With a market capitalization of $30 million, Ocugen (NASDAQ:OCGN) is a long way away from its 52-week high of $21.60. Shares currently rest at 60 cents each, a far cry from passing $20. And adding more salt to the company’s wounds is that in 2014, Ocugen stock traded at $705 per share.
The biotech name is a clear disaster for investors over the years, but for speculators, the first place to look is the recent quarterly earnings report.
If Ocugen shared any positive developments in its business in the last quarter, it might support the notion of investing in the company.
Let us take a deeper look at Ocugen now.
All About Ocugen
Ocugen was founded with a mission to develop innovative therapies in treating underserved eye diseases. OCU300 is its most advanced program. It treats ocular graft-versus-host disease (oGVHD). According to CEO Shankar Musunuri, oGVHD “is a severe chronic autoimmune disease that occurs in up to 60% of allogeneic bone marrow transplantations and represents the critical unmet need.”
There are currently no U.S. Food and Drug Administration-approved treatments for oGVHD even though there will be a total of 53,000 cases in 2020. If not treated, this condition may lead to vision loss. So, Ocugen’s OCU300 will target the ocular tissues effectively. It then protects the ocular surface, so in practice, it is more effective than conventional eye drops.
Ocugen has an orphan drug designation from the FDA for oGVHD.
September 2019 Crash
Ocugen’s stock plunged last year when it completed its merger with Histogenics. Before that, the company completed a $25 million private placement financing. Histogenics completed a reverse stock split at a ratio of 1-for-60. Per the press release, stockholders of Ocugen before the merger received shares of the combined company at an exchange rate of 0.4794.
On Sept. 30, 2019, Ocugen announced a strategic partnership with CanSinoBio. CanSinoBio will handle all commercial and manufacturing developments of clinical supplies. This will alleviate Ocugen’s capital needs to ensure its survival. In return for this deal, CanSinoBio gets the commercialization rights in the China region while it pays royalties on sales.
CanSinoBio has an impressive manufacturing facility that specializes in gene therapy. So, this will align with Ocugen’s gene therapy trials.
Studies Progressing Well
Ocugen continued to enroll patients for its OCU300 study. It should reach half of the client enrollment target by the middle of this year. When that happens, it may start the study. By the second half of next year, the company will have top-line results.
The company’s modifier gene therapy platform has advantages over existing ones from competitors. Its nuclear hormone receptor may target multiple functions of the retina in the eye. So, Ocugen may treat many different diseases from one product.
Enough Cash on Hand
At the end of 2019’s third quarter, the company had $15.3 million of cash on hand. This is enough to fund its operations until the middle of this year. By then, investors will have data from Ocugen’s oGVHD study. It also means the stock will only hold its value if the company reports good results. Another cash raise at that time seems likely. That means a share sale will dilute existing shareholders.
Valuation
The average price target on Ocugen stock is $1.63, implying 180% upside from its current share price.
Stock Rover’s insight report does not paint as rosy a picture. The stock has a value score of 5, which is based on metrics such as enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA), earnings per share predictability, and other valuation ratios.
My Takeaway on Ocugen Stock
Ocugen is a high-risk play whose cash levels are dwindling. The company cannot disappoint investors with poor results in its clinical trials. Looking ahead, Ocugen may potentially recover, if the stock already priced in the upcoming dilution.
As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.
