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Arch Therapeutics files for Chapter 11 bankruptcy protection

Arch Therapeutics Inc. has filed for Chapter 11 bankruptcy protection, citing 'capital market challenges' as a major factor leading up to the filing. Story Highlights Arch Therapeutics Inc. files for Chapter 11 bankruptcy protection. Company failed to list on major exchanges despite multiple attempts. Arch seeks $2 million loan to facilitate asset sale process. Arch Therapeutics Inc. has filed for Chapter 11 bankruptcy protection, citing 'capital market challenges' as a major factor leading up to the decision. The Framingham-based biotech is behind an FDA-cleared wound care product called the AC5 Advanced Wound System that is used to manage injuries such as pressure ulcers, venous leg ulcers, diabetic ulcers, and surgical wounds. Terrence Norchi, co-founder and CEO of Arch, said in an affidavit that the company previously traded on the OTCQB market, but was recently downgraded to the OTC Expert Market because it didn't have adequate capital to be compliant with listing requirements. In order to reach 'broader capital markets access,' Norchi said Arch tried to list on Nasdaq or the New York Stock Exchange multiple times. Sign up for the Business Journal's free daily newsletters. Download the free BBJ app for important news alerts on your phone. 'Despite substantial efforts, these attempts were ultimately unsuccessful. During this time, Arch entered into several vintages of convertible notes, which contained covenants requiring the debtors to continue pursuing an uplist. As uplisting remained elusive, the convertible instruments became increasingly challenging to secure, let alone service,' Norchi said. The chief executive added that these financial challenges 'compounded the difficulty of supporting even a modest commercial presence, despite the strong clinical and regulatory foundation of Arch's lead product, AC5.' The public markets have not been kind to companies looking to complete initial public offerings in the last few years. Six Massachusetts biotechs held IPOs in 2024. All of their stocks are down from their debut. Only one Massachusetts company has gone public so far in 2025. Norchi also detailed 'considerable efforts' to secure funding or find a strategic partner, none of which panned out. Norchi said Arch's financial position deteriorated to the point where it could not meet payroll or other obligations. The company now consists of a single full-time employee who is unpaid and support from a small number of consultants. Chapter 11 bankruptcy is typically used when companies attempt to reorganize their debts while continuing operations. However, Norchi said in the affidavit that with Arch's lack of sufficient funding, it's looking to sell its assets. In order to keep working toward that sale, Arch filed a motion to ask the court for permission to accept up to $2 million in a secured term loan facility from Vivex Biologics Inc. to pay necessary expenses. Don't miss out on Boston-area life science news. Subscribe to the Morning Edition or Afternoon Edition for free. Largest Life Science Companies in Massachusetts Mass. employees Rank Prior Rank Firm/Prior rank (*unranked in 2023)/ 1 1 Takeda 2 2 Sanofi 3 3 Moderna Inc. View this list