NEW YORK (TheStreet) -- Shares of Organovo Holdings (ONVO) were slipping, sharply lower by 15.49% to $4.38 in early market trading Thursday, after the company priced its public offering of common stock this morning.
The medical research device maker announced that it priced 9.425 million shares of its common stock at $4.25 per share.
Organovo has also granted the underwriters a 30-day option to buy an additional 1,413,750 shares of common stock on the same terms and conditions.
The proceeds from the offering are expected to total about $40.1 million before deducting discounts, commissions, and other expenses.
The company expects the offering to close on June 23.
Organovo is a development-stage company focused on developing and commercializing functional human tissues.
Its models can be used in drug discovery and development, biological research, and as therapeutic implants for the treatment of damaged or degenerating tissues and organs.
Separately, TheStreet Ratings team rates ORGANOVO HOLDINGS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ORGANOVO HOLDINGS INC (ONVO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ORGANOVO HOLDINGS INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ORGANOVO HOLDINGS INC reported poor results of -$0.38 versus -$0.35 in the prior year. For the next year, the market is expecting a contraction of 1.3% in earnings (-$0.39 versus -$0.38).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 20.3% when compared to the same quarter one year ago, dropping from -$6.48 million to -$7.80 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Biotechnology industry and the overall market, ORGANOVO HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to -$5.61 million or 3.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ONVO has underperformed the S&P 500 Index, declining 21.71% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: ONVO Ratings Report