Both Organovo and United Therapeutics are focused on solving some of the world's most complex medical problems. Image source: Pixabay

Investing in cutting-edge healthcare stocks isn't for the faint of heart. Companies can go from having no revenue to a blockbuster drug in no time at all -- and investors can reap untold gains. Or a start-up can go belly up and investors lose everything. The line between the two can oftentimes seem perilously thin.

Organovo (ONVO 0.65%) and United Therapeutics (UTHR -1.31%) are two companies on the cutting edge of healthcare technology. Organovo has developed a 3-D bioprinter that helps create liver (and soon, kidney) cells in vivo that mimic native cell behavior. Drug companies then use these cells to test for toxicity long before clinical trials start -- helping them potentially save billions of dollars and potentially even human lives.

United Therapeutics, on the other hand, is a larger company that has found success focusing on developing treatments for life-threatening diseases. Nearly 70% of the company's revenue last quarter came from two drugs: Remodulin, an injection for pulmonary arterial hypertension (PAH), and Tyvaso, which treats the same condition through an inhaler.

Which is the better buy today? Let's evaluate three key dimensions.

Financial fortitude
Investors need to be keenly aware of a company's balance sheet. Though cash on hand and debt levels aren't the be-all, end-all of an investment thesis, these figures play an important role. Lots of cash on hand, with more coming in, allows a company to be flexible, while debt makes them more fragile in the face of unexpected challenges.

Let's consider a few key metrics for each company.


Market Cap


Long-Term Debt

Net Income

Free Cash Flow


$220 million

$70 million


($38.1 million)

($29.8 million)

United Therapeutics

$5.9 billion

$922 million

$30 million

$663 million

$428 million

Source: Yahoo! Finance. Net Income and FCF are for trailing 12 months.

While it might be reassuring that Organovo holds $70 million in cash against absolutely no long-term debt, this doesn't tell the whole story. Organovo has only one marketable product -- its exVive 3D Liver Assay -- and even that has brought in very little revenue to date.

The company burned through $30 million in cash over the past year, and CEO Keith Murphy recently warned that though no dilutive offerings would be necessary in the next 24 months, they weren't out of the question for the future.

United Therapeutics, on the other hand, is solidly profitable, has lots of cash against little debt, and has no problem with free cash flow.

Winner: United Therapeutics

Here's where things get tricky. United Therapeutics has shown that it can effectively target a field -- here, PAH -- and reap the financial rewards from it. The company is also targeting cancer-related and infectious-disease treatments, though these two have shown much less in terms of revenue generation thus far.

In fact, in terms of addressing the near-, medium-, and long-term potential of the company, management focuses solely on treatments for PAH, including the two aforementioned drugs, as well as a newer treatment, Orenitram. Ironically, United Therapeutics has teamed up with Organovo in the past to further research such treatments.

For Organovo, bulls would have you believe that the sky is the limit. Indeed, management believes that Organovo can one day generate over $100 million per year in revenue (versus just $1.2 million in 2015) from its liver and kidney assays alone. But it's important to note that over the next two years, liver and kidney cell assays are the only products Organovo will probably have -- and it probably won't reach that full potential by the end of 2017.

That said, I'll give a cautious nod to Organovo, as its 3-D bioprinter gives the company -- for now -- a virtual monopoly on in vivo, bioprinted cells. While $100 million itself is less than United Therapeutics pulls in during a quarter, Organovo is also worth less than $200 million. If the company can reach even a fraction of its potential in (1) selling its in vivo cells, (2) developing some of its own drugs, or (3) monetizing its NovoGen bioprinter, it could be worth many multiples of its current market cap.

Winner: Organovo

There are lots of popular ways to measure profitability, but many of them don't apply in this situation because Organovo has yet to turn a profit or generate positive free cash flow. Since Organovo isn't expected to be profitable until 2020, the only apples-to-apples comparison we can really make is price-to-sales. On that mark, United Therapeutics is the runaway winner, trading at 4 times sales, versus Organovo's 166 times sales.

Winner: United Therapeutics

Ten years from now, it's entirely possible than an investment in Organovo will end up being the more profitable purchase right now. But we can't predict the future, so using the information that's on hand right now, United Therapeutics seems to clearly be a better buy.