Organovo Holdings, Inc. (NASDAQ:ONVO) (“Organovo”), a
three-dimensional biology company focused on delivering scientific
and medical breakthroughs using its 3D bioprinting technology,
today reported financial results for the fiscal third quarter of
2017 and updated its full-year fiscal 2017 outlook for total
revenue. Net loss was $9.6 million, or $0.09 per share, for
the fiscal third quarter of 2017, as compared to $10.5 million, or
$0.11 per share, for the fiscal third quarter of 2016.
Organovo reported fiscal third-quarter total revenue of $1.2
million, which consisted largely of product and service
revenue(1). Total revenue increased 251 percent versus the
comparable period of fiscal 2016.
“We grew total revenue at a strong year-over-year pace during
the fiscal third quarter, showing continued uptake of our tissue
research services,” said Keith Murphy, CEO, Organovo. “We
recognized revenue from six new customers and seven repeat
customers during the period, demonstrating market penetration and
solid repeat business. We also added one global Top 25 pharma
customer to our roster, bringing our total to eleven with this key
group.”
Murphy continued, “We’re revising our total revenue guidance for
fiscal 2017 because of a change in the timing of customer orders
due to specific customer requests for additional validation studies
related to certain use cases and for qualification of an additional
cell source. We expect to successfully complete the
additional scientific studies required to address these issues, and
don’t anticipate these items will have a long-term impact on
customer adoption. The required studies will delay a portion
of our forecasted revenue into fiscal 2018. We’re working
diligently with our customers to complete the technical work and to
unlock both existing backlog and prospective orders, and look ahead
with confidence to continued growth in our pipeline. In
addition, our internal liver validation data now includes
successful identification of toxicity for two out of three
proprietary compounds that were classic preclinical misses for one
of our Top 10 pharma customers. This hit rate is consistent
with our overall testing success and further demonstrates
significantly increased predictive power for our customers.”
Murphy concluded, “During the fiscal third quarter, we also
announced our 3D bioprinted human liver as the first candidate in
our therapeutic tissues portfolio and presented early data showing
survival and sustained functionality of this tissue when implanted
into animal models at the Tissue Engineering & Regenerative
Medicine International Society Conference (TERMIS). We expect
to optimize the final tissue design and are embarking on pre-GLP
safety and efficacy studies that will take us through the next 18
months. Based on our path forward, we now expect to target an
IND submission with the liver tissue during the calendar year
2020.”
Organovo Business Highlights
Revenue
- Product and service revenue was $0.7 million, up 139 percent
from the prior-year period, largely driven by an increase in
customer contracts for the Company’s tissue research
services.
- Collaborations and grant revenue totaled $0.4 million,
primarily supported by a milestone achievement from the Company’s
agreement with Merck & Co. to develop multiple custom tissue
models.
Operating Expenses
- Cost of revenues was $0.2 million, reflecting the Company’s
expenses related to manufacturing and delivering its product and
service revenues.
- Research and development costs increased 10 percent
year-over-year to $5.0 million, primarily due to increased employee
related and lab supplies costs.
- Selling, general and administrative expenses decreased 11
percent from the prior-year period to $5.5 million, reflecting
lower non-cash shared-based compensation expense, partially offset
by higher employee related costs.
Liquidity & Capital Resources
- The Company ended the fiscal third quarter with a cash and cash
equivalents balance of $70.0 million. Organovo’s net cash
utilization(3) during the period was $7.7 million. The
Company’s net cash utilization for the nine months ended December
31, 2016 was $23.1 million.
- Working capital was $67.5 million to end the fiscal third
quarter compared to $65.2 million in the prior-year quarter.
Fiscal-Year 2017 Outlook
The Company updated its full-year fiscal 2017 outlook for total
revenue and affirmed its outlook for net cash utilization.
The Company now expects:
- Total revenue of between $3.7 million and $4.5 million for
fiscal-year 2017. Fiscal 2016 total revenue was $1.5
million.
- Net cash utilization of between $31.0 million and $34.0 million
for fiscal-year 2017. The Company had a cash and cash
equivalents balance of $62.1 million for its fiscal year ended
March 31, 2016.
|
Fiscal-Year 2017 Outlook (November
2016) |
Fiscal-Year 2017 Outlook (February
2017) |
Fiscal-Year 2017
Total Revenue |
$4.5 million - $6.2 million |
$3.7 million - $4.5 million |
Net Cash Utilization |
$31.0 million - $34.0 million |
Affirmed |
Long-Range Outlook
The Company affirmed its long-range outlook for potential
revenue from its liver and kidney tissue products. The
Company continues to expect:
- As it penetrates the toxicology market, Organovo’s ExViveTM
Human Liver Tissue service will grow into the tens of millions in
annual revenue, and has $100 million+ revenue potential in the
future (inside of a total addressable market of over $1
billion).
- As it penetrates the toxicology market, Organovo’s ExVive Human
Kidney Tissue service will grow into the tens of millions in annual
revenue, and has $100 million+ revenue potential in the future
(inside of a total addressable market of over $2
billion).
Definitions & Supplemental Financial
Measures
(1) Product and service revenue includes tissue research service
agreements and product sales, including product sales from the
Company’s wholly-owned subsidiary, Samsara Sciences Inc.(2)
Collaboration revenue consists of license and collaboration
agreements that contain multiple elements, which may include
non-refundable up-front fees, payments for reimbursement of
third-party research costs, payments for ongoing research, payments
associated with achieving specific development milestones and
royalties based on specified percentages of net product sales, if
any.(3) In addition to disclosing financial results that are
determined in accordance with U.S. GAAP, the Company provides net
cash utilization as a supplemental measure to help investors
evaluate the Company’s fundamental operational performance.
The Company defines net cash utilization as the net decrease
in cash and cash equivalents during the reporting period (which was
an increase of $18.3 million during the third quarter of fiscal
2017) less proceeds from the sale of common stock and the exercise
of warrants and stock options during the reporting period (which
was $26.0 million during the third quarter of fiscal 2017).
Net cash utilization is an operational measure that should be
considered as additional financial information regarding our
operations. This operational measure should not be considered
without also considering our results prepared in accordance with
U.S. GAAP, and should not be considered as a substitute for, or
superior to, our U.S. GAAP results. The Company believes net
cash utilization is a relevant and useful operational measure
because it provides information regarding our cash utilization
rate. Management uses net cash utilization to
manage the business, including in preparing its annual operating
budget, financial projections and compensation plans. The
Company believes that net cash utilization is also useful to
investors because similar measures are frequently used by
securities analysts, investors and other interested parties in
their evaluation of companies in similar industries. However,
there is no standardized measurement of net cash utilization, and
net cash utilization as the Company presents it may not be
comparable with similarly titled operational measures used by other
companies. Due to these limitations, the Company’s management
does not view net cash utilization in isolation but also uses other
measurements, such as cash used in operating activities and
revenues to measure operating performance.
Conference Call InformationAs previously
announced, the Company will host a conference call to discuss its
results at 5:00 p.m. ET on Thursday, February 9, 2017.
Callers should dial (888) 317-6003 (U.S. only) or (412) 317-6061
(from outside the U.S.) to access the call. The conference
call ID is 1376489. The conference call will also be
simultaneously webcast on Organovo’s Investor Relations webpage at
www.organovo.com. A replay of the conference call will be
available beginning Thursday, February 9, 2017 through Thursday,
February 16, 2016 at Organovo’s Investor Relations webpage.
Callers can also dial (877) 344-7529 (U.S. only) or (412) 317-0088,
Access Code 10100036, for an audio replay of the conference
call.
About Organovo Holdings,
Inc.Organovo designs and creates functional,
three-dimensional human tissues for use in medical research and
therapeutic applications. The Company develops 3D human
tissue models through internal development and in collaboration
with pharmaceutical, academic and other partners.
Organovo's 3D human tissues have the potential to accelerate
the drug discovery process, enabling treatments to be developed
faster and at lower cost. The Company’s ExVive Human Liver
and Kidney Tissues are used in toxicology and other preclinical
drug testing. The Company also actively conducts early
research on specific tissues for therapeutic use in direct surgical
applications. In addition to numerous scientific
publications, the Company’s technology has been featured
in The Wall Street Journal, Time Magazine, The Economist,
Forbes, and numerous other media outlets. Organovo is
changing the shape of life science research and transforming
medical care. Learn more
at www.organovo.com.
Forward-Looking Statements Any statements
contained in this press release that do not describe historical
facts constitute forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. Any
forward-looking statements contained herein are based on current
expectations, but are subject to a number of risks and
uncertainties. The factors that could cause the Company's
actual future results to differ materially from current
expectations include, but are not limited to, risks and
uncertainties relating to the Company's ability to develop, market
and sell products and services based on its technology; the
expected benefits and efficacy of the Company's products, services
and technology; the Company’s ability to successfully complete
studies and provide the technical information required to support
market acceptance of its products, services and technology, on a
timely basis or at all; the Company's business, research, product
development, regulatory approval, marketing and distribution plans
and strategies, including its use of third party distributors; the
Company's ability to successfully complete the contracts and
recognize the revenue represented by the contracts included in its
previously reported total contract bookings and secure additional
contracted collaborative relationships; the final results of the
Company's preclinical studies may be different from the Company's
studies or interim preclinical data results and may not support
further clinical development of its therapeutic tissues; the
Company may not successfully complete the required preclinical and
clinical trials required to obtain regulatory approval for its
therapeutic tissues on a timely basis or at all; and the Company’s
ability to meet its fiscal year 2017 outlook and/or its long-range
outlook. These and other factors are identified and described
in more detail in the Company's filings with the SEC,
including its Annual Report on Form 10-K filed with
the SEC on June 9, 2016 and its Quarterly Report on
Form 10-Q filed with the SEC on February 9, 2017. You should
not place undue reliance on these forward-looking statements, which
speak only as of the date that they were made. These
cautionary statements should be considered with any written or oral
forward-looking statements that the Company may issue in the
future. Except as required by applicable law, including the
securities laws of the United States, the Company does
not intend to update any of the forward-looking statements to
conform these statements to reflect actual results, later events or
circumstances or to reflect the occurrence of unanticipated
events.
Organovo Holdings,
Inc. |
|
Unaudited Condensed
Consolidated Statements of Operations and Other Comprehensive
Loss |
|
(in thousands except
for share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Three Months
Ended |
|
Nine Months
Ended |
|
Nine Months
Ended |
|
|
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
|
December 31, 2016 |
|
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Products and services |
$ |
699 |
|
|
$ |
293 |
|
|
$ |
2,396 |
|
|
$ |
689 |
|
|
|
Collaborations |
|
443 |
|
|
$ |
25 |
|
|
|
1,001 |
|
|
|
58 |
|
|
|
Grants |
|
9 |
|
|
$ |
10 |
|
|
|
21 |
|
|
|
188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenues |
|
1,151 |
|
|
|
328 |
|
|
|
3,418 |
|
|
|
935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues |
|
212 |
|
|
|
- |
|
|
|
773 |
|
|
|
- |
|
|
|
Research and development expenses |
|
5,024 |
|
|
|
4,586 |
|
|
|
14,012 |
|
|
|
13,467 |
|
|
|
Selling, general, and administrative expenses |
|
5,546 |
|
|
|
6,212 |
|
|
|
16,520 |
|
|
|
17,680 |
|
|
Total Costs and
Expenses |
|
10,782 |
|
|
|
10,798 |
|
|
|
31,305 |
|
|
|
31,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Operations |
|
(9,631 |
) |
|
|
(10,470 |
) |
|
|
(27,887 |
) |
|
|
(30,212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
1 |
|
|
|
2 |
|
|
|
(4 |
) |
|
|
(27 |
) |
|
|
Interest income |
|
50 |
|
|
|
13 |
|
|
|
124 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense) |
|
51 |
|
|
|
15 |
|
|
|
120 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Expense |
|
(1 |
) |
|
|
- |
|
|
|
(23 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
$ |
(9,581 |
) |
|
$ |
(10,455 |
) |
|
$ |
(27,790 |
) |
|
$ |
(30,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency Translation
Adjustment |
|
(3 |
) |
|
|
- |
|
|
|
(10 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss |
$ |
(9,584 |
) |
|
$ |
(10,455 |
) |
|
$ |
(27,800 |
) |
|
$ |
(30,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share-basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.34 |
) |
|
Weighted average shares used in computing net |
|
|
|
|
|
|
|
|
loss
per common share-basic and diluted |
|
101,174,734 |
|
|
|
92,396,358 |
|
|
|
95,595,640 |
|
|
|
90,026,158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organovo Holdings,
Inc. |
|
Condensed Consolidated Balance
Sheets |
|
(in thousands except
for share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
March 31, 2016 |
|
|
|
|
|
|
|
Unaudited |
|
Audited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
|
69,996 |
|
|
62,091 |
|
|
|
Accounts receivable |
|
|
|
1,030 |
|
|
259 |
|
|
|
Inventory, net |
|
|
|
328 |
|
|
334 |
|
|
|
Prepaid expenses and other current assets |
|
|
|
589 |
|
|
968 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets |
|
|
|
71,943 |
|
|
63,652 |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
assets, net |
|
|
|
3,937 |
|
|
3,711 |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash |
|
|
|
127 |
|
|
79 |
|
|
Other
assets, net |
|
|
|
124 |
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
|
76,131 |
|
|
67,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
722 |
|
|
787 |
|
|
|
Accrued expenses |
|
|
|
2,936 |
|
|
2,450 |
|
|
|
Deferred rent |
|
|
|
155 |
|
|
139 |
|
|
|
Deferred revenue |
|
|
|
620 |
|
|
1,110 |
|
|
|
Warrant liabilities |
|
|
|
8 |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
|
4,441 |
|
|
4,490 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred rent, net of current portion |
|
|
|
786 |
|
|
905 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
|
5,227 |
|
|
5,395 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 150,000,000 shares
authorized, 104,095,729 and 92,391,989 shares issued and
outstanding at December 31, 2016 and March 31, 2016,
respectively |
|
|
|
104 |
|
|
92 |
|
|
|
Additional paid-in capital |
|
|
|
259,470 |
|
|
222,959 |
|
|
|
Accumulated deficit |
|
|
|
(188,660 |
) |
|
(160,870 |
) |
|
|
Unrealized gain (loss) on foreign currency
revaluation |
|
|
|
(10 |
) |
|
- |
|
|
Total
stockholders’ equity |
|
|
|
70,904 |
|
|
62,181 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’
Equity |
|
|
|
76,131 |
|
|
67,576 |
|
|
|
|
|
|
|
|
|
|
|
|
Organovo Holdings,
Inc. |
|
Unaudited Condensed Consolidated Statements of
Cash Flows (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended |
|
Nine Months
Ended |
|
|
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating
Activities |
|
|
|
|
|
Net
loss |
$ |
(27,790 |
) |
|
$ |
(30,203 |
) |
|
|
Adjustments to reconcile net loss to net cash used in
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
824 |
|
|
|
560 |
|
|
|
|
Change in fair value of warrant liabilities |
|
4 |
|
|
|
27 |
|
|
|
|
Stock-based compensation |
|
5,540 |
|
|
|
7,049 |
|
|
|
|
Amortization of warrants issued for services |
|
- |
|
|
|
(99 |
) |
|
|
|
Increase (decrease) in cash resulting from changes
in: |
|
|
|
|
|
|
|
Accounts receivable |
|
(771 |
) |
|
|
(165 |
) |
|
|
|
|
Inventory |
|
6 |
|
|
|
(5 |
) |
|
|
|
|
Prepaid expenses and other assets |
|
400 |
|
|
|
553 |
|
|
|
|
|
Accounts payable |
|
(65 |
) |
|
|
(921 |
) |
|
|
|
|
Accrued expenses |
|
486 |
|
|
|
237 |
|
|
|
|
|
Deferred rent |
|
(103 |
) |
|
|
(54 |
) |
|
|
|
|
Deferred revenue |
|
(490 |
) |
|
|
1,185 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities |
|
(21,959 |
) |
|
|
(21,836 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
Restricted cash deposits |
|
(48 |
) |
|
|
- |
|
|
|
Purchases of fixed assets |
|
(1,061 |
) |
|
|
(1,711 |
) |
|
|
Proceeds from disposals of fixed assets |
|
- |
|
|
|
14 |
|
|
|
Purchases of intangible assets |
|
- |
|
|
|
(35 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
(1,109 |
) |
|
|
(1,732 |
) |
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
Proceeds from issuance of common stock and exercise of
warrants, net |
|
30,401 |
|
|
|
43,137 |
|
|
|
Proceeds from exercise of stock options |
|
582 |
|
|
|
320 |
|
|
|
Principal payments on capital lease obligations |
|
- |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities |
|
30,983 |
|
|
|
43,452 |
|
|
|
|
|
|
|
|
|
|
|
Effect of currency exchange rate
changes on cash and cash
equivalents |
|
(10 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and
Cash Equivalents |
|
7,905 |
|
|
|
19,884 |
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at
Beginning of Period |
|
62,091 |
|
|
|
50,142 |
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of
Period |
$ |
69,996 |
|
|
$ |
70,026 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information: |
|
|
|
|
Interest |
$ |
- |
|
|
$ |
- |
|
|
Income taxes paid |
$ |
23 |
|
|
$ |
3 |
|
|
|
|
|
|
|
|
|
|
|
Investor Contact:
Steve Kunszabo
Organovo Holdings, Inc.
+1 (858) 224-1092
skunszabo@organovo.com
Press Contact:
Jessica Yingling
Little Dog Communications
+1 (858) 480-2411
jessica@litldog.com
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