Organovo Announces Preliminary Fiscal Second-Quarter Total Revenue; Company Restructures to Improve Operational Efficiency
October 04 2017 - 5:05PM
Organovo Holdings, Inc. (NASDAQ:ONVO) (“Organovo”) today reported
preliminary unaudited total revenue for the fiscal second quarter
of 2018. The Company expects to release full fiscal
second-quarter financial results on November 9, 2017. The
Company also announced a restructuring plan to improve operational
efficiency.
Selected Organovo Financial
Highlights
- Preliminary fiscal second quarter total revenue is expected to
be between $1.3 million and $1.4 million, consisting largely of
product and service revenue. At the midpoint, this result
reflects a 2 percent decrease in total revenue versus the
comparable period of fiscal 2017 and a 36 percent increase versus
the fiscal first quarter of 2018.
“We are executing against our key objectives
halfway through fiscal 2018, with the second quarter representing
our second highest quarterly revenue to date and our third
consecutive quarter of sequential product and service revenue
growth,” said Taylor J. Crouch, CEO, Organovo. “Our tissue
systems continue to gain traction with biopharma clients and
academic partners, with exceptionally strong engagement in
developing disease models for compound screening. We see
strong indicators that one or more of our clients will move to
implement our platform for larger routine use applications by the
end of our current fiscal year.”
Crouch continued, “We’re also pleased that our
recently announced NIH grant to study liver disease is off to such
a strong start. Non-alcoholic fatty liver disease (“NAFLD”)
is a growing public health issue around the world, and we believe
our ExViveTM Liver Tissue is uniquely suited to model the dynamics
of non-alcoholic steatohepatitis (“NASH”) and other conditions such
as liver fibrosis in a way that mimics many aspects of human
livers. Our bioprinting platform can facilitate breakthroughs
in studying fatty liver disease and lead to revolutionary
approaches for discovering and developing drugs in this critical,
unmet disease area.”
Restructuring Plan
Organovo announced a plan to restructure its
business to better focus and align resources, reducing
approximately 15 positions, or 13% of its overall workforce.
The internal reorganization will improve operational efficiency,
consolidate overlapping positions and streamline the Company’s
management structure. As a result, the Company expects to
record a restructuring charge in the fiscal third quarter of
approximately $0.9 million, primarily related to employee severance
and benefits costs. In addition, Organovo expects the
workforce reduction will decrease operating costs by $1.3 million
in fiscal 2018 and $2.7 million in fiscal 2019. The reduction
in future operating expenses is expected to improve the Company’s
fiscal 2018 negative Adjusted EBITDA. The actions associated
with today’s restructuring announcement are anticipated to be
complete by the end of calendar-year 2017.
“As we direct our strategic effort to growing liver
and kidney tissue research services, and the ongoing preclinical
development of our liver therapeutic tissue, we identified the
opportunity to streamline our operational capabilities and align
our organization more closely with achieving these precise
commercial and R&D goals,” said Taylor J. Crouch, CEO,
Organovo. “We expect to achieve important process and scale
efficiencies that allow us to better engage with our customers and
focus on opportunities with the highest return-on-investment for
our business. Our new organizational structure also allows us
to reduce costs in non-core areas, and more carefully manage our
cash burn rate with an eye towards delivering long-term shareholder
value.”
About Organovo Holdings,
Inc.Organovo designs and creates functional,
three-dimensional human tissues for use in drug discovery, clinical
development, and therapeutic applications. The Company
develops 3D human tissue systems through internal research programs
and in collaboration with pharmaceutical, academic and other
partners. Organovo's 3D human 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 Human 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 liver therapeutic tissues for
critical unmet medical needs, including certain life-threatening
pediatric diseases. 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 StatementsAny
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 Company’s preliminary
revenue results for the second quarter of fiscal year 2018, the
potential for one or more customer’s electing to implement the
Company’s platform for larger routine use applications by the end
of fiscal 2018, the expected costs, timing and operational benefits
of the Company’s restructuring plan and the financial impact of the
Company’s restructuring plan on its future operating costs and
financial results. The Company’s reported revenue results for
the second quarter of fiscal year 2018 are preliminary, and subject
to adjustments in the ongoing review by the Company and its
external auditors. 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;
the risk of further adjustments to the Company’s preliminary
revenue results for the second quarter of fiscal 2018; 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 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.
Investor & Press Contact:
Steve Kunszabo
Organovo Holdings, Inc.
+1 (858) 224-1092
skunszabo@organovo.com
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