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What changed in VivoSim Labs, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of VivoSim Labs, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+228 added−176 removedSource: 10-K (2024-05-31) vs 10-K (2023-07-14)

Top changes in VivoSim Labs, INC.'s 2024 10-K

228 paragraphs added · 176 removed · 146 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

21 edited+13 added−3 removed36 unchanged
Biggest changeWe use these models to identify gene targets responsible for driving the disease and intend to initiate drug discovery programs around these validated targets. We are initially focusing on the intestine and have ongoing 3D tissue development efforts in ulcerative colitis (“UC”) and Crohn’s disease (“CD”). We intend to add additional tissues/diseases/targets to our portfolio over time.
Biggest changeAs with the clinical development program, we are initially focusing on the intestine and have ongoing 3D tissue development efforts in human tissue models of UC and CD. We use these models to identify new molecular targets responsible for driving the disease and to explore the mechanism of action of known drugs including FXR314 and related molecules.
The NovoGen Bioprinter® Platform Our NovoGen Bioprinters ® are automated devices that enable the fabrication of 3D living tissues comprised of mammalian cells. A custom graphic user interface (“GUI”) facilitates the 3D design and execution of scripts that direct precision movement of multiple 2 dispensing heads to deposit defined cellular building blocks called bio-ink.
The NovoGen Bioprinter® Platform Our NovoGen Bioprinters ® are automated devices that enable the fabrication of 3D living tissues comprised of mammalian cells. A custom graphic user interface (“GUI”) facilitates the 3D design and execution of scripts that direct precision movement of multiple dispensing heads to deposit defined cellular building blocks called bio-ink.
Vineyard Professor of Biophysics at MU, was one of the co-inventors of all of these works (collectively, the “Forgacs Intellectual Property”). The Forgacs Intellectual Property provides us with intellectual property rights relating to cellular aggregates, the use of cellular aggregates to create engineered tissues, and the use of cellular aggregates to 3 create engineered tissue with no scaffold present.
Vineyard Professor of Biophysics at MU, was one of the co-inventors of all of these works (collectively, the “Forgacs Intellectual Property”). The Forgacs Intellectual Property provides us with intellectual property rights relating to cellular aggregates, the use of cellular aggregates to create engineered tissues, and the use of cellular aggregates to create engineered tissue with no scaffold present.
Patent Nos. 9,481,868, 10,094,821 and 10,962,526; Australian Patent No. 2015328173, Canadian Patent No. 2,962,778, European Patent No. 3204488 and Japan Patent No. 7021177. These issued patents and pending patent applications carry remaining patent terms ranging from over 14 years to just over 11 years.
Patent Nos. 9,481,868, 10,094,821 and 10,962,526; Australian Patent No. 2015328173, Canadian Patent No. 2,962,778, European Patent No. 3204488 and Japan Patent No. 7021177. These issued patents and pending patent applications carry remaining patent terms ranging from over 11 years to just over 9 years.
Research Collaborations We continue to collaborate with several academic institutions by providing them with access to our NovoGen Bioprinters ® for research purposes, including: Yale School of Medicine, Knight Cancer Institute at Oregon Health & Science University, and the University of Virginia.
Research Collaborations We continue to collaborate with several academic institutions by providing them with access to our NovoGen Bioprinters ® for research purposes, including: Yale School of Medicine, Knight Cancer Institute at Oregon Health & Science University, and the 3 University of Virginia.
For additional information regarding our royalty obligations see “Note 5. Collaborative Research, Development, and License Agreements” in the Notes to the Consolidated Financial Statements included in this Annual Report. Company Owned Intellectual Property In addition to the intellectual property we have in-licensed, we have historically innovated and grown our intellectual property portfolio.
For additional information regarding our royalty obligations see “Note 6. Collaborative Research, Development, and License Agreements” in the Notes to the Consolidated Financial Statements included in this Annual Report. 4 Company Owned Intellectual Property In addition to the intellectual property we have in-licensed, we have historically innovated and grown our intellectual property portfolio.
With respect to our bioprinting platform, we have 8 issued U.S. patents and 14 issued foreign patents directed to our NovoGen Bioprinter ® and methods of bioprinting: U.S. Patent Nos. 8,931,880; 9,149,952; 9,227,339; 9,315,043; 9,499,779; 9,855,369; 10,174,276, 10,967,560, 11,577,450, 11,577,451 and 11,413,805 ; Australia Patent Nos. 2011318437, 2015202836, 2016253591, 2013249569, and 2014296246; Canada Patent No. 2,812,766; China Patent Nos.
With respect to our bioprinting platform, we have 11 issued U.S. patents and 13 issued foreign patents directed to our NovoGen Bioprinter ® and methods of bioprinting: U.S. Patent Nos. 8,931,880; 9,149,952; 9,227,339; 9,315,043; 9,499,779; 9,855,369; 10,174,276, 10,967,560, 11,577,450, 11,577,451 and 11,413,805 ; Australia Patent Nos. 2015202836, and 2014296246; Canada Patent No. 2,812,766; China Patent Nos.
With respect to our FXR agonist program covering FXR314 and FXR125, we have 6 issued U.S. patents and 14 issued foreign patents directed to composition of matter protection (generic and specific) for FXR314 and FXR125, as well claims directed to methods of treatment of GI diseases, formulations of FXR314 and polymorphs of the FXR314 molecule including United States Patent Nos.11,214,538, 10,705,712, 10,927,082, 10,961,198, 11,136,071 and 11,084,817, granted Australian Patent Nos. 2016323992 and 2018236275, Chinese Patent Nos. 201680066917 and 269065, Eurasian Patent Nos. 040003 and 040704, Israeli Patent Nos. 258011, 296068 and 296065, Indian Patent No. 380510, Japanese Patent Nos. 6905530 and 717709, Mexican Patent Nos. 386,752 and 397265 and South African Patent No. 2018/01750.
With respect to our FXR agonist program covering FXR314 and FXR125, we have 7 issued U.S. patents and 15 issued foreign patents directed to composition of matter protection (generic and specific) for FXR314 and FXR125, as well claims directed to methods of treatment of GI diseases, formulations of FXR314 and polymorphs of the FXR314 molecule including United States Patent Nos.11,214,538, 10,703,712, 10,927,082, 10,961,198, 11,236,071 and 11,084,817, granted Australian Patent Nos. 2016323992 and 2018236275, Chinese Patent Nos. 201680066917 and 269065, Eurasian Patent Nos. 040003 and 040704, Israeli Patent Nos. 258011, 296068 and 296065, Indian Patent No. 380510, Japanese Patent Nos. 6905530 and 717709, Mexican Patent Nos. 386,752 and 397265 and South African Patent No. 2018/01750.
This includes filings on the lead candidate, FXR314, and selected filings on the prior candidate (no longer in development), FXR125. With respect to this FXR portfolio, we solely own 6 issued patents and 14 international patents in jurisdictions, including Australia, China, Eurasia, India, Israel, Mexico, Japan and South Africa.
This includes filings on the lead candidate, FXR314, and selected filings on the prior candidate (no longer in development), FXR125. With respect to this FXR portfolio, we solely own 7 issued patents and 15 international patents in jurisdictions, including Australia, China, Eurasia, India, Israel, Mexico, Japan and South Africa.
Patent Application Nos. 18/156,069, 17/532,618, 18/174,393, 17/349,757, 17/276,787, 17/906,580, 17/906,582 and 17/906,585 and over 50 pending international patent applications in a number of countries including, Australia, Brazil, Canada, Chile, China, the Eurasian Patent Office, the European Patent Office, Israel, India, Japan, South Korea, Mexico, Singapore, 4 Philippines and Hong Kong.
Patent Application Nos. 18/156,069, 18/174,393, 17/349,757, 17/906,580, 17/906,582 and 17/906,585 and over 50 pending international patent applications in a number of countries including, Australia, Brazil, Canada, Chile, China, the Eurasian Patent Office, the European Patent Office, Israel, India, Japan, South Korea, Mexico, Singapore, Philippines and Hong Kong.
We solely own or hold exclusive licenses to 32 issued U.S. patents and more than 115 issued international patents in foreign jurisdictions including Australia, Canada, China, Denmark, France, Great Britain, Germany, Ireland, Japan, South Korea, Sweden, the Netherlands and Switzerland.
We solely own or hold exclusive licenses to 34 issued U.S. patents and more than 45 issued international patents in foreign jurisdictions including Australia, Canada, China, Denmark, France, Great Britain, Germany, Ireland, Japan, South Korea, Sweden, the Netherlands and Switzerland.
ZL201180050831.4 and ZL201480054148.1; European Patent Nos. 2838985, 2629975, and 3028042; Japan Patent Nos. 6333231, 6566426 and 6842918, and Russian Patent No. 2560393. These issued patents and pending patent applications carry remaining patent terms ranging from over 12 years to just over 6 years.
ZL201180050831.4 and ZL201480054148.1; European Patent Nos. 2838985, 2629975, and 3028042; Japan Patent Nos. 6333231, 6566426 and 6842918, and Russian Patent No. 2560393. These issued patents and pending patent applications carry remaining patent terms ranging from over 20 years to just over 7 years.
Our Platform Technology Our 3D human tissue platform is multifaceted. We approach each tissue agnostic to specific technologies, and intend to apply the best 3D technology to a given disease. We are developing novel disease models using high throughput systems, bioprinted and flow/stretch capable 3D systems as appropriate.
We approach each tissue agnostic to specific technologies, and intend to apply the best 3D technology to a given disease. We are developing novel disease models using high throughput systems, bioprinted and flow/stretch capable 3D systems as appropriate.
Using these disease models, we intend to identify and validate novel therapeutic targets. After finding therapeutic drug targets, we will focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these drug candidates towards an Investigational New Drug (“IND”) filing and potential future clinical trials.
After finding therapeutic drug targets, we intend to focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these novel drug candidates towards an Investigational New Drug filing and potential future clinical trials.
These issued patents and pending patent applications carry remaining patent terms ranging from over 18 years to just over 15 years. Employees and Human Capital As of June 1, 2023, we had 24 employees, of which 15 are full-time.
These issued patents and pending patent applications carry remaining patent terms ranging from over 18 years to just over 15 years. Employees and Human Capital As of May 1, 2024, we had 20 employees, of which 12 are full-time.
In line with these plans, we are building upon both our external and in-house scientific expertise, which will be essential to our drug development effort. We use our proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease.
In line with these plans, we are building upon both our external and in house scientific expertise, which will be essential to our drug development effort.
In our work to identify the areas of interest, we evaluate areas that might be better served with 3D disease models than currently available models as well as the commercial opportunity. We hold a large and diverse patent portfolio related to our bioprinting platform and complementary 3D technologies.
We expect to broaden our work into additional therapeutic areas over time and are currently exploring specific tissues for development. In our work to identify the areas of interest, we evaluate areas that might be better served with 3D disease models than currently available models as well as the potential commercial opportunity.
Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) Our current understanding of intestinal tissue models and IBD disease models leads us to believe that we can create models that provide greater insight into the biology of these diseases than are generally currently available.
Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) Our advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures. Using these disease models, we intend to identify and validate novel therapeutic targets.
Item 1. Bu siness. Overview Organovo Holdings, Inc. (“Organovo Holdings,” “we,” “us,” “our,” the “Company” and “our Company”) is a biotechnology company that focuses on building high fidelity, 3D tissues that recapitulate key aspects of human disease.
Item 1. Bu siness. Overview Organovo Holdings, Inc. (“Organovo,” “we,” “us,” “our,” the “Company” and “our Company”) is a clinical stage biotechnology company that is focused on developing FXR314 in inflammatory bowel disease (“IBD”), including ulcerative colitis (“UC”), based on demonstration of clinical promise in three-dimensional (“3D”) human tissues as well as strong preclinical data.
FXR agonism has been tested in a variety of preclinical models of IBD. The acquired program contains two clinically tested compounds and over 2,000 discovery or preclinical compounds. We expect to broaden our work into additional therapeutic areas over time and are currently exploring specific tissues for development.
FXR is a mediator of gastrointestinal and liver diseases. FXR agonism has been tested in a variety of preclinical models of IBD. FXR314 is the lead compound in our established FXR program containing two clinically tested compounds (including FXR314) and over 2,000 discovery or preclinical compounds.
Our advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures. We believe these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas. Our NovoGen Bioprinters ® are automated devices that enable the fabrication of 3D living tissues comprised of mammalian cells.
We use our proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function, and disease. We believe these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas.
Removed
We believe that the use of our bioprinting platform as well as complementary 3D technologies will allow us to develop an understanding of disease biology that leads to validated novel drug targets and therapeutics to those targets to treat disease. The majority of our current focus is on inflammatory bowel disease (“IBD”), including CD and UC.
Added
FXR314 is a drug with safety and tolerability after daily oral dosing in Phase 1 and Phase 2 trials. Further, FXR314 has FDA clinical trial authorization for a Phase 2 trial in UC. Our current clinical focus is in advancing FXR314 in IBD, including UC and Crohn’s disease (“CD”).
Removed
We may also form partnerships around the development of targets or therapeutics for the treatment of IBD. In March of 2023, we entered into and closed an asset purchase agreement with Metacrine, Inc to acquire their farnesoid X receptor ("FXR") program. FXR is a mediator of gastrointestinal ("GI") and liver diseases.
Added
We plan to start a Phase 2a clinical trial in UC in the calendar year 2024. We released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis ("MASH") in April 2024 that are supportive of ongoing development, and we believe FXR314 has a commercial opportunity in MASH, most likely in combination therapy.
Removed
The strength of this patent portfolio, the fact that it was created early in the bioprinting revolution and growth in the bioprinting industry have made for an attractive business opportunity for us. We are now beginning to invest resources to explore and expand business and revenue opportunities from the leveraging of our patent portfolio.
Added
We are exploring the potential for combination therapies using FXR314 and currently approved mechanisms in preclinical animal studies and our IBD disease models. Our second focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease.
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We intend to initiate drug discovery programs around these new validated targets to identify drug candidates for partnering and/or internal clinical development. Our current understanding of intestinal tissue models and IBD disease models leads us to believe that we can create models that provide greater insight into the biology of these diseases than are generally currently available.
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Recent Developments Mosaic Cell Sciences Division In February 2024, we formed our Mosaic Cell Sciences division (“Mosaic”) to serve as a key source of certain primary human cells we utilize in our research and development efforts.
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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.
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We intend for Mosaic to provide us with qualified human cells for use in our clinical research and development programs.
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In addition to supplying us with primary human cells, we intend for Mosaic to offer 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 research and development ("R&D") spending by Organovo.
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Best Efforts Public Offering 2 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.
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In connection with the Offering, we entered into Securities Purchase Agreements with the purchasers of the securities in the Offering on May 8, 2024. The per share exercise price for the Pre-Funded Warrants is $0.001, subject to adjustment as provided therein. The Pre-Funded Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire when exercised in full.
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The holders may exercise the Pre-Funded Warrants by means of a “cashless exercise.” The per share exercise price for the Common Warrants is $0.80, subject to adjustment as provided therein. The Common Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the date that is five years following the original issuance date.
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If a registration statement covering the issuance of the shares of common stock issuable upon exercise of the Common Warrants is not available for the issuance, then the holders may exercise the Common Warrants by means of a “cashless exercise.” In connection with the Offering, we paid JonesTrading Institutional Services LLC, which acted as the placement agent in connection with the Offering, a cash fee of 5.0% of the aggregate gross proceeds raised in the Offering.
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The closing of the Offering occurred on May 13, 2024. We received net proceeds of approximately $4.7 million from the Offering, after deducting the estimated offering expenses payable by us, including the Placement Agent fees. Our Platform Technology Our 3D human tissue platform is multifaceted.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+47 added−4 removed226 unchanged
Biggest changeWe, or any third party with whom we enter into a partnering or development agreement, may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to earn development or milestone payments or for any drug candidates to obtain regulatory approval, including: • delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • failure to obtain sufficient enrollment in clinical trials or participants may fail to complete clinical trials; • clinical trials of our drug candidates that may produce negative or inconclusive results, and as a result we, or any pharmaceutical company with who we enter into a partnering or development agreement, may decide, or regulators may require, additional clinical trials; • suspension or termination of clinical research, either by us, any third party with whom we enter into a partnering or development agreement, regulators or institutional review boards, for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; 10 • additional or unanticipated clinical trials required by regulators or institutional review boards to obtain approval or any drug candidates may be subject to additional post-marketing testing requirements to maintain regulatory approval; • regulators may revise the requirements for approving any drug candidates, or such requirements may not be as anticipated; • the cost of clinical trials for any drug candidates may be greater than anticipated; • the supply or quality of any drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate or may be delayed; and • regulatory authorities may suspend or withdraw their approval of a product or impose restrictions on its distribution; If we, or any third party with whom we enter into a partnering or development agreement, experience delays in the completion of, or termination of, any clinical trial of any drug candidates that we develop, or are unable to achieve clinical endpoints due to unforeseen events, the commercial prospects of our drug candidates will be harmed, and our ability to develop milestones, development fees or product revenues from any of these drug candidates will be delayed.
Biggest changeWe, or any third party with whom we enter into a partnering or development agreement, may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to earn development or milestone payments or for any drug candidates to obtain regulatory approval, including: • delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • failure to obtain sufficient enrollment in clinical trials or participants may fail to complete clinical trials; • clinical trials of our drug candidates that may produce negative or inconclusive results, and as a result we, or any pharmaceutical company with who we enter into a partnering or development agreement, may decide, or regulators may require, additional clinical trials; • suspension or termination of clinical research, either by us, any third party with whom we enter into a partnering or development agreement, regulators or institutional review boards, for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • additional or unanticipated clinical trials required by regulators or institutional review boards to obtain approval or any drug candidates may be subject to additional post-marketing testing requirements to maintain regulatory approval; • regulators may revise the requirements for approving any drug candidates, or such requirements may not be as anticipated; • the cost of clinical trials for any drug candidates may be greater than anticipated; • the supply or quality of any drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate or may be delayed; and • regulatory authorities may suspend or withdraw their approval of a product or impose restrictions on its distribution.
The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as: • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • our ability to execute on our new strategic plan; • reduced government funding for research and development activities; • actual or anticipated variations in our operating results; • adoption of new accounting standards affecting our industry; • additions or departures of key personnel; • sales of our common stock or other securities in the open market; • degree of coverage of securities analysts and reports and recommendations issued by securities analysts regarding our business; • volume fluctuations in the trading of our common stock; and • other events or factors, many of which are beyond our control.
The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as: • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • our ability to execute on our new strategic plan; • reduced government funding for research and development activities; • actual or anticipated variations in our operating results; • adoption of new accounting standards affecting our industry; • additions or departures of key personnel; • sales of our common stock or other securities in the open market; 21 • degree of coverage of securities analysts and reports and recommendations issued by securities analysts regarding our business; • volume fluctuations in the trading of our common stock; and • other events or factors, many of which are beyond our control.
Our ability to generate revenue and achieve profitability will depend on, among other things: 15 • successfully developing human tissues and disease models for drug discovery and development that enable us to identify drug candidates; • successfully outsourcing certain portions of our development efforts; • entering into collaboration or licensing arrangements with pharmaceutical companies to further develop and conduct clinical trials for any drug candidates we identify; • obtaining any necessary regulatory approvals for any drug candidates we identify; and • raising sufficient funds to finance our activities and long-term business plan.
Our ability to generate revenue and achieve profitability will depend on, among other things: • successfully developing human tissues and disease models for drug discovery and development that enable us to identify drug candidates; • successfully outsourcing certain portions of our development efforts; • entering into collaboration or licensing arrangements with pharmaceutical companies to further develop and conduct clinical trials for any drug candidates we identify; • obtaining any necessary regulatory approvals for any drug candidates we identify; and • raising sufficient funds to finance our activities and long-term business plan.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation; disruptions to our technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; disruptions in global supply chains; and constraints, volatility, or disruption in the capital markets, any of which could negatively affect our business and financial condition.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation; disruptions to our technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in 13 international trade policies and relations; disruptions in global supply chains; and constraints, volatility, or disruption in the capital markets, any of which could negatively affect our business and financial condition.
Department of Health and Human Services has started soliciting feedback on some of these measures and, at the same time, is implementing others under its existing authority. For example, in May 14 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.
Department of Health and Human Services has started soliciting feedback on some of these measures and, at the same time, is implementing others under its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.
In the event that the aggregate market value of our common stock held by non-affiliates (“public float”) is less than $75.0 million, the amount we can raise through primary public offerings of securities, including sales under the Sales Agreement, in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float.
However, in the event that the aggregate market value of our common stock held by non-affiliates (“public float”) is less than $75.0 million, the amount we can raise through primary public offerings of securities, including sales under the Sales Agreement, in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float.
Given the breadth and depth of changes in data protection obligations, preparing for and complying with these requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the European Union.
Given the breadth and depth of changes in data protection obligations, preparing for and complying with these requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those 19 of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the European Union.
Even if we establish new strategic relationships, these relationships may never result in the successful development or regulatory approval for any drug candidates we identify for a number of reasons both within and outside of our control. 11 Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
Even if we establish new strategic relationships, these relationships may never result in the successful development or regulatory approval for any drug candidates we identify for a number of reasons both within and outside of our control. Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
These and other provisions in our Certificate of Incorporation, Bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including delaying or impeding a merger, tender offer, or proxy contest involving our company.
These and other provisions in our 22 Certificate of Incorporation, Bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including delaying or impeding a merger, tender offer, or proxy contest involving our company.
An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our other patent applications at risk of not issuing. Additionally, our licensors may continue to retain certain rights to use technologies licensed by us for research purposes.
An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our other patent applications at risk of not issuing. Additionally, our licensors 24 may continue to retain certain rights to use technologies licensed by us for research purposes.
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies in the United States or abroad, even outside the context of litigation, including through re-examination, post-grant review, IPR, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., 22 opposition proceedings).
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies in the United States or abroad, even outside the context of litigation, including through re-examination, post-grant review, IPR, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).
These complications could materially delay or substantially increase the anticipated costs and time to identify and develop viable drug candidates, which would have a material adverse effect on our business and financial condition and our ability to continue operations. We will face intense competition in our drug discovery efforts.
These complications could materially delay or substantially increase the anticipated costs and time to identify and develop viable drug candidates, which would have a material adverse effect on our business and financial condition and our ability to continue operations. 8 We will face intense competition in our drug discovery efforts.
Many of these competitors have significantly greater financial and technical resources, experience and expertise in the following areas than we have, including: • research and technology development; 8 • development of or access to disease models; • identification and development of drug candidates; • regulatory processes and approvals; and • identifying and entering into agreements with potential collaborators.
Many of these competitors have significantly greater financial and technical resources, experience and expertise in the following areas than we have, including: • research and technology development; • development of or access to disease models; • identification and development of drug candidates; • regulatory processes and approvals; and • identifying and entering into agreements with potential collaborators.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Patents covering our products could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad.
Proceedings to 23 enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Patents covering our products could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad.
We are not sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by the U.S.
We are not sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by 15 the U.S.
Accordingly, if these initiatives are not successful, our business, financial condition and results of operations could be adversely affected. If these risks materialize, our stock price could be materially 16 adversely affected. Any difficulties in such investments could have a material adverse effect on our business, financial condition and results of operations.
Accordingly, if these initiatives are not successful, our business, financial condition and results of operations could be adversely affected. If these risks materialize, our stock price could be materially adversely affected. Any difficulties in such investments could have a material adverse effect on our business, financial condition and results of operations.
There is also no guarantee that our remaining patents will be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. 21 We may not be able to protect our intellectual property rights throughout the world.
There is also no guarantee that our remaining patents will be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. We may not be able to protect our intellectual property rights throughout the world.
In addition, Viscient and we each agreed to share certain facilities and equipment and, subject to further agreement, to each make certain employees available for specified projects to the other party at prices to be determined in good faith by the parties.
In addition, Viscient and we each agreed to share certain facilities and equipment and, subject to further agreement, to each 20 make certain employees available for specified projects to the other party at prices to be determined in good faith by the parties.
Some investors and investor advocacy groups may use these factors to guide investment strategies and, in some cases, investors may choose not to invest in our company if they believe our policies relating to corporate responsibility are inadequate.
Some investors and investor advocacy groups may use 12 these factors to guide investment strategies and, in some cases, investors may choose not to invest in our company if they believe our policies relating to corporate responsibility are inadequate.
To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our products to other available therapies.
To obtain reimbursement or pricing 14 approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our products to other available therapies.
Separately, our independent registered public accounting firm has included in its opinion for the year ended March 31, 2023 an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern, which may hinder our ability to obtain future financing. • Additional funds may not be available when we need them on terms that are acceptable to us, or at all.
Separately, our independent registered public accounting firm has included in its opinion for the year ended March 31, 2024 an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern, which may hinder our ability to obtain future financing. • Additional funds may not be available when we need them on terms that are acceptable to us, or at all.
There is no assurance that an active market in our common stock will continue at present levels or increase in the future. 19 Our common stock is currently traded on the Nasdaq Capital Market, but there is no assurance that an active market in our common stock will continue at present levels or increase in the future.
There is no assurance that an active market in our common stock will continue at present levels or increase in the future. Our common stock is currently traded on the Nasdaq Capital Market, but there is no assurance that an active market in our common stock will continue at present levels or increase in the future.
Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify deficiencies in our internal controls that are deemed to be material weaknesses, we may be required to incur significant additional financial and management resources to achieve compliance. 24 Item 1B. Unresolve d Staff Comments. None.
Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify deficiencies in our internal controls that are deemed to be material weaknesses, we may be required to incur significant additional financial and management resources to achieve compliance. 26 Item 1B. Unresolve d Staff Comments. None.
We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and several European and Asian countries may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and other third parties with which we conduct business.
We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and several European and Asian countries, and the Israel-Hamas war may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and other third parties with which we conduct business.
Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, obtain government grants, reduce expenditures and generate significant revenue. Our financial statements as of March 31, 2023 do not include any adjustments that might result from the outcome of this uncertainty.
Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, obtain government grants, reduce expenditures, and generate significant revenue. Our financial statements as of March 31, 2024 do not include any adjustments that might result from the outcome of this uncertainty.
Separately, our independent registered public accounting firm included in its opinion for the year ended March 31, 2023 an explanatory paragraph referring to our recurring losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available.
Separately, our independent registered public accounting firm included in its opinion for the year ended March 31, 2024 an explanatory paragraph referring to our recurring losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available.
Separately, our independent registered public accounting firm has included in its opinion for the year ended March 31, 2023 an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Separately, our independent registered public accounting firm has included in its opinion for the year ended March 31, 2024 an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Our financial statements as of March 31, 2023 have been prepared under the assumption that we will continue as a going concern for the next twelve months. Management has performed an analysis and concluded that substantial doubt exists about our ability to continue as a going concern.
Our financial statements as of March 31, 2024 have been prepared under the assumption that we will continue as a going concern for the next twelve months. Management has performed an analysis and concluded that substantial doubt exists about our ability to continue as a going concern.
Jeffrey N. Miner and our Chief Scientific Officer, is a co-founder, the Chief Scientific Officer and a significant stockholder of Viscient.
Jeffrey N. Miner, our former Chief Scientific Officer, is a co-founder, the Chief Scientific Officer and a significant stockholder of Viscient.
In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data. Further, Brexit has led and could also lead to legislative and regulatory changes and may increase our compliance costs.
In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data. Further, Brexit has led to, and could continue to lead to legislative and regulatory changes, which may increase our compliance costs.
The impact of the Russian invasion of Ukraine on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations. The short and long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time.
The impact of the Russian invasion of Ukraine and the Israel-Hamas war on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations. The short and long-term implications of Russia’s invasion of Ukraine and the Israel-Hamas war are difficult to predict at this time.
Our success will also depend on our ability to select an appropriate development strategy for any drug candidates we identify, including internal development or partnering or licensing arrangements with pharmaceutical companies. We may not be able to partner or license our drug candidates.
Our success will also depend on our ability to select an appropriate development strategy for FXR314 and any other drug candidates we may identify, including internal development or partnering or licensing arrangements with pharmaceutical companies. We may not be able to partner or license our drug candidates.
During fiscal 2023, we provided services to Viscient, and we expect to continue to provide services to Viscient and enter into additional agreements with Viscient in the future. 18 In addition, we license, as well as cross-license, certain intellectual property to and from Viscient and expect to continue to do so in the future.
During fiscal 2024, we provided services to Viscient, and we expect to continue to provide services to Viscient and enter into additional agreements with Viscient in the future. In addition, we license, as well as cross-license, certain intellectual property to and from Viscient and expect to continue to do so in the future.
Finally, certain of our executives also provide services to Viscient Biosciences, Inc. (“Viscient”). Executives that provide services to us and Viscient do not dedicate all of their time to us, as disclosed in our filings, and we may therefore compete with Viscient for the time commitments of our executive officers from time to time.
Finally, our Executive Chairman also provides services to Viscient Biosciences, Inc. (“Viscient”). Executives that provide services to us and Viscient do not dedicate all of their time to us, as disclosed in our filings, and we may therefore compete with Viscient for the time commitments of our Executive Chairman from time to time.
The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers. New laws also are being considered at both the state and federal levels.
The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers. New laws also are being considered at both the state and federal levels and several states have passed comprehensive privacy laws.
For example, the continuing conflict has resulted and may continue to result in increased inflation, escalating energy prices and constrained availability, and thus increasing costs, of raw materials. We will continue to monitor this fluid situation and develop contingency plans as necessary to address any disruptions to our business operations as they develop.
For example, a prolonged conflict in Ukraine or Israel may result in increased inflation, escalating energy prices and constrained availability, and thus increasing costs, of raw materials. We will continue to monitor this fluid situation and develop contingency plans as necessary to address any disruptions to our business operations as they develop.
That total for our common stock includes 2,650,405 shares of our common stock that may be issued upon the vesting of restricted stock units, the exercise of outstanding stock options, or is available for issuance under our equity incentive plans, and 58,426 shares of common stock that may be issued through our Employee Stock Purchase Plan (“ESPP”).
That total for our common stock includes 2,462,899 shares of our common stock that may be issued upon the vesting of restricted stock units, the exercise of outstanding stock options, or is available for issuance under our equity incentive plans, and 45,000 shares of common stock that may be issued through our 2023 Employee Stock Purchase Plan (“ESPP”).
To the extent the war in Ukraine may adversely affect our business as discussed above, it may also have the effect of heightening many of the other risks described herein.
To the extent the wars in Ukraine or Israel may adversely affect our business as discussed above, they may also have the effect of heightening many of the other risks described herein.
As of June 1, 2023, our public float was less than $75.0 million, and therefore we are limited to an aggregate of one-third of our public float in the amount we could raise through primary public offerings of securities in any twelve-month period using shelf registration statements.
As of May 15, 2024, our public float was less than $75.0 million, and therefore we are limited to an aggregate of one-third of our public float in the amount we could raise through primary public offerings of securities in any twelve-month period using shelf registration statements, or $2,474,091.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.
Our management team is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.
There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws.
Similar actions are either in place or under way in the United States. There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws.
Current and future legislation may increase the difficulty and cost of commercializing our drug candidates and may affect the prices we may obtain if our drug candidates are approved for commercialization. 13 In the U.S. and some foreign jurisdictions, there have been a number of adopted and proposed legislative and regulatory changes regarding the healthcare system that could prevent or delay regulatory approval of our drug candidates, restrict or regulate post-marketing activities and affect our ability to profitably sell any of our drug candidates for which we obtain regulatory approval.
In the U.S. and some foreign jurisdictions, there have been a number of adopted and proposed legislative and regulatory changes regarding the healthcare system that could prevent or delay regulatory approval of our drug candidates, restrict or regulate post-marketing activities and affect our ability to profitably sell any of our drug candidates for which we obtain regulatory approval.
On March 16, 2018, we entered into the Sales Agreement pursuant to which we have the ability to sell up to $28.3 million of additional shares of our common stock to the public through an “at the market” offering.
On March 16, 2018, we entered into the Sales Agreement pursuant to which we have the ability to sell shares of our common stock to the public through an ATM offering.
If we were to breach the terms of these license agreements and the agreements were terminated as a result, our ability to continue to develop and commercialize our NovoGen Bioprinters, 3D tissue products and the FXR314 agonist and to operate our business could be adversely impacted. 23 We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.
If we were to breach the terms of these license agreements and the agreements were terminated as a result, our ability to continue to develop and commercialize our NovoGen Bioprinters, 3D tissue products and the FXR314 agonist and to operate our business could be adversely impacted.
Any shares of common stock issued in the at-the-market offering will result in dilution to our existing stockholders. We currently have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”), which we may use to offer from time to time any combination of debt securities, common and preferred stock and warrants.
We currently have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”), which we may use to offer from time to time any combination of debt securities, common and preferred stock and warrants.
In order to protect our proprietary and licensed technology and processes, we rely in part on confidentiality agreements with our corporate partners, employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other advisors.
We may be unable to adequately prevent disclosure of trade secrets and other proprietary information. In order to protect our proprietary and licensed technology and processes, we rely in part on confidentiality agreements with our corporate partners, employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other advisors.
We cannot eliminate the risks of accidental contamination or the accidental spread or discharge of these materials, or any resulting injury from such an event. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed our insurance coverage and our total assets.
We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed our insurance coverage and our total assets.
Moreover, we have the ability to sell up to $28.3 million of additional shares of our common stock to the public through an “at the market” offering pursuant to a Sales Agreement that 9 we entered into with H.C. Wainwright & Co., LLC and Jones Trading Institutional Services LLC on March 16, 2018 (the "Sales Agreement").
Moreover, we have the ability to sell up to $0.8 million of additional shares of our common stock to the public through an “at the market offering” pursuant to a Sales Agreement that we entered into with H.C. Wainwright & Co., LLC and JonesTrading Institutional Services LLC on March 16, 2018 (the “Sales Agreement”).
In addition, if we seek funds through arrangements with collaborative partners, these arrangements may require us to relinquish rights to our technology or potential future product candidates or otherwise agree to terms unfavorable to us. We have a history of operating losses and expect to incur significant additional operating losses.
In addition, if we seek funds through arrangements with collaborative partners, these arrangements may require us to relinquish rights to our technology or potential future product candidates or otherwise agree to terms unfavorable to us.
Risks Related to our Business We are a biotechnology company focusing on 3D bioprinting technology to develop human tissues and disease models for drug discovery and development, which is an unproven business strategy that may never achieve profitability.
Risks Related to our Business We are a clinical stage biotechnology company focusing on clinical drug development of the farnesoid X receptor (“FXR”) agonist FXR314, which involves a substantial degree of uncertainty, and on 3D bioprinting technology to develop human tissues and disease models for drug discovery and development, which is an unproven business strategy that may never achieve profitability.
Any failure to obtain a reliable supply of sufficient human cells or a supply at cost effective prices would harm our business and our results of operations and could cause us to be unable to support our drug development efforts.
Any failure to obtain a reliable supply of sufficient human cells or a supply at cost effective prices would harm our business and our results of operations and could cause us to be unable to support our drug development efforts. We may not be successful in establishing our Mosaic Cell Sciences division (“Mosaic”) as a profitable commercial business.
Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition and results of operations.
Any such unauthorized access, disclosure, or loss of information could cause competitive harm, result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and/or cause reputational harm. 18 Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition and results of operations.
This is particularly true with respect to data security incidents, and sensitive personal information, including health and biometric data. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and business.
Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and business.
Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to curtail or cease our operations.
If adequate funds are not available to us on a timely basis, we may be required to curtail or cease our operations. 16 There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all.
As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock and could significantly affect the value of any investment. 20 Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.
Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.
Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline further and existing stockholders may not agree with our financing plans or the terms of such financings.
Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline further and existing stockholders may not agree with our financing plans or the terms of such financings. 10 Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes, and results of earlier studies and trials may not be predictive of future results.
We will rely upon third-party contractors and service providers for the execution of critical aspects of any future development programs. Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of any future development programs.
Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of any future development programs.
We have generated operating losses each year since we began operations, including $17.7 million and $11.5 million for the years ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had an accumulated deficit of $325.0 million. We expect to incur substantial additional operating losses over the next several years as our research and development activities increase.
We have a history of operating losses and expect to incur significant additional operating losses. We have generated operating losses each year since we began operations, including $15.1 million and $17.7 million for the years ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $339.7 million.
We are authorized to issue 200,000,000 shares of common stock and 25,000,000 shares of preferred stock. As of March 31, 2023, there were an aggregate of 11,426,737 shares of our common stock issued and outstanding and available for issuance on a fully diluted basis and no shares of preferred stock outstanding.
As of March 31, 2024, there were an aggregate of 10,077,726 shares of our common stock issued and outstanding and available for issuance on a fully diluted basis and no shares of preferred stock outstanding.
As widely reported, in the past several years, global credit and financial markets have experienced volatility and disruptions, including, for example, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.
As widely reported, in the past several years, global credit and financial markets have experienced volatility and disruptions, and especially in 2020, 2021 and 2022 due to the impacts of the COVID-19 pandemic, and, more recently, the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia, including, for example, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.
As of January 1, 2023, the California Consumer Privacy Act (as amended by the California Privacy Rights Act) is in full effect, with enforcement by California’s dedicated privacy enforcement agency expected to start later in 2023. While California was first among the states in adopting comprehensive data privacy legislation similar to the GDPR, many other states are following suit.
As of January 1, 2023, the California Consumer Privacy Act (as amended and expanded by the California Privacy Rights Act) is in full effect, with enforcement by California’s dedicated privacy enforcement agency expected to start later in 2023.
There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all. Raising additional funding through debt or equity financing is likely to be difficult or unavailable altogether given the early stage of our therapeutic candidates.
Raising additional funding through debt or equity financing is likely to be difficult or unavailable altogether given the early stage of our therapeutic candidates.
Risks Related to Government Regulation In the past, we have used hazardous chemicals, biological materials and infectious agents in our business.
Risks Related to Government Regulation In the past, we have used hazardous chemicals, biological materials and infectious agents in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.
We believe that operating results for any particular quarter are not necessarily a meaningful indication of future results. Nonetheless, fluctuations in our quarterly operating results could negatively affect the market price of our common stock.
We believe that operating results for any particular quarter are not necessarily a meaningful indication of future results.
We are focusing our efforts on utilizing our 3D bioprinting technology to develop human tissues and disease models for drug discovery and development. Our success will depend upon the viability of our platform technology and any disease models we develop, as well as on our ability to determine which drug candidates we should pursue.
Our success will depend upon our ability to advance the development of FXR314, our ability to determine the appropriate clinical focus for FXR314, our ability to identify additional drug candidates to pursue and the viability of our platform technology and any disease models we develop.
Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws. There also is the threat of consumer class actions related to these laws and the overall protection of personal data.
Many other states are considering similar legislation. Additionally, a broad range of legislative measures also have been introduced at the federal level. Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws.
Additionally, the United Kingdom’s withdrawal from the European Union may increase the possibility that other countries may decide to leave the European Union again. Risks Related to Our Capital Requirements, Finances and Operations Management has performed an analysis and concluded that substantial doubt exists about our ability to continue as a going concern.
In addition, we may need to undertake additional workforce reductions or restructuring activities in the future. Risks Related to Our Capital Requirements, Finances and Operations Management has performed an analysis and concluded that substantial doubt exists about our ability to continue as a going concern.
The amount of future losses and when, if ever, we will achieve profitability are uncertain.
We expect to incur substantial additional operating losses over the next several years as our research and development activities increase. The amount of future losses and when, if ever, we will achieve profitability are uncertain.
Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly. 12 Our product manufacturing, research and development, and testing activities have involved the controlled use of hazardous materials, including chemicals, biological materials and infectious disease agents.
Our product manufacturing, research and development, and testing activities have involved the controlled use of hazardous materials, including chemicals, biological materials and infectious disease agents. We cannot eliminate the risks of accidental contamination or the accidental spread or discharge of these materials, or any resulting injury from such an event.
We may identify material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. Our management team is responsible for establishing and maintaining adequate internal control over financial reporting.
Nonetheless, fluctuations in our quarterly operating results could negatively affect the market price of our common stock. 17 We may identify material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.
The stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such a company.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such a company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and resources, which could harm our business and financial condition.
There can be no assurances that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions.
Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our results of operations or financial condition. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions.
Other jurisdictions outside the European Union are similarly introducing or enhancing privacy and data security laws, rules and regulations. 17 Similar actions are either in place or under way in the United States.
The UK has announced plans to reform the country’s data protection legal framework in its Data Reform Bill, which may introduce significant changes from the GDPR, which may lead to additional compliance costs. Other jurisdictions outside the European Union are similarly introducing or enhancing privacy and data security laws, rules and regulations.
Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and resources, which could harm our business and financial condition. Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our capital stock.
Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our capital stock. We are authorized to issue 200,000,000 shares of common stock and 25,000,000 shares of preferred stock.
Removed
Our existing cash, cash equivalents and interest thereon is expected to be sufficient to fund our projected operating requirements for at least the next 12 months. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect if our operating plans change.
Added
We are a clinical stage biotechnology company that is focused on developing FXR314 in inflammatory bowel disease ("IBD"), including ulcerative colitis ("UC"), based on demonstration of clinical promise in three-dimensional ("3D") human tissues as well as strong preclinical data. Our current clinical focus is in advancing FXR314 in IBD, including UC and Crohn's disease.
Removed
Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes, and results of earlier studies and trials may not be predictive of future results.
Added
Our secondary focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease.
Removed
Any such unauthorized access, disclosure, or loss of information could cause competitive harm, result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and/or cause reputational harm.
Added
We formed Mosaic to serve as a key source of certain of the primary human cells we utilize in our research and development efforts. In addition to supplying human cells for our business requirements, we believe there is an opportunity for Mosaic to operate as a commercial business by selling human cells to other pharmaceutical, biotech and research organizations.

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Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeIn December 2021, we took occupancy of our permanent lab and office space, located at 11555 Sorrento Valley Road, San Diego, CA 92121. See “Note 7. Leases” of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of properties.
Biggest changeIn December 2021, we took occupancy of the aforementioned lab and office space, located at 11555 Sorrento Valley Road, San Diego, CA 92121. See “Note 8. Leases” of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed3 unchanged
Biggest changeIn addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. We are not involved in any material legal proceedings or legal matters at this time. See “Note 8.
Biggest changeIn addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. 27 We are not involved in any material legal proceedings or legal matters at this time. See “Note 9.
Commitments and Contingencies” of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of potential commitments and contingencies related to legal proceedings. Item 4. Mine Safe ty Disclosures. Not applicable. 25 PART II
Commitments and Contingencies” of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of potential commitments and contingencies related to legal proceedings. Item 4. Mine Safe ty Disclosures. Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−3 removed3 unchanged
Biggest changeWe currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities None.
Biggest changeWe currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
The graph set forth below compares the cumulative total stockholder return data on our common stock with the cumulative return data of (i) the Nasdaq Stock Market Composite Index, and (ii) the Nasdaq Biotechnology Index over the five-year period ending March 31, 2023.
The graph set forth below compares the cumulative total stockholder return data on our common stock with the cumulative return data of (i) the Nasdaq Stock Market Composite Index, and (ii) the Nasdaq Biotechnology Index over the five-year period ending March 31, 2024.
This graph assumes the investment of $100 on March 31, 2018 in our common stock and each of the comparative indices and assumes the reinvestment of dividends. No cash dividends have been declared or paid on our common stock.
This graph assumes the investment of $100 on March 31, 2019 in our common stock and each of the comparative indices and assumes the reinvestment of dividends. No cash dividends have been declared or paid on our common stock.
The comparisons in the graph and related information is not intended to forecast or be indicative of possible future performance of our common stock, and we do not make or endorse any predictions as to future stockholder returns. 26 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Organovo Holdings, Inc., the Nasdaq Composite Index, and the Nasdaq Biotechnology Index * $100 invested on March 31, 2018 in stock or index, including reinvestment of dividends.
The comparisons in the graph and related information is not intended to forecast or be indicative of possible future performance of our common stock, and we do not make or endorse any predictions as to future stockholder returns. 29 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Organovo Holdings, Inc., the Nasdaq Composite Index, and the Nasdaq Biotechnology Index * $100 invested on March 31, 2019 in stock or index, including reinvestment of dividends.
Market Information for Common Stock Our common stock is traded on the Nasdaq Capital Market under the symbol “ONVO.” Holders of Record As of March 31, 2023, we had 8,716,906 outstanding shares of common stock and approximately 81 holders of record of our common stock.
Market Information for Common Stock Our common stock is traded on the Nasdaq Capital Market under the symbol “ONVO.” Holders of Record As of May 25, 2024, we had 14,371,826 outstanding shares of common stock and approximately 82 holders of record of our common stock.
Removed
Issuer Purchases of Equity Securities We satisfy certain U.S. federal and state tax withholding obligations due upon the vesting of restricted stock unit awards by automatically withholding from the shares being issued in connection with such award a number of shares of our common stock with an aggregate fair market value on the date of vesting equal to the minimum tax withholding obligations.
Removed
The following table sets forth information with respect to shares of our common stock repurchased by us to satisfy certain tax withholding obligations during the three months ended March 31, 2023: (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid Per Share (or Unit) January 1, 2023 - January 31, 2023 — $ — February 1, 2023 - February 28, 2023 34 (1) $ 2.64 March 1, 2023 - March 31, 2023 — $ — Total 34 $ 2.64 (1) Represents shares of our common stock withheld from employees for the payment of taxes.
Removed
Securities Authorized for Issuance under Equity Compensation Plans Information about securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report. Item 6. [Reserved] 27

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

42 edited+22 added−20 removed22 unchanged
Biggest changeResearch and Development Expenses The following table summarizes our research and development expenses for the years ended March 31, 2023 and 2022 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2023 2022 $ % Research and development $ 8,247 $ 2,787 $ 5,460 196 % Non-cash stock-based compensation 473 419 54 13 % Depreciation and amortization 165 114 51 45 % Total research and development expenses $ 8,885 $ 3,320 $ 5,565 168 % Research and development expenses increased by $5.6 million, or 168%, from approximately $3.3 million for the year ended March 31, 2022 to approximately $8.9 million for the year ended March 31, 2023, as we significantly increased research and development activities.
Biggest changeThe decrease in royalty revenue year over year relates to a decrease in sales of royalty-bearing products by the licensee. 33 Research and Development Expenses The following table summarizes our research and development expenses for the years ended March 31, 2024 and 2023 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2024 2023 $ % Research and development $ 5,133 $ 8,247 $ (3,114 ) (38 %) Non-cash stock-based compensation 138 473 (335 ) (71 %) Depreciation and amortization 227 165 62 38 % Total research and development expenses $ 5,498 $ 8,885 $ (3,387 ) (38 %) Total research and development expenses decreased by $3.4 million, or 38%, from approximately $8.9 million for the year ended March 31, 2023 to approximately $5.5 million for the year ended March 31, 2024.
These 28 estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Our significant accounting policies are set forth in “Note 1.
These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Our significant accounting policies are set forth in “Note 1.
The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. Expected volatility is based on the Company-specific historical volatility rate.
The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. Expected volatility is based on the Company-specific historical volatility 32 rate.
Effect of Inflation and Changes in Prices Management does not believe that inflation and changes in price will have a material effect on our operations. Recent Accounting Pronouncements For information regarding recently adopted and issued accounting pronouncements, see “Note 13. Recent Accounting Pronouncements” in the Notes to the Consolidated Financial Statements contained in this Annual Report.
Effect of Inflation and Changes in Prices Management does not believe that inflation and changes in price will have a material effect on our operations. Recent Accounting Pronouncements For information regarding recently adopted and issued accounting pronouncements, see “Note 14. Recent Accounting Pronouncements” in the Notes to the Consolidated Financial Statements contained in this Annual Report.
On January 29, 2021, we filed a prospectus supplement to the 2021 Shelf (the “ATM Prospectus Supplement”), pursuant to which we could offer and sell, from time to time through the Agents, shares of our common stock in ATM sales transactions having an aggregate offering price of up to $50.0 million.
On January 29, 2021, we filed a prospectus supplement to the 2021 Shelf (the “2021 ATM Prospectus Supplement”), pursuant to which we could offer and sell, from time to time through the Agents, shares of our common stock in ATM sales transactions having an aggregate offering price of up to $50.0 million.
For shares acquirable under our ESPP, we use our Company-specific volatility rate. The expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of our stock options.
For shares acquirable under our 2016 ESPP and 2023 ESPP, we use our Company-specific volatility rate. The expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of our stock options.
We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For the year ended March 31, 2023, the performance obligations assessed were sales-based royalties on a quarterly basis.
We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For the year ended March 31, 2024, the performance obligations assessed were sales-based royalties on a quarterly basis.
Stock-based compensation For purposes of calculating stock-based compensation, we estimate the fair value of stock options and shares acquirable under our 2022 Equity Incentive Plan ("2022 Plan"), Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”), our 2016 Employee Stock Purchase Plan (the “ESPP”) or our 2021 Inducement Equity Plan (the “Inducement Plan”) using a Black-Scholes option-pricing model.
Stock-based compensation For purposes of calculating stock-based compensation, we estimate the fair value of stock options and shares acquirable under our 2022 Equity Incentive Plan (“2022 Plan”), Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”), our 2016 Employee Stock Purchase Plan (the “2016 ESPP”), our 2023 Employee Stock Purchase Plan (the “2023 ESPP”), or our 2021 Inducement Equity Plan (the “Inducement Plan”) using a Black-Scholes option-pricing model.
The 2021 Shelf registration statement was declared effective by the SEC on January 29, 2021 and replaced the 2018 Shelf at that time. On March 16, 2018, we entered into a Sales Agreement (“Sales Agreement”) with H.C. Wainwright & Co., LLC and Jones Trading Institutional Services LLC (each an “Agent” and together, the “Agents”).
The 2024 Shelf was declared effective by the SEC on February 8, 2024 and replaced the 2021 Shelf at that time. On March 16, 2018, we entered into a Sales Agreement (“Sales Agreement”) with H.C. Wainwright & Co., LLC and Jones Trading Institutional Services LLC (each an “Agent” and together, the “Agents”).
Using these disease models, we intend to identify and validate novel therapeutic targets. After finding therapeutic drug targets, we will focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these drug candidates towards an Investigational New Drug (“IND”) filing and potential future clinical trials.
After finding therapeutic drug targets, we intend to focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these novel drug candidates towards an Investigational New Drug filing and potential future clinical trials.
Our full-time research and development staff increased from an average of nine employees for the year ended March 31, 2022 to an average of fifteen employees for the year ended March 31, 2023.
Our full-time research and development staff increased from an average of fifteen employees for the year ended March 31, 2023 to an average of sixteen employees for the year ended March 31, 2024.
The net cash used in investing activities for the year ended March 31, 2023 was attributed to $0.4 million of fixed asset purchases, $0.7 million of purchases of equity securities, net of sales, which was slightly offset by $0.1 million of investment income.
Net cash used in investing activities for the year ended March 31, 2023 consisted of $0.7 million of purchases of equity securities, net of sales, and $0.4 million of fixed asset purchases, which was slightly offset by $0.1 million of investment income. Financing activities Net cash provided by financing activities was $1.4 million for the year ended March 31, 2024.
We expect our total operating expense for the fiscal year ending March 31, 2024 to be between $12.0 million and $14.0 million. Based on our current operating plan and available cash resources, we will need substantial additional funding to support future operating activities.
We expect our total operating expense for the fiscal year ending March 31, 2025 to be approximately $23.5 million. Based on our current operating plan and available cash resources, we will need substantial additional funding to support future operating activities.
As of March 31, 2023, we had total current assets of approximately $17.0 million and current liabilities of approximately $3.7 million, resulting in working capital of $13.3 million. At March 31, 2022, we had total current assets of approximately $29.5 million and current liabilities of approximately $1.4 million, resulting in working capital of $28.1 million.
At March 31, 2023, we had total current assets of approximately $17.0 million and current liabilities of approximately $3.7 million, resulting in working capital of $13.3 million.
Refer to “Operations funding requirements” below for further information regarding financing activities. 31 Operations funding requirements Through March 31, 2023, we have financed our operations primarily through the sale of common stock through public and ATM offerings, the private placement of equity securities, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, and from the sale of convertible notes.
Operations funding requirements Through March 31, 2024, we have financed our operations primarily through the sale of common stock through public and ATM offerings, the private placement of equity securities, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, and from the sale of convertible notes.
If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.
If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.
The following table sets forth a summary of the primary sources and uses of cash for the years ended March 31, 2023 and 2022 (in thousands): Year Ended March 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (12,408 ) $ (8,453 ) Investing activities (966 ) (409 ) Financing activities — 205 Net decrease in cash, cash equivalents, and restricted cash $ (13,374 ) $ (8,657 ) Operating activities Net cash used in operating activities was approximately $12.4 million and $8.5 million for the years ended March 31, 2023 and 2022, respectively.
The following table sets forth a summary of the primary sources and uses of cash for the years ended March 31, 2024 and 2023 (in thousands): Year Ended March 31, 2024 2023 Net cash (used in) provided by: Operating activities $ (14,653 ) $ (12,408 ) Investing activities 816 (966 ) Financing activities 1,437 — Net decrease in cash, cash equivalents, and restricted cash $ (12,400 ) $ (13,374 ) Operating activities Net cash used in operating activities was approximately $14.7 million and $12.4 million for the years ended March 31, 2024 and 2023, respectively.
On January 19, 2021, we filed a shelf registration statement on Form S-3 (File No. 333-252224) to register $150.0 million of common stock, preferred stock, debt securities, warrants and units, or any combination of the foregoing (the “2021 Shelf”) and a related prospectus.
On January 26, 2024, we filed a new shelf registration statement on Form S-3 (File No. 333-276722) to register $150.0 million of common stock, preferred stock, debt securities, warrants and units, or 35 any combination of the foregoing (the “2024 Shelf”).
Selling, General and Administrative Expenses The following table summarizes our selling, general and administrative expenses for the years ended March 31, 2023 and 2022 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2023 2022 $ % Selling, general and administrative $ 7,184 $ 7,794 $ (610 ) (8 %) Non-cash stock-based compensation 1,904 1,837 67 4 % Depreciation and amortization 128 28 100 357 % Total selling, general and administrative expenses $ 9,216 $ 9,659 $ (443 ) (5 %) Selling, general and administrative expenses decreased approximately $0.4 million, or 5%, from $9.7 million for the year ended March 31, 2022 to approximately $9.2 million for the year ended March 31, 2023.
Selling, General and Administrative Expenses The following table summarizes our selling, general and administrative expenses for the years ended March 31, 2024 and 2023 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2024 2023 $ % Selling, general and administrative $ 8,274 $ 7,184 $ 1,090 15 % Non-cash stock-based compensation 1,370 1,904 (534 ) (28 %) Depreciation and amortization 53 128 (75 ) (59 %) Total selling, general and administrative expenses $ 9,697 $ 9,216 $ 481 5 % Total selling, general and administrative expenses increased approximately $0.5 million, or 5%, from $9.2 million for the year ended March 31, 2023 to approximately $9.7 million for the year ended March 31, 2024.
Results of Operations Comparison of the Years Ended March 31, 2023 and 2022 The following table summarizes our results of operations for the years ended March 31, 2023 and 2022 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2023 2022 $ % Revenues $ 370 $ 1,500 $ (1,130 ) (75 %) Research and development $ 8,885 $ 3,320 $ 5,565 168 % Selling, general and administrative $ 9,216 $ 9,659 $ (443 ) (5 %) Other income $ 474 $ 33 $ 441 1,336 % Revenues We had $0.4 million of royalty revenue for the year ended March 31, 2023, compared to $1.5 million revenue for the year ended March 31, 2022.
Results of Operations Comparison of the Years Ended March 31, 2024 and 2023 The following table summarizes our results of operations for the years ended March 31, 2024 and 2023 (in thousands, except percentages): Year Ended March 31, Increase (decrease) 2024 2023 $ % Revenues $ 109 $ 370 $ (261 ) (71 %) Research and development $ 5,498 $ 8,885 $ (3,387 ) (38 %) Selling, general and administrative $ 9,697 $ 9,216 $ 481 5 % Other income $ 417 $ 474 $ (57 ) (12 %) Revenues We had $0.1 million of royalty revenue for the year ended March 31, 2024, compared to $0.4 million of royalty revenue for the year ended March 31, 2023.
In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. 29 Differences in the allocation of the transaction price between delivered and undelivered performance obligations can impact the timing of revenue recognition but do not change the total revenue recognized under any agreement.
Differences in the allocation of the transaction price between delivered and undelivered performance obligations can impact the timing of revenue recognition but do not change the total revenue recognized under any agreement.
We previously had an effective shelf registration statement on Form S-3 (File No. 333-222929) (the “2018 Shelf”) that registered $100.0 million of common stock, preferred stock, warrants and units, or any combination of the foregoing, that was set to expire on February 22, 2021.
We previously had an effective shelf registration statement on Form S-3 (File No. 333-252224), declared effective by the SEC on January 29, 2021 (the “2021 Shelf”), which registered $150.0 million of common stock, preferred stock, warrants and units, or any combination of the foregoing, that expired on January 29, 2024.
Except as required by applicable law we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. Overview We are a biotechnology company that is focusing on building high fidelity, 3D tissues that recapitulate key aspects of human disease.
Except as required by applicable law we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.
Of the $5.2 million in lab and research expenses, $4.0 million relates to acquired in-process research and development ("IPR&D") of Metacrine's FXR program, related research data, and IP.
Of the $4.1 million decrease in lab and research expenses, $4.0 million related to acquired in-process research and development (“IPR&D”) of Metacrine's FXR program, related research data, and IP in the year ended March 31, 2023.
In line with these plans, we are building upon both our external and in-house scientific expertise, which will be essential to our drug development effort. We use our proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease.
In line with these plans, we are building upon both our external and in house scientific expertise, which will be essential to our drug development effort.
Research and development activities consisted of $2.4 million in personnel related costs, $5.2 million in lab and research expenses, $1.0 million in facility costs, and $0.3 million in consulting fees, depreciation, and other miscellaneous expenses.
The decrease in total research and development activities consisted of a $4.1 million decrease in lab and research expenses, which was offset by a $0.4 million increase in consulting costs, a $0.2 million increase in personnel related costs, and a $0.1 million increase in facilities costs and depreciation.
Any shares offered and sold are issued pursuant to our 2021 Shelf. During the year ended March 31, 2023, we sold no shares of common stock in ATM offerings. As of March 31, 2023, we have sold an aggregate of 1,580,862 shares of common stock in ATM offerings under the ATM Prospectus Supplement, for gross proceeds of approximately $21.7 million.
As of March 31, 2024, we have sold an aggregate of 2,753,204 shares of common stock in ATM offerings under the 2021 ATM Prospectus Supplement and 2024 ATM Prospectus, for gross proceeds of approximately $23.2 million.
The $3.8 million increase in operating cash usage, for the year ended March 31, 2023, can be attributed primarily to an increase in our research and development activities. Operating cash usage includes $2.0 million of cash outflows for acquired IPR&D of Metacrine's FXR drug compound, related research data, and IP.
The $2.3 million increase in operating cash usage, for the year ended March 31, 2024, was attributable primarily to the $2.0 million cash payment in fiscal 2024 for acquired IPR&D, in addition to an increase in our research and development activities. Investing activities Net cash provided by investing activities was $0.8 million for the year ended March 31, 2024.
In our work to identify the areas of interest, we evaluate areas that might be better served with 3D disease models than currently available models as well as the commercial opportunity. We hold a large and diverse patent portfolio related to our bioprinting platform and complementary 3D technologies.
We expect to broaden our work into additional therapeutic areas over time and are currently exploring specific tissues for development. In our work to identify the areas of interest, we evaluate areas that might be better served with 3D disease models than currently available models as well as the potential commercial opportunity.
The $1.5 million of royalty revenue for the year ended March 31, 2022 was an upfront payment related to the licensing of certain intellectual property (“IP”). The $0.4 million of royalty revenue for the year ended March 31, 2023, was related to the sales-based royalty revenue earned from the aforementioned licensing of IP.
Royalty revenue for each of the years ended March 31, 2024 and 2023, was related to the sales-based royalty revenue earned from the aforementioned licensing of IP.
Key factors considered in the estimate include sales of products that include the underlying licensed IP and the location of customers related to the jurisdictions of the licensed IP.
Key factors considered in the estimate include sales of products that include the underlying licensed intellectual property (“IP”) and the location of customers related to the jurisdictions of the licensed IP. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.
As of March 31, 2023, there was approximately $100.0 million available in future offerings under the 2021 Shelf, and approximately $28.3 million available for future offerings through our ATM program under the ATM Prospectus Supplement. Having insufficient funds may require us to relinquish rights to our technology on less favorable terms than we would otherwise choose.
As of March 31, 2024, there was approximately $100.0 million available in future offerings under the 2024 Shelf, and approximately $2.6 million available for future offerings through our ATM program under the 2024 ATM Prospectus.
As of March 31, 2022, we had cash and cash equivalents of $28.7 million and an accumulated deficit of $307.7 million. We had negative cash flows from operations of $12.4 million and $8.5 million for the years ended March 31, 2023 and 2022, respectively.
We had negative cash flows from operations of $14.7 million and $12.4 million for the years ended March 31, 2024 and 2023, respectively. As of 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.
Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) Our current understanding of intestinal tissue models and IBD models leads us to believe that we can create models that provide greater insight into the biology of these diseases than are generally currently available.
Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) Our advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures. Using these disease models, we intend to identify and validate novel therapeutic targets.
Financial Condition, Liquidity and Capital Resources Going forward, we intend to leverage our proprietary technology platform to develop therapeutic drugs. Our initial plan is to focus on IBD, including CD and UC with a goal of broadening our work into additional therapeutic areas over time.
Additionally, we plan to leverage our proprietary technology platform to develop therapeutic drugs, focusing on IBD, including CD and UC, with a goal of broadening our work into additional therapeutic areas over time. 34 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.
Critical Accounting Policies, Estimates, and Judgments Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
The closing of the Offering occurred on May 13, 2024. We received net proceeds of approximately $4.7 million from the Offering, after deducting the estimated offering expenses payable by us, including the Placement Agent fees. Critical Accounting Policies, Estimates, and Judgments Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
For the year ended March 31, 2022, we had an average of four full-time employees, which 30 increased to an average of five full-time employees for the year ended March 31, 2023.
Our full-time selling, general, and administrative employees decreased from an average of five employees for the year ended March 31, 2023 to an average of four employees for the year ended March 31, 2024. Other Income (Expense) Other income was $0.4 million and $0.5 million for the years ended March 31, 2024 and 2023, respectively.
The net cash used in investing activities for the year ended March 31, 2022 was related to the purchase of fixed assets. Financing activities Net cash provided by financing activities was zero and $0.2 million for the years ended March 31, 2023 and 2022, respectively.
Net cash provided by investing activities for the year ended March 31, 2024 consisted of the liquidation of equity securities of $0.7 million and $0.1 million of investment income.
FXR agonism has been tested in a variety of preclinical models of IBD. The acquired program contains two clinically tested compounds and over 2,000 discovery or preclinical compounds. We expect to broaden our work into additional therapeutic areas over time and are currently exploring specific tissues for development.
FXR agonism has been tested in a variety of preclinical models of IBD. FXR314 is the lead compound in our established FXR program containing two clinically tested compounds (including FXR314) and over 2,000 discovery or preclinical compounds. FXR314 is a drug with safety and tolerability after daily oral dosing in Phase 1 and Phase 2 trials.
We use these models to identify gene targets responsible for driving the disease and intend to initiate drug discovery programs around these validated targets. We are initially focusing on the intestine and have ongoing 3D tissue development efforts in ulcerative colitis (“UC”) and Crohn’s disease (“CD”). We intend to add additional tissues/diseases/targets to our portfolio over time.
As with the clinical development program, we are initially focusing on the intestine and have ongoing 3D tissue development efforts in human tissue models of UC and CD. We use these models to identify new molecular targets responsible for driving the disease and to explore the mechanism of action of known drugs including FXR314 and related molecules.
Our advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures. Management believes these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas. Our NovoGen Bioprinters ® are automated devices that enable the fabrication of 3D living tissues comprised of mammalian cells.
We use our proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease. We believe these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas.
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. As of March 31, 2023, we had cash and cash equivalents of approximately $15.3 million and an accumulated deficit of $325.0 million.
As of March 31, 2024, we had cash and cash equivalents of approximately $2.9 million and an accumulated deficit of $339.7 million. As of March 31, 2023, we had cash and cash equivalents of $15.3 million and an accumulated deficit of $325.0 million.
Removed
We believe that the use of our bioprinting platform as well as complementary 3D technologies will allow us to develop an understanding of disease biology that leads to validated novel drug targets, and therapeutics to those targets to treat disease. The majority of our current focus is on inflammatory bowel disease (“IBD”), including CD and UC.
Added
Overview We are a clinical stage biotechnology company that is focused on developing FXR314 in inflammatory bowel disease (“IBD”), including ulcerative colitis (“UC”), based on demonstration of clinical promise in three-dimensional (“3D”) human tissues as well as strong preclinical data. FXR is a mediator of gastrointestinal and liver diseases.
Removed
We may also form partnerships around the development of targets or therapeutics for the treatment of IBD. In March of 2023, we entered into and closed an asset purchase agreement with Metacrine, Inc to acquire their farnesoid X receptor ("FXR") program. FXR is a mediator of GI and liver diseases.
Added
Further, FXR314 has FDA clinical trial authorization for a Phase 2 trial in UC. Our current clinical focus is in advancing FXR314 in IBD, including UC and Crohn’s disease (“CD”). We plan to start a Phase 2a clinical trial in UC in the calendar year 2024.
Removed
The strength of this patent portfolio, the fact that it was created early in the bioprinting revolution and growth in the bioprinting industry have made for an attractive business opportunity for us. We are now beginning to invest resources to explore and expand business and revenue opportunities from the leveraging of our patent portfolio.
Added
We released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis ("MASH") in April 2024 that are supportive of ongoing development, and we believe FXR314 has a commercial opportunity in MASH, most likely in combination therapy.
Removed
Overall, the decrease year over year is due to a significant decrease in general corporate costs, most notably legal costs, as we were involved in litigation in fiscal 2022 which was resolved by the end of fiscal 2022.
Added
We are exploring the potential for combination therapies using FXR314 and currently approved mechanisms in preclinical animal studies and our IBD disease models. Our second focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease.
Removed
Year over year, we had an increase in personnel related costs of approximately $0.4 million, an increase in consulting costs of approximately $0.3 million, an increase in depreciation and amortization of approximately $0.1 million.
Added
We intend to initiate drug discovery programs around these new validated targets to identify drug candidates for partnering and/or internal clinical development. Our current understanding of intestinal tissue models and IBD disease models leads us to believe that we can create models that provide greater insight into the biology of these diseases than are generally currently available.
Removed
These increases were offset by a $1.2 million decrease in general corporate costs, mostly attributable to a decrease in legal costs related to litigation regarding patent enforcement that occurred and ended in fiscal 2022. Other Income (Expense) Other income was $0.5 million and less than $0.1 million for the years ended March 31, 2023 and March 31, 2022, respectively.
Added
Recent Developments Mosaic Cell Sciences Division 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.
Removed
For the year ended March 31, 2023, interest income was approximately $0.5 million, due to higher interest rates compared to prior years. For the year ended March 31, 2022, other income consisted of a sale of a bioprinter asset to an academic research institution as well as interest income.
Added
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.
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Investing activities Net cash used in investing activities was $1.0 million and $0.4 million for the years ended March 31, 2023 and 2022, respectively.
Added
We intend for Mosaic to provide us 31 with qualified human cells for use in our clinical research and development programs.
Removed
The net cash provided for the year ended March 31, 2022, was primarily driven by at-the-market ("ATM") share offerings.
Added
In addition to supplying us with primary human cells, we intend for Mosaic to offer 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.
Removed
Failure to obtain adequate financing could adversely affect our operations. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result.
Added
Best Efforts Public Offering 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.
Removed
As of March 31, 2023, we had 8,716,906 total issued and outstanding shares of common stock. On October 12, 2022, our stockholders and the Board of Directors ("Board") approved the 2022 Plan, and it became effective on that date. The 2022 Plan replaced the 2012 Plan on the effective date.
Added
In connection with the Offering, we entered into Securities Purchase Agreements with the purchasers of the securities in the Offering on May 8, 2024. The per share exercise price for the Pre-Funded Warrants is $0.001, subject to adjustment as provided therein. The Pre-Funded Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire when exercised in full.
Removed
Upon the effective date, we ceased granting awards under the 2012 Plan and any shares remaining available for future issuance under the 2012 Plan were cancelled and are no longer available for future issuance. The 2012 Plan continues to govern awards previously granted under it.
Added
The holders may exercise the Pre-Funded Warrants by means of a “cashless exercise.” The per share exercise price for the Common Warrants is $0.80, subject to adjustment as provided therein. The Common Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the date that is five years following the original issuance date.
Removed
At the time the Board approved the 2022 Plan, an aggregate of 1,363,000 shares of our common stock was initially reserved for issuance under the 2022 Plan.
Added
If a registration statement covering the issuance of the shares of common stock issuable upon exercise of the Common Warrants is not available for the issuance, then the holders may exercise the Common Warrants by means of a “cashless exercise.” In connection with the Offering, we paid JonesTrading Institutional Services LLC, which acted as the placement agent in connection with the Offering, a cash fee of 5.0% of the aggregate gross proceeds raised in the Offering.
Removed
We committed to reducing the new 2022 Plan share reserve by the number of shares that were granted under the 2012 Plan and the Inducement Plan between July 25, 2022 and October 12, 2022. From July 25, 2022 to October 12, 2022, we issued 126,262 shares of common stock under the 2012 Plan.
Added
The increase year over year relates to increases in legal and other corporate expenses, including a $0.7 million increase in investor relations expenses and a $0.2 million increase in legal costs, offset by a $0.4 million decrease in personnel related costs.
Removed
As a result, the number of shares reserved for future issuance under the 2022 Plan is 1,236,738 shares of common stock as of March 31, 2023.
Added
Other income primarily consisted of interest income in both years. Financial Condition, Liquidity and Capital Resources Going forward, we intend to focus on clinical drug development of FXR314, the lead compound in our established FXR program. Our current clinical focus is in advancing FXR314 in IBD, including UC and CD.
Removed
We also committed to reducing the aggregate number of shares of common stock issuable pursuant to the Inducement Plan from 750,000 shares to 51,000 shares (which includes 50,000 shares of its common stock issuable pursuant to an outstanding option to purchase common stock with an exercise price of $2.75 per share, leaving only 1,000 shares available for future issuance under the Inducement Plan) and the share reserve was reduced effective October 12, 2022.
Added
We plan to start a Phase 2 clinical trial in UC in the calendar year 2024. We released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis (“MASH”) in April 2024 that is supportive of ongoing development, and we believe FXR314 has a commercial opportunity in MASH, most likely in combination therapy.
Removed
The 2022 Plan provides for the issuance of up to 1,236,738 shares of our common stock, of which 1,071,471 shares remain available for issuance as of March 31, 2023, to executive officers, directors, advisory board members, employees and consultants.
Added
Financing activities consisted of the sale of common stock through at-the-market (“ATM”) share offerings. There were no financing activities for the year ended March 31, 2023. Refer to “Operations funding requirements” below for further information regarding financing activities.
Removed
The 2012 Plan, as amended, provided for the issuance of up to 2,327,699 shares of our common stock, of which no shares remain available for issuance as of March 31, 2023. Additionally, 75,000 shares of common stock have been reserved for issuance under the ESPP, of which 58,426 shares remain available for future issuance as of March 31, 2023.
Added
Any shares offered and sold were issued pursuant to our 2021 Shelf until it was replaced by the 2024 Shelf.
Removed
Finally, 51,000 shares of common stock have been reserved for issuances under our Inducement Plan, of which 1,000 remain available for future issuance as of March 31, 2023.
Added
On January 26, 2024, we filed a prospectus to the 2024 Shelf (the “2024 ATM Prospectus”), pursuant to which we may offer and sell, from time to time, through the Agents, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $2,605,728.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDue to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure. We have limited foreign currency risk exposure as our business operates primarily in U.S. dollars. We do not have significant foreign currency nor any other derivative financial instruments. 33
Biggest changeDue to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure. We have limited foreign currency risk exposure as our business operates primarily in U.S. dollars. We do not have significant foreign currency nor any other derivative financial instruments. 36

Other VIVS 10-K year-over-year comparisons