$ONVO has broad intellectual property (IP) rights including exclusive licenses from the University of Missouri-Columbia and Clemson University in addition to full ownership of six pending patent applications related to 3D bio-printing technology.
The Company’s three-part business model includes the following:
1.) Preclinical drug discovery activities (development milestone and royalty-based business model) such as research agreements with pharmaceutical and biotech companies including current agreements with Pfizer (NYSE: PFE) to develop 3D tissue models for drug development purposes and United Therapeutics (NASDAQ: UTHR) to discover new treatments for a lung condition (pulmonary hypertension)
2.) life science research tools (product sales-based business model) such as pharmacokinetic (ADME or absorption, distribution, metabolism and excretion) testing for experimental drug compounds and toxicology (TOX) testing (e.g. liver TOX testing is very common since this is the primary route of metabolism for most drugs) to predict how drugs will in humans without subjecting people or animals to testing with experimental compounds
3.) a next-generation strategy for regenerative medicine that offers the potential for 3D tissue constructs comprised entirely of functional cells without the need for non-cellular scaffold or bio-material components for surgical implantation to restore normal organ or tissue function in humans following acute or chronic damage or injury with the potential to erase the need for organ transplants / rejection since this technology utilizes a patient’s own cells
In early July the SEC declared a registration statement effective for approx. 15 million (M) shares which dramatically increased the public float of stock available for trading on the OTC Market as the previous float was very small at 4M shares reflecting restricted trading status following the Company’s reverse merger as part of the process to obtain a public stock listing.
The tiny float, low stock price and OTC Market trading were all contributors to the dramatic spike in stock price to over $10/share in mid-June as is common for lower-priced momentum stocks as traders populate message boards, Twitter, Stock Twits, and other websites/blogs (e.g. Seeking Alpha) with articles and rumors while the upside momentum brings in even more day or momentum stock traders that push the price even higher.
The Company reported about 44M shares of common stock outstanding in its most recent SEC filing that did not include the following potential additional sources of shares outlined below. At the end of 1Q12, $ONVO reported $10.4M in cash, no debt and a low ($1.3M) operating loss for the quarter.
- 24M shares of common stock warrants at weighted average exercise price of $1/share (the Company would receive cash proceeds if these warrants are exercised)
- 6.5M shares of common stock available for issuance under 2012 Equity Incentive Plan
- 0.9M shares of common stock issuable upon exercise of options at weighted average price of $0.08/share
The Company is eligible to apply for an upgraded NASDAQ stock listing one year after the reverse merger and would likely seek to obtain the upgraded listing for greater visibility and liquidity (e.g. extended hours trading, higher average trading volumes, lower bid/ask spreads) among investors and traders.
$ONVO anticipates new agreements with biotech and/or pharmaceutical companies within the next 18-24 months and has increased its resources on both business development and R&D (research and development) to improve the conversion rate (i.e. from negotiations to signed deals) and the terms of drug discovery pacts such as the current agreements with $PFE and $UTHR (i.e. from low to mid/high single-digit royalties and $10M to $20M+ development milestone payments).
The Company’s goal is to both talk with more companies regarding potential agreements (business development) while simultaneously generating data (R&D) that is published in peer-reviewed scientific journals to validate the 3D bio-printing technology (e.g. liver TOX data). $ONVO also plans to enter strategic technology partnerships with bio-engineering focused companies that may specialize in complementary areas such as cell growth mediums.
$ONVO represents a truly innovative life science company with the potential to change how drugs are discovered, developed and tested in addition to tremendous opportunity in the area of tissue/organ repair and/or replacement—possibly erasing the need for organ transplants and the concern of rejection.