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Organovo Stock Falls after Media Critique, But Future Roadmap Is Bright

Bioprinting Pioneer Battles in the Stock Market as it Looks Ahead to a Major Milestone

Organovo (NYSE: ONVO) is an exciting 3D printing company that has had a volatile ride in the stock market lately. We dig into some of the factors contributing to changes in its stock price.

As we have covered in the past, Organovo specializes in Bioprinting. The company designs and creates functional, three-dimensional human tissues for medical research and therapeutic applications. The Company collaborates with pharmaceutical and academic partners to develop human biological disease models in three dimensions. These 3D human tissues have the potential to accelerate the drug discovery process, enabling treatments to be developed faster and at lower cost.

This savings amounts to a multi-billion dollar opportunity for changing the way Big Pharma discovers drug therapies. Drug companies will be able to test on 3D printed human tissue in a lab before they even embark on the FDA approval process with animal trials, saving hundreds of millions of dollars.

Read: Bioprinting is a Multi-Billion Dollar Pharma Opportunity for 3D Printing

With all of this promise, why does Organovo only have a $700 million market capitalization? 3D Systems and Stratasys are two other public 3D printing companies that boast multi-billion dollar market caps.

Moreover, why did Organovo climb to an all-time high of $13.65 last week, only to crash nearly 40%?

Organovo Stock Chart

Pictured above: ONVO year-to-date stock chart. Click to enlarge.

The answer is two-fold.

First, Organovo is early in its product roadmap, and has yet to realize much revenue.

Second, the price of the stock is being heavily influenced by the media.

Organovo Product Roadmap

In September, Organovo CEO Keith Murphy shared his company’s future roadmap:

  • Development and launch of 3D Liver
    • Scientific proof of concept – April 2013
    • Functional validation: testing against known drugs – December 2013
    • Delivery to KOLs: alpha and beta testing – April 2014
    • Product launch – December 2014
  • Follow on cell assay product launches
  • Multiple additional pharma partnerships
  • Developed disease models
    • Cancer model readouts over 12-24 months: kidney, others
  • Therapeutic tissue proof of concept and path to clinical

Keith Murphy Organovo Keynote

Note that there is a key milestone coming in December to demonstrate functional validation. Organovo has scheduled a retail investor conference for December 5 to discuss product pipeline and revenue potential, partnership model, cash burn and R&D spend, and more.

Read the full agenda in Organovo’s press release.

Be Careful About the Media

Because ONVO has a relatively small market cap and 3D printing is a concentrated industry, one highly negative or positive story can make a difference in the markets.

Case in point: Seeking Alpha contributor Richard Pearson wrote an article called A Very Detailed Look at Organovo on November 19, saying “Investors should therefore expect the share price to quickly return to below $7.00, where it was prior to over a dozen promotional articles on Organovo released in the past few weeks.”

On that day, the stock fell 40%. Luckily for Mr. Pearson, he was shorting the stock as it read in his disclosure.

If you look across Seeking Alpha as one example of a site sharing investment advice, there has been a lot of attention paid to ONVO by contributors. There is even an article entitled Organovo At the Mercy Of The Media.

Seeking Alpha Organovo Coverage

The takeaway is that investors need to be aware of this media-drive volatility and be prepared to have short-term pops and crashes until Organovo demonstrates, or fails to live up to, the achievements set out on its roadmap.

2014 will be an important year for the Bioprinting pioneer!


Disclosure: At the time of this writing, the author is long ONVO. Please consult your financial advisor on all investment decisions.


Will 3D Systems Be Acquired by IBM? DDD Stock Jumps 6%

3D Systems (NYSE:DDD) has had quite a run as a public company this year. With a stock price up nearly 100% year to date, the company now has a market capitalization over $7 billion.

And today was a big day with a 6% gain thanks to rumors that IBM was looking to buy 3D Systems for a premium at $90 per share (DDD’s current price is $70 as of this writing).

3D Systems Inside 3D Printing Chicago

Why Would IBM Buy 3D Systems?

First of all, 3D Systems is the leader in the 3D printing market. The company boasts the largest market capitalization and has proven it can expand its scope through acquisition and R&D.

Read: What is next for 3D printing giant 3D Systems?

The company has also expanded into the hot desktop 3D printing category.

3D Systems expects to generate around $500 million of revenue this year, with the majority of sales in the industrial sector. But it has also expanded aggressively into the consumer business with the Cube and CubeX 3D printers, and expects prices of desktop 3D printers to come down from $1300 to below $500 over time.

Related: Watch our video interview with 3D Systems CEO

Avi Reichental Keynote Inside 3D Printing Chicago

A Defensive Move?

Perhaps IBM is concerned about the entry of other computing giants. HP CEO Meg Whitman said recently, “We want to lead this [3D printing] business. HP Labs is looking at it.”  With over $13 billion in cash, would HP’s first move be an acquisition?

Amazon also has entered the 3D printing market with the launch of a 3D Printing category on Amazon.com. eBay has also entered with a mobile 3D printing strategy.

Time will tell if the IBM rumor is true, and if so, IBM could be the company to usher in the next technology revolution.

Related: IBM Sees Exponential Growth of 3D Printing Industry

3D Systems: Will the 3D Printing Giant Continue to Thrive?

What is next for the $5 billion 3D printing company?

In a critical analysis published in the Wall Street Journal, Rolfe Winkler wrote, ”[3D Systems'] valuation and the insider selling are potentially worrisome signs that 3D hype may be outpacing reality.”

Winkler has a number of concerns, from adoption of consumer 3D printing to distribution risks to weak materials sales.

Let’s take a deeper look at how far this 3D printing giant has come.

Since May 2011, when the company transferred from the NASDAQ to the NYSE, its stock price has grown nearly 300%. Their stock is riding near its all-time high, shown in the chart below.

3D Systems Stock June11-Sep13

Expanding Revenue and Building a Consumer Business

The company expects to generate around $500 million of revenue this year, with the majority of sales in the industrial sector. But it has also expanded aggressively into the consumer business with the Cube and CubeX 3D printers, and expects prices of desktop 3D printers to come down from $1300 to below $500 over time.

3D Systems Inside 3D Printing Chicago

3D Systems recently presented a full business update at the Citi 2013 Global Technology Conference; you can read the full transcript at Seeking Alpha.

The company has acquired 37 companies since 2009 and continues to look at M&A as a way to fill in the gaps of their business. Here are some key acquisitions:

  • Bespoke Innovations in May 2012 for 3D printed personalized prosthetics
  • FreshFiber in May 2012 for 3D printed electronics accessories
  • My Robot Nation in April 2012 for creative solutions to support 3D printing community Cubify for kids and adults
  • Paramount Industries in April 2012  to advance aerospace and medical device 3D printing

But the company missed their chance to acquire MakerBot, the leader in desktop 3D printing. MakerBot was acquired by Stratasys, 3D Systems’ competitor, for $403 million earlier this year.

Challenges and Opportunities Ahead

3D Systems has had its share of success. In fact, it was recently ranked #5 of the Fortune Magazine’s top 100 fastest growing companies. But will that success continue and what are it’s challenges?

Can the Cube 3D printer series beat out the Stratasys-MakerBot partnership? Can 3D Systems maintain its industrial 3D printer sales growth and continue to optimize its supply-chain and reseller network? Will its entry into the consumer market distract from its larger industrial business?

Perhaps only time will tell. With $350 million on the balance sheet and a $5 billion market cap, 3D Systems seems poised to be competitive as the 3D printing industry continues to accelerate.


3D Systems to Raise $100 Million in Common Stock for Acquisitions

3D Systems logo

3D printer manufacturer 3D Systems (NYSE:DDD) announced that it will raise $100 million by selling common stock.

[The company] intends to use the net proceeds from the offering to finance future acquisitions of other entities or their assets and for working capital and general corporate purposes.

The market did not respond well to this announcement, and shares dropped 6% in after hours trading. Their market capitalization this morning is $1.57 billion.

3D Systems has recently been on an acquisition bender:

  • Bespoke Innovations in May for 3D printed personalized prosthetics
  • FreshFiber in May 2012 for 3D printed electronics accessories
  • My Robot Nation in April 2012 for creative solutions to support 3D printing community Cubify for kids and adults
  • Paramount Industries in April 2012  to advance aerospace and medical device 3D printing

3D Systems also posted a healthy Q1 with record revenue and printer units sold. We reported how 3D printing stocks are hot, up 180% over 6 months and beating out the stock market indices.

Based on this announcement, it appears that more consolidation is on the roadmap for the 3D printing industry, and that 3D Systems is looking to take an early lead as juggernaut in the market.


3D Printing and the Public Markets: Market Cap Comparison [Charts]

3D Printing Public Market Caps

In the last few weeks, we have seen consolidation in the 3D printing space. Public companies are combining with startups, acquiring niche players, and increasing their market capitalizations through M&A.

Below are two charts, courtesy of Kapitall, that show market caps and prices over time of 3D printing giants: 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS).

Interactive Chart: Press Play to compare changes in market cap for DDD and SSYS:

Interactive Chart: Use the Turbo Chart to compare the stock performance of DDD and SSYS against the Standard & Poor 500 index (SPX):


Stock Market image used under Creative Commons from Marcos Fernandez Diaz.