What do 3D printers, face cream, and the stock market have in common? Today, all three seemingly diverse topics are converging to illustrate the potential of one of my longer term investments. Organovo (ONVO), a company that 3D prints human tissues, is trading up about 10% today on news of an agreement with L’Oreal USA.
So far, Organovo has shown success bio printing human liver tissue that can actually mimic the behavior of a liver sitting in your body. Organovo can then sell the tissue for testing, or sell its services to a pharmaceutical company to outsource the testing process of a new drug. Considering that liver complication is one of the major reasons new drugs fail testing, the ability to test human livers before the drug gets to human trial could be a very profitable proposition.
And now Organovo is expanding to a new body part: skin. The company just announced a Research Collaboration Agreement with one of the world’s largest skincare companies, L’Oréal USA Products, Inc. Essentially, Organovo and L’Oreal will team up to test skincare products on printed human skin tissue.
The agreement will be broken into three research phases, and L’Oreal has the right to terminate the agreement at the end of each phase. The phases are ‘development,’ ‘validation,’ and ‘commercial supply.’ L’Oreal will fund the first two phases, and Organovo will get paid once the partnership reaches the commercial supply phase.
L’Oréal will get exclusive rights to the skin tissue that the two companies develop, if it’s being used for skincare products. Organovo keeps the right to the skin tissue if it’s used for testing of prescriptions drugs or other medical uses.
I’ve been an investor in Organovo for a while now. I’ve long believed that biomedical applications showed the most exciting, and meaningful, potential for 3D printing. I will admit though, I’ve been doubting my investment as Organovo has steadily declined over the past few months. But with my new conviction for long term investments, I’ve begrudgingly stayed put.
The news of this new partnership has me optimistic about the stock yet again. The partnership with a major company shows an appetite for Organovo’s service among big companies, who are the most likely to pay big money for it.
Even more so though, I’m happy about Organovo’s commitment to expansion. It’s never a good idea to bet on a one trick pony, as Organovo might have been had it stuck only to liver testing. This partnership with L’Oreal shows the potential for Organovo’s expansion into numerous arenas – cosmetics, pharmaceuticals, and even medical applications like skin grafts and hair transplants.
I’m thinking of buying more shares while the company is still trading down overall. That said, Organovo makes no profit and is the riskiest stock in my portfolio. If you’re thinking of investing in the company, make sure you do plenty of research, consider your tolerance for risk, and are willing to invest for a long time period.