Organovo Holdings (NYSEMKT:ONVO), a San Diego based development-stage biotech now listed on the New York Stock Exchange, excites investors because it is part of the red hot 3D printing industry. Large numbers of people can also identify with the company's ultimate goal: mass manufacture of replacement body organs that would relieve the shortage of organs available for transplant.
But it turns out, printing body parts is a lot more complicated than printing parts for airplanes.
How long for organs?
Organovo is not shy about predicting that it may take decades to get there.
In a recent interview, CEO Keith Murphy said that if the project was made into a national priority like the moonlanding in Kennedy's time with a billion dollar budget, the timeline could be shortened. Since this is not likely to happen, it will take decades.
Iin answering the question "How far away are you from creating tissue that can be used in operations?" Michael Renard, Organovo's executive vice president, said this:
"In the next 10 years it is possible that supplemental tissues, ones that aid in regeneration, will progress through design, clinical and regulatory testing, making it to the clinic as therapies. Examples may include nerve grafts, patches to assist a heart condition, blood vessel segments, or cartilage for a degenerating joint. But more advanced replacement tissues will most likely be in 20 years or more."
There are major obstacles in the way. For example, manufactured tissues need blood vessel networks built into them to deliver oxygen to the cells like it is done in the body, but right now nobody knows how to do that. This is one of the issues that needs to solved before they can build tissues thicker than 1 millimeter.
In the meantime...
Last April at the 2013 Experimental Biology conference in Boston, Organovo presented data on the company's laboratory-made three-dimensional liver.
This is a major advance compared to the previously printed 2D tissues.
These 3D liver tissues are tiny pieces of with a thickness between one half and 1 millimeter. 2D pieces will survive in the petri dish for no more than 2 days, the 3D pieces survive three times that long and act a lot more like real liver.
Dr. Sharon Presnell, Chief Technology Officer stated:
"We've combined three key features that set our 3D tissues apart from 2D cell-culture models. First, the tissues are not a monolayer of cells; our tissues are approximately 20 cell layers thick. Second, the multi-cellular tissues closely reproduce the distinct cellular patterns found in native tissue. Finally, our tissues are highly cellular, comprised of cells and the proteins those cells produce, without dependence on biomaterials or scaffold for three-dimensionality. They actually look and feel like living tissues."
The tissues, fabricated using Organovo's NovoGen bioprinter, are highly reproducible and exhibit superior performance compared to standard 2D controls.
These new 3D liver tissues possess critical liver functions, including albumin production, fibrinogen and transferrin production, and inducible cytochrome P450 enzymatic activities, including CYP 1A2 and CYP 3A4. Cholesterol biosynthesis is also demonstrated for the first time in a multi-cellular 3D human liver system that was made in the lab, suggesting it might be useful in the study of interventional strategies aimed at regulation of cholesterol secretion.
Tiny tissue pieces like these are or soon will be available for other body organs. The small tissues can be useful in toxicology testing of new drugs before expensive clinical trials are undertaken, for weeding out medicines that cause toxic side effects.
Organovo believes that these models will prove superior to animal models or current cell models.
Diseased tissues (like cancer tissues) can be built and studied the same way. These tissues can give scientists a new approach for understanding disease and disease progression, with the opportunity to find new targets for drugs with new mechanisms of action.
This is paid work that Organovo does and will do in partnership with pharmaceutical companies like Pfizer and others.
There are other revenue sources in sight, too.
In July, Methuselah Foundation has initiated a campaign in which it will fund research at major research institutions that use Organovo's NovoGen Bioprinting technology.
Eligible institutions will include public and private research universities and private non-profit research institutes. Under the program, Methuselah Foundation will divide a donation of at least $500,000 among the institutions.
The funding will cover budgeted bioprinter costs or other aspects of project execution, with a good chunk of the money presumably ending up with Organovo.
The goal of the program is to stimulate creation of preliminary results for submission in government grant requests in the 3D bioprinting sector.
Separately, Organovo also hopes for near-term revenues from licensing fees from letting companies access its platform technologies. Longer-term revenues are expected from shared profits and royalties from successful clinical and commercial development of the tissue products.
There are many companies pursuing the development and commercialization of tissue-engineered products for a variety of applications, including but not limited to Organogenesis, Advanced BioHealing (recently acquired by Shire (NASDAQ:SHPG)), Tengion (TNGN.OB), Genzyme (a subsidiary of Sanofi (NYSE:SNY)), HumaCyte and Cytograft Tissue Engineering.
These companies uniquely represent potential competition for Organovo while also being candidates for potential partners. For any tissue-engineered/regenerative medicine product where the 3D aspect is essential, Organovo's platform has a role to play in the generation of prototypes, optimization of prototypes and protocols, and production of the tissue.
Bioprinting should be thought of as the first step in building a fully functional tissue. The printing is the beginning of the process. The printed tissue is moved into a bioreactor where it grows and differentiates into its final form.
Organovo's 3D printing is an additive process like any other in the industry: adding layer upon layer based on following a computer model. The difference is in the raw material used.
Organovos's tissues are built using a combination of hydrogel and cell aggregates deposited in specific spatial arrangements that are programmed into the bioprinter. A wide variety of shapes and orientations can be created using the combination of these ingredients.
The cells used have to be the right cells and in the right biological state; the hydrogel holds them in the right place. Then the cells fuse, form junctions, and the hydrogel can be removed to yield a tangible piece of material made up entirely of human cells.
The amount of time this process takes depends on what kind of tissue is grown. A small piece of blood vessel or liver, for example, from printing to maturity can be quite quick. Once you have the cells ready, the printing can be done in a few hours. It will then take a few days for it to fuse and become anatomically correct, and begin to exhibit expected metabolic properties. It is unknown how long it will take to build larger, organ-sized tissues.
Virtually all tissues have a specific design and repeating patterns. Each tissue has a consistent set of characteristics, such as certain cell types create capillary systems, others nerves and collagens. As science advances, the patterns and symmetries are better understood and the understanding will help to create subsequent tissues.
Organovo claims that it is the only company that does biological 3D printing, therefore the quality and protection of its intellectual property is vital.
The concept for printing tissues originally came from Professor Gabor Forgac's research at the University of Missouri, enabled through a $5 million grant from the National Science Foundation. That work started out imitating the old ink jet printing process using living cells and depositing cells in an architecture that could create tissue.
Organovo was founded from the idea, and it acquired the patents exclusively.
The Forgacs Intellectual Property provides Organovo with rights to create cellular aggregates, to use cellular aggregates to create engineered tissue, and to employ cellular aggregates to create engineered tissue with no scaffold present. It also entitles the company using the NovoGen MMX Bioprinter to create engineered tissues.
The company holds exclusive licenses to four U.S. patents, three U.S. patent applications and corresponding international patent applications. The patent portfolio includes licenses obtained from the University of Missouri-Columbia, Clemson University, and Becton Dickinson.
The Clemson University patent provides rights to use inkjet printer technology to dispense cells, and to create matrices of bioprinted cells on gel materials.
In February of 2013, the company purchased the rights to a patent titled " Bioreactors for Culturing Cells" from Becton, Dickinson and Company (NYSE:BDX). This patent represents the bioreactor technology for the support of the 3D tissues for use in drug discovery and development. No future royalties or milestone payments are owed to Becton Dickinson for these patents.
The company developed the NovoGen MMX Bioprinter, the company's 3D bioprinter, in less than two years after commencing operations.
Red hot 3D industry
3D printing has been used for some time before it became famous, in industrial and commercial applications, but it was too expensive and complicated for consumer use.
That now has changed. As the size and price of 3D printers have gotten smaller, their mass-market use has gone up. The technology also has become more widespread in industrial applications. Companies use it to design everything from auto parts and aircraft components to prosthetic limbs, architectural models and energy systems.
3D printing has grown from a small, specialized niche market into a global industry. Worldwide sales are around $2.1 billion and are expected to more than triple to $6.4 billion by 2019, according to estimates from Wohlers Associates.
3D Systems has seen its own revenue more than triple over the past three years as it takes advantage of higher demand from different sectors of the economy ranging from commercial applications like aerospace/defense, healthcare and automotive to consumer applications and hobbies.
But smaller players based in the U.S. Asia and Europe have appeared, too.
One of those smaller competitors, ExOne (NASDAQ:XONE), went public in February at an opening price of $18 a share. Since then, the stock price has more than tripled. ExOne's 3D printers can make objects from a variety of materials, including metal, plastic and glass.
In the medical field, two areas already utilizing 3D printing are dentistry and prosthetics. Dental fabrication includes crowns, bridges, and implants.
Doctors and engineers in Netherlands recently made huge advances in 3D printer generated prosthetics when they manufactured and implanted a lower jawbone.
The Dutch company Xilloc together with industry partners has created the method to make the first customized 3D-printed lower jaw. The implant procedure was carried out a few months ago on an 83-year old patient with a serious jaw infection. This procedure rescued important vital functions (breathing, speech, chewing, sensation) as well as the aesthetic aspect that would otherwise have been lost.
The 3D printing technique used a powdered metal, which is ideally suited for producing this type of patient-specific implant.
Organovo is a biotech company like no other. It finds itself in the middle of a revolutionary industry with a most difficult task: using living cells as raw material to build organic, living, three dimensional tissues that can be used in human patients. If successful, it could be a game-changer for the biomedical industry.
The company also claims exclusivity: no other company can or is allowed to do the same thing. That aspect is also unique.
The reality for the present is different from the dream. Organovo, for all practical purposes, is more like a small research outfit essentially supported with grant money and contract research work.
But investors don't seem to mind and are buying into the dream. In the past 52 weeks, Organovo's share price ranged from $1.55 to $8.50 amid tremendous volatility, which may continue.
If you buy shares in a company that does not have any income to speak of, you must be either a day-trader or a long-term, very patient investor.
Assuming that you are the latter, it is of no use getting overly excited about daily fluctuations of the stock price. Attention should be paid instead to the company's technical progress: does it do what it set out to do, how fast is the advance and are there competitors on the horizon with more effective ideas? The success of this stock depends, primarily, on its successful innovations in the lab.
With luck, and with lots and lots and lots of patience, as an investor in Organovo, you could witness the future opening up in front of your very eyes and possibly benefit from it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.