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Organovo Tumbles On Secondary Announcement

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Organovo Tumbles On Secondary Announcement

The 3-D printing space has been on fire in 2013, everything with some exposure to the space has caught a bid as exuberance reached all time highs. In recent weeks the momentum for many of these names has begun to slow as fears of revenue generation and valuation made waves. One stock in particular has been exposed to the 3-D firestorm. Organovo (NYSE:ONVO) shares has become increasingly volatile as a number of contesting analyst commentary has plague the stock. Over the last month shares roared higher to $13 per share before tumbling back to $8 in just a matter of days. To put these numbers into context, know the company traded below $2 per share earlier in the year.

The company if you’re not familiar, is working on developing liver assay kits through the 3-D printing of functional human cells. Sounds like pretty crazy right? Well, the company has seen some success and the street is actively working to quantify the value of its future revenues. However, shares of the company were sent tumbling to the downside on Friday morning when it was announced the company had submitted the necessary paperwork for a secondary offering in recent weeks.

On November 27th at around 5 pm, Organovo filed an 8K with the SEC announcing that it had “entered into an Equity Distribution Agreement (the “Distribution Agreement”) with JMP Securities LLC (the “Sales Agent”). Pursuant to the Distribution Agreement, the Company may offer and sell up to 4,000,000 shares of its common stock (the “Shares”), from time to time through the Sales Agent.”

Investors sold the stock as a precautionary move of things to come. Equity dilution is never a great for shareholders, especially when the company has so praised its technology. You would think management would want to protect their own interest as well as shareholder interest should the technology prove effective. At the time of this writing shares of the company were lower by 6 percent to $8.62 per share.

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