Keith Murphy, founder and former Chief Executive Officer of Organovo Holdings, Inc. (NASDAQ: ONVO) (“Organovo” or the “Company”), has issued the following letter to stockholders in connection with the Company’s prospective merger with Tarveda Therapeutics, Inc. (“Tarveda”), a privately-held clinical stage biopharmaceutical company:  

Fellow Stockholders:

The Board of Directors (the “Board”) of Organovo Holdings, Inc. (“Organovo” or the “Company”) is in the process of asking stockholders to support its proposal to merge with Tarveda Therapeutics, Inc. (“Tarveda”), a company with uninspiring science and few other financial options.  However, there have been a number of decisions and actions from the Board that suggest that its judgment and recommendations should not be trusted at all. After my departure in 2017, the decisions made by the Board call into question why anyone would vote for a plan that it proposes.  Time and again, the current mix of directors have demonstrated that the best course for stockholders is to avoid trusting the Board.

It is important to highlight that the Board’s first independent decision—hiring Taylor Crouch to run Organovo despite a troubling track record as a public company Chief Executive Officer—was a questionable one that turned out terribly for stockholders.  The outcome for his previous public company, Variagenics, Inc. (“Variagenics”), will startle investors and sound familiar: Variagenics’ stock price dropped during his short leadership and the company dropped development efforts while holding a lot of remaining cash ($60 million) before seeking a merger. The story sounds like what just happened to Organovo. One would think that Mr. Crouch’s history at Variagenics—failing to engage investors sufficiently and showing a lack of vision to find a way forward even with tens of millions of in cash—revealed inherent problems with his leadership style. And yet, the very directors, who now ask stockholders to vote in favor of their plan, made the decision to hire Crouch anyway, ignoring the likely pitfalls of doing so, and stockholders have suffered as a result.

The next phase of the story of Variagenics may be Organovo’s future as well: the resulting company from its merger, Nuvelo, Inc. (“Nuvelo”), itself followed the same downward path, failing and then running another merger process in turn.  Organovo stockholders may have such a fate in store if they blindly follow the recommendations of the current Board.

The Board’s troubling performance becomes even more evident when one considers the circumstances around the Company’s switch to a therapeutic tissue business model. In August 2018, the Company became primarily a therapeutic tissue company, with a preclinical liver tissue as its only real pipeline product, along with modest commercial operations.

The Board retained Mr. Crouch despite a background that implies that he had been hired to oversee the Company’s existing pipeline of commercial products—not to re-focus the Company to an area where he and existing senior management lacked qualifications and experience. And yet, Organovo’s Board, through inaction or a poor decision, kept the Chief Executive Officer in his role with the following facts in front of them:

  • The Board brought in a commercially-focused Chief Executive Officer to deliver revenue growth.
  • The Chief Executive Officer announced a major commercial focus shift to disease models right after he got started.
  • The shift and the Chief Executive Officer’s execution resulted in annual revenue growth slipping from ~175% (FY2017 revenue was 2.75x that of FY2016) to 6%.  In other words, growth flatlined.
  • As a result of the revenue problems, the Company effectively had to abandon its commercial plan and switched to a therapeutic tissue play.
  • Yet, the Chief Executive Officer had no background in therapeutic tissues.
  • Failing to foresee this, the Chief Executive Officer had already laid off key manufacturing leadership with the ability to make therapeutic tissues successful.  

Dropping the Chief Executive Officer entirely was the only right move at that point, but the Board instead did nothing, letting the Company and stockholders down. Given the current merger proposal with Tarveda, the question is why would shareholders today follow the recommendation of a Board with a track record leading to such poor outcomes?

There was another deficiency in the Board’s planning that is even more obvious to shareholders and others outside the Company.  It greatly magnified the timeline issue with the therapeutic liver tissue. Biotech 101 teaches that a company needs to have a pipeline of products in order to be stable during timeline disruptions or outright product failures, which happen regularly.  About one in three drug programs at that early stage ultimately make it to clinical trials, so a company needs to have a pipeline rather than a single asset.  For a company with a riskier play such as a therapeutic tissue, which could be expected to have an even lower success rate, a pipeline is even more imperative.  Yet that is not the strategy Organovo’s Board elected to follow, with devastating consequences. 

Having no fallback option or closely following program to elevate to top status, the Board chose to shutter operations. The directors probably thought of this as a responsible decision made for stockholders, but stockholders should recognize that this result was the fruit of the outright dereliction of the Organovo Board failing to have back-up programs in place to weather such storms.  The fact that the Company failed with $30 million in the bank makes this even more problematic, as there was plenty of capital to have put another program in place.  The absence of a multi-product pipeline for Organovo in 2019 is evidence of a near total lack of innovative, entrepreneurial, and strategic thinking.  The result of not having an alternative strategy is a stain on the Board’s performance, and yet another indictment of its judgment and, likely, violation of fiduciary duties.

Organovo’s Board is asking stockholders to support its proposal to merge with Tarveda, a company with uninspiring science and few other financial options.  However, a simple review of this Board’s performance and decisions after mid-2017 reveals a track record that suggests the Board’s business judgment and recommendations should not be trusted at all. Rather than blindly supporting the Board’s recommendations, I am voting AGAINST the Tarveda merger, and will continue to push the Board to engage with active stockholders on an option that will lead to a better outcome.


Keith Murphy


Any statements contained herein that do not describe historical facts, including future operations, are neither promises nor guarantees and may constitute “forward-looking statements” as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995.  Such forward-looking statements may include words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology.  Any such forward-looking statements contained herein are based on current assumptions, estimates and expectations, but are subject to a number of known and unknown risks and significant business, economic and competitive uncertainties that may cause actual results to differ materially from expectations.  Numerous factors could cause actual future results to differ materially from current expectations expressed or implied by such forward-looking statements, including the risks and other risk factors detailed in various publicly available documents filed by the Company from time to time with the Securities and Exchange Commission (SEC), which are available at, including but not limited to, such information appearing under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on June 3, 2019.  Any forward-looking statements should be considered in light of those risk factors. Mr. Murphy cautions readers not to rely on any such forward-looking statements, which speak only as of the date they are made.  Mr. Murphy disclaims any intent or obligation to publicly update or revise any such forward-looking statements to reflect any change in Company expectations or future events, conditions or circumstances on which any such forward-looking statements may be based, or that may affect the likelihood that actual results may differ from those set forth in such forward-looking statements.


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