Market Overview

Organova Holdings - Will the Run Continue?


Investors may have missed the boat looking for candidates for the “January Effect.” Organova Holdings (NYSE: ONVO) shares are trading 14% higher on Friday on 169% higher than normal volume and over 30% over the last five trading sessions.

In tandem is 3D Systems (NYSE: DDD) and Stratasys Ltd. (NASDAQ: SSYS) 160% and 68% moves, respectively. Also, The ExOne Co (NASDAQ: XONE) shares rising 158% since its IPO in February.

ONVO develops three-dimensional (3D) bioprinting technology for creating functional human tissues on demand for research and medical applications. In other words, the company is utilizing 3D technology to create human tissue that will advance drug research and development.

The drug industry, which has invested over $800 billion on drug research and development over the past decade, shows no signs of slowing down. In turn, only 252 new FDA approvals occurred during the same time period.

With researchers attempting to maximize every dollar spent on research by shortening the drug timeline and reduce spending on drugs destined to fail, ONVO's bio-printing technology may be what the doctor ordered.

The process will help by providing organ tissue that can used as part of the expensive polypharmacology process. With the release of 3-D liver tissue coming to market at the end of 2014, investors are anticipating positive results. Of course, they are also assuming the assays will be able to identify inferior drugs with liver toxicity before billions are spent on a flawed product.

If indeed the assays produce positive results, ONVO may move forward with plans to create assays for other vital organs, such as the heart and kidneys. This would in turn provide more revenue streams for the company.

Keep in mind, ONVO will end the year up over 300% (11.30 close). Therefore, any disappointments on the development front may have a devastating impact on the share price. Along these lines, a negative Seeking Alpha article that questioned the company's revenue potential ignited nearly a 50% rout during only three trading sessions back in November.

However, if there is one thing investors should have learned from 2013, is is that momentum is king (NFLX, TSLA, GOOG). Once an issue gets moving in one direction, it is nearly impossible to stop it. And it is hard for anyone to argue that that ONVO does not have momentum on its side heading into 2014.

Posted in: Technicals Movers & Shakers Intraday Update Trading Ideas General

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Mid-Afternoon Market Update: Markets Look to Close in the Green for the Last Session of 2013