Organovo Holdings, Inc. (NASDAQ: ONVO) shareholders haven't had much to smile about recently. The 3D bioprinting company's stock is down around 30% in the past two weeks, primarily because of a public offering undertaken to raise more cash. Organovo announces its fiscal 2017 second-quarter results on Nov. 3. Will the company be able to put smiles on investors' faces? It could depend on these three things.
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Human liver tissue. Image source: Getty Images.
1. Any surprise differences from the sneak peek?
Organovo provided a sneak peek at its fiscal second-quarter results on Oct. 11. The company said that it expected to report revenue of $1.4 million, up 357% from the prior-year period. Most of that amount stemmed from product and service revenue.
The preview also gave an updated outlook for the full fiscal year. Organovo now expects total revenue in fiscal 2017 to be between$4.5 million and $6.2 million. That's up from the guidance range of $4 million to $6 million provided in August. Net cash utilization should also be better than initially anticipated. In August, Organovo projected full-year net cash utilization between$32.5 million and $36.5 million. Now the company thinks the range will be between $31 million and $34 million.
Those figures, however, were based on preliminary unaudited results. It's unlikely but still possible that Organovo could announce a surprise or two when the final results are reported.
2.How is the exVive3D kidney tissue launch going?
Aside from the financial results, investors will certainly want to know how the launch of Organovo's new exVive3D human kidney tissue is going. The company began lining up contracts for its 3D kidney tissue in September.
Multiple orders had already been signed at the outset of the kidney tissue launch. Organovo also reported that it was collaborating on toxicology panels and studies with at least two large pharmaceutical companies.
While the launch probably didn't have a significant impact on second-quarter results, early momentum is important. I expect Organovo CEO Keith Murphy to spend a considerable amount of time in his comments during the earnings conference call discussing how things are progressing for the new kidney tissue.
3.Any big new customers?
Merck stands out as Organovo's most visible customer and partner. Organovo continues to receive revenue from its deal with Merck to develop customer tissue models. In its preview a few weeks ago, the company stated that around $400,000 in revenue was received in the fiscal second quarter from the collaboration with Merck.
In his remarks during the fiscal 2017 first-quarter conference call, Keith Murphy mentioned that Organovo now hasfive of the top 25 largest drugmakers as customers. He said that current customers are providing positive feedback on their experiences using Organovo's 3D bioprinted tissues.
I wouldn't be surprised if Murphy announces the total of Big Pharma customers has increased over the past few months. Organovo seems to be getting past some of the initial skepticism about use of 3D tissues. Publication in scientific journals and presenting at industry conferences has helped in that regard. Positive word of mouth is another key factor.
My guess is that Organovo's shareholders will generally like what they hear from the company when it discusses its second-quarter performance. Despite the troublesome dilution resulting from the recent public offering, all the signs seem to point to growth for Organovo.
There's still a long way to go for Organovo to deliver on its lofty expectations of $100 million and higher sales for each of its 3D tissues on the market now. But as long as the company can report measurable progress, there's a reasonable chance that Organovo can make investors smile once again.
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Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.