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Will Vanguard
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Part time investor but full time news junkie. Retired from Xerox after 40 years in their treasury department. Remember Kids, securities are just pieces of paper that you have ownership rights in or debtor rights in. I have been investing for 50 years buying my first stock at 15. I have seen it... More
  • What A Simple Proxy Filing Says About Organovo's Future  5 comments
    Jul 15, 2014 2:21 PM | about stocks: ONVO

    Many Organovo (NYSEMKT:ONVO) investors already know that Dr. Gabor Forgacs is one of the Company's founders. Indeed, the Company states in its S-1 registration filed in June of 2012 that its "foundational proprietary technology derives from research led by Dr. Gabor Forgacs." The document goes on to state that "The Forgacs Intellectual Property provides us with intellectual property 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. The intellectual property rights derived from the Forgacs Intellectual Property also enables us to utilize our NovoGen MMX Bioprinter to create engineered tissues, and provides us with rights to specific compositions with utility in the creation of nerve conduit."

    Also in the S-1 one can find that Dr. Gabor Forgacs resigned as a director effective February 8, 2012, but more importantly he was the owner of over 6,000,000 shares; good enough to make him a 13.9% shareholder at that time.

    The next time we learn of Dr. Forgacs ownership is in the Company's annual proxy filed on September 17, 2012. On that date he held 13.7% of total shares outstanding or 6,057,741 shares.

    The procedural proxy statement was again filed for the following year on July 12 2013; he again held the same amount of shares. Due to dilution, his stake was reduced to 9.3%.

    Subsequently, we had a glance of his ownership stake is April 7, 2014. On that date, the Company decided to issue an 8-K which provided a link to published letters addressed to their investors from Keith Murphy, the Company's Chairman and Chief Executive Officer, and from Dr. Gabor Forgacs, the Company's Scientific Founder. In Dr. Forgacs's letter he writes, "I remain one of the company's largest shareholders and look forward to the exciting things Organovo will continue to do."

    Based on the above statement, one would expect you to find Dr. Gabor Forgacs in the Company's newest annual proxy filed on July 11, 2014.

    However, his name cannot be found in the document, a short three months from his April 7,2014 letter to shareholders. (Curiously the latest proxy was filed after 4 PM on a Friday).

    Under SEC rules a Company's annual proxy must disclose to the best of its knowledge, any person who beneficially owns more than 5% of its common stock; one would think that Organovo would happen to have their founder's contact information as their future is dependent on his technology.

    Regardless, according to the latest proxy, as of the Company's record date 78,282,460 shares were outstanding. 5% of the aforementioned shares outstanding would be 3,914,123 shares. Due to the omission of Dr. Gabor Forgacs from the document, he has sold at a minimum over 2.1 million of his shares this past year.

    Oddly enough, it did not really take much digging within a proxy statement to come to this conclusion. It would have been helpful if he filed a SEC Form 13G or Form 13D or any amendment to say otherwise. As Dr. Forgacs is not officially an "insider" as he is no longer a director, I am unsure why a 13G or 13D has never been filed which is typical for holders of more than 5% of security holders. Ownership of over 5% in a publicly-traded stock is considered to be significant ownership, and therefore must be reported must be reported to the public by the SEC. Again this is typically done through a Form 13G or Form 13D.

    As for the reason he sold at least 2.1 million shares over the last year? You can decide. However, my hunch is that he is not as excited as he was on April 7th.

    Disclosure: The author is short ONVO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

    Themes: short-ideas Stocks: ONVO
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Comments (5)
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  • 3D-BP
    , contributor
    Comments (45) | Send Message
    What a simple Google search says about Dr. Gabor Forgacs' future... I understand why someone who is short Organovo would write an article like this, but please, Will, give the complete story or you threaten your credibility.
    Dr. Forgacs and his son have started another company called Modern Meadow to focus on 3D Printing of leather and eventually meat. Couldn't that explain why he is pulling back from his leadership position in Organovo?



    Full Disclosure: I am long $ONVO
    16 Jul, 01:51 AM Reply Like
  • Will Vanguard
    , contributor
    Comments (55) | Send Message
    Author’s reply » Yes, It’s well known that he has moved on...I don’t dispute that….what I want investors to realize that as the Company was going down the rat hole in April-May they decided to put a letter out from Gabor Forgacs (curiously undated and not under SEC cover…just the link). In this letter he wrote: “I remain one of the company’s largest shareholders and look forward to the exciting things Organovo will continue to do.” As he for whatever reason he ddidn’t file his proper 13D filings but gave the impression that he held over 6 million shares to other shareholders….There is no law that states that someone must sell shares to start a new business…..Indeed if he is running a new start-up he is calling the shots….The Company put out that letter on April 7 to stop the bleeding… either one or both of them knew they would shortly no longer be a large stakeholder in the Company. BTW what do you think of Keith's half million dollar salary now that went effective on March 31?
    16 Jul, 08:34 AM Reply Like
  • 3D-BP
    , contributor
    Comments (45) | Send Message
    Will, my point was that I think you should've included that tidbit of information about the Gabors starting the new company leveraging the same innovative and disruptive technology. I don't blame Organovo for wanting to calm investor fears. As we all know this is a highly speculative stock with a high risk/reward. With the recent successful testing of their liver assays being able to differentiate harmful drugs vs. a close chemical analogue that is known to be non-toxic, I'm still convinced that the reward will be worth the hold.

    16 Jul, 01:04 PM Reply Like
  • 3D-BP
    , contributor
    Comments (45) | Send Message
    I think I'd like a half-million dollar salary! :>D
    16 Jul, 12:52 PM Reply Like
  • Will Vanguard
    , contributor
    Comments (55) | Send Message
    Author’s reply » Pretty rich salary for a company that has yet to deliver anything....
    16 Jul, 01:20 PM Reply Like
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