Organovo(ONVO) - 2020 Q3 - Quarterly Report

Financial Performance - Total revenue for the three months ended December 31, 2019, was $0.3 million, a decrease of $0.5 million, or 62%, compared to the same period in 2018[119] - Total revenue for the nine months ended December 31, 2019, was $2.2 million, a decrease of $0.2 million, or 9%, compared to the same period in 2018[125] - Product and service revenues increased by 20% to approximately $2.1 million for the nine months ended December 31, 2019, driven by a $0.4 million increase in sales of primary human liver cells[125] - The company recorded other income of $1.9 million for the three months ended December 31, 2019, an increase of 1,368% compared to the prior year[118] - Other income for the nine months ended December 31, 2019, was approximately $2.6 million, a significant increase of 461% compared to $0.5 million in the prior year[129] Expenses - Research and development expenses for the three months ended December 31, 2019, were approximately $0.1 million, a decrease of $3.6 million, or 96%, from the prior year period[121] - Research and development expenses decreased by $4.9 million, or 48%, to approximately $5.4 million for the nine months ended December 31, 2019, due to a reduction in nearly all R&D activities[127] - Selling, general and administrative expenses for the three months ended December 31, 2019, were approximately $5.4 million, an increase of $2.0 million, or 59%, over the prior year period[122] - Selling, general and administrative expenses increased by $3.2 million, or 27%, to approximately $15.0 million for the nine months ended December 31, 2019, primarily due to severance costs and legal expenses related to the proposed merger[128] Merger and Acquisition - The merger with Tarveda is expected to result in Tarveda securityholders owning approximately 75% of the combined company on a fully diluted basis[111] - The merger is anticipated to be completed in the fiscal fourth quarter of 2020, subject to customary closing conditions[112] - If the net cash balance at the closing of the merger is below $22 million, the exchange ratio for Tarveda's capital stock will be adjusted to increase the number of shares issued to former Tarveda securityholders[111] - The company anticipates incurring approximately $4.2 million in transaction-related costs and $3.5 million in severance-related costs to complete the merger with Tarveda[137] Cash and Assets - As of December 31, 2019, the company had cash and cash equivalents of approximately $30.5 million and an accumulated deficit of $276.7 million[131] - The company had total current assets of approximately $31.1 million and current liabilities of approximately $2.4 million, resulting in working capital of $28.7 million as of December 31, 2019[132] - Net cash used in operating activities was approximately $11.7 million for the nine months ended December 31, 2019, a decrease from $15.3 million in the prior year[133] Stock and Equity - The 2008 Equity Incentive Plan allows for the issuance of up to 896,256 shares of common stock, while the 2012 Equity Incentive Plan permits up to 28,553,986 shares, with 6,547,442 options and 7,015,674 restricted stock units remaining outstanding as of December 31, 2019[144] - A total of 158,830,354 shares of common stock are issued and outstanding, out of the 200,000,000 shares authorized for issuance as of December 31, 2019[144] - There are 1,188,718 shares of common stock available for issuance under the 2016 Employee Stock Purchase Plan as of December 31, 2019[144] - The company has issued inducement awards for up to 3,098,473 shares of common stock under the Incentive Award Agreements[144] - The total number of shares available for issuance under the 2008 and 2012 Equity Incentive Plans and the 2016 Employee Stock Purchase Plan is 10,482,484 shares as of December 31, 2019[144] Other Information - The company has no off-balance sheet arrangements that could materially affect its financial condition or results of operations[145] - The company does not expect to receive significant proceeds from the exercise of outstanding warrants and options unless the underlying securities are registered and trading prices exceed applicable exercise prices[145] - The company has no unrecorded derivative instruments that could impact its financial condition[145] - The company is classified as a smaller reporting company and is not required to disclose quantitative and qualitative market risk[146] Staffing - The average full-time research and development staff decreased from 44 employees in the prior year to zero employees in the current year[121] - The company sold certain equipment and inventory to LifeNet for $1.5 million in cash[113] - The company sold 6,087,382 shares of common stock in at-the-market offerings, generating net proceeds of approximately $5.0 million during the nine months ended December 31, 2019[138]