WEB NEWS Company Rebuttal
SAN DIEGO , April 15, 2014 /PRNewswire / -- Organovo Holdings, Inc. (NYSE MKT: ONVO), the San Diego -based regenerative medicine company focused on using its breakthrough NovoGen 3D human tissue printing technology to create tissue on demand for medical research and therapeutic applications, today commented on recent reports published by two unaffiliated firms:
"Over the past two months, new and unknown firms have issued articles and reports on Organovo, without speaking to Organovo management for information or perspective on Organovo's business or opportunities. One firm appears to have been formed in February 2014 and has not issued any other reports other than on Organovo; the other firm has a mailing address at a virtual, rent-an-office.
"We have had the opportunity to review these reports in detail and can confirm that they contain inaccurate information and that they are exceptionally – and likely intentionally – misleading. Based on the source of the reports and the blatantly negative tone, we believe they were issued by or at the request of a short seller or short-sellers, who may profit from a decrease in Organovo's stock price following the issuance of these kinds of reports.
"Organovo remains focused on the development of 3D human tissues, including remaining on track for launch of its 3D Liver product in 2014. The Company believes, based on the feedback from its collaborators and scientific advisors, that the demonstrated performance of the 3D Liver to date provides it with the opportunity to redefine the category of in vitro assays. The Company's opportunities in in vitro assays include liver, cancer, skin, and kidney tissue markets and in 2013 it signed research collaborations with top corporate and academic partners in three of those areas. In 2014, Organovo has signed collaboration with the US National Institutes of Health to develop eye tissues and to integrate 3D bioprinting with traditional drug screening technologies.
"The Company continues to execute on its plan to drive to near term revenue starting this calendar year. The Company also is currently in the midst of preclinical development on early bioprinted tissues for direct surgical therapy. The Company's Board and management team remain focused on these goals, and remain confident in the Company's technology and team."
Research
On 6/25/2012 we sent our premium members an email stating that we were taking a small short position in ONVO due to the recently filed S-1 that could lead to massive selling. On 6/27/2012 we sent our members our follow-up research article titled, “Organovo Shares Could Be Headed To $3 Per Share” explaining why we believed that shares could get destroyed once the S-1 goes effective.
Our valuation scenario at that time led us to a price target of $3.00 per share based on 4x an overly aggressive and unrealistic revenue assumption for 2012 of $45 million (the company had $1 million in revenue at the time).
The stock was trading at $9.08 at the day of our article, shares hit a low of $3.50 in the same trading day.
As we will show we still are having a difficult time justifying elevated levels in ONVO shares and still think the stock is worth $3.50 or lower based on new valuation scenarios.
Quotes from our article:
“It is easy to get excited about a company like ONVO that is attempting to make strides in medical research, but we think the valuation, given the facts, is insane.” bullish ONVO Seeking Alpha article mentioned two comparables, Scolr Pharma Inc (NYSE AMEX:DDD) and Stratasys, Inc. (NASDAQ:SSYS). Both firms generate significant revenues, are profitable and are selling at market cap to sales ratios of 5 ONVO, a company with minimal revenues, is selling at a market cap to sales ratio of over 500,
“We believe a more appropriate comparable Advanced BioHealing, Inc planned an initial public offering in May of 2011, but chose not to when Shire Plc agreed to buy the company a day before the biotechnology company was to go public. The company had planned to offer 13.4 million shares, priced from $14 to $16 and would have had 39.8 million shares outstanding, giving its shares a market-cap of around $600 million or a market-cap to sales ratio of 4. 2012 revenues of $140 million profitable here. ”
“Armed with this data, we can derive an approximate value of ONVO's shares of it were to IPO today:
· ONVO's 2011 revenues ~ $1 million
· ONVO's market-cap assuming all warrants are exercised: 60 million outstanding shares times current price per share of 9.1 = $546 million
· ONVO's market-cap to sales ratio >500
Research
On 6/25/2012 we sent our premium members an email stating we were taking a small short position in ONVO due to the recently filed S-1 that could lead to massive selling . Today we sent our members our follow up research explaining why we believe that shares could get destroyed once the S-1 goes effective. This will allow investors who bought shares on the cheap at $1.00 per share in three private placements to begin liquidating their positions. Please see our full commentary here.
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Deal Flow
Via form S-1 from 6/13/2012
This prospectus relates to the resale by certain selling security holders of Organovo Holdings, Inc. of up to 31,995,974 shares of our common stock in connection with the resale of:
up to 15,247,987 shares of our common stock which were issued in our private placement (the “Offering”) of units consisting of (i) one share of our common stock and (ii) one warrant to purchase one share of our common stock at an exercise price of $1.00 per share (the “Units”), with closings of the Offering occurring on each of February 8, 2012 (the “Initial Closing”), February 29, 2012 and March 16, 2012 and shares of common stock issued to certain of the selling security holders on the date of the Initial Closing of the Offering in connection with the conversion of our $1,500,000 in principal amount of 6% convertible promissory notes due March 31, 2012 (the “Bridge Notes”) into 1,525,387 Units;
up to 15,247,987 shares of our common stock issuable upon the exercise of warrants issued to the selling security holders in our Offering of Units (excluding warrants issued to our placement agents in the Offering) and shares of common stock issuable upon the exercise of warrants issued to certain of the selling security holders on the date of the Initial Closing of the Offering in connection with the conversion of the Bridge Notes into 1,525,387 Units; andup to 1,500,000 shares of our common stock issuable upon the exercise of warrants issued to certain selling security holders in connection with the original issuance of our Bridge Notes that where converted into 1,500,000 new warrants on the date of the Initial Closing, each exercisable at a price of $1.00 per share of our common stock.
The selling security holders may offer to sell the shares of common stock being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices, or at negotiated prices. We do not know when or in what amount the selling security holders may offer the securities for sale. The selling security holders may sell any, all or none of the securities offered by this prospectus.
We will not receive proceeds from the sale of shares by the selling security holders. Any proceeds received by us from the exercise of warrants by the selling security holders will be used for general corporate purposes. The selling security holders and any brokers executing sell orders on behalf of the selling security holders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). Commissions received by a broker executing sell orders may be deemed to be underwriting commissions under the Securities Act.
Our common stock is traded on the OTCQB under the symbol “ONVO.” On June 11, 2012, the closing sale price of our common stock on the OTCQB was $5.48 per share.
