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Why OvaScience Shares Tanked 37% Today

By Todd Campbell - Sep 29, 2015 at 11:47AM

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Lower than expected demand for its in-vitro product overseas is forcing the company to cut its guidance for 2015.

Source: OvaScience

What: After cutting guidance for the use of its in-vitro fertilization products, OvaScience (NASDAQ: OVAS) shares lost more than third of their value today.

So what: Previously, OvaScience was guiding for investors to expect 1,000 Augment treatment cycles this year; however, the company now believes it's likely to fall short of that number.

OvaScience is blaming the shortfall on M&A activity within clinics offering Augment, which OvaScience believes will result in lower-than-hoped for fourth quarter demand. That's especially disappointing to investors because the fourth quarter was when the company expected Augment's use to rise sharply.

Now what: OvaScience's Augment is intriguing because it uses mitochondria from a patient's own precursor eggs, rather than donor mitochondria, to improve egg health and boost in-vitro success rates.

The potential to improve in-vitro success is important because most women's success rate is just 20% to 35% per-cycle and spending on in-vitro procedures can  run between $10,000 to $15,000 per cycle, or more.

However, OvaScience's Augment is only available outside the U.S., and while the company has additional in-vitro approaches under development, it's uncertain how big the commercial demand will ultimately be for OvaScience, or when its solutions will be ready for the financially-important U.S. market.

Overall, OvaScience is worth watching, but until it can translate that "intrigue" into dollars on the bottom line, investors ought to approach it cautiously.


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