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A New Orphan Drug Designation Gives Hope to Ocugen Stock

Make no mistake about it. Biopharmaceutial stocks are speculative in nature. Owning a stake in Ocugen (NASDAQ:OCGN) is not for the faint of heart. Yet, a very recent move by the U.S. Food and Drug Administration could have a profound and lasting positive impact on OCGN stock.

rows of pills on a table
Source: Iryna Imago / Shutterstock.com

I am constantly reminding investors never to fight against the government. That includes the top-level regulatory entities like the FDA.

In the case of Ocugen, the government just gave the green light to one of the company’s flagship products. That is a huge development for a relatively small biopharma firm. It’s also great news for the medical community, particularly in the field of ocular science.

Thus, OCGN stockholders can root for the company as it makes medical progress while providing value to shareholders. If all works out according to plan, it is a win-win scenario for everyone, except perhaps for the unfortunate short sellers.

A Closer Look at OCGN Stock

OCGN is one of those biopharma stocks that used to trade at a much higher price. But then, it sank to penny-stock status. I want to be clear: A penny stock is not worth literally just a penny. The designation just means that it trades for less than $5 per share.

Don’t expect OCGN stock to get back to where it was five or 10 years ago. That is just not going to happen anytime soon. We have to focus on what’s realistic in the near term, which is a push above the psychologically important price point of $1.

The FDA announcement of Aug. 10 will certainly help with that objective. During the middle of that day, the OCGN stock price soared more than 20%. Interestingly, the share price also experienced a run-up during the previous trading session.

Was there an information leak, perhaps? I won’t dare to speculate on that. Suffice it to say that the OCGN stock bulls are firmly in control of the price action, at least for the time being.

A Special Status

If you’re an informed biopharma-sector trader, then you should be aware of the Orphan Drug Act. According to the FDA, this act “provides for granting special status” to drugs and products intended for rare diseases.

It is a meaningful designation that the FDA doesn’t just hand out to any company that asks for it. And for people suffering from certain ocular conditions, the Orphan Drug Act could provide hope of a more effective treatment option.

Ocugen’s pipeline of biopharmaceutical solutions focuses on gene-based therapies designed to treat, and possibly even cure, blindness-related conditions.

The company’s three flagship therapies include OCU400, which is designed to treat various mutations of broad retinitis pigmentosa; OCU410, which aims to treat dry age-related macular degeneration; and OCU200, which is intended to treat the retinal conditions diabetic macular edema, diabetic retinopathy and wet age-related macular degeneration.

Clearing the Way for a Breakthrough

Thankfully, the FDA recently granted orphan drug designation to OCU400. In fact, this is the fourth time OCU400 has received such a designation. This time, it covers OCU400 for the treatment of retinal diseases associated with mutations in the PDE6B gene. One of those diseases is potentially retinitis pigmentosa.

Retinitis pigmentosa affects more than 1.5 million individuals across the globe and, unfortunately, has 150 gene mutations. In a press release, Ocugen succinctly summed up OCU400’s unique value proposition as a solution to a seemingly intractable medical problem:

“Traditional gene therapy or gene editing approaches may require more than 150 products to rescue these patients from vision loss. OCU400, a single product candidate, has potential to address broad-spectrum RP.”

It is highly encouraging that the FDA had the wisdom to grant orphan drug designation to OCU400. And it’s exciting to consider the potential for just one product, rather than 150 different ones, solving a problem for a particular group of retinitis pigmentosa sufferers.

The Bottom Line on OCGN Stock

OCGN stock holders can take comfort in knowing that the government has Ocugen’s back in its battle against retinitis pigmentosa. The stakeholders can enjoy the profits while the medical community can appreciate the significant progress that is being made.

David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2020/08/new-orphan-drug-fda-hope-ocugen-ocgn-stock/.

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