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Why Organovo Holdings Inc. Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Organovo Holdings (NASDAQ: ONVO  ) , a three-dimensional biology company focused on developing 3-D bioprinting technology, jumped as much as 17% after reporting its second-quarter earnings results and providing a business update.

So what: For the quarter, Organovo produced just $23,000 in revenue from collaborations -- keep in mind this is a wholly developmental-stage company that isn't expected to produce any revenue until the release of a liver toxicity assay product in 2014. Net loss totaled $10.4 million, or an adjusted $0.14 per share, which reversed an adjusted gain of $38.5 million or $0.69 in the year prior. There is no Wall Street coverage on Organovo, thus no estimates to compare these results against.

What appears to be exciting shareholders the most today is confirmation from Organovo CEO Keith Murphy that the company remains on track to release its first product commercially (the aforementioned liver toxicity assay test) next year. Organovo has, up until now, funded itself by issuing shares, so the possibility that product-based revenue generation could be right around the corner has investors intrigued.

Now what: I'm not going to deny that 3-D bioprinting is an exciting area of potential growth in the health care space, but I also won't start counting my chickens before they're hatched. Organovo has a long way to go to become profitable and even to successfully launching its first product. I would suggest not getting caught up in the emotional investing that seems to dominate anything involving the words "3-D printing" and instead wait for tangible results from Organovo that can help you make a smart long-term investing decision.

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Read/Post Comments (8) | Recommend This Article (13)

Comments from our Foolish Readers

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  • Report this Comment On November 12, 2013, at 2:52 PM, Coffee4Closers wrote:

    I think that if one waits for "tangible" results - they're going to miss out on a ton of growth opportunity. The market will have already anticipated and accounted for those results far in advance of them actually materializing - (just look at Twitter and its insane market cap). When the US patent gets awarded they're be a HUGE bump. When they announce their first product (and before they've sold a single liver assay) - there will be another huge jump. I bought down in the six dollar range - and am holding till 2015 or longer.

  • Report this Comment On November 12, 2013, at 4:20 PM, IveGotTheNUTS wrote:

    I have been invested in ONVO since 2 USD. Those who take the greatest RISKS will receive the greatest REWARDS. Like any investing do not invest what you can not afford to lose. You will never hit a TEN bagger listening to this advice. But do not cry when the market wipes out 80 percent of your porfolio one day. Take profits on the way up, rebuy on the dips. This bull is going to be scary. It will shake many WEAK hands on the way up. No true BULL is easy to ride but this bull is going to be a BEAR trap killeR .

  • Report this Comment On November 12, 2013, at 5:25 PM, MelissainVA wrote:

    I too invested in the 2s. The shear audacity of what they are trying to do impresses me. Will they do it? Who knows, but someone will do it probably a lot sooner than we think. I always keep a few k invested in highly speculative companies like this. And the wild ride doesn't bother me at all.

  • Report this Comment On November 12, 2013, at 5:38 PM, evertonj41 wrote:

    I am grateful for the opportunity to get in on the ground floor of something great regardless of what happen in the near future. I am committed to innovation and the inevitable implied risk.

  • Report this Comment On November 14, 2013, at 8:45 AM, Pricha100 wrote:

    Yeah those high hopes and results are already priced in and then some. 23,000 dollars!!?? And its now a market cap of 800 MILLION and rising!? This certainly has POTENTIAL, but those early birds have already flown the coop. 2 dollars sounds perfectly fine for what it is now and even into the next couple quarters. 10 dollars is madness. Its the definition of irrational exuberance. Take those gains when you can. This stock is coming down hard at some point for sure.

  • Report this Comment On November 14, 2013, at 5:03 PM, EquityBull wrote:

    Welcome to the bubble. 23k in revs. 800 Mil market cap. 400 times revenue.

    IF they conquer every risk that faces them. Execution, competition, FDA, patents, etc maybe something comes of this. This is super high risk for potentially high reward.

    Think of it like putting $1000 on roullete wheel. If you hit you walk away with 35k. A great night at the casino. If not you lose $1000. However your chances of losing are 35 times greater than the 1 chance of winning

  • Report this Comment On November 14, 2013, at 7:57 PM, ibuildthings wrote:

    This seems like a biotech "picks and shovels" play. This little company has a technology that can save huge companies boatloads of research cash. They are working with "name brand" drug companies, so I don't think they are shysters. A small amount of risk money seems prudent.

  • Report this Comment On November 15, 2013, at 8:28 AM, plus10 wrote:

    It is probably a bit of a bubble - in which case a stop-loss is in order. But it may not be 'just a bubble'. Big Pharma partnerships, great (albeit a little over zealous) growth rate, and Happy Faces from CEO for 2014.

    I've seen it many times before (can you spell AAPL in 2004?), so investing in this innovative little company is worth the risk and attention imho.

    For my shares (bought at an average of $5), a little stop-loss to hedge this thrilling ride is the right prescription for this game-changing diamond.

    If it does bounce me out on a stop-loss, I'm gonna let it hit bottom out a couple of times and relaunch. I believe in the technology of 3D and this application as a rule-breaking, game-changing, long-term relationship.


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9/26/2016 4:00 PM
ONVO $3.91 Down -0.06 -1.51%
Organovo Holdings CAPS Rating: ***