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Why Organovo Holdings Inc Stock Bulked Up Today

By Dan Carroll - Jul 24, 2014 at 2:09PM

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

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 ( ONVO -0.46% ), 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 ( JNJ 2.23% ) 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Organovo Holdings, Inc. Stock Quote
Organovo Holdings, Inc.
ONVO
$4.38 (-0.46%) $0.02
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$162.94 (2.23%) $3.56

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