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 (NYSEMKT:ONVO), a tissue engineering specialist whose products are used for research and medical applications, jumped as much as 20% after the company announced the first delivery of 3-D liver tissue to a key opinion leader, or KOL, or in layman's terms, a top research scientist.
So what: This delivery marks a three-month advance in the company's previous guidance on when it would deliver its first 3-D liver tissue to an outside laboratory for research. The expectation is that Organovo will deliver nearly 400 of these 3-D liver tissue products to various KOLs by the end of this month. They will, in turn, offer suggestions on how to improve the product, as well as drum up interest in the 3-D liver tissue with colleagues. With this move being made ahead of schedule Organovo now anticipates that it will launch its 3-D liver tissue assay test before its previously guided December 2014 deadline.
Now what: Today's story is all about the potential for revenue. The big question on every investors' mind is whether this novel idea can be transformed into something that actually produces revenue. The simple fact that Organovo's timeline is running ahead of schedule is certainly surprising. That it's on pace to bring its 3-D liver assay product to market before its originally guided date is great news as well, and would certainly imply that commercial product is a real possibility. While I'm personally excited for Organovo as a health care sector enthusiast, I'm also a realist and wouldn't exactly expect sales to take off, or losses to shrink, in any meaningful way anytime soon. What that means is that the stock will likely remain volatile in the near term, but that its upside is reasonably limited.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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