Investors have recently shown appetite for the stock of Organovo Holdings Inc. (NYSEMKT: ONVO) that shares have jumped nearly 60% YTD. What are investors seeing in this stock and what can you take away from the recent developments around the company?
No profits, but a promising future
First, it is important to remember that Organovo Holdings Inc. (NYSEMKT: ONVO) still doesn’t generate a profit. But investors are betting on its promising future given that the company has continued to add high profile customers. The company is in the business of developing human tissues that are mainly sold to drug companies.
Organovo recently began production of human liver tissues at its Samsara Sciences subsidiary. The company’s goal is to become a key supplier of human tissues and kicking off production at Samsara Sciences is a milestone in attaining that goal.
Besides liver tissue products, the company is also working to launch its kidney tissue product before the end of 2016. Internally, the management of the company sees kidney tissue market as a more than $1 billion opportunity.
Courting big names in the industry
To secure a prosperous future, Organovo Holdings Inc. (NYSEMKT: ONVO) is hunting for customers with not only deeper pockets, but who can also add credibility to its business. The company’s customer roster already lists five of the 25 largest drug companies in the world. Those names include Bristol-Myers Squibb Co (NYSE: BMY), Astellas Pharma and Merck & Co., Inc. (NYSE: MRK). Some of these customers recently showed support to Organovo during its presentation at the annual meeting of the Society of Toxicology.
Organovo Holdings Inc (NYSEMKT:ONVO) recently reported its F2016 results whereby revenue rose 160% to hit $1.5 million, thus exceeding the company’s internal guidance. But it still logged a net loss of $38.6 million, which widened from net loss of $30.1 million in the previous year.
Organovo’s balance sheet reflected cash balance of $62.1 million at the end of F2016, which should be more than enough to fund operations throughout the current fiscal year. The company expects its operations to consume $32.5 million in F2017.
F2017 outlook Organovo Holdings Inc. (NYSEMKT: ONVO)
The management of Organovo Holdings Inc. (NYSEMKT: ONVO) guided F2017 revenue in the band of $4 to $6 million, which if attained should be a significant improvement from $1.5 million in F2016.