Organovo's 3 Biggest Opportunities in 3-D Bioprinting

The 3-D printing craze has infected many investors in the last year, but it isn't limited to resin or metal creations. Organovo (NYSEMKT: ONVO  ) is in the early stages of developing a bioprinting platform that can produce more accurate, more functional human tissues for medical testing applications. There's a lot left to prove, but successfully scaling such technologies could revolutionize health care in a number of ways. What's the impact? What time frame can investors expect for commercializing such novel products? Here are the three biggest opportunities that await Organovo in 3-D bioprinting.

1. Pharmaceutical research (1-3 years)
The top 12 pharmaceutical companies spent $802.5 billion on research and development between 1997 and 2011 on their way to 139 drug approvals, according to data compiled by Matthew Herper. That's an astounding $5.77 billion per approved drug! Amgen (NASDAQ: AMGN  ) had the most efficient pipeline, spending just $3.7 billion per approval, while AstraZeneca spent the most at $11.8 billion for each approved therapy.  

Some of the inefficiency is due to internal problems, but drug development comes with a high probability of failure for all companies. In fact, up to 40% of all money thrown at drug development chases drugs that never leave the clinic. Why? One of the biggest problems during drug discovery is accurately assessing toxicity to human cells, particularly liver toxicity. Approximately 25% of all drugs that were withdrawn from the market or failed a phase 3 trial between 1990 and 2010 were yanked due to liver toxicities. Industry leaders Amgen and Pfizer (NYSE: PFE  ) may be worth hundreds of billions of dollars, but even they must rely on archaic testing models: animals or two-dimensional cell culture assays. Neither is optimized to predict what will happen in complex human tissues.  

A lab bench at Organovo featuring the company's NovoGen bioprinter. Source: Organovo 

Organovo's first product candidate can help increase the efficiency of the pharmaceutical industry by more accurately predicting liver toxicities. The company recently presented data collected over a 40-day period with its 3-D liver tissue that demonstrated the potential to retain certain native liver functions for long periods of time. Tissue that remains functional for one month or longer would allow pharmaceutical companies to replicate the administration of various doses of a drug on the same tissue, which could lead to more valuable toxicology information at an earlier stage in development.

The bioprinting company wants to develop three businesses: toxicology assays (product-based), disease models (partnerships-based), and simple tissue therapy technology (clinical-based). The three-year goal is to launch and deliver human liver tissue toxicology assays to industry partners beginning in December 2014, develop disease models for various organs, and define a clinical pathway for developing therapeutic tissues. That's quite an ambitious plan, but successful execution would create tremendous value for shareholders and the pharmaceutical industry.

2. Cancer tumor models (3-7 years)
A lot of people get excited for Organovo's potential to revolutionize organ transplants by printing fully functional human organs (No. 3 on our list), but a bigger and more immediate opportunity lies in the ability to create 3-D cancer tissues. Why re-create cancer tumors when the world spends billions of dollars each year trying to beat them into submission? Imagine having the power to print a series of cancerous tumors in a lab and then test various medications against them. Such technology could be used for researching new oncology compounds or personalized medicine applications utilizing drugs already on the market to get the best response and safety profile for each individual patient.

Organovo is collaborating with Oregon Health and Science University's Knight Cancer Center to develop the technology. The pair is expected to publish results from several studies after the second half of next year, after which a pathway for commercial develop can be established. While any number of pharmaceutical companies would surely be interested, it would also be worthwhile to partner with a cancer diagnostics company such as Genomic Health (NASDAQ: GHDX  ) to expedite commercialization and improve the chances of building a successful platform.

Genomic Health performs genomic analysis on tumor samples to identify tumor-specific characteristics. If Organovo can print multiple tumor types with certain genetic dispositions (as occurs in the real world), pharmaceutical companies or doctors could rapidly develop individual regimens based on the cancer tissue and patient's genetics by utilizing Genomic Health's platform. It's a win-win proposition.

3. Organ transplantation (15-20 years)
Although more than 114,300 Americans are waiting for an organ transplant, less than 5,000 procedures occurred in 2012. On average, 18 people die each day due to the perpetual shortage of available organs. Bioprinting has the potential to make waiting lists a thing of the past.

The ability to print organs in a hospital and transplant them into patients in need is certainly within reach of Organovo's platform, but it will take decades to perfect. First, the company must develop a completely functional organ that is highly similar to its "natural" counterpart. The tissues produced by the company today are only hundreds of cell layers thick -- useful for research applications but a far cry from an entire organ. Then, the company must run a gauntlet of costly medical trials to prove the safety, robustness, and effectiveness of its organs. Even assuming international regulatory agencies don't hesitate to approve such technology, the trials could take over a decade to complete.

Developing the technology to make impactful contributions in organ transplants is a long-term goal of Organovo, but investors shouldn't assign much value to it just yet.

Foolish bottom line
The more I research Organovo, the more I like its long-term potential. There are dozens of possible opportunities that a successful bioprinting platform could capture. Unfortunately, any investment in the company today would be based solely on potential. There are no recurring revenue streams, no concrete examples of royalty ranges in which to value partnerships, and still relatively little being poured into internal research and development (although there is progress being made). Given all of the question marks I personally wouldn't invest in the company at its current market cap, but would consider adding a small, speculative position on a pullback. It may just be potential at this point, but it sure is difficult to ignore.

3-D printing can transform your portfolio
Bioprinted 3-D human tissues may be years away, but it isn't the only 3-D printing technology within your reach. With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.

 


Read/Post Comments (8) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 24, 2013, at 1:24 PM, Yoshimaroko wrote:

    I wonder if it's possible for them to create proper tissue that would then be grafted, say to make a repair to a liver? Hmmmmmm.

  • Report this Comment On October 24, 2013, at 2:39 PM, DrDick1954 wrote:

    I believe you are seriously overestimating the timeframes for this company's technology to become useful and profitable.

    Pharma research timeframe, I agree with 1-3 years

    Cancer tumor models, I say 2-4 years

    Organ printing, 3-10 years

    Why? Because money AND demand will flow in like water once the initial successes in pharma research are realized. This is literally a ground floor opportunity for a 100-bagger in 10-15 years, assuming the company is not bought out from under us.

  • Report this Comment On October 24, 2013, at 3:07 PM, TMFBlacknGold wrote:

    @DrDick1954,

    Thanks for your thoughts. I think the cancer tumor model is 3-7 years away based upon the company's own guidance. Scientific publications are due to trickle out in the next 12-24 months, which would lay the groundwork for development of a commercial product. That alone may take a few years.

    Additionally, I think organ transplantation opportunities are 15-20 years away based on where the company's technology stands today and the fact that clinical trials will likely take a decade or more. Tack on long-term safety trials that will probably be required by regulatory bodies and it could be quite a long ways away.

    Best,

    --Maxxwell

  • Report this Comment On October 24, 2013, at 5:08 PM, generics wrote:

    When I first ran across this stock a year ago, I was stunned by its potential. I bought 2000 shares at about 2. I have, for the most part, held through the ups and downs and will continue to do so.

    Liver cells don't maintain their differentiated state well in culture. The ability of ONVO's artificial cultures to make liver proteins and assume liver-like structures is amazing, especially since they have shown these "livers" function for at least a month. Now they are expanding to kidneys.

    I agree it's risky, but the potential is incredible.

  • Report this Comment On October 24, 2013, at 7:57 PM, pinotman wrote:

    Great article! I think you missed a fourth or maybe fifth. What about opportunities in the personal care and cosmetics industries? They have to do testing and no animals will be harmed. The timeframe should be shorter once the industries find this option.

  • Report this Comment On October 24, 2013, at 8:10 PM, TMFBlacknGold wrote:

    @pinotman,

    I have quite a bit of material to go through in the coming weeks -- this is just the beginning! I'll look at each opportunity in greater depth and present more original content about the potential of non-conventional cell culture technologies.

    --Maxxwell

  • Report this Comment On October 25, 2013, at 3:02 PM, jpokergman wrote:

    Dude, I like your focus, and the way you don't over-hype the so called realm of the possible.

    I personally think that the total time period involved in the "New drug" discovery process, is one of big Pharma's biggest challenge's going fwd.

    In my mind, it takes 20 years minimum, to go from a Completely brand new concept, to beginning a ROI process....IF, and that's big IF, everything goes right.

    Now along comes this little known Company that can actually "Print" a Liver, that has stood up to Acetometophine for a significant period of time, as far as testing is concerned.

    Why is that so important? The Liver is the Human Chemistry Lab. Probably even more important to the Big Pharma companies' than the Brain, or the Heart, when it comes to drug development and testing.

    Yet the BIGGEST opportunity is for small Investor's at this present time. As many astute Foolish observers can tell you, there are few Mutual Funds or Large Institutions that have positions YET.

    I believe that the reason for this is lack of Analyst coverage. How does one value such a Company from a "Tight-Butt" point of view? They need a courageous Fool to step up, before the others can pile on.

    I am sure the arguments are quite heated during Staff meetings over the potential of Organovo. I am just as sure that this fool, is the last guy that would want to go Round and round with those short sighted, albeit very adept Money Managers.

    Therefore, unless something evil is afoot, which I am unaware of, this fool see's nothing but bright sky's and huge innovation's coming from this delightfully ingenious pack of Fools at Organovo.

    Thank you again for your thought's.

  • Report this Comment On November 15, 2013, at 1:10 AM, rencewell wrote:

    ANY HELP IS APPRECIATED!!! Is onvo a buy at 11.90/ share?? I reduced my exposure significantly, after the last big dip-- I sold almost all of my shares, and now I regret it.

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