Organovo Announces Fiscal Third-Quarter 2018 Results; Company Updates Full-Year Fiscal 2018 Outlook
February 08 2018 - 4:05PM
Organovo Holdings, Inc. (NASDAQ:ONVO) (“Organovo”) today reported
financial results for the fiscal third quarter of 2018 and updated
its full-year fiscal 2018 outlook. The Company reported
fiscal third-quarter total revenue of $1.2 million. Total
revenue was unchanged from the prior-year period and decreased 15
percent versus the fiscal second quarter of 2018. Net loss
was $7.8 million, or $0.07 per share, for the fiscal third quarter
of 2018, as compared to $9.6 million, or $0.09 per share, for the
fiscal third quarter of 2017. Negative Adjusted EBITDA(1) for
the third quarter was $5.2 million, as compared to $7.3 million for
the prior-year period.
“Our liver therapeutic tissue program continues to make
excellent progress in achieving critical regulatory and scientific
milestones,” said Taylor J. Crouch, CEO, Organovo. “With the
U.S. Food and Drug Administration (“FDA”) recently granting orphan
designation for our NovoTissues® treatment of Alpha-1 antitrypsin
deficiency (“A1AT”), our path to commercializing this novel
therapeutic comes with significant developmental and economic
incentives. With few alternative therapies and a high annual
cost of care, patient need is great in treating this rare,
debilitating liver disease. We’ve also begun new studies in a
second therapeutic indication within the category of inborn errors
of metabolism, Fumarylacetoacetate Hydrolase (“FAH”) deficiency,
and look forward to reporting proof-of-principle data in the coming
months.”
Crouch continued, “In our commercial segment, we continue to
shift our R&D and business development efforts to high-value
liver disease modeling services. We’re seeing meaningful
early uptake as we transition away from routine toxicology
projects, with nearly all of our service revenue in the fiscal
third quarter representing disease modeling studies. With
approximately 250 global programs pursuing treatments in the areas
of non-alcoholic fatty liver disease (“NAFLD”) and non-alcoholic
steatohepatitis (”NASH”), we believe being a pioneer in this area
translates into the best path forward for boosting our revenue
growth. Sophisticated clients are already partnering with us
in a multi-faceted approach to develop custom tissue models,
allowing us to target the entire drug discovery and development
spectrum. We continue to expect deeper engagement from our
customers over the next several months.”
Crouch concluded, “We have the ability to monetize our platform
in many ways, including the provision of primary human cells for
research applications, compound screening in disease models,
licensing agreements that capitalize on our technology, and the
ongoing development of novel therapeutics. We’ll continue to
direct our resources at all of these opportunities as we focus on
long-term value creation.”
Third-Quarter Organovo Business Highlights
Revenue
- Total revenue was $1.2 million, unchanged from the year-ago
period. Higher grant revenue related to the Company’s
National Institutes of Health (“NIH”) project offset lower revenue
from collaborative agreements.
- Product and service revenue was $0.8 million, up 19 percent
from the prior-year period, largely driven by an increase in liver
disease modeling studies and sales from human cell and tissue
products.
Operating Expenses
- Cost of revenues was $0.2 million, a decrease of 9 percent from
the prior-year period, reflecting a greater contribution from
higher-margin primary human cell and tissue products.
- Research and development costs decreased 20 percent
year-over-year to $4.0 million, primarily due to lower employee and
lab supply costs related to the Company’s organizational
restructuring and prioritization of R&D projects.
- Selling, general and administrative expenses decreased 12
percent from the prior-year period to $4.9 million, reflecting
lower employee and non-cash stock-based compensation expenses,
which offset $0.8 million in severance and other costs related to
the Company’s organizational restructuring.
Liquidity & Capital Resources
- The Company ended the fiscal third quarter with a cash and cash
equivalents balance of $47.3 million.
- During the fiscal third quarter, the Company generated net
proceeds of approximately $3.1 million from the issuance
of 2.3 million shares of common stock in at-the-market (“ATM”)
offerings at a weighted average price of $1.42 per
share. Through January 31, 2018, the Company generated
additional net proceeds of approximately $2.1 million from the
issuance of 1.5 million shares of common stock in ATM offerings at
a weighted average price of $1.40.
- Working capital was $46.0 million to end the fiscal third
quarter compared to $67.5 million in the prior-year quarter.
Fiscal-Year 2018 Outlook
The Company updated its full-year fiscal 2018 outlook for total
revenue and negative Adjusted EBITDA. The Company now
expects:
- Total revenue of between $4.5 million and $5.2 million for
fiscal-year 2018. Fiscal 2017 total revenue was $4.2
million.
- Negative Adjusted EBITDA of between $25.0 million and $26.0
million for fiscal-year 2018. Fiscal 2017 negative Adjusted
EBITDA was $29.8 million. The Company’s continued improvement
in negative Adjusted EBITDA will be largely driven by reduced
operating costs as the result of its organizational restructuring
and a more rigorous focus on its existing commercial opportunities
and therapeutics research program.
|
Fiscal-Year 2018 Outlook(November
2017) |
Fiscal-Year 2018 Outlook (February
2018) |
Fiscal-Year 2018
Total Revenue |
$4.5 million - $6.5 million |
$4.5 million - $5.2 million |
Fiscal-Year 2018 Negative Adjusted
EBITDA |
$26.0 million - $28.0 million |
$25.0 million - $26.0 million |
A reconciliation of non-GAAP negative Adjusted EBITDA, as
forecasted for fiscal 2018, to the closest corresponding GAAP
measure, net loss, is not available without unreasonable efforts on
a forward-looking basis due to the high variability and low
visibility of certain charges that may impact our GAAP results on a
forward-looking basis, such as the measures and effects of
stock-based compensation.
Definitions & Supplemental Financial
Measures
- In addition to disclosing financial results that are determined
in accordance with U.S. GAAP, the Company provides Adjusted EBITDA
which is a non-GAAP financial measure, as a supplemental measure to
help investors evaluate the Company's fundamental operational
performance. Adjusted EBITDA represents earnings before
interest, income taxes, depreciation and amortization, stock-based
compensation expenses and restructuring/CEO transition costs.
Adjusted EBITDA does not represent, and should not be considered in
isolation from, as a substitute for, or as superior to, U.S. GAAP
measurements such as net income or loss. By eliminating
interest, income taxes, depreciation and amortization, stock-based
compensation expenses and restructuring/CEO transition costs, the
Company believes the result is a useful measure across time in
evaluating its fundamental core operating performance.
Management also uses Adjusted EBITDA to manage the business,
including in preparing its annual operating budget, financial
projections and compensation plans. The Company believes that
Adjusted EBITDA 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 Adjusted EBITDA, and Adjusted EBITDA as the Company
presents it may not be comparable with similarly titled non-GAAP
financial measures used by other companies. Since Adjusted
EBITDA does not account for certain expenses, its utility as a
measure of the Company's operating performance has material
limitations. Due to these limitations, investors should not
view Adjusted EBITDA in isolation, but should also consider other
measurements, such as net income or loss and revenues, to measure
the Company’s operating performance. Please refer to the
schedule below for a reconciliation of consolidated GAAP net income
to Adjusted EBITDA for the fiscal quarters ended December 31, 2017
and 2016.
Organovo Holdings, Inc. |
Supplemental Reconciliation of GAAP Net Income
to Adjusted EBITDA |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|
|
December 31, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss |
$ |
(7,791 |
) |
$ |
(9,581 |
) |
|
|
|
|
Interest
expense |
|
- |
|
|
- |
|
|
|
|
|
Interest
income |
|
(118 |
) |
|
(50 |
) |
|
|
|
|
Income taxes |
|
- |
|
|
1 |
|
|
|
|
|
Depreciation and
amortization |
|
315 |
|
|
322 |
|
|
|
|
|
Stock-based
compensation |
|
1,250 |
|
|
2,018 |
|
|
|
|
|
Restructuring/CEO
transition |
|
1,130 |
|
|
- |
|
|
|
|
|
Adjusted
EBITDA |
$ |
(5,214 |
) |
$ |
(7,290 |
) |
Conference Call Information
As previously announced, the Company will host a
conference call to discuss its results at 5:00 p.m. ET on Thursday,
February 8, 2018. 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 2242366. 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 8,
2018 through Thursday, February 15, 2018 at Organovo’s Investor
Relations webpage. Callers can also dial (877) 344-7529 (U.S.
only) or (412) 317-0088, Access Code 10115734, for an audio replay
of the conference call.
About Organovo Holdings, Inc.Organovo is
developing and commercializing a platform technology to produce and
study living tissues that emulate key aspects of human biology and
disease for use in drug discovery, clinical development, and
therapeutic applications. The Company develops tissue systems
through internal research programs and in collaboration with
pharmaceutical, academic and other partners. Organovo's
living tissues have the potential to transform the drug discovery
process, enabling treatments to be developed more effectively and
with greater relevance to performance in human trials and
commercialization. The Company’s ExViveTM Liver and Kidney
Tissues are used in high-value drug profiling, including compound
screening in disease models, toxicology, target and marker
discovery/validation, and other drug testing. The Company is
also advancing a preclinical program to develop its NovoTissues®
liver therapeutic tissues for critical unmet medical needs,
including certain life-threatening pediatric diseases.
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. Forward-looking statements include, but are
not limited to, statements regarding the potential for one or more
customer’s electing to move toward framework agreements involving
annual budgets, revenue commitments, and/or dedicated research
plans, statements regarding customer demand for and acceptance of
our disease modeling services and statements regarding the
potential benefits and therapeutic uses of the Company’s
therapeutic liver tissue, including the benefits of an orphan
designation. 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 execute framework
agreements involving multi-year commitments and routine use on a
timely basis, or at all; 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 recognize deferred revenue;
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; the Company’s ability to control the costs and to
achieve the expected operational benefits and long-term cost
savings of its restructuring plan; and the Company’s ability to
meet its fiscal year 2018 outlook. These and other factors are
identified and described in more detail in the Company's filings
with the SEC, including its Quarterly Report on Form 10-Q filed
with the SEC on February 8, 2018 and its Annual Report on Form 10-K
filed with the SEC on June 7, 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
Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Products
and services |
|
$ |
832 |
|
|
$ |
699 |
|
|
$ |
2,722 |
|
|
$ |
2,396 |
|
|
|
Collaborations and licenses |
|
|
61 |
|
|
|
443 |
|
|
|
367 |
|
|
|
1,001 |
|
|
|
Grants |
|
|
260 |
|
|
|
9 |
|
|
|
409 |
|
|
|
21 |
|
|
|
Total
Revenues |
|
|
1,153 |
|
|
|
1,151 |
|
|
|
3,498 |
|
|
|
3,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
192 |
|
|
|
212 |
|
|
|
747 |
|
|
|
773 |
|
|
|
Research and
development expenses |
|
|
4,005 |
|
|
|
5,024 |
|
|
|
13,982 |
|
|
|
14,012 |
|
|
|
Selling, general, and
administrative expenses |
|
|
4,865 |
|
|
|
5,546 |
|
|
|
16,457 |
|
|
|
16,520 |
|
|
|
Total
costs and expenses |
|
|
9,062 |
|
|
|
10,782 |
|
|
|
31,186 |
|
|
|
31,305 |
|
|
|
Loss from
Operations |
|
|
(7,909 |
) |
|
|
(9,631 |
) |
|
|
(27,688 |
) |
|
|
(27,887 |
) |
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
|
|
|
Change in
fair value of warrant liabilities |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(4 |
) |
|
|
Interest
expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Interest
income |
|
|
118 |
|
|
|
50 |
|
|
|
334 |
|
|
|
124 |
|
|
|
Total Other
Income (Expense) |
|
|
118 |
|
|
|
51 |
|
|
|
334 |
|
|
|
120 |
|
|
|
Income Tax
Expense |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(23 |
) |
|
|
Net
Loss |
|
$ |
(7,791 |
) |
|
$ |
(9,581 |
) |
|
$ |
(27,354 |
) |
|
$ |
(27,790 |
) |
|
|
Currency
Translation Adjustment |
|
$ |
(2 |
) |
|
$ |
(3 |
) |
|
$ |
(2 |
) |
|
$ |
(10 |
) |
|
|
Comprehensive
Loss |
|
$ |
(7,793 |
) |
|
$ |
(9,584 |
) |
|
$ |
(27,356 |
) |
|
$ |
(27,800 |
) |
|
|
Net loss per common
share—basic and diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.29 |
) |
|
|
Weighted average shares
used in computing net loss per common share—basic and
diluted |
|
|
107,345,623 |
|
|
|
101,174,734 |
|
|
|
106,107,721 |
|
|
|
95,595,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organovo Holdings,
Inc. |
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
March 31, 2017 |
|
|
|
(Unaudited) |
|
(Audited) |
|
Assets |
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and
cash equivalents |
|
|
47,338 |
|
|
|
62,751 |
|
|
Accounts
receivable |
|
|
1,174 |
|
|
|
647 |
|
|
Grant
receivable |
|
|
260 |
|
|
|
- |
|
|
Inventory, net |
|
|
605 |
|
|
|
550 |
|
|
Prepaid
expenses and other current assets |
|
|
891 |
|
|
|
1,144 |
|
|
Total
current assets |
|
|
50,268 |
|
|
|
65,092 |
|
|
Fixed
assets, net |
|
|
2,978 |
|
|
|
3,840 |
|
|
Restricted cash |
|
|
127 |
|
|
|
127 |
|
|
Other
assets, net |
|
|
181 |
|
|
|
121 |
|
|
Total
assets |
|
$ |
53,554 |
|
|
$ |
69,180 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Accounts
payable |
|
$ |
452 |
|
|
$ |
1,171 |
|
|
Accrued
expenses |
|
|
2,808 |
|
|
|
4,101 |
|
|
Deferred
revenue |
|
|
857 |
|
|
|
582 |
|
|
Deferred
rent |
|
|
180 |
|
|
|
157 |
|
|
Total
current liabilities |
|
|
4,297 |
|
|
|
6,011 |
|
|
Deferred
revenue, net of current portion |
|
|
43 |
|
|
|
58 |
|
|
Deferred
rent, net of current portion |
|
|
613 |
|
|
|
749 |
|
|
Total
liabilities |
|
|
4,953 |
|
|
|
6,818 |
|
|
Commitments and Contingencies (Note 3) |
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
Common
stock, $0.001 par value; 150,000,000 shares authorized,
109,322,626 and 104,551,466 shares issued and outstanding at
December 31, 2017 and March 31, 2017, respectively |
|
|
109 |
|
|
|
104 |
|
|
Additional paid-in capital |
|
|
275,176 |
|
|
|
261,586 |
|
|
Accumulated deficit |
|
|
(226,671 |
) |
|
|
(199,317 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(13 |
) |
|
|
(11 |
) |
|
Total
stockholders’ equity |
|
|
48,601 |
|
|
|
62,362 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
53,554 |
|
|
$ |
69,180 |
|
|
|
|
|
|
|
|
|
|
|
|
Organovo Holdings, Inc. |
|
Unaudited Consolidated Statements of Cash
Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
12/31/2017 |
|
12/31/2016 |
|
Cash Flows From Operating Activities |
|
|
|
|
|
Net
loss |
|
$ |
(27,354 |
) |
|
$ |
(27,790 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
962 |
|
|
|
824 |
|
|
Change in
fair value of warrant liabilities |
|
|
— |
|
|
|
4 |
|
|
Stock-based compensation |
|
|
5,600 |
|
|
|
5,540 |
|
|
Increase
(decrease) in cash resulting from changes in: |
|
|
|
|
|
Accounts
receivable |
|
|
(527 |
) |
|
|
(771 |
) |
|
Grants
receivable |
|
|
(260 |
) |
|
|
— |
|
|
Inventory |
|
|
(55 |
) |
|
|
6 |
|
|
Prepaid
expenses and other assets |
|
|
253 |
|
|
|
400 |
|
|
Accounts
payable |
|
|
(719 |
) |
|
|
(65 |
) |
|
Accrued
expenses |
|
|
(1,293 |
) |
|
|
486 |
|
|
Deferred
rent |
|
|
(113 |
) |
|
|
(103 |
) |
|
Deferred
revenue |
|
|
260 |
|
|
|
(490 |
) |
|
Net cash used
in operating activities |
|
|
(23,246 |
) |
|
|
(21,959 |
) |
|
Cash Flows From
Investing Activities |
|
|
|
|
|
Restricted cash deposits |
|
|
— |
|
|
|
(48 |
) |
|
Purchases
of fixed assets |
|
|
(90 |
) |
|
|
(1,061 |
) |
|
Purchases
of intangible assets |
|
|
(70 |
) |
|
|
— |
|
|
Net cash used
in investing activities |
|
|
(160 |
) |
|
|
(1,109 |
) |
|
Cash Flows From
Financing Activities |
|
|
|
|
|
Proceeds
from issuance of common stock and exercise of warrants, net |
|
|
7,169 |
|
|
|
30,401 |
|
|
Proceeds
from exercise of stock options |
|
|
826 |
|
|
|
582 |
|
|
Net cash
provided by financing activities |
|
|
7,995 |
|
|
|
30,983 |
|
|
Effect of
currency exchange rate changes on cash and cash
equivalents |
|
|
(2 |
) |
|
|
(10 |
) |
|
Net Increase
(Decrease) in Cash and Cash Equivalents |
|
|
(15,413 |
) |
|
|
7,905 |
|
|
Cash and Cash
Equivalents at Beginning of Period |
|
|
62,751 |
|
|
|
62,091 |
|
|
Cash and Cash
Equivalents at End of Period |
|
$ |
47,338 |
|
|
$ |
69,996 |
|
|
Supplemental
Disclosure of Cash Flow
Information: |
|
|
|
|
|
Interest paid |
|
$ |
— |
|
|
$ |
— |
|
|
Income taxes paid |
|
$ |
— |
|
|
$ |
23 |
|
|
|
|
|
|
|
|
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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