SAN DIEGO, Feb. 09, 2017 (GLOBE NEWSWIRE) -- 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 - | 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.
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