How to Play Organovo (NYSE: ONVO) Stock After Earnings

Organovo Holdings Inc. (NYSE: ONVO) stock is up 12.7% this week after the company reported quarterly and fiscal-year earnings on Tuesday.

ONVO stockFor the quarter ending March 31, ONVO reported an earnings per share (EPS) loss of $0.10. That was below the consensus estimate of a $0.09 loss.

Revenue for the company is still very small, but it's growing. For the full year 2015, Organovo reported $600,000 in revenue. That was a 50% increase from FY 2014.

The market liked ONVO's earnings. Shares climbed as high as $5.69 today (Thursday). ONVO has now climbed 60% since April 1.

Despite the earnings miss and small revenue stream, ONVO stock remains one of our favorite biotech stocks to buy. You see, the technology the company is developing is revolutionary...

Why ONVO Stock Is Climbing this Week

Organovo focuses on 3D bioprinting, one of the most exciting biotech industries on the market.

Bioprinting refers to Organovo's process of developing functional human tissues that are used in drug development, biological research, and as therapeutic implants for degenerating tissues and organs.

"Organovo makes the tissue with an exciting new technology called 3D Bioprinting, which identifies key architectural and compositional elements of a target tissue," Money Morning Biotech Investing Specialist Ernie Tremblay said. "It then creates a design that can be utilized by a 'bioprinter' to generate that tissue in the laboratory."

The company's biggest product is the exVive3D Human Liver Tissue. This functional liver tissue created with a 3D bioprinter remains fully functional for at least 40 days. It is used mainly in preclinical safety testing.

In the earnings release, company officials announced that it has received roughly $1.94 million in contract bookings for the tissue since April 2014. Organovo also said its customers include some of the world's top 25 pharmaceutical companies.

This bioprinting technology allows doctors and researchers to provide "personalized medicine" to their patients. Instead of a "one-size-fits-all" treatment for thousands of patients, these work differently for every patient based on his or her needs.

"Personalized medicine could provide real-life 'magic bullets' for diseases like cancer, multiple sclerosis, lupus, and inflammatory bowel disease (Crohn's and ulcerative colitis)," he continued.

And the applications stretch far beyond diseases.

"This field also holds the promise of miraculous treatments for severe spinal injuries, joint and bone repair, and organ replacement," Tremblay said.

There is some serious money flowing into personalized medicine, too. According to the Alliance of Regenerative and Personalized Medicine, cell therapies have already generated $900 million in revenue. At the end of 2014, more than 160,000 patients had received treatment.

It's still a new field, but ONVO is at the forefront. According to the company, it has developed the world's first commercial 3D bioprinting technology platforms. The liver tissue it develops is the first in the world of its kind.

Organovo already has some major partners...

Why We Recommend ONVO Stock in 2015

Organovo has agreements with numerous institutes and private companies like the United Therapeutics Corporation, the Knight Cancer Institute, and the Michael J. Fox Foundation, among others.

ONVO stock's low price is another reason we recommend it. Even after climbing 50% in the last two months, the stock still trades near $5.50 per share. That means ONVO stock still has plenty of upside.

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The larger companies in this field have already seen tremendous growth. Biogen Idec Inc. (Nasdaq: BIIB) and Amgen Inc. (Nasdaq: AMGN) are two of the biggest names in the field, but their upside is limited. They've both already climbed 753% and 192% in the last five years respectively.

Organovo is still small, with a market cap just over $400 million. It's a development-stage company, so it does come with a little bit more risk. But again, the upside is huge.

"The possibilities for using this company's products in both medical research and in clinical applications represent limitless income potential - and, I believe, an extraordinary opportunity for the long-term investor," Tremblay said.

The Bottom Line: ONVO stock is up again this week after the company updated shareholders on the exciting potential 3D bioprinted liver tissue. It's one of our favorite biotech plays right now, because it's at the forefront of this revolutionary field.

Follow me on Twitter @KyleAndersonMM.

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