[Updated 2:33 p.m. Aug. 8. See below.] Organovo says it has run out of money to advance its efforts to develop 3-D “patches” of living human liver tissue to tide over people waiting for an organ transplant.
The San Diego-based biotech has been working since 2007 to use a method known as bio-printing to come up with such a product, which Organovo (NASDAQ: ONVO) was developing for patients with end-stage liver disease and a group of rare diseases that also necessitate organ transplantation. In the meantime, the company built a business as a contract research organization around its 3-D human tissue cultures, which pharma companies have used to test drug candidates.
[Updated with information about layoffs.] But, in a statement issued Wednesday, CEO Taylor Crouch said the company didn’t have the time or resources to handle the challenges presented by the “variability of biological performance and related duration of potential benefits” of its lead program. Organovo’s share price fell 36 percent to 25 cents apiece on the news. The company laid off 40 workers, or 69 percent of its workforce, it disclosed in a regulatory filing Thursday.
About a year ago, the company said it anticipated that by the end of 2019, it would have two liver therapeutic tissue programs on track for an IND the following year.
But in late May, the company extended its timeline for preclinical studies of its lead program, tissue cultures being tested in animal models of an orphan disease known as Alpha-1-antitrypsin deficiency. Data from a group of animal studies showed the tissue was functional for a shorter time than it had been in earlier studies, so Organovo decided to do more testing, extending its preclinical work into 2020.
Organavo said that meant it wouldn’t move the investigational tissue into human testing until 2021.
“We have determined that we need to conduct additional preclinical studies, optimize our manufacturing processes, and most importantly to generate decisive scientific data regarding the prolonged functionality and therapeutic benefits of our liver tissue patch,” Crouch said at the time. “Accordingly, we intend to devote substantially all of our financial and operating resources to meet these critical timelines.”
[[Updated to reflect addition of details about restructuring above.]] It wasn’t enough. On Wednesday the company announced it hired an advisor to look into “strategic alternatives,” such as an acquisition or merger. Organovo said it’s restructuring to conserve cash in the meantime.
In the year ending March 31, Organovo reported a net loss of $26.6 million on revenues of $3 million compared to a net loss of $34.8 million on revenues of $4.6 million the year prior. Its research and development expenses in those years were, respectively, about $14.8 million and $18 million. The reduction stemmed from cutbacks on its R&D group from an average of 71 people to a team of about 47, year over year, as Organovo narrowed its focus to its therapeutic development program. The company attributed its reduced revenue in its most recent fiscal year to fewer contracts for liver tissue testing services and the end of some of its collaborations.
The company was notified by Nasdaq in June that its stock would have to trade at $1 or higher apiece for 10 days running by late December to avoid being delisted from the Nasdaq Global Market.