For every star performing biotech, life sciences or innovative 3D printing company there are another 9 where investors would have been better off keeping their cash under a mattress.
Organovo报告第一年全年营业on a commercial basis we look for clues as to which category they might fit into. With more than 25 patents secured and another 80 pending, do the current share price and today’s published financial accounts tell the full story?
Organovo increased total revenue from $570 thousand in 2015 to $1.5 million for 2016. However, losses also increased from $30.8 million to $38.6 million. Although yet to turn a profit, Organovo were always going to generate a sizeable amount of text in the3D Printing mediaand beyond. The promise of combining biophysics, developmental biology and of course 3D printing to advance healthcare and life sciences is an attractive proposition.
在全球范围内，制药行业的年收入超过1万亿美元. If the industry were a country it would rank as the 16thGDP最大，仅落后于墨西哥。因此，当Organovo首席执行官基思·墨菲（Keith Murphy）说时，”我们正在满足非常吸引人的市场的关键未满足需求”，这可能是一种轻描淡写。
On Thursday’s call with analysts and investors Murphy reiterated a point he has made a number of times before. Today’s total revenue is yet to reach the potential annual income of $200m* that is possible within the near-term.
As the founder of Organovo, Dr. Gabor Forgacs has received accolades and numerous conference speaking invitations. Earlier this week, at one such conference, Forgacs explained to the audience at the 8thedition of the From Solid State to Biophysics conference in Dubrovnik, Croatia one of these unmet needs in an attractive market.
“ 650亿美元。这是2011年美国全球制药行业在研究和开发期间花费的金额。”这导致FDA批准了21种药物，每次成功药物约为30亿美元。
The low success rate can be explained in part by the transition between preclinical animal trials (which themselves are preceded by substantial work) and human clinical trials. This transition sees between 20-50% of drug candidates fail. The preclinical work typically equates to a sum that can reach $500 million. Forgacs says the simple explanation for these expensive failures are the differences between animals and humans.
Organovo believe they have a solution to this expensive problem: extrusion based bioprinting.
Everything Flows
Describing the process of extrusion based bioprinting Forgacs says, “You have a bioprinter and bioparticles, either spherical multicellular units (aggregates) or cylindrical units. The print nozzle lays down these particles together with a supporting material that is later removed. Once the particles are laid down, they fuse. The composition of the bio-particles depends on what you want to do.”
While other approaches to regenerative medicine such as inkjet bioprinting and using化学注入的脚手架exist, Forgacs believes the extrusion method is the most powerful.
In contrast to 3D printing in the inanimate world Forgacs explains, “bioprinting does not result in an (immediately) useful product, a viable biological structure without post-printing maturation.” Maturation involves several processes, at this stage biology takes over and the living cells fuse together. Forgacs gives an example of vascular structures such as blood vessels, “The bioprinted structure is put into a profusion bioreactor where near physiological conditions are created. Under these conditions the structure starts maturing.”
成熟是“高度非平凡的过程”。为了形成血管，例如，需要三种特定的细胞类型。他继续说：“因此，在这篇文章印刷过程中发生了奇迹般的事情。细胞不仅融合，还可以整理细胞。即，他们找到了其生理位置和结构的其余部分之间的界面。”这是大自然自我组织的惊人力量。Formacs解释说：“这是因为有（血）流动。细胞具有应力敏感基因，感知流动，因此它们被迫遗传去了应该去的地方。这种情况发生在体外，在体内，是令人难以置信的”
这种组织融合和细胞分配是这里起作用的两个最重要的现象。
Another key component of the underlying science of bioprinting is based on tissue liquidity, pioneered by the developmental biologist Malcolm Steinberg at Princeton University. Steinberg realized embryonic tissues have a lot in common with liquids. Forgacs explains, “irregular tissue fragments spontaneously round up into spherical aggregates, liquid drops do the same thing. Embryonic tissues preferentiality envelop each other (or sort out) like liquids which have surface tension, water has a higher surface tension than oil which is why they remain separate with the oil surrounding the water. This can be reproduced in embryonic tissues.”
It is must be pointed out that this is an analogy, not an identical process, but it allows scientists to make predictions.
从实验室到现实世界
Organovo want to use their bioprinted structures, which are engineered to be structurally and functionally equivalent to humans, as an interface between preclinical animal trials and human clinical trials. This will provide an earlier indication of the success of new drugs. Eventually, Forgacs envisions bioprinted structures may remove the need for controversial animal trials entirely. As CEO Keith Murphy puts it, “我们的竞争优势是我们制造100％的细胞功能性人体组织。”
Organovo’s first commercial product, the exVive3D Human Liver Tissue, launched in November 2014 and drove the bulk of the $570,000 revenue for the financial reporting period ending in March 2015.
Organovo previously presented the results of tests, which validate their claims. Murphy gave details of one test where the exVive 3D Human Liver Tissue picked up a previously missed problem. The CEO said Organovo’s product detected the “toxicity of another drug missed during preclinical studies, troglitazone, which was marketed as Rezulin and caused acute liver failure in 100s of patients. The drug had a clear toxic response in the exVive3D Liver Tissue at seven days.”
Murphy explains a core advantage of Organovo’s product is addressing gaps of other testing methods. He says that in the liver space, predominantly animal models and 2D cell cultures are the gold standards. Some use other technologies from 2007/2008, but these are only used by 1-2%. As a first mover Organovo have a clear competitive advantage.
To speak at a conference entitled From Solid State to Biophysics is very appropriate for a theoretical physicist turned tissue engineer. Indeed, Forgacs wears a number of different hats. He began his research into bioprinting at the University of Missouri-Columbia, this was spun out into Organovo and then Modern Meadow.
In 2005 Forgacs began to gear up his lab at Missouri for bioprinting research, and a number of his academic research team followed him in 2007 when he left to found Organovo. The company now employs 128 people at its laboratory in San Diego and Forgacs makes frequent visits to Brooklyn, New York where Modern Meadow, founded 2013, is based. In the same year Organovo listed on the NYSE MKT stock exchange.
Shortly after listing Organovo’s share price reached a $12.50 high point in November 2013. Currently the price is hovering below the $3 mark and the company has a market cap of $260 million. A flurry of trading activity (a possible short-squeeze) in early April raised the price to its current level, previously the stock had reached a 12 month low of $1.60.
Analyst sentiment regarding Organovo will be bolstered by these latest results. Although, even during past bearish phases analyst opinion has prevailed that the stock remains a hold or buy recommendation.
Addressing the vagaries of equity markets retired CFO Barry Michaels had previously said, “This is a business that has to grow year-over-year not necessarily quarter-over-quarter and we need to make and demonstrate steady progress towards that goal of getting it into the tens and millions.” Michaels completed his last day at the company in April 2016, the search for a replacement CFO is ongoing.
Analysts have occasionallyquestionedthis pace and pointed to the company’s periodic returns to equity markets for additional funding. A necessity that has allowed operations to continue while losing $10 million a quarter, but rarely a signal received in a positive light by the market.
在2016年，Organovo从股票发行中筹集了4,310万美元（2015年：23100万美元）。首席执行官墨菲（Murphy）渴望强调该公司使用不兑现赠款和合作伙伴关系的非贷款形式的意愿。与L'Oreal开发合成皮肤产品的合作伙伴关系就是其中的一个例子。
With reported cash and equivalent balances at $62 million for the fiscal year ended March 2016 ($50m 2015) based on historic performance the company will be able to operate for 2 years before requiring an additional cash infusion.
“You can live forever”
Organovo can already print elementary organ structures like vessels and make small pieces of tissue. This year the company will release a kidney tissue and then another for heart tissue in the future.
The next stage is to put together the liver, kidney and heart tissues connected by blood vessels. This will allow testing in an environment that even closer replicates that inside the human body. These models of organisms with 5 or 6 tissues connected together that function in unison will be a compelling product for pharmaceutical companies.
Moving even further forward Forgacs believes that the small replica livers can be implanted into those awaiting organ transplant. This will sustain patients until a suitable donor can be found. He refuses to speculate on the issue of whether full organs can be bioprinted.
He warns, “we will never be able to create the exact same copy of very complex human organs like the heart” then adds, “but who says we need to?”
心脏是泵，“如果我们可以使用生物打印从您自己的细胞中制作泵可以具有相同的功能，它将在免疫学上与您的身体兼容，如果您愿意，您可以永远活着。”他说，这将是50年之内的。
Beyond regenerative medicine Forgacs envisions bioprinting applications for meat and leather. If the company can make medical grade tissues what if it could also make meat and leather with lower inputs of land, water, energy, chemicals, and no harm to health and animals. Modern Meadow was established to pursue this goal.
The Modern Meadow process works by taking cells via bioposy, the cells are grown in a lab and then the useful cells isolated. As 95% of leather is composed of collagen, these are the cells isolated for that particular application. A structure is then created using bioprinting and the result can be tanned and used as leather. Making leather in this manner allows pieces to be made for purpose and therefore decreases the waste that occurs when using the product in its natural and often irregular form.
Bioprinting for meat and leather uses primarily planar structures, which are easy to form with 3D printing. The leather can also be made substantially finer which makes it more suitable for use in fashion garments in addition to more utilitarian items of clothing such as protective jackets. In the food area, Modern Meadow have created a meat chip that is 60% animal protein, no other product has this level of animal protein.
预测未来
Expectations regarding a company’s future earnings are a key driver of its current share price. Uncertainty, or deviation from announced earning forecasts, can contribute to a price drop almost as much as a failed product or contested IP claim. There is an expectation for company executives to provide frequent market updates, primarily via answering analyst questions in detail.
Organovo break with this expectation, partly through necessity (pharmaceutical research is highly guarded, for obvious reasons) and partly through choice. Paul Gallant, general manager, joined today’s call to provide additional insight into Organovo’s sales process and customer relationship management.
格兰特确认Organovo增加了摇来摇去m 4 to 5 the number of customers within the top 25 pharmaceutical companies. He also stated that returning customer business is strong. His core message was, “The power and versatility of our technology platform, multiple tissue types in multiple markets” and that 2017 will be a year of strong revenue growth.
Murphy explained that quarterly revenue had a tendency to be “choppy” due factors beyond Organovo’s control. As the company performs work under long term contracts these can often span quarterly reporting dates. Furthermore, the results of testing by Organovo customers may lead to changes in their internal R&D calendars and scheduling of work. Therefore, a steady increase in revenue should not be expected and its absence is no cause for alarm.
When questioned further on a breakdown of customer numbers by investment analyst Brandon Couillard of Jefferies, Murphy made the point that revenue guidance remained the best indicator and the company preferred to use GAAP metric. Murphy added that they will try to shrink total engagement time from initiating contact with customer to booking revenue. As some customers are on their 3rdorders this grants the ability to turn around the next contract faster as the customer relationship is already in place.
Biotech stocks, especially smaller capped companies, have always offered investors an interesting proposition.
一种常见的模式是早期兴奋和股价高涨的股价，而不是经济成果。后来，随着公司努力将其革命性IP商业化的商业化，股票可能会感到沮丧。或者，对于少数人来说，由于公司要么以健康的标记收购，要么本身就蓬勃发展，因此有一段意外的财产正在等待。
Organovo正在创建一个新的市场，对潜在客户进行教育是一个漫长的过程。平均8-11个月可以在与客户的初始接触和收入的接收之间经过。但是Organovo在市场上获得了吸引力，客户正在重复业务。尽管在毒理学领域众所周知，墨菲指出，该公司还必须努力确保来自更广泛团体的潜在客户也知道。他指出，在最近与布里斯托尔·迈尔斯·斯奎布（Bristol Myers Squibb）的演讲中，“越来越多的人来找我们，我们的演讲仅是站立的房间。”
Organovo预计2017年的肝组织业务增长了200％。
The new kidney product will be priced a premium and revenue recognition is forecast for the middle of the new fiscal reporting period. The company has already commenced an early access program with a dozen customers to prime the market and receive feedback. In the absence of liquidity issues a slow but steady approach appears to be a reasonable strategy.
从长期来看，Organovo希望在3 - 5年内获得FDA批准的组织置换产品有可能彻底改变患者治疗，并伴随着数十亿美元的市场机会。
*$200m is based on revenue from two streams discussed by Murphy in Organovo’s Q3 2016 earnings callhere.
