Business context and reporting period
The filing is Organovo Holdings, Inc.’s Form 10-K for the fiscal year ended March 31, 2017, with unaudited fourth-quarter results. This differs from the request metadata, which names Vivosim Labs, Inc. and period 2016 Q4. Organovo describes itself as an early commercial-stage 3D bioprinting company, selling preclinical liver and kidney tissue research services and developing custom tissue models and a potential transplantable liver tissue.
Financial results and liquidity
| Metric | FY ended March 31, 2017 | FY ended March 31, 2016 |
|---|---|---|
| Revenue | $4.23 million | $1.48 million |
| Cost of revenue | $0.96 million | Immaterial; included in R&D |
| Operating loss | $38.58 million | $38.64 million |
| Net loss | $38.45 million | $38.58 million |
| Operating cash used | $29.19 million | $29.37 million |
| Cash and cash equivalents at year-end | $62.75 million | $62.09 million |
FY2017 revenue comprised $3.17 million from products and services, $1.02 million from collaborations, and $0.04 million from grants. Gross profit was approximately $3.27 million, or 77% of revenue, based on reported revenue and cost of revenue. R&D expense was $19.55 million and selling, general and administrative expense was $22.30 million. Annual net loss per share was $0.39.
For FY2017’s fourth quarter, revenue was $0.81 million and net loss was $10.66 million, or $0.10 per share. Quarterly revenue was down from $1.15 million in Q3 FY2017; quarterly loss widened from $9.58 million.
At March 31, 2017, current assets were $65.09 million, current liabilities $6.01 million, and working capital $59.08 million. Total liabilities were $6.82 million and stockholders’ equity $62.36 million. The balance sheet lists no debt balance; the filing text does not provide a separate debt-maturity schedule. Operating lease commitments totaled $5.70 million. Financing activities provided $31.25 million, primarily from equity issuance, including $25.7 million net proceeds from an October 2016 public offering.
Material changes versus the prior comparable period
- Revenue increased approximately 185% year over year, primarily from more tissue research-service contracts and collaboration milestones; grant revenue declined.
- Cost of revenue rose to $0.96 million as the company began reporting costs of manufacturing and delivering commercial services. R&D expense increased 8%, while SG&A was nearly flat.
- Operating and net losses remained broadly stable year over year. Operating cash burn was also similar, while cash at year-end increased slightly after substantial equity financing.
- Common shares outstanding rose from 92.39 million to 104.55 million during the fiscal year, reflecting equity financing and other share issuances.
Outlook, commentary, risks, and unusual items
Management said existing cash was expected to fund operations for at least the next 12 months, while noting that additional capital would be needed to advance development and commercialization plans. No specific revenue, earnings, or cash-flow guidance was provided. The company expects continuing losses and uncertain timing, if any, to profitability.
Commercial offerings include ExVive Human Liver Tissue and the kidney tissue service launched in September 2016. In October 2016, Organovo announced preclinical development of a bioprinted human liver tissue for potential transplantation; this remains early-stage and would require substantial preclinical and clinical work and regulatory approval.
Principal risks include limited commercial history, ongoing cash burn and potential dilution from future fundraising, uncertain customer adoption and collaborations, competition, availability of qualified human cells, reliance on a single San Diego laboratory, and lengthy and uncertain regulation of therapeutic products. The company reported no material legal proceedings and no accrued loss contingency. Auditors issued unqualified opinions on the financial statements and internal control over financial reporting, which was reported effective as of March 31, 2017. Subsequent to year-end, Taylor Crouch was appointed CEO, effective April 24, 2017.
Important facts for investors to verify
- Confirm the issuer and reporting period: this is Organovo Holdings, Inc.’s FY2017 10-K, not a filing identifying Vivosim Labs or FY2016 Q4.
- Assess the composition and repeatability of revenue growth, especially service contracts and collaboration milestones, and the economics of the newly reported cost of revenue.
- Review cash burn against management’s stated 12-month funding assessment, and the company’s potential need for further financing and related dilution.
- Track commercial adoption of the kidney service and progress, funding needs, and regulatory milestones for the experimental liver therapeutic program.
- Review the significant equity compensation and shares reserved for issuance, as well as lease commitments and customer concentration.