onvo-8k_20170209.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): February 9, 2017

 

ORGANOVO HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Commission File Number: 001-35996

 

Delaware 

 

27-1488943

(State or other jurisdiction

of incorporation)

 

(I.R.S. Employer

Identification No.)

 

6275 Nancy Ridge Dr.,

San Diego, California 92121

(Address of principal executive offices, including zip code)

 

(858) 224-1000

(Registrant’s telephone number, including area code)

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 


 

Item 2.02 Results of Operations and Financial Condition

On February 9, 2017, Organovo Holdings, Inc. (the “Company”) issued a press release announcing financial results for its third quarter ended December 31, 2016.  A copy of the press release is attached hereto as Exhibit 99.1.

The information furnished in this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934 or otherwise subject to the liabilities of that Section.  The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission (the “SEC”).

Item 9.01 Financial Statements and Exhibits

(d)

 

Exhibits

99.1

 

Press Release, dated February 9, 2017.



 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

ORGANOVO HOLDINGS, INC.

 

 

 

 

Date: February 9, 2017

/s/ Keith Murphy

 

Keith Murphy

 

Chief Executive Officer and President

 

 



 


 

Exhibit Index

Exhibit

No.

 

Description

99.1

 

Press Release, dated February 9, 2017.

 

 

onvo-ex991_6.htm


Exhibit 99.1

 

Investor Contact:

 

Press Contact:

 

 

 

Steve Kunszabo

 

Jessica Yingling

Organovo Holdings, Inc.

 

Little Dog Communications

+1 (858) 224-1092

 

+1 (858) 480-2411

skunszabo@organovo.com

 

jessica@litldog.com

 

 

 

 

 

ORGANOVO ANNOUNCES FISCAL THIRD-QUARTER 2017 RESULTS; COMPANY UPDATES FULL-YEAR FISCAL 2017 TOTAL REVENUE OUTLOOK

SAN DIEGO – February 9, 2017 – Organovo Holdings, Inc. (NASDAQ:ONVO) (“Organovo”), a three-dimensional biology company focused on delivering scientific and medical breakthroughs using its 3D bioprinting technology, today reported financial results for the fiscal third quarter of 2017 and updated its full-year fiscal 2017 outlook for total revenue.  Net loss was $9.6 million, or $0.09 per share, for the fiscal third quarter of 2017, as compared to $10.5 million, or $0.11 per share, for the fiscal third quarter of 2016.

Organovo reported fiscal third-quarter total revenue of $1.2 million, which consisted largely of product and service revenue(1).  Total revenue increased 251 percent versus the comparable period of fiscal 2016.  

“We grew total revenue at a strong year-over-year pace during the fiscal third quarter, showing continued uptake of our tissue research services,” said Keith Murphy, CEO, Organovo.  “We recognized revenue from six new customers and seven repeat customers during the period, demonstrating market penetration and solid repeat business.  We also added one global Top 25 pharma customer to our roster, bringing our total to eleven with this key group.”   

Murphy continued, “We’re revising our total revenue guidance for fiscal 2017 because of a change in the timing of customer orders due to specific customer requests for additional validation studies related to certain use cases and for qualification of an additional cell source.  We expect to successfully complete the additional scientific studies required to address these issues, and don’t anticipate these items will have a long-term impact on customer adoption.  The required studies will delay a portion of our forecasted revenue into fiscal 2018.  We’re working diligently with our customers to complete the technical work and to unlock both existing backlog and prospective orders, and look ahead with confidence to continued growth in our pipeline.  In addition, our internal liver validation data now includes successful identification of toxicity for two out of three proprietary compounds that were classic preclinical misses for one of our Top 10 pharma customers.  This hit rate is consistent with our overall testing success and further demonstrates significantly increased predictive power for our customers.”


Murphy concluded, “During the fiscal third quarter, we also announced our 3D bioprinted human liver as the first candidate in our therapeutic tissues portfolio and presented early data showing survival and sustained functionality of this tissue when implanted into animal models at the Tissue Engineering & Regenerative Medicine International Society Conference (TERMIS).  We expect to optimize the final tissue design and are embarking on pre-GLP safety and efficacy studies that will take us through the next 18 months.  Based on our path forward, we now expect to target an IND submission with the liver tissue during the calendar year 2020.  

Organovo Business Highlights

Revenue

 

Product and service revenue was $0.7 million, up 139 percent from the prior-year period, largely driven by an increase in customer contracts for the Company’s tissue research services.  

 

Collaborations and grant revenue totaled $0.4 million, primarily supported by a milestone achievement from the Company’s agreement with Merck & Co. to develop multiple custom tissue models.

Operating Expenses

 

Cost of revenues was $0.2 million, reflecting the Company’s expenses related to manufacturing and delivering its product and service revenues.  

 

Research and development costs increased 10 percent year-over-year to $5.0 million, primarily due to increased employee related and lab supplies costs.

 

Selling, general and administrative expenses decreased 11 percent from the prior-year period to $5.5 million, reflecting lower non-cash shared-based compensation expense, partially offset by higher employee related costs.

Liquidity & Capital Resources

 

The Company ended the fiscal third quarter with a cash and cash equivalents balance of $70.0 million.  Organovo’s net cash utilization(3) during the period was $7.7 million.  The Company’s net cash utilization for the nine months ended December 31, 2016 was $23.1 million.  

 

Working capital was $67.5 million to end the fiscal third quarter compared to $65.2 million in the prior-year quarter.


Fiscal-Year 2017 Outlook

The Company updated its full-year fiscal 2017 outlook for total revenue and affirmed its outlook for net cash utilization.  The Company now expects:  

 

Total revenue of between $3.7 million and $4.5 million for fiscal-year 2017.  Fiscal 2016 total revenue was $1.5 million.  

 

Net cash utilization of between $31.0 million and $34.0 million for fiscal-year 2017.  The Company had a cash and cash equivalents balance of $62.1 million for its fiscal year ended March 31, 2016.

 

Fiscal-Year 2017 Outlook

(November 2016)

Fiscal-Year 2017 Outlook

(February 2017)

Fiscal-Year 2017

Total Revenue

$4.5 million - $6.2 million

$3.7 million - $4.5 million

Net Cash Utilization

$31.0 million -

$34.0 million

Affirmed

 

 

Long-Range Outlook

The Company affirmed its long-range outlook for potential revenue from its liver and kidney tissue products.  The Company continues to expect:

 

As it penetrates the toxicology market, Organovo’s ExViveTM Human Liver Tissue service will grow into the tens of millions in annual revenue, and has $100 million+ revenue potential in the future (inside of a total addressable market of over $1 billion).

 

As it penetrates the toxicology market, Organovo’s ExVive Human Kidney Tissue service will grow into the tens of millions in annual revenue, and has $100 million+ revenue potential in the future (inside of a total addressable market of over $2 billion). 


Definitions & Supplemental Financial Measures

(1)

Product and service revenue includes tissue research service agreements and product sales, including product sales from the Company’s wholly-owned subsidiary, Samsara Sciences Inc.

(2)

Collaboration revenue consists of license and collaboration agreements that contain multiple elements, which may include non-refundable up-front fees, payments for reimbursement of third-party research costs, payments for ongoing research, payments associated with achieving specific development milestones and royalties based on specified percentages of net product sales, if any.

(3)

In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company provides net cash utilization as a supplemental measure to help investors evaluate the Company’s fundamental operational performance. The Company defines net cash utilization as the net decrease in cash and cash equivalents during the reporting period (which was an increase of $18.3 million during the third quarter of fiscal 2017) less proceeds from the sale of common stock and the exercise of warrants and stock options during the reporting period (which was $26.0 million during the third quarter of fiscal 2017).  Net cash utilization is an operational measure that should be considered as additional financial information regarding our operations.  This operational measure should not be considered without also considering our results prepared in accordance with U.S. GAAP, and should not be considered as a substitute for, or superior to, our U.S. GAAP results.  The Company believes net cash utilization is a relevant and useful operational measure because it provides information regarding our cash utilization rate.    Management uses net cash utilization to manage the business, including in preparing its annual operating budget, financial projections and compensation plans.  The Company believes that net cash utilization is also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries.  However, there is no standardized measurement of net cash utilization, and net cash utilization as the Company presents it may not be comparable with similarly titled operational measures used by other companies.  Due to these limitations, the Company’s management does not view net cash utilization in isolation but also uses other measurements, such as cash used in operating activities and revenues to measure operating performance.   



Conference Call Information

As previously announced, the Company will host a conference call to discuss its results at 5:00 p.m. ET on Thursday, February 9, 2017.  Callers should dial (888) 317-6003 (U.S. only) or (412) 317-6061 (from outside the U.S.) to access the call.  The conference call ID is 1376489.  The conference call will also be simultaneously webcast on Organovo’s Investor Relations webpage at www.organovo.com.  A replay of the conference call will be available beginning Thursday, February 9, 2017 through Thursday, February 16, 2016 at Organovo’s Investor Relations webpage.  Callers can also dial (877) 344-7529 (U.S. only) or (412) 317-0088, Access Code 10100036, for an audio replay of the conference call.

About Organovo Holdings, Inc.

Organovo designs and creates functional, three-dimensional human tissues for use in medical research and therapeutic applications.  The Company develops 3D human tissue models through internal development and in collaboration with pharmaceutical, academic and other partners.  Organovo's 3D human tissues have the potential to accelerate the drug discovery process, enabling treatments to be developed faster and at lower cost.  The Company’s ExVive Human Liver and Kidney Tissues are used in toxicology and other preclinical drug testing.  The Company also actively conducts early research on specific tissues for therapeutic use in direct surgical applications.  In addition to numerous scientific publications, the Company’s technology has been featured in The Wall Street Journal, Time Magazine, The Economist, Forbes, and numerous other media outlets.  Organovo is changing the shape of life science research and transforming medical care.  Learn more at www.organovo.com.  



Forward-Looking Statements

Any statements contained in this press release that do not describe historical facts constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties.  The factors that could cause the Company's actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the Company's ability to develop, market and sell products and services based on its technology; the expected benefits and efficacy of the Company's products, services and technology; the Company’s ability to successfully complete studies and provide the technical information required to support market acceptance of its products, services and technology, on a timely basis or at all; the Company's business, research, product development, regulatory approval, marketing and distribution plans and strategies, including its use of third party distributors; the Company's ability to successfully complete the contracts and recognize the revenue represented by the contracts included in its previously reported total contract bookings and secure additional contracted collaborative relationships; the final results of the Company's preclinical studies may be different from the Company's studies or interim preclinical data results and may not support further clinical development of its therapeutic tissues; the Company may not successfully complete the required preclinical and clinical trials required to obtain regulatory approval for its therapeutic tissues on a timely basis or at all; and the Company’s ability to meet its fiscal year 2017 outlook and/or its long-range outlook.  These and other factors are identified and described in more detail in the Company's filings with the SEC, including its Annual Report on Form 10-K filed with the SEC on June 9, 2016 and its Quarterly Report on Form 10-Q filed with the SEC on February 9, 2017.  You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made.  These cautionary statements should be considered with any written or oral forward-looking statements that the Company may issue in the future.  Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events.  

 

###

 

 


Organovo Holdings, Inc.

Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss

(in thousands except for share data)

 

Three Months Ended

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

December 31, 2016

 

 

December 31, 2015

 

 

December 31, 2016

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products and services

$

699

 

 

$

293

 

 

$

2,396

 

 

$

689

 

Collaborations

 

443

 

 

$

25

 

 

 

1,001

 

 

 

58

 

Grants

 

9

 

 

$

10

 

 

 

21

 

 

 

188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

1,151

 

 

 

328

 

 

 

3,418

 

 

 

935

 

Cost of revenues

 

212

 

 

 

-

 

 

 

773

 

 

 

-

 

Research and development expenses

 

5,024

 

 

 

4,586

 

 

 

14,012

 

 

 

13,467

 

Selling, general, and administrative expenses

 

5,546

 

 

 

6,212

 

 

 

16,520

 

 

 

17,680

 

Total Costs and Expenses

 

10,782

 

 

 

10,798

 

 

 

31,305

 

 

 

31,147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

(9,631

)

 

 

(10,470

)

 

 

(27,887

)

 

 

(30,212

)

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

1

 

 

 

2

 

 

 

(4

)

 

 

(27

)

Interest income

 

50

 

 

 

13

 

 

 

124

 

 

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Income (Expense)

 

51

 

 

 

15

 

 

 

120

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

(1

)

 

 

-

 

 

 

(23

)

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(9,581

)

 

$

(10,455

)

 

$

(27,790

)

 

$

(30,203

)

Currency Translation Adjustment

 

(3

)

 

 

-

 

 

 

(10

)

 

 

-

 

Comprehensive Loss

$

(9,584

)

 

$

(10,455

)

 

$

(27,800

)

 

$

(30,203

)

Net loss per common share-basic and diluted

$

(0.09

)

 

$

(0.11

)

 

$

(0.29

)

 

$

(0.34

)

Weighted average shares used in computing net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

loss per common share-basic and diluted

 

101,174,734

 

 

 

92,396,358

 

 

 

95,595,640

 

 

 

90,026,158

 

 

 

 


Organovo Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands except for share data)

 

 

December 31, 2016

 

 

March 31, 2016

 

 

 

Unaudited

 

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

69,996

 

 

 

62,091

 

Grant receivable

 

 

-

 

 

 

-

 

Accounts receivable

 

 

1,030

 

 

 

259

 

Inventory, net

 

 

328

 

 

 

334

 

Prepaid expenses and other current assets

 

 

589

 

 

 

968

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

71,943

 

 

 

63,652

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

3,937

 

 

 

3,711

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

127

 

 

 

79

 

Other assets, net

 

 

124

 

 

 

134

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

76,131

 

 

 

67,576

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

722

 

 

 

787

 

Accrued expenses

 

 

2,936

 

 

 

2,450

 

Deferred rent

 

 

155

 

 

 

139

 

Deferred revenue

 

 

620

 

 

 

1,110

 

Current portion of capital lease

 

 

-

 

 

 

-

 

Accrued interest payable

 

 

 

 

 

 

-

 

Convertible notes payable, current portion

 

 

 

 

 

 

-

 

Warrant liabilities

 

 

8

 

 

 

4

 

Total current liabilities

 

 

4,441

 

 

 

4,490

 

 

 

 

 

 

 

 

 

 

Deferred rent, net of current portion

 

 

786

 

 

 

905

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

5,227

 

 

 

5,395

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 150,000,000 shares authorized, 104,095,729 and 92,391,989 shares issued and outstanding at December 31, 2016 and March 31, 2016, respectively

 

 

104

 

 

 

92

 

Additional paid-in capital

 

 

259,470

 

 

 

222,959

 

Accumulated deficit

 

 

(188,660

)

 

 

(160,870

)

Unrealized gain (loss) on foreign currency revaluation

 

 

(10

)

 

 

-

 

Total stockholders’ equity

 

 

70,904

 

 

 

62,181

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

 

76,131

 

 

 

67,576

 

 

 


Organovo Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows (in thousands)

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

December 31, 2016

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows From Operating Activities

 

 

 

 

 

 

 

Net loss

$

(27,790

)

 

$

(30,203

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

824

 

 

 

560

 

Change in fair value of warrant liabilities

 

4

 

 

 

27

 

Stock-based compensation

 

5,540

 

 

 

7,049

 

Amortization of warrants issued for services

 

-

 

 

 

(99

)

Increase (decrease) in cash resulting from changes in:

 

 

 

 

 

 

 

Accounts receivable

 

(771

)

 

 

(165

)

Inventory

 

6

 

 

 

(5

)

Prepaid expenses and other assets

 

400

 

 

 

553

 

Accounts payable

 

(65

)

 

 

(921

)

Accrued expenses

 

486

 

 

 

237

 

Deferred rent

 

(103

)

 

 

(54

)

Deferred revenue

 

(490

)

 

 

1,185

 

Net cash used in operating activities

 

(21,959

)

 

 

(21,836

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows From Investing Activities

 

 

 

 

 

 

 

Restricted cash deposits

 

(48

)

 

 

-

 

Purchases of fixed assets

 

(1,061

)

 

 

(1,711

)

Proceeds from disposals of fixed assets

 

-

 

 

 

14

 

Purchases of intangible assets

 

-

 

 

 

(35

)

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(1,109

)

 

 

(1,732

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

 

Proceeds from issuance of common stock and exercise of warrants, net

 

30,401

 

 

 

43,137

 

Proceeds from exercise of stock options

 

582

 

 

 

320

 

Principal payments on capital lease obligations

 

-

 

 

 

(5

)

Net cash provided by financing activities

 

30,983

 

 

 

43,452

 

 

 

 

 

 

 

 

 

Effect of currency exchange rate changes on cash and cash equivalents

 

(10

)

 

 

-

 

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

7,905

 

 

 

19,884

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents at Beginning of Period

 

62,091

 

 

 

50,142

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents at End of Period

$

69,996

 

 

$

70,026

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

Interest

$

-

 

 

$

-

 

Income taxes paid

$

23

 

 

$

3