Borislav Tonev

A Disappointing Performance From Arch Therapeutics Inc (OTCBB:ARTH)'s Pumpers

by Borislav Tonev July 31, 2013
20ARTH.pngIt's been over a month since we wrote our first article on Arch Therapeutics Inc (OTCBB:ARTH, ARTH message board) so it's fair to say that for the last forty-one days we've been keeping a close eye on them and, even if we do say so ourselves, we have left nothing pass by unnoticed. Naturally enough, when we saw that the stock has lost around 10% of its value during yesterday's session, we were determined to find out why.

There's been a long-lasting pump for ARTH which started on July 8 when a landing page disclosing a $790 thousand compensation went live. Then, a couple of days later, a paper mailer brochure was distributed and it said that the total promotional budget is $2.9 million. Along with it, the newsletters controlled by Providence Media Strategies LLC also sprang to life and sent out their first emails in a while, boasting ARTH as their latest pick and sporting a disclaimer which says that the people who stand behind Providence have pocketed $200 thousand for their efforts. Earlier this week, however, the disclaimer on the aforementioned landing page was apparently edited and it now says that the compensation is over $1.2 million. The diversity of figures around the fine prints means that we can't really be sure how much exactly was paid for the whole campaign but we're pretty certain that "a colossal amount of money" is somewhere near the mark.

About an hour and a half before the start of yesterday's session The Bedford Report, Five Star Equities and Paragon Report sent out their latest alerts and they titled them "ARTH Update! Must read for all shareholders". The emails themselves contain no new information whatsoever, but experience has taught us that when the pumpers say "Update" and put a lot of exclamation marks, something interesting is going to happen. Sure enough, an hour after the emails from Providence Media hit our inbox, ARTH came up with a press release.

According to MarketWired, the announcement was published at exactly 9:00AM and it was supposed to "report on the current activities". Having read through the PR a couple of times, we're not sure what's so current about the activities depicted in it since we know about the AC5 treatment, we know that if it sees the light of day, it will be extremely efficient and we know that ARTH are still somewhere deep in the pre-clinical stage of testing. All in all, just like the emails, ARTH's "update" is nothing to get particularly excited about.

Apparently, we weren't the only ones who had some complaints about ARTH's announcement. We stumbled upon this article on a website called SmallCap Network (SCN) which, when you take the time zone difference into account, appears to have been published about two hours after the press release. That's an astonishingly short period of time considering the amount of research that has gone into writing it.

It's content however, is more interesting. You can see that the author is criticizing ARTH for not "doing any justice" to the company and the product that nobody (outside the people who are developing and testing it) has ever seen. The author says that the AC5 is far superior to anything that modern medicine (or medieval, for that matter since he speaks about cauterization) has to offer and when you read through his narrative, you get the sense that he has tested it himself which in turn makes you realize what the sole purpose of the article is - pumping ARTH. A quick look at the disclaimer, reveals that SCN have pocketed $9 thousand for their efforts. What does that mean to the regular investor?

7ECAU.pngIt means that we have a new member of the pumping team employed to give ARTH another boost, and by the looks of things, this isn't particularly effective since shortly after SCN's article went online, the ticker started sliding and by the end of the day, around a tenth of the value was gone. That said, we're not surprised by the poor performance since we've seen the same outfit and the same author being equally convinced about Echo Automotive Inc (OTCBB:ECAU)'s success, who have lost around 80% since SNC's coverage on them.

Their presence however, also suggests that the pump is far from over which in turn means that ARTH, along with other promoted tickers like Xumanii, Inc. f/k/a Medora Corp (OTCMKTS:XUII) and Sanborn Resources Ltd (OTCBB:SANB), remains on the list of the riskiest investment options in Pennyland. Make sure you have that in mind before making your final decision.

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