3D printing revolutionized manufacturing and enabled the do-it-yourself regime. And, another type of 3D printing may revolutionize the pharmaceutical industry. This type of printing is 3D bio printing.
3D bio printing uses an ink jet printer to print cells or cells and a support structure into bits of functional tissue. There is quite a bit of speculation around the use of 3D bio printing for manufacturing organs for transplantation purposes. However, the more immediate use of this technology would be for drug discovery.
Currently, drug discovery is an arduous journey. It consists of systematically screening various drug candidates at different concentrations to see if the molecule successfully modifies the drug target. Then, if a promising drug candidate is identified, this molecule is tested in more sophisticated models. The price tag for this research and development process was about $1.8 billion USD in 2010.
Once you are in for about a couple billion, one might be granted a patent on the potential drug candidate and need to find some more money for human trials, which are also expensive.
Needless to say, there is room for improvement.
3D printed tissue may be useful for drug discovery, it provides a more realistic platform for screening drugs candidates. Basically, a potential drug may affect a 3D tissue model differently when compared to current 2D models, and those invested in 3D bio printing believe this printed tissue will more accurately reflect a human response to the drug candidate.
Organovo (NONVO) is a major 3D bio printer player with a "focus on developing a range of tissue and disease models for medical research and therapeutic applications." The current tissue of interest is liver tissue as 10% of all drugs fail in Phase III trials due to liver toxicity. Once the initial R&D is complete and the end of lengthy and expensive human trials is near, there is a 10% chance the drug may adversely affect the liver - some initial testing in an effective liver model could save a lot of time and money.
An effective 3D liver tissue model could allow pharmaceutical companies to screen for liver toxicity during the drug development process or prior to human trials. This would allow a pharmaceutical company to weed out liver toxicity causing drug candidates prior to starting human trials. ONVO's first product, a liver tissue model, can differentiate between similar molecules with different toxicity levels. Meaning, once a target molecule is identified with existing drug screening techniques, the ONVO liver tissue product will allow them to test variations of the molecule to identify the least toxic version of the drug candidate. Thus, reducing the odds of failure due to liver toxicity during Phase III human trials - saving lots of time and money. This is an attractive value proposition for anyone in drug development, a patented molecule pre-screened for liver toxicity is very valuable indeed - Phase III trials represent 40% of pharmaceutical company R&D expenditure.
From a technology perspective, these printed tissues could be quite valuable. However, its income statement could be better. ONVO generated $370,000 in revenue with net negative income of $25,848,000 in 2014. ONVO has plenty of cash with $48,170,000 in the bank and negligible current liabilities. Additionally, ONVO is on track to launch the first viable product in the near future - a 3D liver assay or drug-screening platform can differentiate between similar molecules with different toxicity levels. ONVO has about 2 years' worth of cash reserves as of March 2014 and is schedule to launch its first product in December 2014. R&D expenses may decrease after launch and revenue will increase, however, it will be a while before ONVO turns a profit.
ONVO's first product is promising, could save Big Pharma substantial sums of money on the drug development and human trial processes, and initial testing indicates the liver toxicity assay does what it is supposed to do. ONVO has enough cash to get to product launch plus about a year of additional runway. Going long on ONVO means you believe ONVO's first product will become an essential drug development tool, and the large cash position means there is a healthy margin of error in these early stages.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in ONVO over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.