Please ensure Javascript is enabled for purposes of website accessibility

Organovo Holdings Inc Reaches Milestone Ahead of Schedule, Stock Pops

By Brian Stoffel – Jan 29, 2014 at 10:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This 3-D bioprinter is full of good news for investors today. Here's what it all means.

Organovo Holdings Inc (ONVO -0.66%) is a 3-D bioprinting company that has seen its shares pop by as much as 17% today, on a day when the rest of the market is down. What's the reason for this movement, and what does it mean for investors? Read below to find out.

Source: Organovo 

As a publicly traded company, Organovo doesn't have much revenue to brag about. In fact, over the past four quarters, the company has logged only $1.2 million in revenue -- and yet it is currently valued at a ridiculous $750 million.

You won't see valuations like that very often in the public markets. But then again, you won't see too many companies trying to do what this company is attempting either. This year is supposed to be a big one for Organovo, as its first product -- 3-D liver assays -- are set to hit the market before 2015.

In simple terms, these liver assays are 3-D printed liver cells that are supposed to behave just like native liver cells. Pharmaceutical companies can use the cells to test drugs for toxicities and get more reliable results than they can now -- all before applying for FDA approval. The idea is that because the toxicities will show up earlier in the approval process -- or before the process even begins -- the drug companies will save tons of money before going through the laborious and expensive FDA gauntlet.

Hitting a major milestone early
Back in December, I pointed out three things that investors in Organovo needed to watch in 2014. The first was the results of the company's functional validation. Basically, that means the company was testing the cells in-house to see if they responded appropriately to known toxicities.

Source: Organovo 

The results from these tests were expected to be released sometime in March. Following that, Organovo planned to turn over its liver cells to key opinion leaders (KOLs) for feedback in April.

But today, the company announced that the timeline has sped up dramatically. Instead of April, Organovo was able to deliver its first liver tissue to a KOL -- identified as a top research scientist -- in January. The company's Chief Technology Officer also stated, "we have...greatly increased our ability to produce [3-D liver tissues]. By the end of January, we expect to have bioprinted nearly four hundred 3D Liver tissues during the month." 

That also means that instead of these liver assays hitting the market in December 2014, the company now expects for them to be generating revenue before December -- although no specific timeline was given.

What this means for investors
Make no mistake about it, Organovo is a risky and volatile stock. As mentioned above, it is extremely pricey based on traditional metrics.

And yet for long-term investors -- we're talking decades-long -- it's hard to deny the opportunity here. That's why I already own shares of the company. But as of this writing, they comprise less than 1% of my overall holdings.

Though $750 million is a large market cap for the company right now, if it is able to continue bioprinting other types of cells, I think the stock could appreciate noticeably in the future. I'm content to buy in at higher prices when more information is available -- if that's how things pan out.

Brian Stoffel owns shares of Organovo. The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Organovo Holdings Stock Quote
Organovo Holdings
$1.50 (-0.66%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.