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Organovo Investor Presentation November 2015 Forward-Looking Statements This presentation contains statements about future events and expectations known as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has based these forwardlooking statements on its current expectations and the information currently available to it, but any forward-looking statements are subject to a number of risks and uncertainties. The factors that could cause the Company’s actual future results to differ materially from its current expectations include, but are not limited to, risks and uncertainties relating to the Company's ability to develop, market and sell products and services based on its technology; the expected benefits and efficacy of the Company's products, services and technology; the market acceptance of the Company’s products and services; the Company’s ability to generate revenue and control its operating losses; the validity of the Company’s intellectual property rights and the ability to protect those rights; and the Company's ability to implement and achieve its business, research, product development, regulatory approval, marketing and distribution plans and strategies. These and other factors are identified and described in more detail in the Company’s filings with the Securities and Exchange Commission (“the SEC”), including those factors listed under the caption "Risk Factors" in the Company’s Form 10-K for the year ended March 31, 2015, filed with the SEC on June 9, 2015, as well as other filings Organovo makes with the SEC from time to time. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events. 1 Supplemental Financial Measures In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company provides net cash utilization as a supplemental measure to help investors evaluate the Company’s fundamental operational performance. The Company defines net cash utilization as the change in the amount of cash and cash equivalents at the beginning of the reporting period as compared to the end of the reporting period, excluding financing activities (which would include proceeds from the sale of common stock and the exercise of warrants and stock options). Net cash utilization is an operational measure that should be considered in addition to the Company’s results prepared in accordance with U.S. GAAP. This operational measure should not be considered as a substitute for, or superior to, U.S. GAAP results. The Company believes net cash utilization is a relevant and useful operational measure because it provides information regarding its cash utilization rate. Management uses net cash utilization to manage the business, including in preparing its annual operating budget, financial projections and compensation plans. The Company believes that net cash utilization is also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in a similar stage of product development and commercialization. However, there is no standardized measurement of net cash utilization, and net cash utilization as the Company presents it may not be comparable with similarly titled operational measures used by other companies. Due to these limitations, investors should not view net cash utilization in isolation, but should also consider other measurements, such as cash used in operating activities and revenues, to evaluate the Company’s operating performance. 2 Investment & Business Highlights Organovo – A Bright Future 4 Investment Highlights Attractive and growing markets – Critical unmet needs Favorable competitive dynamics – First mover advantage Technology leadership – Strong IP portfolio Growing revenue – Building product and service platform 5 Organovo Overview • Founded in 2007 and listed on • • • the NYSE MKT in 2013 Proprietary 3D bioprinting technology invented at University of Missouri with $5 million NSF grant; continued engineering development at Organovo Core business focused on recreating 100% cellular native tissue architecture for in vitro and in vivo applications Key customers/partners include major pharma and academic institutions 201 2 6 Addressing the Gaps in Pharmaceutical Discovery Human 3D toxicity / efficacy models Program Costs -> $$ $$ $$$ $$$$ Target Discovery Target Validation Lead Optimization Pre-Clinical non-GLP Pre-Clinical GLP In vitro Gap $ $$$$$ 10-12 Years, ~$1.2 billion Clinical Trials In vivo Human 3D disease models • • • • Enable better predictive, physiologically relevant in vitro modeling Fill the gap between in vitro and in vivo preclinical research De-risk total discovery program costs by enabling decision points further upstream Potential to avoid ~$1 billion in development costs and timeline delays for a single drug with better information about which drugs to advance (efficacy, toxicology) • Provide disease modeling applications across the pre-clinical drug discovery workflow 7 Critical Unmet Need for More Predictive Preclinical Tissue Models • In 2012, there were 10 late stage • • clinical trial failures resulting in $7 billion-$10 billion in wasted costs Of 126 phase 3 clinical trial failures from 1990-2010, 73% were for either toxicity or lack of efficacy Of 39 drugs withdrawn from the market from 1990-2010, 26% involved hepatotoxicity and 33% were CV toxicity PHASE 3 FAILURES (1990-2010) N=126 Other, 27% Safety/ Toxicity, 28% Lack of Efficacy, 45% DRUGS WITHDRAWN DUE TO TOXICITY (1990-2010) N=39 Other, 41% Hepatoxicity, 26% CV Toxicity, 33% References: FDA.gov; Pharmaceutical Research Manufacturers of America Profile (2011); EvaluatePharma; Parexel Sourcebook (2012); CDER Report to Nation; Tufts Center for Drug Discovery 8 Critical Unmet Need for Tissues that Replace or Repair Organ Function • Engineered tissues offer an • (1) U.S. Transplants 1991 – 2013(1) answer to dramatic supply issues that are a constant challenge in transplant medicine ($7 billion U.S. transplantation market) Tissue engineered organ and tissue replacements could address issues associated with conventional transplantation (graft vs. host disease, size mismatch) U.S. Department Health & Human Services 9 Favorable Markets & Competitive Dynamics Market Liver Land Toxicology M2M Kidney Toxicology Size(1) • $1.3 billion • 6,500 annual programs • $2.1 billion • 6,500 annual programs • >$50 billion in annual Efficacy Models R&D; new drug ~$1.2 billion and 10-12 years Competition • Gaps in 2D and animal • Each program needs models • Unsatisfying Next Gen models project run every 9 months • Average contract is $150K • Gaps in 2D and animal models • Gaps in 2D and animal models • >100,000 U.S. patients on Therapeutic Tissues (1) (2) transplant waiting list • ~30,000 transplants annually Organovo Position & Growth Strategy(2) • N/A • Pricing superior to liver tissue • Average contract expected to be $250K • Enable discovery in areas with roadblocks • Royalty opportunity • Partner with academia • FDA clinical trials for marketed product Pharmaceutical Research Manufacturers of America Profile (2011) Company data and projections 10 NovoGen Bioprinting Process Superior predictive solution that recreates 3D native tissue architecture 11 Technology Leadership – Comparing In Vivo-Like Form & Function Spheroids Scaffold + Cells Micro-patterned cultures Organovo Bioprinted Tissue Tissue-like cellular density ✗ ✗ ✗ ✔ True 3D; >250m in x, y, and z axes ✔ ✔ ✗ ✔ Multiple tissue-specific cell types ✔ ✔ ✔ ✔ Spatially-controlled cell compartments ✗ ✗ ✔ ✔ In-vivo like tissue micro-architecture ✗ ✗ ✗ ✔ Reproducible; compatible with automated fabrication ✔ ✗ ✔ ✔ Easy-to-handle format ✗ ✔ ✔ ✔ 12 Strong IP Portfolio • Own or exclusively license 20 • • • patents worldwide; 80 patent applications pending Exclusive licenses to foundational patents with early priority dates from three major U.S. universities Patent filings relate to bioprinting technology and its various uses in tissue creation, use in drug discovery and specific tissue constructs Rich portfolio of trade secrets and “know how” 13 Best-In-Class Partners & Collaborators 14 Platform Technology – Growth Opportunities Tissue Research Programs Liver Preclinical Safety (Product/Service) ✔ (Launched C4Q14) Efficacy Models (Partnerships) Simple Tissues for Therapy (Clinical) ✔ ✔ ✔ ✔ ✔ ✔ Lung Kidney ✔ (Expected launch C3Q16) ✔ Cancer Bone Skin ✔ ✔ ✔ ✔ Blood Vessel Heart ✔ ✔ ✔ ✔ ✔ ✔ Key Focus Areas 15 exVive3DTM Liver Tissue - Excellent Matching of Human Liver Biology System Liver Enzymes Longevity Cholesterol 2D hepatocytes Poorly conserved 2 days No exVive3D Liver Well conserved 42 days+ Yes System Troglitazone(1) Toxic (X)(2) Methotrexate 2D hepatocytes No toxicity seen No toxicity seen No fibrosis seen Rat models No toxicity seen No toxicity seen No fibrosis seen Human results Toxic Toxic Chronic fibrosis exVive3D Liver Toxic Toxic Chronic fibrosis Pfizer paid $750 million in legal costs and $150 million to remove drug from market (1) FDA Final Report (2000): Executive Summary, Liver Failure Risk with Troglitazone (Rezulin) (2) Partnership with Roche; proof of concept study with known DILI drug 16 exVive3D Liver Tissue – Proof of Concept Demonstrated to reveal toxicity • 7-day daily dosing • With known drug-induced liver • injury (DILI) drug and close analogue Compared biochemical markers, gene expression, cytokines, histology N=10 per group * = p< 0.05 ** = p< 0.01 *** = p< 0.001 **** = p< 0.0001 One way ANOVA Grubbs outlier analysis 17 exVive3D Kidney Tissue Development Pricing expected to be superior to liver tissue; no existing alternatives • • • • Scientific proof of concept – April 2015 ✔ Functional validation – October 2015 ✔ Beta testing – C2Q16 Initiation of contracting – C3Q16 18 Platform Technology – Growth Opportunities Tissue Research Programs Liver Preclinical Safety (Product/Service) ✔ (Launched C4Q14) Efficacy Models (Partnerships) Simple Tissues for Therapy (Clinical) ✔ ✔ ✔ ✔ ✔ ✔ Lung Kidney ✔ (Expected launch C3Q16) ✔ Cancer Bone Skin ✔ ✔ ✔ ✔ Blood Vessel Heart ✔ ✔ ✔ ✔ ✔ ✔ Key Focus Areas 19 Efficacy Models – Highlights Royalty and licensing opportunities for successful drugs • A new drug costs ~$1.2 billion and takes • • • 10-12 years to develop(1) Significantly impact cost, predictability and speed of drug discovery High failure rates in clinical trials due to failure to predict efficacy Many areas where animal models are known to be poor predictors – “The use of animal models for therapeutic development and target validation is time consuming, costly and may not accurately predict efficacy in humans.”(2) (1) (2) U.S. Department of Health & Human Services Dr. Francis Collins, Director of the National Institutes of Health 20 Efficacy Models – L’Oreal 3D skin model partnership with world leader in cosmetics • ~$30 billion annual sales; $1.1 billion • • • R&D budget in 2014 Second-stage contract; first contract in 2013 to prototype 3D skin models Multiple potential revenue sources – commercial supplier for bioprinted skin tissue, co-marketing skin model, royalty opportunity on cosmetic products tested in 3D skin model Toxicology testing with skin tissues 21 Efficacy Models – Cancer Opportunity Move upstream in discovery efforts with strong royalty opportunity • Premier academic and industry • • • • partnerships Breast cancer initial model already established – bioprinted with defined multi-cellular composition and architecture Clear differential outcomes vs. 2D cultures Multiple solid tumor types under investigation Active business development pipeline in oncology 22 Efficacy Models – Liver Tissue exVive3D Liver Tissue can also be leveraged for drug discovery efforts • Recent positive data from The Hamner • • Institutes showing robust liver fibrosis model validation Non-alcoholic steatohepatitis (NASH/fatty liver disease) is a significant area of current research in pharma drug discovery Cholesterol is not seen in other models and one can potentially modify its expression with high specificity Healthy ExVive 3D Liver Tissue Fibrotic ExVive 3D Liver Tissue After TGF-B Exposure 23 Platform Technology – Growth Opportunities Tissue Research Programs Liver Preclinical Safety (Product/Service) ✔ (Launched C4Q14) Efficacy Models (Partnerships) Simple Tissues for Therapy (Clinical) ✔ ✔ ✔ ✔ ✔ ✔ Lung Kidney ✔ (Expected launch C3Q16) ✔ Cancer Bone Skin ✔ ✔ ✔ ✔ Blood Vessel Heart ✔ ✔ ✔ ✔ ✔ ✔ Key Focus Areas 24 Simple Tissue for Therapy Potential to revolutionize therapeutic applications – “Tissue-On-Demand” • Creating tissue replacement products for • • • • surgical implantation Critical unmet need with significant challenges Multiple tissue types (ex. liver patch) being evaluated – solid early results in animal models Early feedback from key constituents suggests focus on areas of high unmet clinical need where a tissue is the best hope for treatment Aiming for IND submission in at least one tissue in 3-4 years 25 Financial Overview Key Financial Metrics & FY16 Outlook Key Financial Metrics Product & Service Revenue Total Revenue Cash & Cash Equivalents F1H16 (9/30/15) ($M) $0.4 $0.6 $76.9 FY16 Outlook(1) (1) (2) Total Revenue Recognized From Previously Reported Contract Bookings(2) $1.2 million - $1.4 million Net Cash Utilization $32 million - $36 million Guidance speaks only as of the date it was originally provided (November 9, 2015). Inclusion of guidance herein should not be interpreted as a re-affirmation by Organovo of its guidance. Organovo undertakes no obligation to update its guidance after the date it was originally provided. In fiscal 2016, the Company expects to recognize between $1.2 million and $1.4 million of its approximately $2 million in contract bookings for its exVive3D Liver Tissue previously reported for the period from April 1, 2014 to June 9, 2015. 27 Revenue Recognition Summary Customer engagement and work planning (4-6 months) Completion of work (4-5 months for single stage contract) Revenue recognition (8-11 months after initial customer contact) 28 Accelerating Breakthrough Research… Attractive and growing markets – Critical unmet needs Favorable competitive dynamics – First mover advantage Technology leadership – Strong IP portfolio Growing revenue – Building product and service platform 29 Organovo Investor Presentation November 2015 Appendix What Is Bioprinting? • The automated fabrication of a tissue through the spatially-controlled deposition of cells and/or cellcontaining materials in defined, usercontrolled geometric patterns, wherein the resulting multi-cellular tissue is viable, three-dimensional and mimics key aspects of native tissue architecture and/or function • Our finished tissues are scaffold-free, comprised only of relevant tissue cell types and the extracellular matrix the cells produce 32