ONVO

金融角斗士

              Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ONVO over 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.
                          
          In the battle for Organovo's (ONVO) valuation, the bears are winning. When I last wrote about Organovo on May 14th, ONVO was trading at $5.02/share on the OTCQB. Despite meaningful advances by the company, including uplisting to the NYSE and significant reduction to financing risk, its share price has continued to slide down from the post-uplisting high of $8.50/share to its current price of $5.08. In my opinion, this is an irrational depreciation of 40%.
It's my opinion that Organovo is extremely oversold. The current decline of ONVO shares can be attributed to the investors' outlook on the following three points:

• Organovo's recent financing was "dilutive"
• The current legal battle with Spencer Trask Ventures (STV)
• Organovo is far from revenue
  

On all three points, I believe Mr. Market's reaction were overdone, if not downright illogical. In the past year alone Organovo has made strides nearly identical to Inovio. In addition, in terms of core operations and financing history, Organovo displays a remarkable similarity to Inovio (INO), and as such, I believe fair value for ONVO lies above $8.00/share in light of recent progress.
Organovo Background
For those of you who haven't been watching the Organovo story play out, here's a short primer from my previous article:

"Organovo is a biotech company in the 3d bioprinting space. The company's 3d bioprinting technology allows for the printing of living tissues and cells, resulting in major implications for the future of drug development, biological research, and tissue transplantation.
Organovo's bioprinting technology carries the potential to revolutionize current standards of healthcare research and development. The ability to print 3-dimensional models of living tissue would present the ladder able to bridge the gap between animal testing and human trials, easily accelerating the development of various drugs, and breakthroughs in biology. Moreover, as Organovo's technology continues to develop, the science fiction-esque concept of organ printing may become a reality."

The expansive possibilities of the company's 3d bioprinting platform naturally allows for an expansive pipeline of opportunities for the next decade. Organovo's closest market opportunity lies in its ability to forecast the potential toxicities in the human body. Although difficult to gauge, the current trend in drug approvals by the FDA appears to indicate a potentially massive opportunity.
Near-term Market Opportunity lies in Improving The Drug Development Process

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披露：我文中所提到的任何股票没有位置，但可能在接下来的72个小时开始onvo长的位置。我自己写的文章，它表示自己的意见。我没有收到赔偿吗（除了寻求α）。我有任何股票在这篇文章中所提到的公司没有业务关系

在为Organovo的战斗（onvo）估价，熊赢得。当我最后一次写的Organovo五月十四日，onvo美元的OTCQB 5.02/share交易。尽管有意义的进展的公司，包括转版的纽约证券交易所，融资风险显著降低，其股价继续从后转版高达8.50/share到目前的5.08美元的价格下滑。在我看来，这是40%个不合理的折旧。

我认为是Organovo极端超卖。onvo股份目前的下降可以归因于投资者的前景在以下三点：

Organovo的最近的融资“稀释”

Spencer Trask企业当前的法律战（STV）

Organovo远离收入

在这三点，我认为市场的反应过度了，如果不是完全不合逻辑的。在过去的一年里Organovo方面取得长足进展，Inovio几乎相同。此外，在核心业务和融资的历史条件，Organovo显示一个惊人的相似Inovio（INO），因此，我相信onvo公允价值高于美元在最近的进展，光8.00/share。

Organovo的背景

对于那些你没看Organovo的故事发挥出来，这是从我以前的文章很短的引物：

“在3D生物打印Organovo空间生物技术公司。公司的3D生物打印技术允许活细胞的印刷，导致对药物的发展，未来的重大影响的生物学研究，并组织移植。

Organovo的生物打印技术进行目前的医疗研究和开发标准，可能彻底改变。打印三维模型的活组织的能力将梯子能够桥动物试验和人体试验之间的差距，容易加速各种药物的发展和突破，生物学。此外，为Organovo的技术的不断发展，科幻小说式的概念，器官打印可能成为现实。”

该公司的3D生物打印平台自然可以为下一个十年的机会扩张管道的膨胀的可能性。Organovo的最近的市场机遇在于它预测在人体的潜在毒性的能力。虽然难以衡量，在FDA批准药物的趋势似乎表明一个潜在的巨大的机会。

近期的市场机会在于改善药物的发展过程

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As shown in the graph above, standards on FDA approval of new pharmaceuticals have become increasingly stringent, and unfortunately cost of drug R&D has grown increasingly. Using 2010 figures, the average cost of bringing a drug to market, not including substantial marketing costs, lies in the ballpark of $2.38 billion. This is substantially more than the figure listed in my last article, where I used the Forbes article's statement, "the average cost of bringing a new drug to market is $1.3 billion."

This figure, created from data from the years 1997-2011, demonstrates the ballooning cost/approval ratio in the pharmaceutical space. Organovo's technology holds the promise of acceleration and cost-reduction of this time-consuming and illogically expensive drug approval process. Subsequently, further demonstration of progress of the technology's efficacy should open the door for multiple partnerships with pharmaceutical companies looking increase their bottom line. Given that partnerships are the current paradigm for drug development for large healthcare companies, I expect these future partnerships to be royalty-based on future sales, if we assume that these royalties will be on the order of 2-4% of the >$50 billion spent on R&D currently, Organovo's drug development opportunity should stand in the order of $1-2 billion/year.

Despite Developments Similar to Inovio's, ONVO Continues to Trade Lower

Given the dearth of articles on Organovo, the purpose of this article isn't to rehash the plentiful bull and bear theses already in the public. To demonstrate the undervaluation of Organovo, I plan on addressing the three points stated in the introduction, drawing parallels to Inovio when germane.

1. Organovo's recent financing was "dilutive"

Development stage biotech companies, by their very nature, almost always have dilutive financings. The salient question when it comes to biotech financings is "Was it a prudent financing?" In other words, was the financing toxic to investors in the long run? It wasn't. The hallmark of a great financing is that it staves off the need for future financings in a meaningful manner at terms that do not materially affect shareholders in a significantly adverse manner.

If you recall, the majority of short pieces on Organovo centered on the company's then-recent S-3 registration filing for $100 million of new shares/warrants. Investors, scared of the potential dilution, exited the security en masse. These S-3 registrations are common within the biotech sector, but more importantly, are not all-or-nothing financings. If desired, Organovo could've conducted a financing with its registration by selling only one share (No company in its right mind would ever do this, but the point remains.). Organovo, despite downward pressure on share price, appropriately conducted and closed a $46.6 million public offering by selling 10,350,000 shares (9 million initial + 1,350,000 overallotment) at $4.50/share, netting $43.3 million in the process.

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在上面的图所示，在FDA新药审批标准越来越严格，不幸的是药品研发成本越来越。使用2010的数字，平均成本将毒品市场，不包括大量的营销成本，是2380000000美元的棒球场。这是大大超过的身影在我的上一篇文章列出，我用福布斯的文章的说法，“平均成本的新药上市1300000000美元。”

这个数字，从年1997-2011创建的数据，论证了膨胀的成本/批准率在制药空间。Organovo的技术是加速和减少这种费时和昂贵的药品批准过程成本的不合逻辑的承诺。随后，对技术进步的有效性的进一步论证应该打开门与制药公司在多个合作伙伴关系提高他们的底线。鉴于大型医疗保健公司的伙伴关系是药物开发的当前范式中，我希望这些未来的伙伴关系是基于对未来销售的版税，如果我们假设这些版税将花在研发的2-4% > 50000000000美元的订单目前，Organovo的药物开发的机会应该站在美元1-2亿美元/年的顺序。

尽管发展类似Inovio，onvo继续走低

鉴于文章Organovo奇缺，这篇文章的目的不是炒冷饭丰富的牛市和熊市的论文已公开的。证明Organovo的低估，我计划在三点，在介绍说，绘制平行时主要有密切关系。

1。Organovo的最近的融资“稀释”

发展阶段的生物技术公司，由于其本身的性质，几乎总是有稀释融资。当涉及到生物科技融资的突出问题是，“这是一个审慎的理财？”换句话说，是融资有毒的投资者在长期？不然一个融资的特点是，它可以避免需要以一种有意义的方式在未来的融资条款，不构成重大影响的股东在一个显着的不利的方式。

如果你还记得，在公司的近期S-3登记备案美元新股/权证100000000中心的短片的Organovo多数。投资者，害怕的潜在稀释，退出集体安全。这些S-3注册生物技术部门中是常见的，但更重要的是，不全或无的融资。如果需要，可以进行融资Organovo的登记只卖一个份额（在它的脑子没有公司能做到这一点，但仍然存在。）。Organovo，尽管股票价格向下的压力，适当地进行，并关闭了46600000美元的公开募股出售10350000股（9000000 + 1350000的超额配售）4.50/share美元，扣除43300000美元的过程中。

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By taking an upfront hit of 27.5%, INO shareholders prevented the possibility of further dilution for the next 21 months. This has paid off handsomely for early investors who realized the value of the financing, easily netting over 250% in gains as the cash allowed the immunotherapeutic company to reach significant catalysts. Let's not forget, the shorts also tried to make the same case for Inovio.

2. The current legal battle with Spencer Trask Ventures

Fellow contributor Richard Pearson is easily one of the most outspoken bears on Organovo. In his most recent short piece on ONVO, he wrote about the current legal action between the company and its former early investor and placement agent Spencer Trask Ventures. The details of the proceeding can be read in his article. Having read the documents hosted on Richard Pearson's own website, moxreport.com (this is made quite clear upon viewing the site), it is my own opinion that Organovo's liability from the legal battle has been largely overblown, credits due to Pearson's subtle use of hyperbole and logical fallacies.

His article's section on the matter fails to mention any legal precedent that would further clarify Organovo or STV's position, instead relying on misleading vividness to paint a negative portrayal of Organovo and its management. Although I may not be a lawyer, my research (and a law course I took in college) leads me to believe that STV's case is invalid. STV's rescission appears to in be bad faith, especially in consideration of the fact that STV continued to accept payment after the so called "rescission email". In my opinion, the worst case scenario for Organovo and its shareholders will be a settlement outside of court for no more than $1 million, which given its current cash position, should not meaningfully impact its operational outlook.

The following is the company's details on the matter on its 10-k, I don't recommend reading it, but for those of you who do:

    "Spencer Trask Matter. On June 28, 2013, the Company filed a lawsuit for declaratory relief in the Supreme Court for the State of New York (case # 652305/2013) against Spencer Trask Ventures, Inc. ("STV") in connection with a Warrant Solicitation Agency Agreement (the "WSAA") that the Company entered into with STV in February 2013. In this action, the Company is seeking a declaration that the WSAA remains a valid and enforceable agreement. Over the course of several weeks in February 2013, Organovo and STV, through their respective attorneys, negotiated the WSAA pursuant to which the Company engaged STV as the Company's warrant solicitation agent in connection with the Company's efforts to solicit the exercise of outstanding Organovo warrants during the first quarter of 2013. STV's President signed the WSAA on behalf of STV, and the Company's CEO executed the agreement on behalf of Organovo. Spencer Trask provided services to the Company pursuant to the WSAA, and the Company has paid STV for those services.

    The Company's dispute with Spencer Trask arose in March 2013 after the Company approached Spencer Trask about exercising their outstanding warrants to help the Company qualify for up listing its common stock on the NYSE MKT. Previously, Spencer Trask had not asserted any claims for additional compensation as a result of the warrant tender offer the Company completed in December 2012. In March 2013, the Company received two demand letters from STV, and a demand for arbitration notice in June 2013. In the first demand letter, STV alleges that it is entitled to compensation (including a cash fee and warrants to purchase common stock) as a result of the warrant tender offer the Company completed in December 2012 and as a result of the notice of warrant redemption the Company completed in March 2013. In the second letter, STV alleges it is entitled to damages because the Company allegedly violated confidentiality provisions in the Placement Agency Agreement (the "PAA") the Company had previously entered into with STV in December 2012 in connection with the private placement financings the Company completed in February and March 2012 (the "Private Placements"), by contacting the warrant holders who participated in the warrant tender offer. In response, on June 28, 2013, the Company filed a lawsuit for declaratory relief in the Supreme Court for the State of New York against STV. The Company's tender offer was made to warrant holders of record relating to warrants already owned by them and whose identity was public information via a Registration Statement on Form S-1 the Company was required to file to register the resale of the shares underlying their warrants. For these and other reasons, including applicability of the WSAA, the Company believes STV is not entitled to compensation under the PAA and there was no violation of confidentiality. The Company received notice on August 5, 2013 that STV had filed its arbitration demand with the arbitrator.

    The Company believes that the assertions made against it by STV are without merit and the Company intends to continue to vigorously defend against the claims made by STV, including any arbitration matter filed by STV. The Company has not established a loss contingency accrual for these claims because any potential liability is not probable or estimable. Nonetheless, an unfavorable resolution of these claims could have a material adverse effect on the Company's business, liquidity or financial condition in the reporting period in which such resolution occurs."