Business context and reporting period
The supplied filing is Organovo Holdings, Inc.’s Form 10-Q for the three months ended June 30, 2019 (fiscal 2020 first quarter), not a filing identified as Vivosim Labs, Inc. or a calendar-year 2019 first-quarter report. Organovo develops bioprinted human tissues and also sells cell products and research services.
During the quarter, the company concluded that variability in performance and duration of benefits made its lead in vivo liver therapeutic program unattractive to continue developing. It suspended the program and began an active process to evaluate strategic alternatives.
Financial results and position
| Metric | Three months ended June 30, 2019 | Prior-year comparable period |
|---|---|---|
| Revenue | $0.668 million | $0.689 million |
| Operating loss | $6.521 million | $7.577 million |
| Net loss | $6.323 million | $7.416 million |
| Net loss per share, basic and diluted | $0.05 | $0.07 |
| Cash used in operations | $5.935 million | $7.022 million |
| Net cash from financing | $4.944 million | $2.907 million |
Products and services revenue was $0.606 million, collaborations and licenses $0.010 million, and grants $0.052 million. Product and service revenue rose 11% year over year, while collaboration and license revenue fell 77% and grant revenue declined. Total revenue decreased 3%.
Research and development expense increased 13% to $3.823 million; selling, general and administrative expense decreased 30% to $3.315 million. Cost of revenue was $0.051 million. Calculated gross margin was approximately 92% versus 83% a year earlier; the filing does not report these margins directly. Operating loss improved about 14%, and net loss improved about 15% year over year.
At June 30, 2019, cash and cash equivalents were $35.487 million, with a further $0.079 million restricted as lease collateral. Working capital was $33.9 million, compared with $34.8 million at March 31, 2019. The company reported no interest-bearing borrowings on the balance sheet; operating lease liabilities totaled $4.820 million, including $1.046 million current. Accumulated deficit was $267.1 million. Cash, cash equivalents and restricted cash decreased $0.990 million during the quarter.
Material changes, outlook and risks
- The company raised approximately $5.0 million net by issuing 6.087 million shares through its at-the-market offering. Shares outstanding increased to 130.279 million at June 30, 2019.
- Management said available resources were expected to support current operations for at least 12 months under its current plans. It also warned that the suspended lead program and uncertainty around strategic alternatives created substantial doubt about its ability to finance other programs long term. No assurance was given that a transaction or additional financing could be completed; failure could force the company to cease operations.
- On August 7, 2019, after quarter-end, the company announced a reduction of approximately 40 positions, or 69% of its workforce. It expected a roughly $1.3 million restructuring charge and approximately $5.3 million in annual employee-cost savings. It found no impairment charge was then required for an asset group with approximately $5.9 million of carrying value, but said a write-down could become necessary.
- Nasdaq notified the company that its share price had failed the $1 minimum bid requirement. The initial cure period ran through December 23, 2019; a reverse split of 1-for-5 to 1-for-20 was proposed for stockholder authorization. Delisting remained a risk.
- The company reported no outstanding legal claims and no off-balance-sheet arrangements. It adopted lease accounting on April 1, 2019, recognizing right-of-use assets and lease liabilities.
No formal financial guidance was provided. Management’s outlook depends on cost reductions, financing availability, and the outcome of its strategic review; potential alternatives included a merger, asset sale, collaboration or licensing arrangement, or equity or debt financing.
Important facts for investors to verify
- Confirm the issuer and reporting period: this filing is for Organovo Holdings, Inc., fiscal Q1 2020, despite the request metadata naming Vivosim Labs, Inc. and 2019 Q1.
- Check subsequent disclosures on the strategic review, any transaction or financing, and the company’s ability to maintain operations.
- Track restructuring execution, actual severance costs, realized savings, and any later asset impairment.
- Verify Nasdaq bid-price compliance, any reverse-split authorization or implementation, and the continued listing status.
- Monitor cash burn, ATM share issuance and dilution, and the effect of lease obligations on liquidity.