The 3-D printing industry has existed for several decades, but exploded onto the scene in 2012. Shares of the two most dominant companies, 3D Systems and Stratasys, managed to beat the broader market again this year, but even they got lapped by Organovo Holdings . The company is technically developing a tissue engineering platform, not a 3-D printing platform. But management has wisely capitalized on the market's insatiable appetite for anything with the "3-D printing" label. It's also sexier for the media to write about 3-D bioprinting than tissue engineering. Amiright?

Whatever you call it, shares of Organovo Holdings are up more than 240% in 2013 and were even up as much as 400% in recent weeks.

^SPX Chart


^SPX data by YCharts.

That's quite a year for any company, but can share gains be explained by any tangible events or is investor optimism -- a more intangible metric -- leading the charge? Both can explain the company's tremendous 2013, although the latter is more responsible in my opinion.

Tangible events
There were quite a few notable developments for Organovo Holdings in 2013. A partnership with Oregon Health & Science University Knight Cancer Institute started the year on the right foot. The collaboration will develop 3-D cancer tissue models to aid in drug discovery efforts. A similar partnership with ZenBio, announced in February, will take aim at developing 3-D tissue models for drug discovery and could eventually lead to fully functional organ development for transplantation. The two partnerships could be big drivers for Organovo Holdings' long-term prospects. 

The NovoGen Bioprinting platform could revolutionize early pharmaceutical research. Source: Organovo Holdings.

... versus investor optimism
Of course, the company also made real progress this year with its first product candidate: 3-D liver tissue. Research that led to the first fully cellular 3-D tissue -- meaning it doesn't contain polymers or other inorganic materials for scaffolding -- was announced in April. The company has raced ahead with development since then, demonstrating key liver functions for 40 day periods with the engineered tissues. While product development has been impressive, the company is currently planning to launch 3-D liver tissue assays for toxicology in December 2014 at the earliest. That makes the road to revenue a long one for investors.

There is obviously a lot of hype and potential built into Organovo Holdings' valuation, which is evident with a quick trip to the company's balance sheet or income statement. It may wield a novel platform that has the potential to add value to the pharmaceutical industry, but it is awfully difficult for me to endorse a $700 million market cap given the limited revenue potential in the next few years.

Why is the company so highly valued? Well, shares began listing on the NYSE in July after stumbling around the OTC Bulletin Board. That alone increased its exposure to individual investors and handed shares the air of credibility, which likely explains why share gains have outpaced financial developments. Institutional investors have expressed more caution and currently own just 8% of the 77 million outstanding shares, contributing to the wild volatility.

Good luck valuing this one
Shares of Organovo Holdings had a tremendous 2013. While tangible progress was indeed achieved in the past 12 months, I'm not so sure announcing the beginning of research and development efforts warrants a 240% gain. Sure, development of the company's first product candidate is on track, but investors should remember that it won't launch until the end of next year. Perhaps that doesn't matter. After all, you can't invest in a similar company (yet). Nonetheless, I won't be investing anytime soon given the volatility and lack of catalysts in the next year, but I will discuss what investors can look forward to in 2014 in my next article.

3-D printing stocks continue to crush the market
Organovo Holdings isn't a true 3-D printing company, but you couldn't tell by looking at its phenomenal share gains. For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3-D printing. Although this sounds like something out of a science fiction novel, the success of 3-D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.

The article Can Anything Explain Organovo Holdings' Tremendous 2013? originally appeared on Fool.com.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on biopharmaceuticals, industrial biotech, and the bioeconomy. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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