As we race out of the global pandemic, is there still a need for the Covid-19 vaccine being developed by biopharmaceutical company Ocugen (NASDAQ:OCGN)? And what does that mean for OCGN stock?
The Malvern, Pennsylvania-based company’s share price has largely been propped up in recent months on excitement related to its proposed vaccine against Covid-19. In February, Ocugen announced a deal with India-based vaccine developer Bharat Biotech to bring the Covid-19 treatment Covaxin to the U.S. marketplace.
OCGN stock jumped 803% on the news, catapulting from $1.75 to $15.81 a share. While an exciting leap higher, Ocugen’s stock has since fallen back to just under $9 as investors try to determine if the pharmaceutical company that primarily develops treatments for eye disease is too late to the Covid-19 vaccination party.
Regulatory Approval
Covaxin holds some promise as a treatment against Covid-19. The drug has gotten approval from regulators in India for use in certain emergency situations. And some medical experts say that Covaxin could help to treat people against the new strains and variants of Covid-19 that are cropping up around the world.
To its credit, Ocugen appears to have signed an advantageous deal with Bharat Biotech that will provide it with half of all the profits from the sale of Covaxin in the U.S.
However, while Ocugen has applied for emergency use authorization, of Covaxin with the U.S. Food and Drug Administration, it has yet to receive any approvals from the regulator. Ocugen says it hopes to receive emergency use authorization by the end of June, but that approval is not guaranteed.
Complicating the FDA approval is the fact that Covaxin’s clinical trials are taking place in India and not in the U.S., and the drug is being tested on people who have several different strains of Covid-19. How the FDA will view the data from the India-based clinical trial remains a question.
Vaccine Supplies
The timing of when Covaxin could become widely available is an issue given that there are now many vaccines available to treat Covid-19 and supplies are getting close to meeting global demand. Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and Johnson and Johnson (NYSE:JNJ) are each working around the clock to ship their approved Covid-19 vaccines to countries all around the globe. While shortages of vaccines existed earlier this year, those gaps have now largely been closed and people who want a vaccine are able to get one in most jurisdictions.
Demand for Covid-19 vaccines is expected to crest this fall and gradually begin to decline. This begs the question of whether Covid-19 treatments such as Covaxin will be needed by the time they are commercially available. Competition remains intense among vaccine developers. There are currently about 90 Covid-19 vaccines in human clinical trials around the world, but, to date, fewer than 10 have received regulatory approval.
Core Business
Until this year, Ocugen was a biopharmaceutical company exclusively focused on vision and the human eye. Ocugen’s core business remains developing therapeutic treatments for eye diseases such as age-related macular degeneration and diabetic retinopathy. The company jumped on the Covid-19 bandwagon, but it has no experience in developing treatments for airborne respiratory diseases such as Covid-19. Ocugen has also never distributed a vaccine throughout the U.S., let alone around the world.
Investors should also be aware that Ocugen has used the rally in its stock to raise capital and dilute its shares. In February, the company sold 3 million shares of common stock at $7.65 per share. Ocugen remains a small company in the world of pharmaceuticals. Before its stock run-up, Ocugen had a market capitalization of just $55 million. The company’s sales in 2020 were just $43,000 and its losses tallied $21.8 million. Ocugen does not have the resources of pharmaceutical giants such as Pfizer and Johnson & Johnson.
Don’t Believe The Hype Around OCGN Stock
Ocugen is a day late and a dollar short when it comes to the roll out of Covid-19 vaccines. OCGN stock has been treading water since early May, trading sideways at just under $9 per share. Investors appear to be taking a wait-and-see approach to the company and its shares at this point.
Taking a position in Ocugen stock now could be risky given the precarious nature of its Covid-19 treatment. Investors should stay on the sidelines with Ocugen, at least until the FDA delivers its opinion on the Covaxin vaccine.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.