Organovo Reports Q2 2012 Financial Results, Provides Business Update
SAN DIEGO, Aug. 15, 2012 /PRNewswire/ -- Organovo Holdings, Inc. (OTCQB: ONVO) ("Organovo") a three-dimensional biology company focused on delivering breakthrough 3-D bioprinting technology, today reported unaudited financial results for the period ended June 30, 2012.
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Organovo is focused on breakthrough 3D bioprinting technology to create tissue on demand for research and medical applications. The company's NovoGen MMX Bioprinter(™) is part of a 3D human tissue generation platform that works across a broad array of tissue and cell types to recapitulate in vivo biology. Organovo's bioprinting technology has immediate applications in disease research, drug discovery and development, and toxicology testing. In the future, the Company believes that applications of this technology hold the promise to generate tissues for therapeutic uses.
Second quarter 2012 revenues increased approximately 49% above the same period in 2011. Collaborative research revenues for the second quarter increased approximately 81% over the same period of prior year revenues, but were partially offset by a reduction in grant revenues. Loss from Operations for the second quarter was approximately $1,449,700.
Recent Corporate Highlights
On July 17, 2012, Organovo announced the commencement of operations at its new, larger facility in San Diego, California. The new facility has over three times the capacity of Organovo's previous headquarters and is expected to facilitate the Company's needs to grow staff and research and development output.
On July 9, 2012, Organovo announced the receipt of two issued patents. The patents consisted of the issuance in the United States of a patent to which the Company owns the exclusive license from the University of Missouri, and the issuance in the United Kingdom of the Company's first assigned patent.
On July 9, 2012 Organovo announced the appointment of James T. Glover, former CFO of Beckman Coulter and Anadys Pharmaceuticals, to its Board of Directors. Mr. Glover has been affirmed as an independent director by the Organovo Board of Directors, and the Company expects to attract additional independent directors as it grows.
On May 21, 2012, Organovo announced the hiring of Dr. Eric Michael David as Chief Strategy Officer.
On April 25, 2012, Organovo announced the hiring of Michael Renard as its Executive Vice President, Commercial Operations, and the promotion of Dr. Sharon Presnell to Chief Technology Officer.
The Company is performing on current contracts with Pfizer and United Therapeutics. The Company expects to book revenue on both contracts in the second half of 2012.
"Organovo continues to deliver on plan," stated Keith Murphy, chief executive officer of Organovo. "Our growing team, seasoned leadership, and greater capacity in the new facility all point to a growth in our impactful research and development efforts, which will contribute to growth in long term shareholder value."
Financial Results
For the second quarter 2012 total revenues of approximately $259,000 were $85,600 or 49% above the approximately $173,300 in revenues for the same period in 2011. Collaborative research revenues for the second quarter of approximately $259,000 increased $115,600 or 81% over the same period of prior year revenues of approximately $143,400. That growth was partially offset by no grant or product revenues in the second quarter 2012, compared to approximately $30,000 of grant revenues in the prior year second quarter.
Operating expenses increased approximately $1,061,600 or 164% in the second quarter 2012 over the second quarter 2011, from approximately $647,000 in 2011 to $1,708,600 in 2012. Most significantly, relative to the same period in the prior year, the Company invested in infrastructure and outside services to support its transition from private ownership to a publicly owned and traded corporation. As expected in such transition, incremental initiatives were established in investor outreach, corporate governance, and SEC financial reporting. Non-payroll related incremental public company expenses incurred in the second quarter 2012 over the second quarter 2011 was approximately $150,000. There were no second quarter 2011 public company expenses. Moreover, the Company invested in building its executive, research, and development staff, increasing second quarter 2012 payroll related expenses by approximately $523,800 or 174% over the second quarter 2011. Second quarter 2012 executive search fees were approximately $24,000, newly established fees to our non-employee board members were approximately $41,300 and additional space was rented to accommodate our growing administrative and research staff at an approximate incremental cost of $25,000 over the period in 2011.
The increase in other expenses for the second quarter 2012 over the second quarter 2011, an increase of approximately $33,876,600, was primarily related to the non-cash transaction costs associated with the warrants issued in our 2012 Private Placement. During the first quarter of 2012 we incurred costs due to the placement agent for the first quarter Private Placement fees of $1,617,629 and reimbursed expenses and legal fees of $166,310. In addition, we issued warrants to purchase 6,099,195 shares of our common stock to the placement agent and warrants to purchase 15,247,987 of our common stock to investors in the Private Placement. The warrants issued to the placement agent and Private Placement investors were determined to be derivative liabilities as a result of the anti-dilution provisions in the warrant agreements that may result in an adjustment to the warrant exercise price. We will revalue the derivative liability on each balance sheet date and will do so until the securities to which the derivatives liabilities relate are exercised or expire. The change in fair value of warrant liabilities for the three months ended June 30, 2012, was approximately $33,937,200. Other expenses for the three months ended June 30, 2011 of approximately $58,900 related to interest recorded on convertible notes payable.
Organovo Holdings Inc. (A development stage company) Condensed Balance Sheets June 30, 2012 December 31, 2011 (Unaudited) (Audited) Assets Current Assets Cash and cash equivalents $ 8,469,312 $ 339,607 Inventory 527,246 291,881 Deferred financing costs — 318,843 Prepaid expenses and other current assets 204,488 79,874 Total current assets 9,201,046 1,030,205 Fixed Assets - Net 323,153 278,208 Restricted Cash 88,290 — Other Assets 96,923 100,419 Total assets $ 9,709,412 $ 1,408,832 Liabilities and Stockholders' Deficit Current Liabilities Accounts payable $ 259,518 $ 657,560 Accrued expenses 406,371 437,837 Deferred revenue 223,117 152,500 Accrued interest payable — 24,018 Convertible notes payable, current portion — 703,833 Total current liabilities 889,006 1,975,748 Warrant Liabilities 80,577,988 1,266,869 Total liabilities $ 81,466,994 $ 3,242,617 Commitments and Contingencies Stockholders' Deficit Common stock, $0.001 par value; 150,000,000 shares authorized, 43,772,483 and 22,445,254 43,773 22,445 issued and outstanding at June 30, 2012 and December 31, 2011, respectively Additional paid-in capital 7,355,924 4,835,326 Deficit accumulated during the development stage (79,157,279) (6,691,556) Total stockholders' deficit (71,757,582) (1,833,785) Total Liabilities and Stockholders' Deficit $ 9,709,412 $ 1,408,832 Organovo Holdings, Inc. (A development stage company) Unaudited Condensed Statements of Operations Three Period from Three Months Months Six Months Six Months April 19, Ended Ended Ended Ended 2007 June 30, June 30, June 30, June 30, 2011 (Inception) 2012 2011 2012 through June 30, 2012 Revenues Product $ — $ — $ — $ 100,000 $ 223,500 Collaborations 258,975 143,375 378,975 217,740 1,142,063 Grants — 30,000 — 56,924 664,112 Total Revenues 258,975 173,375 378,975 374,664 2,029,675 Cost of product — — 50,584 133,607 revenue Selling, general, and 1,056,066 335,946 1,957,909 579,440 4,623,946 administrative expenses Research and development 652,568 311,066 1,199,855 709,730 4,398,243 expenses Loss from (1,449,659) (473,637) (2,778,789) (965,090) (7,126,121) Operations Other Income (Expense) Fair value of warrant liabilities in — — (19,019,422) — (19,019,422) excess of proceeds received Change in fair value of (33,937,175) — (47,442,994) — (47,449,563) warrant liabilities Financing transaction costs in — — (2,129,500) — (2,129,500) excess of proceeds received Interest — (58,843) (1,087,453) (111,925) (3,405,895) expense Interest 1,692 — 1,984 — 3,990 income Other expense — — (9,549) (1,550) (30,768) Total Other Income (33,935,483) (58,843) (69,686,934) (113,475) (72,031,158) (Expense) Net Loss $ $ (532,480) $ $ (1,078,565) $ (35,385,142) (72,465,723) (79,157,279) Net loss per common share - $ (0.82) $ (0.05) $ (1.96) $ (0.10) basic and diluted Weighted average shares used in computing net 43,029,026 11,546,910 36,974,745 11,175,474 loss per common share - basic and diluted Organovo Holdings, Inc. (A development stage company) Unaudited Condensed Statements of Cash Flows Period from Six Months Ended Six Months Ended April 19, 2007 June 30, 2012 June 30, 2011 (Inception) through June 30, 2012 Cash Flows From Operating Activities Net loss $ (72,465,723) $ (1,078,565) $(79,157,279) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of deferred 318,843 — 438,296 financing costs Depreciation and amortization 38,728 32,430 195,056 Amortization of debt discount 896,167 — 2,083,735 Interest accrued on convertible 11,616 111,925 495,392 notes payable Fair value of warrant liabilities in excess of 19,019,422 — 19,019,422 proceeds Change in fair value of warrant 47,442,994 — 47,449,563 liabilities Stock-based compensation 42,642 1,882 59,591 Warrants issued in connection — — 527,629 with exchange agreement Increase (decrease) in cash resulting from changes in: Accounts receivable — — — Grants receivable — 59,744 — Inventory (235,365) (93,717) (527,246) Prepaid expenses and other (124,614) (10,835) (217,620) assets Accounts payable (398,042) 213,828 259,518 Accrued expenses (31,467) 28,918 406,371 Deferred revenue 70,618 125,048 223,117 Net cash used in operating (5,414,181) (609,342) (8,744,455) activities Cash Flows From Investing Activities Restricted cash deposits (88,290) — (88,290) Purchases of fixed assets (80,177) (9,286) (507,000) Purchases of intangible assets — (65,000) (95,000) Net cash used in investing (168,467) (74,286) (690,290) activities Cash Flows From Financing Activities Proceeds from issuance of — 298,700 4,630,000 convertible notes payable Proceeds from issuance of 13,822,600 — 13,822,600 common stock and warrants Proceeds from issuance of — 150,000 250,000 related party notes payable Repayment of related party — (25,000) (250,000) notes payable Repayment of convertible notes (110,247) — (110,247) and interest payable Deferred financing costs — (6,415) (438,296) Net cash provided by financing 13,712,353 417,285 17,904,057 activities Net Increase (Decrease) in Cash 8,129,705 (266,343) 8,469,312 and Cash Equivalents Cash and Cash Equivalents at 339,607 285,308 — Beginning of Period Cash and Cash Equivalents at $ 8,469,312 $ 18,965 $ 8,469,312 End of Period
About Organovo Holdings, Inc.
Organovo is a three-dimensional biology company focused on delivering breakthrough bioprinting technology and creating tissue on demand for research and medical applications. The Company's NovoGen three-dimensional bioprinting technology is a platform that works across all tissue and cell types. Organovo's NovoGen MMX Bioprinter was selected as one of the "Best Inventions of 2010" by TIME Magazine. Organovo is helping pharmaceutical partners develop human biological disease models in three dimensions that enable therapeutic drug discovery and development. Organovo's bioprinting technology can also be developed to create surgical tissues direct therapy. Organovo leads the way in solving complex medical research problems and building the future of medicine. For more information, please visit http://www.organovo.com.
Safe Harbor Statement
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the Company's ability to develop, market and sell products based on its technology; the expected benefits and efficacy of the Company's products and technology; the availability of substantial additional funding for the Company to continue its operations and to conduct research and development, clinical studies and future product commercialization; and, the Company's business, research, product development, regulatory approval, marketing and distribution plans and strategies. These and other factors are identified and described in more detail in our filings with the SEC, including, our current reports on Form 8-K. We do not undertake to update these forward-looking statements made by us.
SOURCE Organovo Holdings, Inc.