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GUIDED THERAPEUTIC COM USD0.001 (POST REV SPLT) (OTCBB:GTHP) Is Ready To Run On FDA Approval

GUIDED THERAPEUTIC COM USD0.001 (POST REV SPLT) (OTCBB:GTHP) Is Ready To Run On FDA Approval
Written by
Chris Sandburg
Published on
January 30, 2017
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GUIDED THERAPEUTIC COM USD0.001 (POST REV SPLT) (OTCBB:GTHP) is a company we have come back to on a number of occasions over the past twelve months or so. It's one of those biotechnology companies that has incredible promise, but can't seem to find its groove in terms of living up to this promise and – in turn – rewarding shareholders with some value add. Throughout early January, the company ran up from its year open price around $0.31 a share, to January 25 highs just short of two dollars a share. That's a 500% gain. Post highs, however, the company has corrected, and currently sits around 35% of the peak.

A couple of things are worth discussing here. The first, the driver behind the gains. The second, our suggested driver behind the subsequent correction, and why we think this correction is an opportunity to get in at a discount ahead of a return to the upside momentum.By way of a quick introduction, Guided is a diagnostics company, with a lead asset called LuViva. It is targeting the replacement of the current standard of care diagnostic test for cervical cancer – a Pap smear test. The latter is the scraping of cells from a female's cervix and then the subjection of the cells to diagnostic test procedures in an attempt to identify potentially cancerous cells. It's invasive, and while highly effective in diagnosing cervical cancer, many females don't have the test because of this invasiveness. With LuViva, Guided has brought an alternative to market that is noninvasive. It works by employing a technology called biophotonics to detect both physical and chemical changes in tissue that present early signs of cancer. It's instantaneous from a results perspective, and non-invasive in that it’s undertaken using a scanning tool outside the body.It is already selling in Europe, Asia, Canada and Russia, and in certain instances it is being used in the US, but it doesn't yet have FDA approval as an alternative diagnostic test in a cervical cancer indication in the US.In our previous coverage, we noted that the company is working towards approval from the FDA, and this was what we were looking for as a medium-term major catalyst for Guided. As seen since, this company will move on any hints that FDA acceptance is just around the corner, so any news can be seen as an immediate upside injection.The most recent announcement, however, didn't relate to the US.Instead, it addresses a distribution deal signed with a Chinese entity called Shandong Yaohua Medical Instrument Corporation. The latter has picked up the sales and manufacturing rights for LuViva for China, Taiwan, Hong Kong and Macau, in return for $1 million upfront, the purchase of a minimum of ten LuViva Advance Cervical Scan devices in 2017 and royalties for disposables based on minimum orders once Chinese Food and Drug Administration (CFDA) approval is obtained.Considering this company currently only holds a market capitalization of a little over $700,000, a $1 million upfront injection of capital will make a lot of difference to markets' perceived valuation of Guided.It’s the second part of the deal, however, that we think has driven a correction (aside from, of course, the standard profit-taking on the run). That is, Guided has agreed to issue $1 million in common stock to Shandong in order to "further align the strategic interests of the parties".This issue has caused a bit of downside momentum, but importantly, it derives from already registered equity and as stated in the 8K that detailed the transaction, the issue did not involve (or require) the registration of any new securities. This minimizes the impact in current shareholders (a base that is still likely reeling from a recent split).So, what's next?The above mentioned CFDA approval will be a big catalyst, as it opens up the door to some Chinese royalties. The major one, however, is the FDA nod. When this hits press (and we think it is a case of when, not if) then the company could run to the tune of treble digit percentage points in a very short period of time.We will be updating our subscribers as soon as we know more. For the latest updates on GTHP, sign up below!Disclosure: We have no position in GTHP and have not been compensated for this article.

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