Ocugen’s (NASDAQ:OCGN) stock is up 198% in the last three months — an astounding turnaround for the Malvern, Pennsylvania-based biotech and OCGN stock. As the novel coronavirus pandemic continues to rage in several parts of the world, companies are making a last-ditch effort to take advantage of the vaccine revenue on offer.
Ocugen stock is trading at just under $7 a pop, a far cry from its 52-week low of 17 cents per share. Almost all of this growth is down to an exciting association with Bharat Biotech, the biotechnology company behind COVAXIN, one of only two vaccines to get Emergency Use Authorization (EUA) in India.
Ocugen aims to launch the two-dose COVAXIN vaccine for the U.S. market in the second quarter of 2021. Chief executive Shankar Musunuri told Reuters that 100 million doses would be available after it gets clearance from the U.S. Food and Drug Administration (FDA). At this time, vaccines developed by Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ) have been cleared for emergency use.
Understandably, if the company gets the nod, it will be a major coup, one that will cause OCGN stock to skyrocket. However, in case things go south, you could be stuck with a lemon. The risk-return tradeoff is attractive, though. Though OCGN stock is risky, it deserves a small position in your portfolio.
OCGN Stock: The Last of the Mohicans
If we rewind the clocks a year, every pharmaceutical company was scrambling to get involved in the Covid-19 vaccine race. The virus had brought several world economies to a grinding halt. Hence, it was no surprise investors were on the lookout for candidates in the pharma space at this time, leading to astronomical valuations.
However, more than a year into the crisis, we see price corrections. For instance, Pfizer stock is down 0.35% in the last three months. Based on evidence from clinical trials, the vaccine is 95% effective and was the first to get EUA. However, the stock still finds itself in a slump.
It’s not something strange or unusual, though. Now that vaccines are rolling out, retail traders are booking their profits and setting their sights elsewhere. Amid all this, Ocugen is a late entry to the party. Its mainly known for manufacturing gene therapies to treat blindness diseases.
The foremost product in its suite is OCU400, used to help restore “retinal integrity and function across a range of genetically diverse inherited retinal diseases.” It has received the fourth orphan drug designation to treat PDE6B gene mutation-associated retinal diseases from the FDA. The European Commission has also granted OCU400 drug orphan medicinal product designation. Both of these developments are positive and led to a small spike in the share price.
However, overall, the company’s fundamentals are nothing to write home about, with just $42,620 in revenue for 2020. Net loss ballooned to $21.8 million, up from $20.2 million in 2019. The only silver lining is that the company has cash of $24.2 million, as of Dec. 31, 2020.
Hence, any positive momentum we will see from OCGN stock will likely come due to COVAXIN.
Future of Bharat Biotech in America
Considering the vaccine supply-chain issues the U.S. is facing, I am hopeful that COVAXIN will get EUA soon. It’s only one of two vaccines active in India, the second-most populous country in the world. Its efficacy rate of 81% may seem low, considering the 95% efficacy rate of Pfizer’s coronavirus vaccine and the 94.5% rate for the Moderna vaccine. However, it’s still better than Johnson & Johnson’s 66%.
When Reuters quizzed Shankar Musunuri regarding the vaccine’s gameplan, considering the other options out there, he made some interesting observations. First, he believes a niche for Ocugen could initially focus on children, as it is likely safe for those over the age of 12. That’s a niche that hasn’t been exploited as of yet. Plus, Musunuri believes the vaccine can be used as an additional booster shot. Regardless, considering amount of vaccines needed across America, I am sure that Covaxin will be a success once it’s approved.
And it’s not only the U.S. that is looking to buy the vaccine. Brazil’s Health Ministry has signed a deal to purchase 20 million doses of Covaxin in a deal worth 1.6 billion reais, with the first eight million doses to arrive in March. Moving forward, several other populous countries may ink deals to that effect.
So, how should you play this one? Recent reports lead me to believe you can take a calculated risk on this one. More things are going in favor of Bharat Biotech than against, making it worth a small position in your portfolio.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.