ORGANOVO HOLDINGS INC

Previous wording

Except to the limited extent required by applicable law, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Current wording

Except to the limited extent required by applicable law, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Previous wording

In February 2024, we formed our Mosaic Cell Sciences division (“Mosaic”) to serve as a key source of certain of the primary human cells we utilize in our research and development efforts. We believe Mosaic can help us optimize our supply chain, reduce operating expenses related to cell sourcing and procurement and ensure that the cellular raw materials we use are of the highest quality and are derived from tissues that are ethically sourced in full compliance with state and federal guidelines. Mosaic provides the Company with qualified human cells for use in its clinical research and development programs. In addition to supplying the Company with primary human cells, Mosaic offers human cells for sale to life science customers, both directly and through distribution partners, which we expect to offset costs and over time become a profit center that offsets overall R&D spending by Organovo.

Current wording

In February 2024, we formed our Mosaic Cell Sciences division (“Mosaic”) to serve as a key source of certain of the primary human cells we utilize in our research and development efforts. We believe Mosaic can help us optimize our supply chain, reduce operating expenses related to cell sourcing and procurement and ensure that the cellular raw materials we use are of the highest quality and are derived from tissues that are ethically sourced in full compliance with state and federal guidelines. Mosaic provides us with qualified human cells for use in its clinical research and development programs. In addition to supplying us with primary human cells, Mosaic offers human cells for sale to life science customers, both directly and through distribution partners, which we expect to offset costs and over time become a profit center that offsets our overall R&D spending.

Previous wording

The Notice had no immediate effect on the listing or trading of our common stock and our common stock will continue to trade on the Nasdaq Capital Market under the symbol “ONVO”. We intend to monitor the closing bid price of our common stock and consider our available options if our common stock does not trade at a level likely to result in us regaining compliance with Rule 5550(a)(2) by January 14, 2025, including effecting a reverse stock split, which would be subject to the prior approval of our stockholders. There can be no assurance that we will be able to regain compliance with Nasdaq’s minimum bid price requirement or that we will maintain our compliance with the other listing requirements necessary for us to maintain the listing of our common stock on the Nasdaq Capital Market.

Current wording

The Notice had no immediate effect on the listing or trading of our common stock and our common stock will continue to trade on the Nasdaq Capital Market under the symbol “ONVO”. We intend to monitor the closing bid price of our common stock and consider our available options if our common stock does not trade at a level likely to result in us regaining compliance with Rule 5550(a)(2) by January 14, 2025, including effecting a reverse stock split, which would be subject to the prior approval of our stockholders.

Previous wording

For the three months ended June 30, 2024, total research and development expenses were $1.4 million, a decrease of $0.3 million, or approximately 16%, from the prior year period. Our average full-time research and development staff decreased from an average of eighteen full-time employees for the three months ended June 30, 2023 to an average of fifteen full-time employees for the three months ended June 30, 2024. Our fiscal 2025 operations resulted in a $0.2 million decrease in personnel related costs which includes stock-based compensation, a $0.1 million decrease in facilities costs, a $0.1 million decrease in lab expenses, offset by a $0.1 million increase in consulting expenses. Going forward, we intend to continue to advance the clinical drug development of FXR314 and expect an associated increase in expenses.

Current wording

For the three months ended September 30, 2024, total research and development expenses were $1.0 million, a decrease of $0.4 million, or approximately 26%, from the prior year period. Our average full-time research and development staff decreased from an average of eighteen full-time employees for the three months ended September 30, 2023 to an average of fourteen full-time employees for the three months ended September 30, 2024. Our operations for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 resulted in a $0.1 million decrease in facilities costs, and a $0.4 million decrease in material related costs, offset by a $0.1 million increase in personnel related costs which includes stock-based compensation. Going forward, we intend to continue to advance the clinical drug development of FXR314 and expect an associated increase in expenses.

Previous wording

Other income was less than $0.1 million and $0.2 million for the three months ended June 30, 2024 and 2023, respectively, which was related to interest income.

Current wording

Other income was less than $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, which was related to interest income.

Previous wording

For the three months ended June 30, 2024 and 2023, total revenue was less than $0.1 million and $0.1 million, respectively. Royalty revenue is related to sales-based royalties from licensing intellectual property. The decrease in royalty revenue year over year relates to a decrease in sales of royalty bearing products by the licensee in fiscal 2025. We expect quarterly sales of royalty bearing products by the licensee to remain consistent with the first quarter of fiscal 2025 going forward. Product revenue is related to the sale of human cells developed by Mosaic. The first quarter of fiscal 2025 is the first quarter of product sales since the inception of Mosaic. We expect product revenue to increase going forward.

Current wording

For each of the six months ended September 30, 2024 and 2023, total revenue was $0.1 million. Royalty revenue is related to sales-based royalties from licensing intellectual property. The decrease in royalty revenue year over year relates to a decrease in sales of royalty bearing products by the licensee in fiscal 2025. We expect quarterly sales of royalty bearing products by the licensee to remain consistent with the sales in the second quarter of fiscal 2025 going forward. Product revenue is related to the sale of human cells developed by Mosaic. The first two quarters of fiscal 2025 are the first two quarters of product sales since the inception of Mosaic. We expect product revenue to increase going forward.

Previous wording

For the three months ended June 30, 2024, total selling, general and administrative expenses were approximately $2.0 million, a decrease of $0.6 million, or approximately 22%, compared to the prior year period. Our average full-time general and administrative staff of five employees remained the same for each of the three months ended June 30, 2024 and 2023. However, in fiscal 2024 one of the staff was our former General Counsel who was an Executive Officer included in a reduction in force during the second quarter of fiscal 2024. Subsequently, a sales associate for the Mosaic Cell Sciences segment was hired in the fourth quarter of fiscal 2024. Our fiscal 2025 operations resulted in a $0.3 million decrease in personnel related expenses which includes stock-based compensation, a $0.1 million decrease in consulting expenses, and a $0.2 million decrease in legal and other corporate costs, which includes a $0.3 decrease in legal expenses, and a $0.1 million decrease in audit and tax expense, offset by a $0.2 million increase in investor relations expenses.

Current wording

For the six months ended September 30, 2024, total selling, general and administrative expenses were approximately $3.7 million, a decrease of $1.7 million, or approximately 32%, compared to the prior year period. Our average full-time general and administrative staff of five employees remained the same for each of the six months ended September 30, 2024 and 2023. However, in fiscal 2024 one of the employees was our former General Counsel who was an executive officer and was included in a reduction in force during the second quarter of fiscal 2024. Subsequently, a sales associate for Mosaic was hired in the fourth quarter of fiscal 2024. Our operations for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023 resulted in a $1.0 million decrease in personnel related expenses which includes stock-based compensation, a $0.2 million decrease in consulting expenses, a $0.5 million decrease in legal and other corporate costs, which includes a $0.4 million decrease in legal expenses, and a $0.2 million decrease in audit and tax expense, offset by a $0.1 million increase in investor relations expenses.

Previous wording

The accompanying consolidated financial statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2024, we had cash and cash equivalents of approximately $6.2 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $343.0 million. The restricted cash was pledged as collateral for a letter of credit that the Company is required to maintain as a security deposit under the terms of the lease agreement for its facilities. We had negative cash flow from operations of approximately $3.0 million during the three months ended June 30, 2024. At March 31, 2024, we had cash and cash equivalents of approximately $2.9 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $339.7 million.

Current wording

The accompanying consolidated financial statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. At September 30, 2024, we had cash and cash equivalents of approximately $3.2 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $345.6 million. The restricted cash was pledged as collateral for a letter of credit that we are required to maintain as a security deposit under the terms of the lease agreement for our facilities. We had negative cash flow from operations of approximately $5.6 million during the six months ended September 30, 2024. At March 31, 2024, we had cash and cash equivalents of approximately $2.9 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $339.7 million.

Previous wording

At June 30, 2024, we had total current assets of approximately $7.3 million and current liabilities of approximately $2.0 million, resulting in working capital of $5.3 million. At March 31, 2024, we had total current assets of approximately $3.9 million and current liabilities of approximately $1.9 million, resulting in working capital of $2.0 million.

Current wording

At September 30, 2024, we had total current assets of approximately $4.8 million and current liabilities of approximately $2.4 million, resulting in working capital of $2.4 million. At March 31, 2024, we had total current assets of approximately $3.9 million and current liabilities of approximately $1.9 million, resulting in working capital of $2.0 million.

Previous wording

The following table summarizes the primary sources and uses of cash for the three months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes the primary sources and uses of cash for the six months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Net cash used in operating activities for the three months ended June 30, 2024, was approximately $3.0 million as compared to $5.3 million used in operating activities for the three months ended June 30, 2023. This $2.3 million decrease in operating cash usage can be attributed primarily to the $2.0 million cash payment in fiscal 2024 for acquired in-process research and development assets.

Current wording

Net cash used in operating activities for the six months ended September 30, 2024, was approximately $5.6 million as compared to $8.5 million used in operating activities for the six months ended September 30, 2023. This $2.9 million decrease in operating cash usage can be attributed primarily to the $2.0 million cash payment in fiscal 2024 for acquired in-process research and development assets.

Previous wording

Net cash provided by investing activities was less than $0.1 million for the three months ended June 30, 2024, which consisted of interest income. Net cash provided by investing activities was $0.8 million for the three months ended June 30, 2023, which consisted of the purchases of investments of $4.9 million, the maturities of investments of $5.0 million, the liquidation of equity securities of $0.7 million, and fixed asset purchases of less than $0.1 million.

Current wording

Net cash provided by investing activities was less than $0.1 million for the six months ended September 30, 2024, which consisted of interest income. Net cash provided by investing activities was $0.8 million for the six months ended September 30, 2023, which consisted of the purchases of investments of $7.9 million, the maturities of investments of $8.0 million, the liquidation of equity securities of $0.7 million, and fixed asset purchases of less than $0.1 million.

Previous wording

Net cash provided by financing activities was $6.2 million and zero for the three months ended June 30, 2024 and 2023, respectively. Financing activities consisted of the sale of common stock through at-the-market (“ATM”) share offerings and a public offering of common stock and accompanying common warrants and pre-funded warrants. Refer to “Operations funding requirements” below for further information regarding financing activities.

Current wording

Net cash provided by financing activities was $5.9 million and zero for the six months ended September 30, 2024 and 2023, respectively. Financing activities consisted of the sale of common stock through at-the-market (“ATM”) share offerings and a public offering of common stock and accompanying common warrants and pre-funded warrants. Refer to “Operations funding requirements” below for further information regarding financing activities.

Previous wording

During the three months ended June 30, 2024, we issued 1,352,600 shares of common stock in ATM offerings for net proceeds of approximately $1.7 million, all of which were sold pursuant to the 2024 Shelf. As of June 30, 2024, we have sold an aggregate of 1,389,002 shares of common stock in ATM offerings under the 2024 ATM Prospectus, with gross proceeds of approximately $1.8 million and net proceeds of approximately $1.8 million. As of June 30, 2024, there was approximately $100.0 million available for future offerings under the 2024 Shelf, and approximately $0.8 million available for future offerings through our ATM program under the 2024 ATM Prospectus.

Current wording

During the six months ended September 30, 2024, we issued 1,352,600 shares of common stock in ATM offerings for net proceeds of approximately $1.7 million, all of which were sold pursuant to the 2024 Shelf. As of September 30, 2024, we have sold an aggregate of 1,389,002 shares of common stock in ATM offerings under the 2024 ATM Prospectus, with gross proceeds of approximately $1.8 million and net proceeds of approximately $1.8 million. As of September 30, 2024, there was approximately $100.0 million available for future offerings under the 2024 Shelf, and approximately $0.8 million available for future offerings through our ATM program under the 2024 ATM Prospectus.

Previous wording

On May 8, 2024, the we priced a best efforts public offering (the “Offering”) of: (i) 1,562,500 shares of our common stock and accompanying common warrants (“Common Warrants”) to purchase up to 1,562,500 shares of common stock at a combined public offering price of $0.80 per share and accompanying Common Warrant to purchase one share of common stock and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase 5,000,000 shares of common stock and accompanying Common Warrants to purchase up to 5,000,000 shares of common stock at a combined public offering price of $0.799 per Pre-Funded Warrant and accompanying Common Warrant to purchase one share of common stock. The closing of the Offering occurred on May 13, 2024. We received net proceeds of approximately $4.5 million from the Offering, after deducting the offering expenses payable by us including the placement agent fees.

Current wording

On May 8, 2024, we priced a best efforts public offering (the “Offering”) of: (i) 1,562,500 shares of our common stock and accompanying common warrants (“Common Warrants”) to purchase up to 1,562,500 shares of common stock at a combined public offering price of $0.80 per share and accompanying Common Warrant to purchase one share of common stock and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase 5,000,000 shares of common stock and accompanying Common Warrants to purchase up to 5,000,000 shares of common stock at a combined public offering price of $0.799 per Pre-Funded Warrant and accompanying Common Warrant to purchase one share of common stock. The closing of the Offering occurred on May 13, 2024. We received net proceeds of approximately $4.5 million from the Offering, after deducting the offering expenses payable by us including the placement agent fees.