Why Organovo Holdings Inc Stock Bulked Up Today

A partnership with Johnson & Johnson exploring the company's bio-printed tissue in drug discovery leads to a big pop in shares

Jul 24, 2014 at 2:09PM

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 (NYSEMKT:ONVO), an innovative biotech company specializing in 3D bio-printing of tissue and cells, shot up by as much as 15% today after the company announced a partnership with Johnson & Johnson (NYSE:JNJ) to explore bio-printed tissue in aiding drug discovery.

So What: J&J and Organovo haven't released details about just what kind of work the latter's innovative bio-printing will be used for, but Organovo's 8-K report with the SEC this morning pointed out that the work will come from outside of the company's existing efforts to use printed liver cells in testing drug toxicity. The deal with Johnson & Johnson marks a major partnership for Organovo, which previously has agreed to deals with Pfizer and United Therapeutics in research utilizing printed tissue.

Now What: Today's deal is a major breath of relief for shareholders who have watched Organovo's stock take a pounding in 2014, particularly after noted short-selling blog Citron Research sounded the alarm on the stock's prospects back in January. A partnership with a health care giant like Johnson & Johnson is just what the doctor ordered for this company, which is eager to ink collaboration deals with drug developers. Organovo's bio-printed tissue offers a far quicker – and more predictive-method of testing drug effects on human cells as compared to standard lab drug testing on animal subjects or two-dimensional cells that precede human testing.

Considering the cost and time it takes to develop pharmaceuticals, there's a rich opportunity available for Organovo's technology, and partnerships with major developers like J&J are just what the company's future requires. It's interesting to note that the deal with J&J won't utilize Organovo's existing work in printing liver cells to judge toxicity, but the company is still aiming to launch its 3-D liver assay by the end of the year. Given Organovo's innovative edge and its stock's severe slide in 2014, this is one cutting-edge health care pick that's worth keeping an eye in.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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