RenovaCare Inc (OTCMKTS:RCAR) Just Popped: Here's Why

The last time we looked at RenovaCare Inc (OTCMKTS:RCAR), the company was trading at a little over $4.00 a piece.At the time (this was back on May), we suggested that the company was something of a sleeping giant, rooted in the fact that we believe that RenovaCare's development pipeline is solid and that the lead asset on said pipeline, a stem cell skin rejuvenation product, has the potential to really shake up its target space. RCAR Daily ChartAt the same time, however, the company had been relatively quiet in terms of updating markets as to the progress of the asset in question along its path towards commercialization and that this lack of quantifiable operational progress meant potential trigger pullers had nothing to give them an excuse to jump in on a position.This week, however, that's changed.Renovacare has sprung back into action and markets are rewarding the company with some sharp upside momentum. From $2.90 a share at November 1 close of play, Renovacare currently trades for $4.35 a piece – a 50% run in a little over seven days.So what's causing the run and what's next?At the end of October, the company announced the closing of a registered direct offering that saw it pick up around $2.3 million Exactly what the company plans to do with this cash remains to be seen – current use of proceeds statements are limited to operational purposes – but we think that the best use of the cash would be to get things moving on a study that can underpin a registration application in the US for the product outlined above.What's the product?As noted, it's a skin regeneration type asset and it's designed (primarily) to treat patients with burn wounds. These are hard wounds to treat with this difficulty rooted in the stripping of layers of skin that happens when people get burnt. Current standard of care primarily revolves around skin grafts but there's a serious infection risk associated with this sort of treatment and even when it goes well, the results are rarely that great. It's also only really of any use when the burns aren’t too bad. Get a serious burn wound and there's not much a skin graft will do.So RenovaCare has developed a treatment that's based on two separate assets. One is a stem cell type mixture that's developed into a spray-able solution and the other is a gun-type device that's designed to spray the stem cell solution onto the wound.Once applied, the stem cells take hold (as a skin graft might) and new skin develops over the affected area. This way, the skin that develops is effectively brand new skin – hair can grow in it, it's durable, all that sort of thing.In order to get this device on shelves, Renovacare needs to put together some data that shows that this device (and the stem cell solution) can be effective in a large patient sample. The current data is basically limited to compassionate use programs and animal studies and is far from sufficient to support a registration application, even under the pared-down 501(k) program.So why do we think the company is running now?It's speculative, but there's a good chance we are about to get some news related to this device and a program that could support a registration application. If this is the case, markets are loading up in anticipation of said news and its impact on the company's time-to-market.This is speculative, of course, and there's a good chance that this run is speculative, yes, but warranted, no.If that's the case, things will settle down near term.We think there's more to it than that, however, and we think it's well worth a punt ahead of a potential continuation of the current action.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on RCAR, sign up below!Image courtesy of Joseph Elsbernd via FlickrDisclosure: We have no position in RCAR and have not been compensated for this article.