will double over the next seven years, is dominated by a relatively small number of global firms,” writes analyst Michael Higgins. “We believe those firms will be increasingly attracted to, if not threatened by, Arch’s AC5 hemostat as it continues to develop.”

AC5 is a clear gel of self-assembling peptides, which form a scaffold of rod-like nanofibers within seconds of exposure to the ions naturally present in all bodily fluids, including blood, cerebrospinal fluid, and interstitial fluid, he added. The barrier formed is transparent, semi-solid, and adherent to the surface of the bleeding or leaking wound.

“One of the more revolutionary aspects of AC5 is that is has consistently demonstrated a time to hemostasis that is less than 30 seconds in animal and human studies, which is three-to four-fold faster than today’s leading hemostats and sealants,” Mr. Higgins said.

In 2017, Arch plans to file for a CE mark for all indications in Europe and a 510(k) for external topical indications in the U.S. It also plans to submit an IDE to the FDA this year for an internal surgical trial, with the goal of gaining a PMA for internal topical indications in the U.S. in 2020.