Organovo (ONVO) Declines on Disappointing Fiscal 2014

Jianyu Zhao  |

Organovo Holdings, Inc. (ONVO)  has been tumbling since the company released its financial results for the fiscal year that ended March 31, 2014. The stock has declined 10.46 percent to $6.52 per share, as of 1:39pm EDT. In spite of a brief period of gains in May, the stock has continued slipping since November 2013.

Fiscal Year 2014 Had Wider-Than-Expected Losses

According to the company’s financial results, there’s a wider losses in revenue than expected. Revenues of $0.40 million for the year that ended March 31, 2014 decreased approximately 67 percent from $1.20 million for the year that ended December 31, 2012.

“This decrease reflects the completion or declining activity under two collaborative research agreements since 2012, partially offset by increasing revenue contributions from three new collaborative research agreements,” the company stated.

Organovo also posted a $25.80 million net loss, or $0.35 per share, during the three months that ended March 31, 2014. Specifically, research and development expenses soared 135 percent to $8.00 million, while selling and administrative expenses spiked 83 percent to $13.00 million.

The stock has a 52-week trading range of $4.43 to $13.65 per share, rising 66 percent over that span.

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Organovo Has Its Strengths

As a new technology, three-dimensional (3D) printing has always been an attractive play for investors, especially a company like Organovo, which develops human tissues with the technology. Unlike other 3D printing companies, Organovo is focused on generating human tissues that can sustain function for long enough to be useful in clinical tests through 3D bioprinting, something that could be worth hundreds of millions in saved costs for the pharmaceutical industry.

Organovo did have a strong momentum in November of last year after announcing that it could print human liver tissue capable of sustaining function for up to 40 days. In fact, the company’s financial report is a stark reminder that clinical-stage companies burn through cash at an exceptional rate.

“Organovo was able to continue our achievement of strong results in fiscal 2014,” said CEO Keith Murphy in astatement. “We demonstrate the viability and utility of our 3D liver tissues and breast tumor disease model, expanded our partnerships, uplisted our common stock to the NYSE MKT, raised significant financing, and saw tremendous scientific results from our bioprinting efforts in a variety of tissue types. We will continue to focus in fiscal 2015 on executing our business plan and on striving to deliver long-term shareholder value.”

ONVO Still Needs Time To Promote Its Products

Like any other small-cap biotech company, Organovo’s ultimate success or failure relies entirely on how well the company translates its ideas on paper into tangible revenue. Something it must do relatively quickly then to avoid being forced to seek additional financing.

Artificial organ tissue built through 3D printing could create cash cow that would mean massive returns for Organovo shareholders. However, with a product this new, there still isn’t a concrete sense of what the market will hold yet.

But with the 3D-printed tissue expected to reach the market later this year, Organovo’s ultimate fate may not be a matter of speculation for much longer.


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