Organovo: Your New Liver May Be On The Way

| About: Organovo Holdings, (ONVO)
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With the current 3D printing market in a state of frenzy, many companies like 3D Systems Corporation (NYSE:DDD), Stratasys (NASDAQ:SSYS), Cimatron (NASDAQ:CIMT) and Perceptron (NASDAQ:PRCP) sit to reap potentially large benefits. In this article however I will take a look at what I feel to be the most unique 3D printing company, Organovo Holdings Inc. (NASDAQ:ONVO) (NASDAQ:ONVO). Organovo is a company which creates functional living human tissue using a proprietary 3D biological printing technology. CEO Keith Murphy says that the company accomplishes this by placing living human cells into a 3D matrix that can then grow into human tissue. Manufacturing 3D biological tissue however is not the only venture in Organovo's business model.

The company also has a division which aims to work directly with pharmaceutical companies who are looking for more efficient ways to test new drugs. One of the major problems that pharmaceutical companies can face when bringing new drugs to market are the drugs failing to meet FDA safety approvals after lots of money has already gone into early stage testing. Unfortunately for the drug companies it is unapparent to them that their drug candidates are going to fail until late stage testing. At this point millions of dollars have already gone into early and mid stage clinical testing. One of the major causes of failure for these drugs is that while the drugs worked well in tests using animal models, the success did not carry over to human tissues, inevitably causing the drugs to be unapproved by the FDA as a result.

"We can make any tissue and any disease model," states Dr. Eric David, Organovo's CSO. Dr. David feels this gives the company a tremendous power by giving them the ability to test drugs on both manufactured healthy tissues as well as manufactured diseased tissues which the company creates. Since most drug failures are encountered in late clinical testing phases, Organovo aims to give pharmaceutical companies the ability to test their products on living human tissue right from the start. This can give them much better and clinically predictive pre-clinical results on human tissue models. "This is something they have never had access to before," states Dr. Eric David. Pharmaceutical companies often hold numerous potential drugs of which to consider initiating testing for FDA approval on. Trying to figure out which of these drugs has the best potential for approval can often be like shooting craps. Organovo aims to enable these pharmaceutical companies to engage in pre-clinical testing using human tissues, which in turn will save them both time and money and can allow them to pick a drug that has a better chance of succeeding in the long run during clinical trials.

The final area of Organovo's business model I'd like to take a look at is the field of organ transplants. The companies ultimate goal in this area is to create organs derived from a patients own cells which can then be used for patients needing transplant surgeries. This appears to be one of the companies longer term thrusts and is a much needed area of medical necessity. If the company can pull this off then there is no telling where it could take them in the future. It would certainly hurt black market organ sales.

While Organovo's business ventures are certainly revolutionary in aim, I believe the stock should still be considered as highly speculative in nature as this is a newly emerging field with early stage developments in place. As well, since the concept of organ manufacturing seems to be in very preliminary stages I would consider this stock to be a longer term investment rather than short term. The company has not turned the corner to profitability thus far and predicting if or when the company will become profitable is not possible for me to say. What sets Organovo apart in my opinion as being one of the most distinct of the 3D plays is its niche market in the biotech space as well as its patents held. Being that the company has already inked out partnerships with Pfizer (NYSE:PFE), United Therapeutics (NASDAQ:UTHR) and Autodesk Inc. (NASDAQ:ADSK) I feel that the exposure the company sits to grow with is quite large. Yet the final area that Organovo might wind up taking off in is as a buyout target for its partners or competitors alike. With 3D systems, Inc. alone taking over 16 companies in the field since early 2011, I cannot see how Organovo could not be on their radar list of potential acquisitions. In the event that a takeover is in Organovo's future, investors may find themselves cashing out much earlier than they'd hoped.

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.