Viscient will turn its attention to 3D bioprinting lung tissue for infectivity research to assist global efforts to combat SARS-CoV-2, the novel coronavirus that causes COVID-19Organovo failed to receive a majority of stockholder votes in favor of its merger, and 47 million shares cast votes against the Board’s recommendation to allow adjournment of the purported special meetingOrganovo did not follow SEC guidance in changing the location of its special meeting to hold the merger vote, therefore validity of the adjournment is in questionGiven world events and the need for unity and focus of efforts at this time, Keith Murphy, founder of Viscient Biosciences and Organovo, calls for pause in Organovo merger attempt
SAN DIEGO, March 31, 2020 /PRNewswire/ — Keith Murphy, founder and Chief Executive Officer of Viscient Biosciences (“Viscient”), today is calling for a pause in the merger attempt of Organovo Holdings, Inc (“Organovo”), after Organovo failed to receive enough votes to consummate the merger. Mr. Murphy also founded Organovo, was its former CEO and Chairman Emeritus, and has opposed the merger as a 1% stockholder of Organovo. Given the conditions of global pandemic and the opportunity for 3D bioprinting technology to assist in finding cures for COVID-19, Mr. Murphy is reaching out with a call to his former Board peers for a pause in the merger conflict.
Viscient is a biotherapeutics company focused on using 3D bioprinting technology to displace the use of animal models in pharma research and provide more accurate models of human disease.? Viscient foresees a world where drug costs can be reduced due to more accurate disease modeling which can accelerate drug discovery and preclinical research. Viscient achieved a breakthrough in December: finding the world’s first drug targets discovered using 3D bioprinted disease models. Viscient has validated several such targets using its proprietary liver fibrosis tissue that replicates non-alcoholic steatohepatitis (NASH, a serious form of fatty liver disease).
Mr. Murphy said, “When you can remove diseased cells from the human body and reproduce that disease in a dish, you can see the true biology and quickly find a therapy that will work in clinical trials.? Drugs found in animal models so often fail because of the species gap, but as we proved with our NASH liver work, important novel drug targets can be found using 3D bioprinting technology. We now are moving quickly to apply the same technology to create 3D human lung tissue to test potential COVID-19 therapies to accelerate development.”
Viscient, or a sister company to be funded and launched shortly using the same technology, will now use 3D bioprinting technology to create lung tissue to support viral infectivity research and search for an effective therapy against SARS-CoV-2, the novel coronavirus which causes COVID-19. Using the paradigm developed for liver as well as previous work in lung tissue, 3D bioprinted and other 3D tissue models made with lung cells,?including a patient’s own cells, are expected to be used as a “clinical trial in a dish,” helping test potential COVID-19 therapies quickly and with highly accurate biology. Previous research has already shown that 3D human lung tissue better models viral infectivity compared to regular cell culture.
Regarding the merger of Organovo and Tarveda Biosciences (“Tarveda”), it is Mr. Murphy’s strong opinion that Organovo’s notifications regarding the special meeting of stockholders failed to follow SEC guidance and that this failure calls into question the validity of the adjournment.1 Organovo changed the location of the meeting without proper notice to stockholders, causing documented stockholder confusion that is likely to have resulted in stockholders missing the opportunity to vote. However, in the midst of a global crisis, Mr. Murphy proposes that rather than clash over these matters at this time, both sides pause in the process and resume these matters later.
“It’s in no one’s interest to get into a legal battle at this time given the global pandemic we all are facing,” said Mr. Murphy, “Viscient has an opportunity to help speed potential therapies for the novel coronavirus to market. I’m calling on the Organovo Board to do the right thing and agree to cease activity and table these matters in light of the circumstances. With so many stockholders not voting in support of this merger and likely to consider the adjournment invalid, the Board should also now see this as the right thing for the investors.”
Organovo is in a particularly good position to press pause, as it has already ceased major operations.? With capital markets in turmoil, it also seems like a poor time to launch a new public company via this type of merger. Tarveda, the merger company, intends to develop cancer compounds and launch additional clinical trials, but it would seem impossible to do so during this novel coronavirus outbreak.? Indeed, many pharma and biotech companies are pausing clinical trials due to healthcare systems being overwhelmed in the critical fight against COVID-19.
In August 2019, Organovo announced that its Board was seeking strategic alternatives. In October 2019, Viscient Biosciences announced that it had made a merger proposal for Organovo. In November 2019, Organovo announced that it had reached a definitive merger agreement with another company, Tarveda. As a stockholder of Organovo, Mr. Murphy has publicly opposed the Tarveda merger.
Organovo called a special meeting of stockholders, to be held on March 26, 2020, to hold a vote on matters including the approval of measures needed to complete the merger with Tarveda. Organovo changed the meeting location without proper notification to stockholders as required by the SEC.? Despite this, Organovo also did not receive sufficient support from its stockholders to consummate the merger.? Organovo purported to adjourn the meeting until April 7, 2020, to solicit additional proxies, which is to say, to attempt to receive more votes over time to support the merger.? The vote to adjourn the meeting was 47.8 million votes for and 46.9 million votes against, close enough that the failure to properly notify becomes a significant issue.? If the vote to adjourn did not pass, Organovo would not be able to keep trying to solicit votes in favor of the merger, and the merger vote would have already fallen short.
Given that Organovo’s insufficient notification to stockholders renders the adjournment potentially ineffective and throws its whole process into chaos, the matter is likely to require legal adjudication and possibly a complete restart of its proxy voting process. In the light of current world events, out of consideration for the safety of court personnel, and to respect both the large number of shareholders voting against and those whose votes may not have been counted, Mr. Murphy suggests that rather than attempt to push forward under such circumstances, Organovo avoid such divisive conflict at this time.?
1. The assertion that Organovo changed the location of the meeting without proper notice is in light of the fact that SEC guidance explicitly requires companies changing to virtual stockholder meetings to issue press releases for such changes, which Organovo did not do.? https://www.sec.gov/ocr/staff-guidance-conducting-annual-meetings-light-covid-19-concerns
About Viscient Biosciences
Viscient Biosciences is a San Diego-based biotechnology company working at the intersection of human 3D tissue technology and multi-omics (genomics, transcriptomics, metabolomics) analysis to discover and develop drugs across a range of therapeutic areas with significant unmet medical need. By leveraging our expertise in complex, three-dimensional disease models comprised of human cells and complex analytical methods, we are able to drive drug discovery in a previously unavailable context, leading to a better understanding of disease and an improved opportunity to impact patients’ lives. Founded by a combination of former Organovo and Ardea Biosciences scientists and entrepreneurs, Viscient is initially conducting discovery and development work in non-alcoholic steatohepatitis (“NASH”). Learn more at www.viscientbiosciences.com.?
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SOURCE Viscient Biosciences