VivoSim Labs, INC. VIVS US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and the related notes. This management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results or events to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in section Item 1A. “Risk Factors” in this Annual Report. Except as required by applicable law we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

Overview

We are a clinical stage biotechnology company that is focused on developing FXR314 in inflammatory bowel disease (“IBD”), including ulcerative colitis (“UC”), based on demonstration of clinical promise in three-dimensional (“3D”) human tissues as well as strong preclinical data. FXR is a mediator of gastrointestinal and liver diseases. FXR agonism has been tested in a variety of preclinical models of IBD. FXR314 is the lead compound in our established FXR program containing two clinically tested compounds (including FXR314) and over 2,000 discovery or preclinical compounds. FXR314 is a drug with safety and tolerability after daily oral dosing in Phase 1 and Phase 2 trials. Further, FXR314 has FDA clinical trial authorization for a Phase 2 trial in UC.

Our current clinical focus is in advancing FXR314 in IBD, including UC and Crohn’s disease (“CD”). We plan to start a Phase 2a clinical trial in UC in the calendar year 2024. We released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis ("MASH") in April 2024 that are supportive of ongoing development, and we believe FXR314 has a commercial opportunity in MASH, most likely in combination therapy. We are exploring the potential for combination therapies using FXR314 and currently approved mechanisms in preclinical animal studies and our IBD disease models.

Our second focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease. We use our proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease. We believe these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas.

As with the clinical development program, we are initially focusing on the intestine and have ongoing 3D tissue development efforts in human tissue models of UC and CD. We use these models to identify new molecular targets responsible for driving the disease and to explore the mechanism of action of known drugs including FXR314 and related molecules. We intend to initiate drug discovery programs around these new validated targets to identify drug candidates for partnering and/or internal clinical development.

Our current understanding of intestinal tissue models and IBD disease models leads us to believe that we can create models that provide greater insight into the biology of these diseases than are generally currently available. We are creating high fidelity disease models, leveraging our prior work including the work found in our peer-reviewed publication on bioprinted intestinal tissues (Madden et al. Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) Our advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures.

Using these disease models, we intend to identify and validate novel therapeutic targets. After finding therapeutic drug targets, we intend to focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these novel drug candidates towards an Investigational New Drug filing and potential future clinical trials.

We expect to broaden our work into additional therapeutic areas over time and are currently exploring specific tissues for development. In our work to identify the areas of interest, we evaluate areas that might be better served with 3D disease models than currently available models as well as the potential commercial opportunity. In line with these plans, we are building upon both our external and in house scientific expertise, which will be essential to our drug development effort.

Recent Developments

Mosaic Cell Sciences Division

In February 2024, we formed our Mosaic Cell Sciences division (“Mosaic”) to serve as a key source of certain of the primary human cells we utilize in our research and development efforts. We believe Mosaic can help us optimize our supply chain, reduce operating expenses related to cell sourcing and procurement and ensure that the cellular raw materials we use are of the highest quality and are derived from tissues that are ethically sourced in full compliance with state and federal guidelines. We intend for Mosaic to provide us

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with qualified human cells for use in our clinical research and development programs. In addition to supplying us with primary human cells, we intend for Mosaic to offer human cells for sale to life science customers, both directly and through distribution partners, which we expect to offset costs and over time become a profit center that offsets overall R&D spending by Organovo.

Best Efforts Public Offering

On May 8, 2024, we priced a best efforts public offering (the “Offering”) of: (i) 1,562,500 shares of our common stock and accompanying common warrants (“Common Warrants”) to purchase up to 1,562,500 shares of common stock at a combined public offering price of $0.80 per share and accompanying Common Warrant to purchase one share of common stock and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase 5,000,000 shares of common stock and accompanying Common Warrants to purchase up to 5,000,000 shares of common stock at a combined public offering price of $0.799 per Pre-Funded Warrant and accompanying Common Warrant to purchase one share of common stock. In connection with the Offering, we entered into Securities Purchase Agreements with the purchasers of the securities in the Offering on May 8, 2024.

The per share exercise price for the Pre-Funded Warrants is $0.001, subject to adjustment as provided therein. The Pre-Funded Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire when exercised in full. The holders may exercise the Pre-Funded Warrants by means of a “cashless exercise.”

The per share exercise price for the Common Warrants is $0.80, subject to adjustment as provided therein. The Common Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the date that is five years following the original issuance date. If a registration statement covering the issuance of the shares of common stock issuable upon exercise of the Common Warrants is not available for the issuance, then the holders may exercise the Common Warrants by means of a “cashless exercise.”

In connection with the Offering, we paid JonesTrading Institutional Services LLC, which acted as the placement agent in connection with the Offering, a cash fee of 5.0% of the aggregate gross proceeds raised in the Offering.

The closing of the Offering occurred on May 13, 2024. We received net proceeds of approximately $4.7 million from the Offering, after deducting the estimated offering expenses payable by us, including the Placement Agent fees.

Critical Accounting Policies, Estimates, and Judgments

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in this annual report to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments used in preparing our financial statements and related disclosures, none of which are considered critical. All estimates affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

Our significant accounting policies are set forth in “Note 1. Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements contained within this Annual Report. Of those policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations. Accounting policies regarding stock-based compensation are considered critical, as they require significant assumptions. If there is a difference between the assumptions used in determining our stock-based compensation expense and the actual factors that become known over time, specifically with respect to anticipated forfeitures, we may change the input factors used in determining stock-based compensation costs for future grants. These changes, if any, may materially impact our results of operations in the period such changes are made.

Stock-based compensation

For purposes of calculating stock-based compensation, we estimate the fair value of stock options and shares acquirable under our 2022 Equity Incentive Plan (“2022 Plan”), Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”), our 2016 Employee Stock Purchase Plan (the “2016 ESPP”), our 2023 Employee Stock Purchase Plan (the “2023 ESPP”), or our 2021 Inducement Equity Plan (the “Inducement Plan”) using a Black-Scholes option-pricing model. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. Expected volatility is based on the Company-specific historical volatility

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rate. For certain options granted with vesting criteria contingent on market conditions, we engage with valuation specialists to calculate fair value and requisite service periods using Monte Carlo simulations. For certain options granted with vesting criteria contingent on pre-defined Company performance criteria, we periodically assess and adjust the expense based on the probability of achievement of such performance criteria. For shares acquirable under our 2016 ESPP and 2023 ESPP, we use our Company-specific volatility rate. The expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of our stock options. The dividend yield assumption is based on our history and expectation of no dividend payouts. If factors change and we employ different assumptions, our stock-based compensation expense may differ significantly from what we have recorded in the past.

For purposes of calculating stock-based compensation, we estimate the fair value of restricted stock units (“RSUs”) with pre-defined performance criteria, based on the closing stock price on the date of grant. No exercise price or other monetary payment is required for receipt of the shares issued in settlement of the respective award; instead, consideration is furnished in the form of the participant’s service to us.

If there is a difference between the assumptions used in determining our stock-based compensation expense and the actual factors that become known over time, we may change the input factors used in determining stock-based compensation costs for future grants. These changes, if any, may materially impact our results of operations in the period such changes are made.

Revenue

We assess whether our license agreements are considered a contract with a customer under ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) or an arrangement with a collaborator subject to guidance under ASC Topic 808, Collaborative Arrangements (“Topic 808”). These agreements can include one or more of the following: (i) non-refundable upfront fees and (ii) royalties based on specified percentages of net product sales. At contract inception, we assess the goods or services agreed upon within each contract and assess whether each good or service is distinct and determine those that are performance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

For the year ended March 31, 2024, the performance obligations assessed were sales-based royalties on a quarterly basis. We evaluate the performance obligation to determine if it can be satisfied at a point in time or over time. For agreements that include sales-based royalties, we estimate and recognize revenue in the period the underlying sales occur. Key factors considered in the estimate include sales of products that include the underlying licensed intellectual property (“IP”) and the location of customers related to the jurisdictions of the licensed IP. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. Differences in the allocation of the transaction price between delivered and undelivered performance obligations can impact the timing of revenue recognition but do not change the total revenue recognized under any agreement.

Results of Operations

Comparison of the Years Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the years ended March 31, 2024 and 2023 (in thousands, except percentages):

Year Ended March 31, Increase (decrease)

Selling, general and administrative $ 9,697 $ 9,216 $ 481 5 %

Revenues

We had $0.1 million of royalty revenue for the year ended March 31, 2024, compared to $0.4 million of royalty revenue for the year ended March 31, 2023. Royalty revenue for each of the years ended March 31, 2024 and 2023, was related to the sales-based royalty revenue earned from the aforementioned licensing of IP. The decrease in royalty revenue year over year relates to a decrease in sales of royalty-bearing products by the licensee.

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Research and Development Expenses

The following table summarizes our research and development expenses for the years ended March 31, 2024 and 2023 (in thousands, except percentages):

Year Ended March 31, Increase (decrease)

Total research and development expenses $ 5,498 $ 8,885 $ (3,387 ) (38 %)

Total research and development expenses decreased by $3.4 million, or 38%, from approximately $8.9 million for the year ended March 31, 2023 to approximately $5.5 million for the year ended March 31, 2024. Our full-time research and development staff increased from an average of fifteen employees for the year ended March 31, 2023 to an average of sixteen employees for the year ended March 31, 2024. The decrease in total research and development activities consisted of a $4.1 million decrease in lab and research expenses, which was offset by a $0.4 million increase in consulting costs, a $0.2 million increase in personnel related costs, and a $0.1 million increase in facilities costs and depreciation. Of the $4.1 million decrease in lab and research expenses, $4.0 million related to acquired in-process research and development (“IPR&D”) of Metacrine's FXR program, related research data, and IP in the year ended March 31, 2023.

Selling, General and Administrative Expenses

The following table summarizes our selling, general and administrative expenses for the years ended March 31, 2024 and 2023 (in thousands, except percentages):

Year Ended March 31, Increase (decrease)

Depreciation and amortization 53 128 (75 ) (59 %)

Total selling, general and administrative expenses $ 9,697 $ 9,216 $ 481 5 %

Total selling, general and administrative expenses increased approximately $0.5 million, or 5%, from $9.2 million for the year ended March 31, 2023 to approximately $9.7 million for the year ended March 31, 2024. The increase year over year relates to increases in legal and other corporate expenses, including a $0.7 million increase in investor relations expenses and a $0.2 million increase in legal costs, offset by a $0.4 million decrease in personnel related costs. Our full-time selling, general, and administrative employees decreased from an average of five employees for the year ended March 31, 2023 to an average of four employees for the year ended March 31, 2024.

Other Income (Expense)

Other income was $0.4 million and $0.5 million for the years ended March 31, 2024 and 2023, respectively. Other income primarily consisted of interest income in both years.

Financial Condition, Liquidity and Capital Resources

Going forward, we intend to focus on clinical drug development of FXR314, the lead compound in our established FXR program. Our current clinical focus is in advancing FXR314 in IBD, including UC and CD. We plan to start a Phase 2 clinical trial in UC in the calendar year 2024. We released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis (“MASH”) in April 2024 that is supportive of ongoing development, and we believe FXR314 has a commercial opportunity in MASH, most likely in combination therapy. Additionally, we plan to leverage our proprietary technology platform to develop therapeutic drugs, focusing on IBD, including CD and UC, with a goal of broadening our work into additional therapeutic areas over time.

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The accompanying consolidated financial statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of March 31, 2024, we had cash and cash equivalents of approximately $2.9 million and an accumulated deficit of $339.7 million. As of March 31, 2023, we had cash and cash equivalents of $15.3 million and an accumulated deficit of $325.0 million. We had negative cash flows from operations of $14.7 million and $12.4 million for the years ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, we had total current assets of approximately $3.9 million and current liabilities of approximately $1.9 million, resulting in working capital of $2.0 million. At March 31, 2023, we had total current assets of approximately $17.0 million and current liabilities of approximately $3.7 million, resulting in working capital of $13.3 million.

The following table sets forth a summary of the primary sources and uses of cash for the years ended March 31, 2024 and 2023 (in thousands):

Year Ended March 31,

Net cash (used in) provided by:

Investing activities 816 (966 )

Financing activities 1,437 —

Operating activities

Net cash used in operating activities was approximately $14.7 million and $12.4 million for the years ended March 31, 2024 and 2023, respectively. The $2.3 million increase in operating cash usage, for the year ended March 31, 2024, was attributable primarily to the $2.0 million cash payment in fiscal 2024 for acquired IPR&D, in addition to an increase in our research and development activities.

Investing activities

Net cash provided by investing activities was $0.8 million for the year ended March 31, 2024. Net cash provided by investing activities for the year ended March 31, 2024 consisted of the liquidation of equity securities of $0.7 million and $0.1 million of investment income. Net cash used in investing activities for the year ended March 31, 2023 consisted of $0.7 million of purchases of equity securities, net of sales, and $0.4 million of fixed asset purchases, which was slightly offset by $0.1 million of investment income.

Financing activities

Net cash provided by financing activities was $1.4 million for the year ended March 31, 2024. Financing activities consisted of the sale of common stock through at-the-market (“ATM”) share offerings. There were no financing activities for the year ended March 31, 2023. Refer to “Operations funding requirements” below for further information regarding financing activities.

Operations funding requirements

Through March 31, 2024, we have financed our operations primarily through the sale of common stock through public and ATM offerings, the private placement of equity securities, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, and from the sale of convertible notes.

Our ongoing cash requirements include research and development expenses, compensation for personnel, consulting fees, legal and accounting support, insurance premiums, facilities, maintenance of our intellectual property portfolio, license and collaboration agreements, listing on the Nasdaq Capital Market, and other miscellaneous fees to support our operations. We expect our total operating expense for the fiscal year ending March 31, 2025 to be approximately $23.5 million. Based on our current operating plan and available cash resources, we will need substantial additional funding to support future operating activities. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date these financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

We previously had an effective shelf registration statement on Form S-3 (File No. 333-252224), declared effective by the SEC on January 29, 2021 (the “2021 Shelf”), which registered $150.0 million of common stock, preferred stock, warrants and units, or any combination of the foregoing, that expired on January 29, 2024. On January 26, 2024, we filed a new shelf registration statement on Form S-3 (File No. 333-276722) to register $150.0 million of common stock, preferred stock, debt securities, warrants and units, or

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any combination of the foregoing (the “2024 Shelf”). The 2024 Shelf was declared effective by the SEC on February 8, 2024 and replaced the 2021 Shelf at that time.

On March 16, 2018, we entered into a Sales Agreement (“Sales Agreement”) with H.C. Wainwright & Co., LLC and Jones Trading Institutional Services LLC (each an “Agent” and together, the “Agents”). On January 29, 2021, we filed a prospectus supplement to the 2021 Shelf (the “2021 ATM Prospectus Supplement”), pursuant to which we could offer and sell, from time to time through the Agents, shares of our common stock in ATM sales transactions having an aggregate offering price of up to $50.0 million. Any shares offered and sold were issued pursuant to our 2021 Shelf until it was replaced by the 2024 Shelf.

On January 26, 2024, we filed a prospectus to the 2024 Shelf (the “2024 ATM Prospectus”), pursuant to which we may offer and sell, from time to time, through the Agents, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $2,605,728. Any shares offered and sold in these ATM transactions are issued pursuant to the 2024 Shelf.

During the year ended March 31, 2024, we sold 1,172,342 shares of common stock in ATM offerings, of which 1,135,940 shares were sold pursuant to the 2021 Shelf, and 36,402 shares were sold pursuant to the 2024 Shelf. As of March 31, 2024, we have sold an aggregate of 2,753,204 shares of common stock in ATM offerings under the 2021 ATM Prospectus Supplement and 2024 ATM Prospectus, for gross proceeds of approximately $23.2 million. As of March 31, 2024, there was approximately $100.0 million available in future offerings under the 2024 Shelf, and approximately $2.6 million available for future offerings through our ATM program under the 2024 ATM Prospectus.

In May 2024, we closed a best efforts public offering conducted off a Registration Statement on Form S-1 (File No. 333-278668) and issued and sold (i) 1,562,500 shares of our common stock, and accompanying common warrants (“Common Warrants”) to purchase up to 1,562,500 shares of common stock and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase 5,000,000 shares of common stock and accompanying Common Warrants to purchase up to 5,000,000 shares of common stock for estimated net proceeds of $4.7 million.

As of May 29, 2024, we had cash and cash equivalents of approximately $7.0 million.

Having insufficient funds may require us to relinquish rights to our technology on less favorable terms than we would otherwise choose. Failure to obtain adequate financing could adversely affect our operations. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. We cannot be sure that additional financing will be available if and when needed, or that, if available, we can obtain financing on terms favorable to our stockholders. Any failure to obtain financing when required will have a material adverse effect on our business, operating results, and financial condition.

Effect of Inflation and Changes in Prices

Management does not believe that inflation and changes in price will have a material effect on our operations.

Recent Accounting Pronouncements

For information regarding recently adopted and issued accounting pronouncements, see “Note 14. Recent Accounting Pronouncements” in the Notes to the Consolidated Financial Statements contained in this Annual Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We invest our excess cash in short term, high quality interest bearing securities including US government and US government agency securities and high-grade corporate commercial paper. The primary objective of our investment activities is to preserve our capital for the purpose of funding our operations. To achieve these objectives, our investment policy allows us to maintain a portfolio of cash, cash equivalents, and short-term investments in a variety of securities, including money market funds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because the majority of our investments are comprised of cash and cash equivalents. We currently do not hedge interest rate exposure. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure. We have limited foreign currency risk exposure as our business operates primarily in U.S. dollars. We do not have significant foreign currency nor any other derivative financial instruments.

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Item 8. Consolidated Financial Statements.

Organovo Holdings, Inc.

Index to Consolidated Financial Statements

PageNumber

Reports of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of March 31, 2024 and 2023 F-4

Notes to Consolidated Financial Statements F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of:

Organovo Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Organovo Holdings, Inc. (“Company”) as of March 31, 2023, and the related consolidated statements of operations and other comprehensive loss, stockholders’ equity, and cash flows for the year ended March 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023, and the results of its operations and its cash flows for the year ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses and negative cash flows from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ Mayer Hoffman McCann P.C.

We served as the Company's auditor from 2011 to 2023.

San Diego, California

July 13, 2023

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of:

Organovo Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Organovo Holdings, Inc. (the “Company”) as of March 31, 2024, and the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended March 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses and negative cash flows from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Rosenberg Rich Baker Berman P.A.

We have served as the Company’s auditor since 2023.

Somerset, New Jersey

May 31, 2024

F-3

ORGANOVO HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands except for share and per share data)

Assets

Current Assets

Accounts receivable 33 152

Investment in equity securities — 706

Prepaid expenses and other current assets 705 889

Operating lease right-of-use assets 1,299 1,705

Prepaid expenses and other assets, net 302 515

Liabilities and Stockholders' Equity

Current Liabilities

Operating lease liability, current portion 506 492

Operating lease liability, net of current portion 888 1,313

Commitments and Contingencies (Notes 8 and 9)

Stockholders' Equity

Accumulated other comprehensive income — 2

Treasury stock, 46 shares at cost (1 ) (1 )

Total Liabilities and Stockholders' Equity $ 6,349 $ 20,313

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ORGANOVO HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

(in thousands except for share and per share data)

Year Ended Year Ended

Revenues

Research and development expenses 5,498 8,885

Selling, general, and administrative expenses 9,697 9,216

Other Income (Expense)

Loss on fixed asset disposals — (9 )

Gain on investment in equity securities 12 29

Income Tax Expense (2 ) (2 )

Other comprehensive income:

Unrealized gain (loss) on available-for-sale debt securities (2 ) 2

Net loss per common share—basic and diluted $ (1.60 ) $ (1.98 )

The accompanying notes are an integral part of these consolidated financial statements.

F-5

ORGANOVO HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Common Stock Treasury Stock

Stock-based compensation expense — — 2,377 — — — — 2,377

Stock-based compensation expense 66 — 1,508 — — — — 1,508

Issuance of common stock from public offering, net 1,173 1 1,436 — — — — 1,437

The accompanying notes are an integral part of these consolidated financial statements.

F-6

ORGANOVO HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended Year Ended

Cash Flows From Operating Activities

Adjustments to reconcile net loss to net cash used in operating activities:

Gain on investment in equity securities (12 ) (29 )

Loss on disposal of fixed assets — 9

Accretion on investments (142 ) (105 )

Depreciation and amortization 280 293

Increase (decrease) in cash resulting from changes in:

Inventory (297 ) —

Prepaid expenses and other assets 392 177

Operating right-of-use asset and lease liability, net (5 ) 70

Net cash used in operating activities (14,653 ) (12,408 )

Cash Flows From Investing Activities

Purchases of fixed assets (42 ) (396 )

Purchases of equity securities — (1,061 )

Proceeds from sales of equity securities — 384

Liquidation of equity securities 718 —

Net cash provided by (used in) investing activities 816 (966 )

Cash Flows From Financing Activities

Proceeds from issuance of common stock, net 1,437 —

Net cash provided by financing activities 1,437 —

Net Decrease in Cash, Cash Equivalents, and Restricted Cash (12,400 ) (13,374 )

Cash, cash equivalents, and restricted cash at beginning of period 15,444 28,818

Cash, cash equivalents, and restricted cash at end of period $ 3,044 $ 15,444

Total cash, cash equivalents and restricted cash $ 3,044 $ 15,444

Supplemental Disclosure of Cash Flow Information:

Income taxes paid $ 2 $ 2

Purchases of fixed assets in accounts payable $ — $ 64

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Organovo Holdings, Inc.

Notes to Consolidated Financial Statements

Note 1. Description of Business and Summary of Significant Accounting Policies

Nature of operations and basis of presentation

Organovo Holdings, Inc. (“Organovo Holdings,” “Organovo,” and the “Company”) is a clinical stage biotechnology company that is focused on developing FXR314 in inflammatory bowel disease (“IBD”), including ulcerative colitis (“UC”), based on demonstration of clinical promise in three-dimensional (“3D”) human tissues as well as strong preclinical data. FXR is a mediator of gastrointestinal and liver diseases. FXR agonism has been tested in a variety of preclinical models of IBD. FXR314 is the lead compound in the Company's established FXR program containing two clinically tested compounds (including FXR314) and over 2,000 discovery or preclinical compounds. FXR314 is a drug with safety and tolerability after daily oral dosing in Phase 1 and Phase 2 trials. Further, FXR314 has FDA clinical trial authorization for a Phase 2 trial in UC.

The Company's current clinical focus is in advancing FXR314 in IBD, including UC and Crohn’s disease (“CD”). The Company plans to start a Phase 2a clinical trial in UC in the calendar year 2024. The Company released Phase 2 data for FXR314 for the treatment of metabolic function-associated steatohepatitis (“MASH”) in April 2024 that is supportive of ongoing development, and the Company believes FXR314 has a commercial opportunity in MASH, most likely in combination therapy. The Company is exploring the potential for combination therapies using FXR314 and currently approved mechanisms in preclinical animal studies and the Company's IBD disease models.

The Company's second focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease. The Company uses its proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease. The Company believes these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas.

As with the clinical development program, the Company is initially focusing on the intestine and has ongoing 3D tissue development efforts in human tissue models of UC and CD. The Company uses these models to identify new molecular targets responsible for driving the disease and to explore the mechanism of action of known drugs including FXR314 and related molecules. The Company intends to initiate drug discovery programs around these new validated targets to identify drug candidates for partnering and/or internal clinical development.

The Company's current understanding of intestinal tissue models and IBD disease models leads the Company to believe that it can create models that provide greater insight into the biology of these diseases than are generally currently available. The Company is creating high fidelity disease models, leveraging its prior work including the work found in its peer-reviewed publication on bioprinted intestinal tissues (Madden et al. Bioprinted 3D Primary Human Intestinal Tissues Model Aspects of Native Physiology and ADME/Tox Functions. iScience. 2018 Apr 27;2:156-167. doi: 10.1016/j.isci.2018.03.015.) The Company's advances include cell type-specific compartments, prevalent intercellular tight junctions, and the formation of microvascular structures.

Using these disease models, the Company intends to identify and validate novel therapeutic targets. After finding therapeutic drug targets, the Company intends to focus on developing novel small molecule, antibody, or other therapeutic drug candidates to treat the disease, and advance these novel drug candidates towards an Investigational New Drug filing and potential future clinical trials.

The Company expects to broaden its work into additional therapeutic areas over time and is currently exploring specific tissues for development. In its work to identify the areas of interest, the Company evaluates areas that might be better served with 3D disease models than currently available models as well as the potential commercial opportunity. In line with these plans, the Company is building upon both its external and in house scientific expertise, which will be essential to its drug development effort.

In February 2024, the Company formed its Mosaic Cell Sciences division (“Mosaic”) to serve as a key source of certain primary human cells that the Company utilizes in its research and development efforts. The Company believes Mosaic can help optimize its supply chain, reduce operating expenses related to cell sourcing and procurement and ensure that the cellular raw materials the Company uses are of the highest quality and are derived from tissues that are ethically sourced in full compliance with state and federal guidelines. The Company intends for Mosaic to provide it with qualified human cells for use in its clinical research and development programs. In addition to supplying the Company with primary human cells, the Company intends for Mosaic to offer human cells for sale to life science customers, both directly and through distribution partners, which the Company expects to offset costs and over time become a profit center that offsets overall research and development ("R&D") spending by the Company.

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Liquidity and Going Concern

The accompanying consolidated financial statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of March 31, 2024, the Company had cash and cash equivalents of approximately $2.9 million, restricted cash of approximately $0.1million and an accumulated deficit of approximately $339.7 million. The restricted cash was pledged as collateral for a letter of credit that the Company is required to maintain as a security deposit under the terms of the lease agreements for its facilities. The Company also had negative cash flows from operations of approximately $14.7 million during the year ended March 31, 2024.

Through March 31, 2024, the Company has financed its operations primarily through the sale of common stock through public and at-the-market (“ATM”) offerings, the private placement of equity securities, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, and from the sale of convertible notes. During the year ended March 31, 2024, the Company issued 1,172,342 shares of its common stock through its ATM facility.

Based on the Company's current operating plan and available cash resources, including the total net proceeds of $4.7 million from the best efforts public offering that closed in May 2024, the Company will need substantial additional funding to support future operating activities. The Company has concluded that the prevailing conditions and ongoing liquidity risks faced by the Company raise substantial doubt about its ability to continue as a going concern for at least one year following the date these consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As the Company continues its operations and is focusing its efforts on drug discovery and development, the Company will need to raise additional capital to implement this business plan. The Company cannot predict with certainty the exact amount or timing for any future capital raises. The Company will seek to raise additional capital through debt or equity financings, or through some other financing arrangement. However, the Company cannot be sure that additional financing will be available if and when needed, or that, if available, it can obtain financing on terms favorable to its stockholders. Any failure to obtain financing when required will have a material adverse effect on the Company’s business, operating results, and financial condition.

Use of estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions.

Investments

Investments consist of investments in debt securities and investments in equity securities.

Investments in debt securities consist of investments in U.S. Treasury bills. As of March 31, 2024 and 2023, all investments that have original maturities of three months or less are classified as cash equivalents on the Consolidated Balance Sheets. As of March 31, 2024, all investments are classified as available-for-sale, as the sale of such investments may be required prior to maturity to implement management strategies. Available-for-sale debt securities are recorded at fair value. Any unrealized gains and losses are included in accumulated other comprehensive income as a component of stockholders' equity until realized. As U.S. Treasury bills are risk-free, any declines in fair value are considered temporary.

Investments in equity securities consist of investments in the common stock of entities traded in active markets. The Company does not have the ability to exercise significant influence over any entities. Therefore, initial investments are recorded at cost, and are remeasured at fair value as of the balance sheet date. Any gains or losses resulting from the change in fair value are recorded in net income. The investments in equity securities are classified as current assets.

Fair value measurement

Financial assets and liabilities are measured at fair value, which is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The following is a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

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•

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial instruments

For certain of the Company’s financial instruments, including cash and cash equivalents, prepaid expenses and other assets, accounts payable, accrued expenses, the carrying amounts are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Restricted cash

As of each of March 31, 2024 and 2023, the Company had approximately $0.1 million of restricted cash, deposited with a financial institution. The entire amount was held in certificates of deposit to support a letter of credit agreement related to the Company’s facility leases entered into in November 2020 and amended in November 2021.

Inventory

Inventories are stated at the lower of cost or net realizable value. Inventory as of March 31, 2024 consisted of approximately $0.3 millionin finished goods, which is related to the Mosaic Cell Sciences division. There were no finished goods inventory as of March 31, 2023. Please refer to "Note 16. Business Segment Information" for further information.

Fixed assets and depreciation

Fixed assets are carried at cost. Expenditures that extend the life of the asset are capitalized and depreciated. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets or, in the case of leasehold improvements, over the lesser of the useful life of the related asset or the remaining lease term. The estimated useful lives of the fixed assets range between one and seven years.

Impairment of long-lived assets

In accordance with authoritative guidance, the Company reviews its long-lived assets, including fixed assets and other assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates whether future undiscounted net cash flows will be less than the carrying amount of the assets and adjusts the carrying amount of its assets to fair value. Management has determined that no impairment of long-lived assets occurred as of March 31, 2024 and 2023.

Research and development

Research and development expenses, including direct and allocated expenses, consist of independent research and development costs, as well as costs associated with sponsored research and development. Research and development costs are expensed as incurred.

Acquired in-process research and development

The Company has acquired drug candidates in development. The costs to acquire a drug candidate are immediately expensed as acquired in-process research and development, provided that the drug candidate has no alternative future use. Acquired in-process research and development expenses are included in total research and development expenses on the Consolidated Statements of Operations and Other Comprehensive Loss.

FXR Program

In March 2023, the Company acquired Metacrine's FXR program for $4.0 million. The FXR program was determined to have no alternative future use, and therefore was considered acquired in-process research and development and fully expensed. In the year

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ended March 31, 2023, the Company paid a $2.0 million upfront payment, and the remaining $2.0 million was paid in the year ended March 31, 2024, upon the final transfer of the drug compounds, related data, and IP.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. As of March 31, 2024, the Company identified two operating segments. Please refer to "Note 16. Business Segment Information" for further information.

Income taxes

Deferred income taxes are recognized for the tax consequences in future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the combination of the tax payable for the year and the change during the year in deferred tax assets and liabilities. The Company’s policy regarding uncertainty in income taxes is pursuant to Accounting Standard Codification (“ASC”) Topic 740-10. Interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits is recognized as a component of income tax expense.

Revenue recognition

The Company has generated revenues from payments received from licensing intellectual property.

The Company has entered into a license agreement with a company that includes the following: (i) non-refundable upfront fees and (ii) royalties based on specified percentages of net product sales, if any. At the initiation of the agreement, the Company has analyzed whether it results in a contract with a customer under Topic 606.

The Company has considered a variety of factors in determining the appropriate estimates and assumptions under these arrangements, such as whether the Company is a principal vs. agent, whether the elements are distinct performance obligations, whether there are determinable stand-alone prices, and whether any licenses are functional or symbolic. The Company has evaluated each performance obligation to determine if it can be satisfied and recognized as revenue at a point in time or over time. Typically, non-refundable upfront fees have been considered fixed, while sales-based royalty payments have been identified as variable consideration which must be evaluated to determine if it has been constrained and, therefore, excluded from the transaction price. Please refer to “Note 6. Collaborative Research, Development, and License Agreements” for further information.

Stock-based compensation

The Company accounts for stock-based compensation in accordance with the ASC Topic 718, Compensation — Stock Compensation, which establishes accounting for equity instruments exchanged for employee and non-employee services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award (determined using either the Black-Scholes or Monte Carlo option-pricing models, depending on the complexity of the equity grant), and is recognized as an expense, under the straight-line method, over the employee or non-employee's requisite service period (generally the vesting period of the equity grant). The assumed dividend yield is based on the Company’s expectation of not paying dividends in the foreseeable future. The Company uses its Company-specific historical volatility rate. The risk-free interest rate assumption is based on U.S. Treasury rates. The weighted average expected life of options is estimated using the average of the contractual term and the weighted average vesting term of the options. Option forfeitures are treated as a reduction of stock-based compensation expense and accounted for as they occur.

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive income (loss) in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive income (loss).

F-11

Net loss per share

Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. The weighted-average number of shares used to compute diluted loss per share excludes any assumed exercise of stock options and warrants, shares reserved for purchase under the Company’s 2023 Employee Stock Purchase Plan (“2023 ESPP”), the assumed release of restriction of restricted stock units (“RSUs”), and shares subject to repurchase as the effect would be anti-dilutive. No dilutive effect was calculated for the years ended March 31, 2024 and 2023 as the Company reported a net loss for each respective period and the effect would have been anti-dilutive.

Common stock equivalents excluded from computing diluted net loss per share were approximately0.8 million shares and 1.6 million shares for the years ended March 31, 2024 and 2023, respectively.

Note 2. Investments and fair value measurement

Investments in debt securities

As of March 31, 2024, the Company held $1.0 million of investments in debt securities (which are included in the $2.9 million of cash and cash equivalents). For the year ended March 31, 2024, there was $0.1 million of interest income related to the investments in debt securities. There were less than $0.1 million of unrealized gains recorded on investments in debt securities for the year ended March 31, 2024. As the investments in debt securities consist of U.S. Treasury bills from active markets, the fair value is measured using level 1 inputs.

The following table summarizes the Company's investments in debt securities that are measured at fair value as of March 31, 2024 and 2023 (in thousands):

Amortized costs basis Gross unrealized gains Gross unrealized losses Fair value

Investments in debt securities $ 997 $ 1 $ — $ 998

Investments in debt securities $ 4,943 $ 2 $ — $ 4,945

Investments in equity securities

For the year ended March 31, 2024, $0.7 million of equity securities were liquidated and there was less than a $0.1 million gain on the investment in equity securities. As of March 31, 2024, the fair value of investment in equity securities was zero, as a result of the liquidation of the shares by the underlying company on June 26, 2023. As the investments in equity securities consist of common stock from active markets, the fair value is measured using level 1 inputs.

The following table presents the activity for investments in equity securities measured at fair value for the year ended March 31, 2024 (in thousands):

Investment in Equity Securities(in thousands)

Gain on investment in equity securities 12

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Note 3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

Other current assets 4 69

Note 4. Fixed Assets

Fixed assets consisted of the following (in thousands):

Furniture and fixtures 66 66

Computer software and equipment 244 537

Less accumulated depreciation (1,258 ) (1,276 )

As of March 31, 2024 and 2023, all of the Company’s fixed assets were active and in use. Depreciation expense for the years ended March 31, 2024 and 2023 was approximately $0.3 million and $0.2 million, respectively.

Note 5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

Accrued compensation $ 536 $ 609

Accrued legal and professional fees 93 193

Acquired in-process research and development — 2,000

Other accrued expenses 98 46

Note 6. Collaborative Research, Development, and License Agreements

License Agreements

BICO Group AB

From June 2021 to February 2022, certain patents owned or sublicensed by the Company became the subject of IPR proceedings filed by Cellink AB and its subsidiaries (collectively, “BICO Group AB”). The Company and BICO Group AB were also engaged in litigation regarding patent infringement during the same time period. On February 22, 2022, the Company and BICO Group AB signed a settlement and patent license agreement (“License Agreement”) to close all matters noted above. In addition to closing all legal matters and patent disputes noted above, as part of the agreement, the Company agreed to grant a non-exclusive license to BICO

F-13

Group AB to use the Company’s aforementioned patents for its business operations of manufacturing and selling bioprinters as well as bioinks. The Company concluded that the nature of the license granted represents functional intellectual property.

As part of the License Agreement, BICO Group AB agreed to pay the Company a one time, nonrefundable upfront fee of $1,500,000. Based on ASC Topic 606, the Company concluded that the performance obligation related to this upfront fee consisted of the Company filing stipulations of dismissal of all legal matters noted above, as well as the Company granting the non-exclusive license of the aforementioned patents within five days of receiving the upfront payment. The conditions of the performance obligation were satisfied, and therefore the Company recognized revenue of $1,500,000 on February 22, 2022, the executed date of the License Agreement.

Additionally, as part of the License Agreement, BICO Group AB agreed to pay the Company ongoing sales-based royalties (based on percentages of BICO Group AB’s net sales) for the use of the granted license. The sales-based royalties became effective beginning on February 22, 2022, the effective date of the License Agreement, and continue until the expiration of the last surviving licensed patent. As the sales-based royalties are required to be paid 45 days after the end of every quarter, there is variable consideration that must be estimated to determine royalty revenue within a given reporting period. Once actual revenue earned is determined in the following fiscal quarter, an adjustment is made from the previously estimated amount. For the years ended March 31, 2024 and 2023, the Company recorded $109,000 and $370,000, respectively, of royalty revenue based on sales-based royalties from the License Agreement.

Also as part of the License Agreement, certain patents involved in the agreement are sublicensed by the Company from the University of Missouri and Clemson University. See below for further information.

University of Missouri

In March 2009, the Company entered into a license agreement with the Curators of the University of Missouri to in-license certain technology and intellectual property relating to self-assembling cell aggregates and to intermediate cellular units. The Company received the exclusive worldwide rights to commercialize products comprising this technology for all fields of use. The Company is required to pay the University of Missouri royalties ranging from 1% to 3% of net sales of covered tissue products, and of the fair market value of covered tissues transferred internally for use in the Company’s commercial service business, depending on the level of net sales achieved by the Company each year.

On December 5, 2022, the Company amended the license agreement with the University of Missouri, whereby the Company agreed to pay a single, upfront payment of $50,000 to the University of Missouri in exchange for the aforementioned licensed intellectual property to be fully paid up by the Company. As a result, the Company will continue to have rights to the licensed intellectual property until its expiration in June 2028, but will no longer owe minimum annual royalty payments, royalty payments based on net sales, or any other payments (other than patent annuities and any prosecution costs) in the future.

Clemson University

In May 2011, the Company entered into a license agreement with Clemson University Research Foundation ("CURF") to in-license certain technology and intellectual property relating to ink-jet printing of viable cells. The Company received the exclusive worldwide rights to commercialize products comprising this technology for all fields of use. The Company was required to pay the university royalties ranging from 1.5% to 3% of net sales of covered tissue products and the fair market value of covered tissues transferred internally for use in the Company’s commercial service business, depending on the level of net sales reached each year. The license agreement terminates upon expiration of the patents licensed, which are expected to expire in May 2024, and is subject to certain conditions as defined in the license agreement. Minimum annual royalty payments of $40,000 per year were due beginning in calendar 2016. The royalty payments of $40,000 were made for the years ended March 31, 2024 and 2023. The annual minimum royalty is creditable against royalties owed during the same calendar year.

In addition to the annual royalties noted above, CURF is owed 40% of all payments including but not limited to, upfront payments, license fees, issue fees, maintenance fees, and milestone payments received from third parties, including sublicensees, in consideration for sublicensing rights to licensed products. However, per the agreement, in the event that the Company defends the technology by litigation, it can offset any royalties due by legal expenses incurred. As of March 31, 2024, the Company’s legal expenses exceeded royalties owed from the upfront payment and sales-based royalties related to the license agreement. Therefore, no royalty expense to CURF was recorded for the year ended March 31, 2024. No royalty expense related to sales-based royalties has been recorded to date

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Capitalized License Fees

Capitalized license fees consisted of the following (in thousands):

Less accumulated amortization (101 ) (101 )

License fees, net $ 8 $ 13

The above license fees, net of accumulated amortization, are included in prepaid expenses and other assets in the accompanying consolidated balance sheets and are being amortized over the life of the related patents. Amortization expense of licenses was approximately $5,000 and $82,000 for the years ended March 31, 2024 and 2023, respectively. At March 31, 2024, the weighted average remaining amortization period for all licenses was approximately 3 years. The annual amortization expense of licenses for the next five years is estimated to be approximately $3,000per year.

The Salk Institute for Biological Studies

In March 2023, the Company acquired the FXR Agonist program from Metacrine. All patent rights related to this program have been assigned to the Company in connection with the acquisition. In addition, the Company assumed and was assigned a license agreement with the Salk Institute for Biological Studies (hereafter “Salk”) that provides certain payments to Salk upon the successful development and commercialization of the lead compound, FXR314. The Company is required to pay Salk royalties ranging from 1% to 1.125% of net sales of therapeutics based on FXR314. In addition, the Company is required to make certain milestone payments based on the successful initiation and/or completion of certain development milestones, including $500,000 within 45 days of the dosing of the first patient in a phase III clinical trial, $1,000,000 within 45 days of FDA approval of the first Licensed Product and $1,500,000 within 45 days of the first commercial sale of a Licensed Product in the Territory. There are also reduced milestone payments application to a second or third licensed product, if any. Should the Company sublicense a licensed product to a third party, then it must pay a 3.5% of sublicensing revenue attributable to such a sublicense.

Note 7. Stockholders’ Equity

Preferred stock

The Company is authorized to issue 25,000,000 shares of preferred stock. There are no shares of preferred stock currently outstanding, and the Company has no present plans to issue shares of preferred stock.

Common stock

In January 2012, the Company's Board of Directors ("Board") approved the 2012 Amended and Restated Equity Incentive Plan ("2012 Plan"). The 2012 Plan initially authorized the issuance of up to 327,699 shares of common stock for awards of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance units, performance shares, and other stock or cash awards, and the number of shares issuable pursuant thereto was increased several times to an aggregate of 2,327,699 shares.

In March 2021, the Board approved the 2021 Inducement Equity Incentive Plan ("Inducement Plan"). The Inducement Plan authorized the issuance of up to 750,000 shares of common stock for awards of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance units, performance shares, and other stock or cash awards. In February 2022, 50,000 incentive stock options were issued under the Inducement Plan.

On October 12, 2022, the Company's stockholders and the Board approved the 2022 Equity Incentive Plan ("2022 Plan"), and it became effective on that date. The 2022 Plan replaced the 2012 Plan on the effective date. Upon the effective date, the Company ceased granting awards under the 2012 Plan and any shares remaining available for future issuance under the 2012 Plan were cancelled and are no longer available for future issuance. The 2012 Plan continues to govern awards previously granted under it. At the time the Board approved the 2022 Plan, an aggregate of 1,363,000 shares of the Company’s common stock was initially reserved for issuance under the 2022 Plan. The Company committed to reducing the new 2022 Plan share reserve by the number of shares that were granted under the 2012 Plan and the Inducement Plan between July 25, 2022 and October 12, 2022. From July 25, 2022 to October 12, 2022, the Company issued 126,262 shares of its common stock under the 2012 Plan. As a result, the number of shares reserved for future issuance under the 2022 Plan is 1,236,738 shares of common stock. The Company also committed to reducing the

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aggregate number of shares of its common stock issuable pursuant to the Inducement Plan from 750,000 shares to 51,000 shares (which includes 50,000 shares of its common stock issuable pursuant to an outstanding option to purchase common stock with an exercise price of $2.75 per share, leaving only 1,000 shares available for future issuance under the Inducement Plan) and the share reserve was reduced effective October 12, 2022.

The Company previously had an effective shelf registration statement on Form S-3 (File No. 333-252224), declared effective by the SEC on January 29, 2021 (the “2021 Shelf”), which registered $150.0 million of common stock, preferred stock, warrants and units, or any combination of the foregoing, that expired on January 29, 2024. On January 26, 2024, the Company filed a new shelf registration statement on Form S-3 (File No. 333-276722) to register $150.0 million of the Company's common stock, preferred stock, debt securities, warrants and units, or any combination of the foregoing (the "2024 Shelf"). The 2024 Shelf was declared effective by the SEC on February 8, 2024 and replaced the 2021 Shelf at that time.

On March 16, 2018, the Company entered into a Sales Agreement (“Sales Agreement”) with H.C. Wainwright & Co., LLC and Jones Trading Institutional Services LLC (each an “Agent” and together, the “Agents”). On January 29, 2021, the Company filed a prospectus supplement to the 2021 Shelf (the “2021 ATM Prospectus Supplement”), pursuant to which the Company may offer and sell, from time to time through the Agents, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $50.0 million. Any shares offered and sold were issued pursuant to the 2021 Shelf until it was replaced by the 2024 Shelf.

On January 26, 2024, the Company filed a prospectus to the 2024 Shelf (the "2024 ATM Prospectus"), pursuant to which the Company may offer and sell, from time to time through the Agents, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $2,605,728. Any shares offered and sold in these ATM transactions will be issued pursuant to the 2024 Shelf.

During the year ended March 31, 2024, the Company issued 1,172,342 shares of common stock in ATM offerings, of which 1,135,940 shares were sold pursuant to the 2021 Shelf, and 36,402 shares were sold pursuant to the 2024 Shelf. As of March 31, 2024, the Company has sold an aggregate of 2,753,204 shares of common stock in ATM offerings under the 2021 ATM Prospectus Supplement and 2024 ATM Prospectus, with gross proceeds of approximately $23.2 million. As of March 31, 2024, there was approximately $100.0 million available for future offerings under the 2024 Shelf, and approximately $2.6 million available for future offerings through the Company’s ATM program under the 2024 ATM Prospectus.

Restricted stock units

The following table summarizes the Company’s RSUs activity for the year ended March 31, 2024:

Number of Shares WeightedAverage Price

Cancelled / forfeited — $ —

Stock options

During the year ended March 31, 2024, under the 2022 Plan, 184,158 stock options were granted at various exercise prices.

On August 28, 2023, the Company's Executive Chairman voluntarily forfeited 462,500 outstanding stock options, of which 312,918 were unvested and therefore cancelled, and 149,582 were vested and therefore treated as expired. The forfeited stock option awards were not replaced by other awards or other compensation and there is no plan to replace the forfeited awards. Therefore, all previous unrecognized compensation expense associated with the forfeited awards, approximately $519,000, was recognized as a selling, general, and administrative expense on the date of forfeiture.

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The following table summarizes stock option activity for the year ended March 31, 2024:

OptionsOutstanding Weighted-AverageExercise Price AggregateIntrinsicValue

Options exercised — $ — $ —

The weighted-average remaining contractual term of stock options exercisable and outstanding at March 31, 2024 was approximately 7.38years.

During the years ended March 31, 2024 and 2023, the Company issued zero shares of common stock upon exercise of stock options.

Employee Stock Purchase Plan

In June 2016, the Board, and subsequently in August 2016, the Company's stockholders approved, the 2016 ESPP. The Company reserved 75,000 shares of common stock for issuance thereunder. As of October 31, 2023, the 2016 ESPP was replaced by the 2023 ESPP (as defined below).

In July 2023, the Board adopted, and subsequently on October 31, 2023, the Company's stockholders approved, the 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The 2023 ESPP became effective on October 31, 2023 and replaced the 2016 ESPP on that date. The Company reserved 45,000 shares of common stock for issuance thereunder. The 2023 ESPP permits employees to purchase common stock through payroll deductions, limited to 15 percent of each employee’s compensation up to $25,000 per employee per year or 500 shares per employee per six-month purchase period. Shares under the 2023 ESPP are purchased at 85 percent of the fair market value at the lower of (i) the closing price on the first trading day of the six-month purchase period or (ii) the closing price on the last trading day of the six-month purchase period. The initial offering under the 2023 ESPP commenced on March 1, 2024.

Common stock reserved for future issuance

Common stock reserved for future issuance consisted of the following at March 31, 2024:

Common stock reserved under the 2012 Plan —

Common stock reserved under the ESPP 45,000

Common stock reserved under the 2021 Inducement Equity Plan 1,000

Stock-based compensation expense and valuation information

Stock-based awards include stock options and RSUs under the Company's 2022 Plan, 2012 Plan, inducement awards, performance-based RSUs under an Incentive Award Performance-Based Restricted Stock Unit Agreement, the Inducement Plan, and rights to purchase stock under the 2023 ESPP.

Stock-based compensation expense for all stock-based awards consists of the following (in thousands):

Research and development $ 138 $ 473

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The total unrecognized compensation cost related to unvested stock option grants as of March 31, 2024 was approximately $485,000 and the weighted average period over which these grants are expected to vest is2.17 years.

The total unrecognized stock-based compensation cost related to unvested RSUs as of March 31, 2024 was approximately $151,000which will be recognized over a weighted average period of 0.73 years.

As of March 31, 2024, there was one participant enrolled into the 2023 ESPP for the current purchase period, beginning March 1, 2024.

The fair value of stock options was estimated at the grant date using the following weighted average assumptions:

Dividend yield — —

Risk-free interest rate 4.11 % 3.32 %

Expected life of options 6 years 6 years

Weighted average grant date fair value $ 1.34 $ 1.83

The fair value of each RSU is recognized as stock-based compensation expense over the vesting term of the award. The fair value is based on the closing stock price on the date of the grant.

The Company uses the Black-Scholes valuation model to calculate the fair value of shares issued pursuant to the 2016 ESPP and the 2023 ESPP. Stock-based compensation expense is recognized over the purchase period using the straight-line method. The fair value of ESPP shares was estimated at the purchase period commencement date using the following assumptions:

Dividend yield — —

Risk-free interest rate 5.27 % 3.34 %

Expected term 6 months 6 months

Grant date fair value $ 0.39 $ 0.82

The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The Company uses the Company-specific historical volatility rate as the indicator of expected volatility. The risk-free interest rate assumption was based on U.S. Treasury rates. The expected life is the 6-month purchase period.

Note 8. Leases

After the initial adoption of ASC Topic 842, on an on-going basis, the Company evaluates all contracts upon inception and determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of identified asset in exchange for consideration over a period of time. If a lease is identified, the Company will apply the guidance from ASC Topic 842 to properly account for the lease.

Operating Leases

On November 23, 2020, the Company entered into a lease agreement, pursuant to which the Company permanently leased approximately 8,051 square feet of office space (the “Permanent Lease”) in San Diego once certain tenant improvements were completed by the landlord and the premises were ready for occupancy. Additionally, on November 17, 2021, the Permanent Lease was amended to add an additional 2,892 square feet of office space in the same building. The Permanent Lease commenced on December

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17, 2021 and is intended to serve as the Company’s permanent premises for approximately sixty-two months. Monthly rental payments are approximately $40,800 with 3% annual escalators.

The Company determined that the Permanent Lease is considered an operating lease under ASC Topic 842, and therefore upon the lease commencement date of December 17, 2021, recognized lease liabilities and corresponding right-of-use assets of $2.3 million. The Company records operating lease expense on a straight-line basis over the life of the lease (referred to as “operating lease expense”). Variable lease expenses associated with the Company’s leases, such as payments for additional monthly fees to cover the Company’s share of certain facility expenses (common area maintenance) are expensed as incurred.

The table below summarizes the Company’s lease liabilities and corresponding right-of-use assets as of March 31, 2024 (in thousands):

ASSETS

Operating lease right-of-use assets $ 1,299

Total lease right-of-use assets $ 1,299

LIABILITIES

Current

Operating lease liability $ 506

Noncurrent

Operating lease liability, net of current portion $ 888

Total lease liabilities $ 1,394

Weighted average remaining lease term: 2.83

Weighted average discount rate: 6 %

Variable lease expense was approximately $153,000 and $146,000 for the years ended March 31, 2024 and 2023, respectively. Operating lease expense was approximately $503,000and $499,000 for the years ended March 31, 2024 and 2023, respectively.

Cash outflows associated with the Company’s operating lease for the years ended March 31, 2024 and 2023 were $509,000 and $430,000, respectively.

Future lease payments relating to the Company’s operating lease liabilities as of March, 31, 2024 are as follows (in thousands):

Total future lease payments 1,521

Less: Imputed Interest (127 )

Total lease obligations 1,394

Less: Current obligations (506 )

Noncurrent lease obligations $ 888

Note 9. Commitments and Contingencies

Legal matters

In addition to commitments and obligations in the ordinary course of business, the Company may be subject, from time to time, to various claims and pending and potential legal actions arising out of the normal conduct of its business.

The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In

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addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability.

The Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures. During the period presented, the Company has not recorded any accrual for loss contingencies associated with any claims or legal proceedings; determined that an unfavorable outcome is probable or reasonably possible; or determined that the amount or range of any possible loss is reasonably estimable. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more legal matters were resolved against the Company in a reporting period, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.

Note 10. Income Taxes

A reconciliation of the statutory federal rate and the effective rate, for operations, is as follows for the years ended March 31, 2024 and 2023 (in thousands, except percentages):

Tax computed at federal statutory rate $ (3,081 ) 21 % $ (3,624 ) 21%

State income tax, net of federal benefit (110 ) 0.7 % (44 ) 0.2%

Research credits — 0 % 60 -0.4%

Uncertain tax positions 111 -0.8 % — 0 %

Provision (benefit) for income taxes $ — 0.0% $ — 0.0%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets are as follows as of March 31, 2024 and 2023 (in thousands, except percentages):

Deferred tax assets:

Accrued expenses and reserves 105 116

Operating lease liability 307 384

Stock-based compensation 315 755

Other, net 4 3

Net deferred tax assets $ 393 $ 504

Deferred tax liabilities:

Operating lease right-of-use assets (286 ) (363 )

Investment in equity securities — (6 )

Total deferred tax liabilities $ (393 ) $ (504 )

$ — $ —

A full valuation allowance has been established to offset the deferred tax assets as management cannot conclude that realization of such assets is more likely than not. Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss and research tax credit carryforwards to offset taxable income may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of March 31, 2024. Until this analysis is completed, the Company has removed the deferred tax assets related to net operating losses from its

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deferred tax asset schedule. Further, until a study is completed and any limitation known, approximately $1.7 million and $1.6 million for the years ended March 31, 2024 and 2023, respectively, would be considered as an uncertain tax position if netted against the deferred tax asset. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. The valuation allowance increased by approximately $525,000 and approximately $1,875,000 for the years ended March 31, 2024 and 2023, respectively.

The Company had federal and state net operating loss carryforwards of approximately $219.4 million and $42.8 million, respectively, as of March 31, 2024. Federal net operating loss carryforwards of approximately $75.8 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year subject to revisions made by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The remaining federal net operating losses will begin to expire in 2028, unless previously utilized. The state net operating loss carryforwards (“NOLs”) will begin to expire in 2028, unless previously utilized.

The Company had federal and state research tax credit carryforwards of approximately $5.0 million and $4.5 million at March 31, 2024, respectively. The federal research tax credit carryforwards begin expiring in 2028. The state research tax credit carryforwards do not expire.

The Company did not record any accruals for income tax accounting uncertainties for the year ended March 31, 2024.

The Company did not accrue either interest or penalties from inception through March 31, 2024.

The Company does not expect its unrecognized tax benefits to significantly increase or decrease within the next 12 months.

The Company is subject to tax in the United States and in California. As of March 31, 2024, the Company’s tax years from inception are subject to examination by the tax authorities due to the generation of net operating losses. The Company is not currently under examination by any jurisdiction.

Note 11. Concentrations

Credit risk and significant customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments. The Company maintains cash balances at various financial institutions located within the United States. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation. Balances may exceed federally insured limits. The Company is also potentially subject to concentrations of credit risk in its revenues and accounts receivable. However, the Company only receives royalty revenue from one licensee and has not historically experienced any accounts receivable write-downs.

Note 12. Related Parties

From time to time, the Company enters into agreements with one or more related parties in the ordinary course of its business. These agreements are ratified by the Board or a committee thereof pursuant to its related party transaction policy.

Viscient Biosciences (“Viscient”) is an entity for which Keith Murphy, the Company’s Executive Chairman, serves as the Chief Executive Officer and President. Dr. Jeffrey Miner, the Company’s former Chief Scientific Officer, is also the Chief Scientific Officer of Viscient, and Thomas Jurgensen, the Company’s former General Counsel, previously served as outside legal counsel to Viscient through his law firm, Optima Law Group, APC.

On December 28, 2020, the Company entered into an intercompany agreement (the “Intercompany Agreement”) with Viscient and Organovo, Inc., the Company’s wholly-owned subsidiary, which included an asset purchase agreement for certain lab equipment. Pursuant to the Intercompany Agreement, the Company agreed to provide Viscient certain services related to 3D bioprinting technology, which includes, but is not limited to, histology services, cell isolation, and proliferation of cells and Viscient agreed to provide the Company certain services related to 3D bioprinting technology, including bioprinter training, bioprinting services, and qPCR assays, in each case on payment terms specified in the Intercompany Agreement and as may be further determined by the parties. In addition, the Company and Viscient each agreed to share certain facilities and equipment and, subject to further agreement, to each make certain employees available for specified projects for the other party at prices to be determined in good faith by the parties. The Company evaluated the accounting for the Intercompany Agreement and concluded that any services provided by Viscient to the Company will be expensed as incurred, and any compensation for services provided by the Company to Viscient will be considered a reduction of personnel related expenses. Any services provided to Viscient do not fall under Topic 606 as the Intercompany Agreement is not a contract with a customer. For the years ended March 31, 2024 and 2023, the Company incurred no

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consulting expenses from Viscient. Additionally, for the years ended March 31, 2024 and 2023, the Company provided approximately $14,000 and $59,000 of histology services to Viscient, respectively.

Note 13. Defined Contribution Plan

The Company has a defined contribution 401(k) plan covering substantially all employees. During the year ended March 31, 2015, the 401(k) plan was amended (the “Amended Plan”) to include an employer matching provision. Under the terms of the Amended Plan, the Company will make matching contributions on up to the first 6% of compensation contributed by its employees. Amounts expensed under the Company’s 401(k) plan for the years ended March 31, 2024 and 2023 were approximately $61,000 and $10,000, respectively.

Note14. Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies. Unless otherwise stated, the Company believes that the impact of the recently issued accounting pronouncements that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. Adoption of the ASU allows for either the prospective or retrospective application of the amendment and is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has not yet completed its assessment of the impact of ASU 2023-09 on the Company’s Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this guidance.

Note15. Restructuring

On August 18, 2023, the Company announced to its employees a plan to reduce the Company’s workforce, effective August 25, 2023, by approximately six employees, which represented approximately 24% of its employees as of August 18, 2023. The Company refocused operations on FXR314, its clinical drug candidate. This decision to reduce the Company’s workforce was made in order to focus spending on the Company’s clinical program for FXR314, reduce ongoing operating expenses not related to clinical expenses, and extend the Company’s cash runway. The Company incurred approximately $0.4 million of cash expenditures for the year ended March 31, 2024, in connection with the reduction in force, which related to severance pay. As of March 31, 2024, all restructuring costs were paid in full. The Company anticipates annual cost savings of approximately $1.5 million resulting from the reduction in force.

Note16. Business Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company's operating segments were identified in fiscal 2024 and did not impact prior periods. The Company's operating segments are as follows:

Research & Development

The research and development (“R&D”) segment consists of the Company's drug development efforts. The Company's current clinical focus is in advancing FXR314 in IBD, including UC and CD. The Company plans to start a Phase 2a clinical trial in UC in the calendar year 2024. The Company released Phase 2 data for FXR314 for the treatment of MASH in April 2024 that are supportive of

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ongoing development, and believes FXR314 has a commercial opportunity in MASH, most likely in combination therapy. The Company is exploring the potential for combination therapies using FXR314 and currently approved mechanisms in preclinical animal studies and its IBD disease models.

The Company's second focus is building high fidelity, 3D tissues that recapitulate key aspects of human disease. The Company uses its proprietary technology to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function and disease. The Company believes these attributes can enable critical complex, multicellular disease models that can be used to develop clinically effective drugs across multiple therapeutic areas.

As with the clinical development program, the Company is initially focusing on the intestine and has ongoing 3D tissue development efforts in human tissue models of UC and CD. The Company uses these models to identify new molecular targets responsible for driving the disease and to explore the mechanism of action of known drugs including FXR314 and related molecules. The Company intends to initiate drug discovery programs around these new validated targets to identify drug candidates for partnering and/or internal clinical development.

Mosaic Cell Sciences

The Mosaic Cell Sciences segment, which began operations in February 2024, consists of our Mosaic Cell Sciences division (“Mosaic”) which will serve as a key source of certain of the primary human cells that the Company utilizes in its research and development efforts. The Company believes Mosaic can help optimize its supply chain, reduce operating expenses related to cell sourcing and procurement, and ensure that the cellular raw materials it uses are of the highest quality and are derived from tissues that are ethically sourced in full compliance with state and federal guidelines. The Company intends for Mosaic to provide the Company with qualified human cells for use in its clinical research and development programs. In addition to supplying the Company with primary human cells, the Company intends for Mosaic to offer human cells for sale to life science customers, both directly and through distribution partners, which the Company expects to offset costs and over time become a profit center that offsets overall R&D spending by the Company.

Business Segment Information

The Company's R&D segment generates royalty revenue related to its IP. The R&D segment's identifiable assets are its fixed assets. The Company expects that the Mosaic segment will generate future product revenue as part of its core operations, and its identifiable assets are its fixed assets and inventory. Other Company assets are comprised of all other assets that are not distinctly identifiable to a segment, which are presented on the Company's Consolidated Balance Sheets as of March 31, 2024.

R&D segment revenues consisted of the following (in thousands):

Year Ended Year Ended

R&D

Mosaic

Product revenue — —

Total segment revenue $ 109 $ 370

Total company revenue $ 109 $ 370

Operating segment expenses consisted of the following (in thousands):

Year Ended Year Ended

Total segment operating expenses $ 5,498 $ 8,885

Selling, general, and administrative expenses 9,697 9,216

Operating segment assets consisted of the following (in thousands):

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R&D

Mosaic

Fixed assets, net 183 —

Total segment assets $ 903 $ 902

Note17. Subsequent Events

On May 8, 2024, the Company priced a best efforts public offering (the “Offering”) of: (i) 1,562,500 shares of its common stock and accompanying common warrants (“Common Warrants”) to purchase up to 1,562,500 shares of common stock at a combined public offering price of $0.80 per share and accompanying Common Warrant to purchase one share of common stock and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase 5,000,000 shares of common stock and accompanying Common Warrants to purchase up to 5,000,000 shares of common stock at a combined public offering price of $0.799 per Pre-Funded Warrant and accompanying Common Warrant to purchase one share of common stock. In connection with the Offering, the Company entered into Securities Purchase Agreements with the purchasers of the securities in the Offering on May 8, 2024.

The per share exercise price for the Pre-Funded Warrants is $0.001, subject to adjustment as provided therein. The Pre-Funded Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire when exercised in full. The holders may exercise the Pre-Funded Warrants by means of a “cashless exercise.”

The per share exercise price for the Common Warrants is $0.80, subject to adjustment as provided therein. The Common Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the date that is five years following the original issuance date. If a registration statement covering the issuance of the shares of common stock issuable upon exercise of the Common Warrants is not available for the issuance, then the holders may exercise the Common Warrants by means of a “cashless exercise.”

In connection with the Offering, the Company paid JonesTrading Institutional Services LLC, which acted as the placement agent in connection with the Offering, a cash fee of 5.0% of the aggregate gross proceeds raised in the Offering.

The closing of the Offering occurred on May 13, 2024. The Company received net proceeds of approximately $4.7 million from the Offering, after deducting the estimated offering expenses payable by the Company, including the Placement Agent fees.

Additionally, between April 1, 2024 and the date of the filing of this Annual Report on Form 10-K, the Company issued 1,389,002 shares of common stock in ATM offerings under the 2024 ATM Prospectus for net proceeds of approximately $1.8 million.

As of May 29, 2024, the Company's cash and cash equivalents balance was approximately $7.0 million.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our executive chairman and our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision of our Executive Chairman and our Chief Financial Officer, and with the participation of all members of management, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our executive chairman and our principal financial officer concluded that our disclosure controls and procedures were designed and operating effectively as of the end of the period covered by this Annual Report.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management’s annual report on internal control over financial reporting is set forth below.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our system of internal control over financial reporting is designed to provide reasonable assurance to our management and the Board regarding the preparation and fair presentation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Our management, under the supervision of our Executive Chairman and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2024. In making this assessment, we used the framework included in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria set forth in Internal Control — Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of March 31, 2024.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of the fiscal year ended March 31, 2024, to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Executive Chairman and our Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Item 9B. Other Information.

During the fiscal quarter ended March 31, 2024, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

37

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

38

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information relating to our directors, executive officers and corporate governance, including our Code of Business Conduct, will be included in the proxy statement for the 2024 annual meeting of the Company’s stockholders, expected to be filed within 120 days of the end of our most recently completed fiscal year, which is incorporated herein by reference. The full text of our Code of Business Conduct, which is the code of ethics that applies to all of our officers, directors and employees, can be found in the “Investors” section of our website accessible to the public at www.organovo.com.

Item 11. Executive Compensation.

Information relating to executive compensation will be included in the proxy statement for the 2024 annual meeting of the Company’s stockholders, expected to be filed within 120 days of the end of our most recently completed fiscal year, which is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table summarizes information about the Company’s equity compensation plans by type as of March 31, 2024:

(C)

(A) Number of

Number of securities available

securities to be (B) for future issuance

issued upon Weighted-average under Equity

exercise/vesting exercise price Compensation Plans

of outstanding of outstanding (excluding securities

options, warrants, options, warrants, reflected in

Plan category units and rights units and rights column (A))

(1)

Includes the 2012 Plan, the 2022 Plan, and the 2023 ESPP.

(2)

Includes stock options to purchase 648,007 shares of common stock with a per share weighted-average exercise price of $6.62. Also includes 122,642 restricted stock units with no exercise price.

(3)

Includes 45,000 shares of common stock available for purchase under the 2023 ESPP as of March 31, 2024.

(4)

Includes the Inducement Plan.

(5)

Includes 50,000 stock options with a per share exercise price of $2.75 granted pursuant to the Inducement Plan.

(6)

Includes 1,000 shares of common stock reserved for issuance pursuant to the Inducement Plan.

Information relating to the beneficial ownership of our common stock will be included in the proxy statement for the 2024 annual meeting of the Company’s stockholders, expected to be filed within 120 days of the end of our most recently completed fiscal year, which is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information relating to certain relationships and related transactions and director independence will be included in the proxy statement for the 2024 annual meeting of the Company’s stockholders, expected to be filed within 120 days of the end of our most recently completed fiscal year, which is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Information relating to principal accountant fees and services will be included in the proxy statement for the 2024 annual meeting of the Company’s stockholders, expected to be filed within 120 days of the end of our most recently completed fiscal year, which is incorporated herein by reference.

39

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)

The following documents have been filed as part of this Annual Report:

1.

Consolidated Financial Statements: The information required by this item is included in Item 8 of Part II of this annual report.

2.

Financial Statement Schedules: Financial statement schedules required under the related instructions are not applicable for the years ended March 31, 2024 and 2023 and have therefore been omitted.

3.

Exhibits: The exhibits listed in the Exhibit Index attached to this report are filed or incorporated by reference as part of this annual report.

(b)

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report.

40

EXHIBIT INDEX

Exhibit No. Description

4.3* Description of Securities.

41

Exhibit No. Description

42

Exhibit No. Description

21.1* Subsidiaries of Organovo Holdings, Inc.

23.1* Consent of Independent Registered Public Accounting Firm.

23.2* Consent of Independent Registered Public Accounting Firm.

24.1* Power of Attorney (included on signature page hereto).

97* Organovo Holdings, Inc. Clawback Policy.

101.INS* Inline XBRL Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

+ Designates management contracts and compensation plans.

† This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the redaction pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

# Certain identified information has been omitted pursuant to Item 601(b)(10) of Regulation S-K because such information is both (i) not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby undertakes to furnish supplemental copies of the unredacted exhibit upon request by the Securities and Exchange Commission.

^ Non-material schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.

43

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

ORGANOVO HOLDINGS, INC.

By: /s/ Keith Murphy

Keith Murphy

Executive Chairman

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Keith Murphy and Thomas Hess, and each of them individually, as the undersigned’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place, and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their respective substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature Title Date