Organovo(ONVO) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Organovo Holdings, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents Organovo Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's business, significant accounting policies, investments, equity, lease commitments, and related party transactions for the periods ended December 31, 2023, and March 31, 2023 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands): | Item | Dec 31, 2023 (Unaudited) | Mar 31, 2023 | | :--------------------------------- | :----------------------- | :----------- | | Assets | | | | Cash and cash equivalents | $5,295 | $15,301 | | Total current assets | $6,241 | $17,048 | | Total assets | $8,881 | $20,313 | | Labilities and Stockholders' Equity | | | | Total current liabilities | $1,700 | $3,671 | | Total liabilities | $2,699 | $4,984 | | Total stockholders' equity | $6,182 | $15,329 | | Total Liabilities and Stockholders' Equity | $8,881 | $20,313 | - Cash and cash equivalents decreased significantly from $15.3 million at March 31, 2023, to $5.3 million at December 31, 2023[11] - Total current assets decreased from $17.0 million to $6.2 million, and total stockholders' equity decreased from $15.3 million to $6.2 million[11] Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net loss Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss (in thousands, except per share data): | Item | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2023 | Nine Months Ended Dec 31, 2022 | | :---------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Royalty revenue | $5 | $131 | $80 | $208 | | Total Revenues | $5 | $131 | $80 | $208 | | Research and development expenses | $1,434 | $1,185 | $4,435 | $3,436 | | Selling, general and administrative expenses | $2,251 | $2,305 | $7,635 | $6,724 | | Total costs and expenses | $3,685 | $3,490 | $12,070 | $10,160 | | Loss from Operations | $(3,680) | $(3,359) | $(11,990) | $(9,952) | | Net Loss | $(3,604) | $(3,264) | $(11,626) | $(9,800) | | Net loss per common share—basic and diluted | $(0.40) | $(0.37) | $(1.31) | $(1.13) | - Total revenues decreased significantly for both the three-month period (from $131 thousand to $5 thousand) and the nine-month period (from $208 thousand to $80 thousand) year-over-year[13] - Net loss increased for both periods, reaching $(3.6) million for the three months and $(11.6) million for the nine months ended December 31, 2023[13] Unaudited Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Unaudited Condensed Consolidated Statements of Stockholders' Equity (in thousands): | Item | Balance at March 31, 2023 | Balance at December 31, 2023 | | :--------------------------------- | :------------------------ | :------------------------- | | Common Stock (shares) | 8,717 | 9,839 | | Common Stock (amount) | $9 | $10 | | Additional paid-in capital | $340,317 | $342,796 | | Accumulated Deficit | $(324,998) | $(336,624) | | Total Stockholders' Equity | $15,329 | $6,182 | - Total stockholders' equity decreased from $15.3 million at March 31, 2023, to $6.2 million at December 31, 2023, primarily due to net losses[17] - The company issued 935,000 shares of common stock from a public offering, contributing $1.172 million to additional paid-in capital during the nine months ended December 31, 2023[17] Unaudited Condensed Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities over specific periods Unaudited Condensed Consolidated Statements of Cash Flows (in thousands): | Cash Flow Activity | Nine Months Ended Dec 31, 2023 | Nine Months Ended Dec 31, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(11,982) | $(7,675) | | Net cash provided by (used in) investing activities | $803 | $(804) | | Net cash provided by financing activities | $1,173 | $0 | | Net decrease in cash, cash equivalents, and restricted cash | $(10,006) | $(8,479) | | Cash, cash equivalents, and restricted cash at end of period | $5,438 | $20,339 | - Net cash used in operating activities increased to $(11.98) million for the nine months ended December 31, 2023, from $(7.67) million in the prior year[20] - Investing activities shifted from using cash ($0.8 million) in 2022 to providing cash ($0.8 million) in 2023, primarily due to maturities of investments and liquidation of equity securities[20] - Financing activities provided $1.17 million in cash in 2023 from common stock issuance, compared to none in 2022[20] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the unaudited condensed consolidated financial statements Note 1. Description of Business This note describes Organovo Holdings, Inc.'s core business, focusing on clinical drug development and 3D human tissue models - Organovo Holdings, Inc. is a clinical-stage biotechnology company focused on the clinical drug development of the farnesoid X receptor (FXR) agonist FXR314 for gastrointestinal and liver diseases, particularly Inflammatory Bowel Disease (IBD) including Ulcerative Colitis (UC) and Crohn's disease (CD)[23][24] - The company plans to initiate a Phase 2a clinical trial for FXR314 in UC in calendar year 2024[24] - A secondary focus is building high-fidelity, 3D human tissues to create complex multicellular disease models for drug discovery, initially concentrating on intestinal models for UC and CD to identify novel therapeutic targets[25][26][27][28] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements, including going concern considerations - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and include Organovo and its wholly-owned subsidiaries[31][32] - The company's cash and cash equivalents of $5.3 million and an accumulated deficit of $336.6 million as of December 31, 2023, along with negative operating cash flows of $12.0 million, raise substantial doubt about its ability to continue as a going concern for at least one year[33][35] - The company finances operations primarily through common stock sales (public and ATM offerings), private placements, intellectual property licensing, grants, and collaborative research agreements, and will require substantial additional funding[34][35] - Investments include available-for-sale debt securities (U.S. Treasury bills) and equity securities, recorded at fair value, with unrealized gains/losses on debt securities in OCI and on equity securities in net income[37][38][39] - Revenue is primarily from licensing intellectual property, specifically sales-based royalties, which are recognized based on estimates and adjusted once actual sales are determined[43][44] Note 3. Investments and Fair Value Measurement This note details the company's investment portfolio and the methods used to measure their fair value Investments in Debt Securities (in thousands): | Item | Amortized costs basis | Fair value | | :------------------------ | :-------------------- | :--------- | | As of March 31, 2023 | $4,943 | $4,945 | | As of December 31, 2023 | $1,995 | $1,995 | - As of December 31, 2023, the company held $2.0 million in debt securities (U.S. Treasury bills), down from $4.9 million at March 31, 2023, with fair value measured using Level 1 inputs[47][48] Investments in Equity Securities Activity (in thousands): | Item | Amount | | :------------------------------ | :----- | | Balance at March 31, 2023 | $706 | | Liquidation of equity securities | $(718) | | Gain on investment in equity securities | $12 | | Balance at December 31, 2023 | $0 | - Equity securities were fully liquidated by June 26, 2023, resulting in a zero fair value at December 31, 2023, and a $0.7 million liquidation with a less than $0.1 million gain for the nine months ended December 31, 2023[49][50] Note 4. Accrued Expenses This note provides a breakdown of the company's accrued expenses, highlighting significant changes Accrued Expenses (in thousands): | Item | Dec 31, 2023 | Mar 31, 2023 | | :--------------------------------- | :----------- | :----------- | | Accrued compensation | $439 | $609 | | Accrued legal and professional fees | $97 | $193 | | Acquired in-process research and development | $0 | $2,000 | | Other accrued expenses | $191 | $46 | | Total Accrued Expenses | $727 | $2,848 | - Total accrued expenses decreased significantly from $2.8 million at March 31, 2023, to $0.7 million at December 31, 2023, primarily due to the payment of $2.0 million for acquired in-process research and development[51] Note 5. Stockholders' Equity This note details the components and changes in stockholders' equity, including common stock, preferred stock, and equity incentive plans - The company is authorized to issue 25 million shares of preferred stock, with none currently outstanding[52] - As of December 31, 2023, 9,838,755 shares of common stock were issued and outstanding, an increase from 8,716,906 shares at March 31, 2023[11] - The 2022 Equity Incentive Plan replaced the 2012 Plan, reserving 1,236,738 shares for issuance as of October 12, 2022, with 1,643,798 shares remaining available at December 31, 2023[54][63] - The company issued 934,621 shares of common stock through ATM offerings during the nine months ended December 31, 2023, generating approximately $22.9 million in gross proceeds from ATM offerings to date[56] - Total unrecognized compensation cost for unvested stock options was approximately $0.6 million (2.30 years weighted average vesting) and for unvested RSUs was $0.2 million (0.97 years weighted average vesting) as of December 31, 2023[65][66] Note 6. Collaborative Research, Development, and License Agreements This note describes the company's agreements with third parties for research, development, and intellectual property licensing - The company has a non-exclusive license agreement with BICO Group AB for bioprinter and bioink patents, generating sales-based royalties[70][71] - Royalty revenue for the three and nine months ended December 31, 2023, was $5,000 and $80,000, respectively, reflecting a decrease due to lower sales of royalty-bearing products by the licensee[71] - The license agreement with the University of Missouri for self-assembling cell aggregates was amended in December 2022, making it fully paid up for a $50,000 upfront payment, eliminating future royalty obligations[73][75] - The license agreement with Clemson University for ink-jet printing of viable cells requires royalties of 1.5% to 3% of net sales and 40% of sublicense payments, but no royalty expense was recorded for the nine months ended December 31, 2023, as legal expenses exceeded royalties owed[76][77] Note 7. Commitments and Contingencies This note addresses potential future obligations and uncertain events that could impact the company's financial position - The company may be subject to various claims and legal actions in the ordinary course of business, but has not recorded any accrual for loss contingencies as an unfavorable outcome is not probable or reasonably estimable[78][79][80] Note 8. Leases This note outlines the company's operating lease arrangements for its facilities - The company has an operating lease for lab and office space in San Diego, commenced December 17, 2021, for approximately 62 months, with monthly payments of $40,800 and 3% annual escalators[82] Operating Lease Liabilities and Right-of-Use Assets (in thousands): | Item | Dec 31, 2023 | | :--------------------------------- | :----------- | | Operating lease right-of-use assets | $1,403 | | Current operating lease liability | $502 | | Noncurrent operating lease liability | $999 | | Total lease liabilities | $1,501 | | Weighted average remaining lease term | 3.08 years | | Weighted average discount rate | 6% | - Operating lease expense was approximately $125,000 for the three months and $377,000 for the nine months ended December 31, 2023[85] Note 9. Concentrations This note identifies significant concentrations of credit risk and revenue sources - The company's credit risk is concentrated in temporary cash investments held at various financial institutions, with balances potentially exceeding federally insured limits[87] - All royalty revenue is derived from a single licensee, but the company has not historically experienced accounts receivable write-downs[87] Note 10. Related Parties This note discloses transactions and relationships with entities considered related parties to the company - The company has an intercompany agreement with Viscient Biosciences, an entity where Organovo's Executive Chairman serves as CEO and President, for mutual services related to 3D bioprinting technology and shared facilities/equipment[90][91] - For the nine months ended December 31, 2023, Organovo provided $13,000 in histology services to Viscient, with no consulting expenses incurred from Viscient[91] Note 11. Restructuring This note details the company's recent workforce reduction and its financial implications - On August 18, 2023, Organovo announced a workforce reduction of approximately 24% (six employees) to refocus on FXR314 clinical development, reduce operating expenses, and extend cash runway[92] - The company estimates approximately $0.4 million in cash expenditures for severance pay related to the reduction in force, with $0.38 million recorded as restructuring charges for the nine months ended December 31, 2023[92][93][94] - Annual cost savings of $1.5 million are anticipated from this restructuring[92] Note 12. Subsequent Events This note reports significant events that occurred after the balance sheet date but before the financial statements were issued - Between January 1, 2024, and the filing date, the company issued 201,319 shares of common stock through ATM offerings, generating approximately $0.2 million in net proceeds[95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Organovo Holdings, Inc.'s financial condition and results of operations, highlighting the company's strategic shift to clinical drug development of FXR314 and 3D tissue models, its liquidity challenges, and the financial performance for the three and nine months ended December 31, 2023, compared to the prior year Basis of Presentation This section explains the accounting principles and standards used in preparing the unaudited condensed consolidated financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with SEC instructions for Form 10-Q and U.S. GAAP, and include all normal recurring adjustments[98] - Interim operating results are not necessarily indicative of full-year results[98] Overview This section provides a high-level summary of Organovo's strategic focus on clinical drug development and 3D human tissue technology - Organovo is a clinical-stage biotechnology company focused on developing the FXR agonist FXR314 for IBD (Ulcerative Colitis and Crohn's disease), with a Phase 2a clinical trial in UC planned for 2024[99][100] - The company also develops high-fidelity 3D human tissues to create disease models for drug discovery, initially for UC and CD, aiming to identify novel therapeutic targets and develop drug candidates[101][102][103][104][105] - Future plans include expanding into additional therapeutic areas and leveraging scientific expertise for drug development[106] Critical Accounting Policies, Estimates, and Judgments This section discusses the significant accounting policies and estimates that require management's judgment - Financial statements require management estimates and assumptions, which are continually reviewed, but none are considered critical[107] - No significant changes to critical accounting policies have occurred since March 31, 2023[108] Results of Operations This section analyzes the company's financial performance, comparing revenues and expenses over different periods Comparison of the three months ended December 31, 2023 and 2022 This section compares the company's financial performance for the three-month periods ended December 31, 2023, and 2022 Results of Operations (Three Months Ended December 31, in thousands, except %): | Item | 2023 | 2022 | Increase (decrease) $ | Increase (decrease) % | | :--------------------------------- | :--- | :--- | :-------------------- | :-------------------- | | Revenues | $5 | $131 | $(126) | (96%) | | Research and development | $1,434 | $1,185 | $249 | 21% | | Selling, general and administrative | $2,251 | $2,305 | $(54) | (2%) | | Other income | $76 | $95 | $(19) | (20%) | - Total revenue decreased by 96% to $5,000, primarily due to reduced sales of royalty-bearing products by the licensee[109][110] - Research and development expenses increased by 21% to $1.4 million, driven by the strategic shift to advance FXR314 clinical development, including increases in consulting and lab expenses[109][111] - Selling, general and administrative expenses decreased by 2% to $2.3 million, mainly due to a decrease in personnel-related costs (including stock-based compensation) from a reduction in force, offset by increases in legal and investor relations expenses[109][112] Comparison of the nine months ended December 31, 2023 and 2022 This section compares the company's financial performance for the nine-month periods ended December 31, 2023, and 2022 Results of Operations (Nine Months Ended December 31, in thousands, except %): | Item | 2023 | 2022 | Increase (decrease) $ | Increase (decrease) % | | :--------------------------------- | :--- | :--- | :-------------------- | :-------------------- | | Revenues | $80 | $208 | $(128) | (62%) | | Research and development | $4,435 | $3,436 | $999 | 29% | | Selling, general and administrative | $7,635 | $6,724 | $911 | 14% | | Other income | $366 | $154 | $212 | 138% | - Total revenue decreased by 62% to $80,000, attributed to lower sales of royalty-bearing products by the licensee[114][115] - Research and development expenses increased by 29% to $4.4 million, due to increased personnel, lab, consulting, depreciation, and facility costs associated with advancing FXR314 clinical development[114][116] - Selling, general and administrative expenses increased by 14% to $7.6 million, primarily due to higher legal and investor relations expenses, despite a decrease in personnel-related costs from a reduction in force[114][118] - Other income increased by 138% to $0.4 million, mainly from interest income[114][119] Financial Condition, Liquidity and Capital Resources This section assesses the company's financial health, cash position, and ability to meet its short-term and long-term obligations - The company's primary focus is clinical drug development of FXR314, with a Phase 2a clinical trial in UC planned for 2024, and leveraging 3D tissue technology for therapeutic drug development[120] - As of December 31, 2023, cash and cash equivalents were $5.3 million, restricted cash $0.1 million, and an accumulated deficit of $336.6 million, with negative cash flow from operations of $12.0 million for the nine months ended December 31, 2023[121] - Working capital decreased from $13.3 million at March 31, 2023, to $4.5 million at December 31, 2023[122] Sources and Uses of Cash (Nine Months Ended December 31, in thousands): | Cash Flow Activity | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Operating activities | $(11,982) | $(7,675) | | Investing activities | $803 | $(804) | | Financing activities | $1,173 | $0 | | Net decrease in cash, cash equivalents, and restricted cash | $(10,006) | $(8,479) | - The company expects total operating expenses for fiscal year ending March 31, 2024, to be between $13.0 million and $15.0 million[128] - Substantial additional funding is required, raising substantial doubt about the company's ability to continue as a going concern for at least one year[128] - The company has an effective shelf registration statement (2021 Shelf) for $150.0 million and an ATM program with $27.1 million available, and filed a new 2024 Shelf for $150.0 million[129][130][131][132] - As of December 31, 2023, 9,838,755 shares of common stock were outstanding, with 2,509,149 shares reserved for future issuance under various equity plans[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Organovo Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk under Item 305(e) of Regulation S-K - The company is a smaller reporting company and is not required to provide disclosures about market risk[138] Item 4. Controls and Procedures This section details Organovo Holdings, Inc.'s disclosure controls and procedures, confirming their effectiveness as of December 31, 2023, and noting no material changes in internal control over financial reporting during the quarter. It also acknowledges the inherent limitations of control systems Disclosure Controls and Procedures This section describes the company's controls designed to ensure timely and accurate disclosure of financial information - Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2023, and concluded they were designed and operating effectively[139][140] Changes in Internal Control over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting during the fiscal quarter ended December 31, 2023, that materially affected or are reasonably likely to materially affect internal control over financial reporting[141] Inherent Limitations on Effectiveness of Controls This section acknowledges that internal control systems have inherent limitations and cannot provide absolute assurance - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as resource constraints, faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[142] PART II. OTHER INFORMATION This section covers additional information not included in the financial statements, such as legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section refers to Note 7 of the financial statements for a discussion of Organovo Holdings, Inc.'s legal proceedings and contingencies, indicating no material accruals for loss contingencies - Legal proceedings and contingencies are discussed in Note 7 of the financial statements[145] Item 1A. Risk Factors This section outlines the substantial risks associated with investing in Organovo Holdings, Inc., including significant operating losses, unproven business strategies, intense competition, funding requirements, lengthy clinical development processes, reliance on third parties, market volatility, and intellectual property challenges. It emphasizes that the company's ability to continue as a going concern is in substantial doubt Risk Factor Summary This section provides a concise overview of the primary risks facing the company, including financial and operational challenges - Key risks include substantial operating losses, unproven 3D tissue technology for drug discovery, need for constant human cell supply, substantial additional funding requirements leading to dilution or operational restrictions, lengthy and uncertain clinical drug development, dependence on strategic relationships, potential impact of legislation on drug commercialization, and substantial doubt about the company's ability to continue as a going concern[149] Risks Related to our Business This section details risks inherent to the company's operations, including unproven strategies, competition, and reliance on key resources - The company's business strategy, focusing on FXR314 clinical development and 3D bioprinting for drug discovery, is new and unproven, with no identified drug candidates from the new model to date, posing uncertainty for profitability[150][152] - Substantial additional operating losses are expected as research and development activities increase, with profitability dependent on successful drug candidate identification, clinical trials, regulatory approval, and financing[151] - The biotechnology industry is highly competitive, with many competitors possessing greater resources and expertise, requiring substantial investments to compete effectively[153][155][156] - Access to a constant, reliable supply of human cells is critical for 3D tissue development, and failure to secure this at cost-effective prices would harm the business[157] - The company's future success depends on attracting and retaining key executive officers and scientific personnel, with intense competition for qualified individuals[158] Risks Related to Government Regulation This section addresses risks stemming from regulatory compliance, environmental concerns, and healthcare legislation impacting product commercialization - The company's use of hazardous chemicals and biological materials in R&D poses risks of accidental contamination, leading to potential lawsuits and costs exceeding insurance coverage[179] - Commercial viability of potential products depends on adequate reimbursement from third-party payors, which is uncertain and subject to cost-containment trends and legislative changes like the Inflation Reduction Act of 2022 and PPACA[180][181][182][187][188][189] - Restructuring efforts in August 2023 to reduce workforce and focus on FXR314 may not yield anticipated benefits or savings, potentially leading to additional expenses or future workforce reductions[194] Risks Related to Our Capital Requirements, Finances and Operations This section covers financial and operational risks, including going concern issues, funding needs, operating losses, and management retention - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern due to insufficient funds, which could adversely affect share price and ability to raise capital[195][196] - Additional funding may not be available on acceptable terms, leading to potential delays or cessation of business opportunities and dilution for existing stockholders if equity is issued[197] - The company has a history of operating losses ($12.0 million for nine months ended Dec 31, 2023) and expects significant additional losses, with profitability uncertain[198][199] - Quarterly operating results may vary due to factors like R&D expenditures, strategic evaluations, and litigation, potentially affecting stock price[200][202] - Future strategic investments carry risks of unforeseen losses, deficiencies in internal controls, and failure to achieve desired returns, potentially impacting financial condition and stock price[205][206][207] - The company's success depends on retaining key executive officers and personnel, and conflicts of interest may arise due to shared executives with Viscient Biosciences, Inc[208] Risks Related to Our Common Stock and Liquidity Risks This section discusses risks associated with the company's common stock, including listing compliance, price volatility, dilution, and anti-takeover provisions - Failure to maintain Nasdaq Capital Market listing (e.g., minimum bid price) could harm stock liquidity and ability to raise capital[222][223] - The stock price is highly volatile and can fluctuate due to various factors, potentially leading to investor losses and costly securities litigation[224][226] - Future issuance of additional equity securities to raise funds will likely dilute existing stockholders' ownership interests and could depress the stock price[227][228] - The company does not intend to pay dividends in the foreseeable future, retaining earnings for expansion, which may affect stock market value[229] - Anti-takeover provisions in organizational documents and Delaware law may discourage or prevent a change of control, even if beneficial to stockholders[230][232] Risks Related to Our Intellectual Property This section outlines risks concerning the protection, enforcement, and potential infringement of the company's intellectual property rights - The company's success depends on adequately protecting its proprietary rights through patents, which may be challenged or insufficient to prevent competitors[233][234][235] - Protecting intellectual property globally is expensive and challenging, with varying patent laws and enforcement strengths in foreign jurisdictions, potentially limiting protection[236][237][239][240] - Patents may be found invalid or unenforceable if challenged in court or administrative bodies, leading to loss of rights, reduced scope, or invalidation, as seen in past IPR proceedings with Cellink AB[241][242][244] - Patent infringement lawsuits are expensive, time-consuming, and may not be successful, potentially distracting management and compromising confidential information[245][246][247] - Changes in U.S. patent law (e.g., Leahy-Smith Act, Supreme Court rulings) and international patent systems (e.g., European unitary patent system) create uncertainty and could diminish patent value, weakening the ability to protect products[251][252][253] - Dependence on license agreements (e.g., with University of Missouri, Clemson University, Salk Institute) means non-compliance or termination could materially harm the business and product development[254] - Failure to prevent disclosure of trade secrets and proprietary information through confidentiality agreements could adversely affect competitive position[255] - The company may face claims of wrongful use or disclosure of third-party confidential information by employees or consultants, leading to costly litigation[256] General Risk Factors This section covers broader risks, including compliance costs for federal securities laws and the Sarbanes-Oxley Act - Compliance with federal securities laws and Sarbanes-Oxley Act reporting requirements is expensive[257] - Failure to comply with Section 404 of the Sarbanes-Oxley Act or discovery of material weaknesses in internal controls could lead to sanctions, adverse financial results, and a decline in stock price[258][259] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Organovo Holdings, Inc. issued 65,789 unregistered shares of common stock to a marketing firm on December 6, 2023, as consideration for services, relying on Section 4(a)(2) of the Securities Act exemption - On December 6, 2023, the company issued 65,789 unregistered shares of common stock to a marketing firm for services, relying on Section 4(a)(2) of the Securities Act exemption[260] Item 3. Defaults Upon Senior Securities Organovo Holdings, Inc. reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[261] Item 4. Mine Safety Disclosure This item is not applicable to Organovo Holdings, Inc - Mine Safety Disclosure is not applicable to the company[262] Item 5. Other Information During the fiscal quarter ended December 31, 2023, no directors or officers adopted or terminated any Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended December 31, 2023[263] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents, equity incentive plans, and certifications, with some filed herewith and others incorporated by reference - The report includes various exhibits such as Certificate of Incorporation, Bylaws, 2023 Employee Stock Purchase Plan, and certifications from the Principal Executive Officer and Principal Financial Officer[265] SIGNATURES The report is duly signed on behalf of Organovo Holdings, Inc. by Keith Murphy, Executive Chairman (Principal Executive Officer), and Thomas Hess, Chief Financial Officer (Principal Financial Officer), on February 8, 2024 - The report was signed by Keith Murphy, Executive Chairman (Principal Executive Officer), and Thomas Hess, Chief Financial Officer (Principal Financial Officer), on February 8, 2024[270]