BTIG starts Organovo at buy

BTIG initiated coverage of Organovo Holdings (NASDAQ:ONVO) with a “buy” rating and $5 price target. The stock closed at $3.69 on Dec. 14.

Organovo uses 3D printing and “bio-ink” to create 3D tissue structures without scaffolding. The cells form layers and more closely function like real human tissue than traditional cells in a dish. The company plans to use the product in three markets: preclinical testing, drug development, and as an implant.

“We believe that Organovo is a long-term investment with multiple opportunities, that the markets for liver and kidney tissues in preclinical testing are $3.7-billion on their own, that the use of tissues for drug discovery could lead to royalty payments, and that the potential market for therapeutic tissues would lead to significant upside from the current stock price and is essentially a call option,” writes analyst Dr. Sean Lavin.

“While we see many positives, 3D tissue printing and use in drug discovery is entirely new and we admit we have little to go on in predicting the rate at which pharma will adopt this technology,” he added.

Dr. Lavin said that printing tissue for therapeutic uses has the potential to change the transplant market.

“The company is very early in development, having recently presented promising data on liver tissue in animal models, but we believe that over time and, if successful, there is a tremendous need for transplant alternatives,” he said.

Printing a new heart is not a current reality, however, printing small segments or patches of tissues, such as liver, kidney, and vascular might be initial possibilities, he added.