Clinical-stage biopharmaceutical company Ocugen (NASDAQ:OCGN) is an interesting entrant in the race to develop a vaccine for the novel coronavirus. And for folks seeking exposure to a Covid-19 vaccine developer at a low price, OCGN stock seems like a solid pick.
That being said, I actually contend that OCGN stock is cheap and pricey at the same time. I know that sounds like a contradiction, but hear me out.
It’s possible for a stock to be cheap in the sense of trading under $5. OCGN stock fits that description. As a result, it might be appealing to investors with smaller-sized accounts.
On the other hand, OCGN stock could also be considered expensive because its share price has gone up too much, too quickly. But its higher share price might be justified in light of an important partnership that the company recently launched. Let’s unpack all of this now, starting with Ocugen’s recent price activity.
A Closer Look at OCGN Stock
While many stocks bottomed out in March of last year, that’s actually not the case with OCGN stock. Rather, it reached its lowest point of 2020 when it traded at just 17 cents in mid-July.
The bulls didn’t just capitulate, though. In fact, they made a couple of attempts to reach the $1 level in July and August. Those price spikes were short-lived, however.
Then came December, and OCGN stock soared from 29 cents to an eye-popping 52-week high of $3.50. Personally, I have a tendency to want to take profits on a stock when it has soared ten-fold.
Yesterday OCGN stock closed at $2.23. That’s still quite a bit higher than where the stock traded throughout 2020.
Therefore, based on the magnitude of the recent price move, I would be hard-pressed to recommend a long position in OCGN stock now.
By the way, I should also mention that on Jan. 8, it was announced that OCGN stock had regained compliance with the Nasdaq Exchange’s listing rules. Since the stock had maintained a closing bid price of $1 or greater for ten consecutive trading days, it met the exchange’s minimum-price requirement.
Working Together to Fight Covid-19
Prior to 2020, Ocugen’s primary business was developing gene therapies to cure blindness-related diseases. The company continues to pursue this highly worthwhile objective, but there’s something else in its pipeline that’s attracting a lot of attention.
Specifically, Ocugen is also developing a vaccine for Covid-19. However, the company isn’t working on the vaccine by itself.
In a Dec. 22 press release, Ocugen announced that it is collaborating with biopharmaceutical company Bharat Biotech on the development of the latter company’s Covid-19 vaccine candidate, known as COVAXIN.
This vaccine candidate will be targeted towards the United States market. It has already been evaluated in roughly 1,000 subjects in Phase 1 and Phase 2 clinical trials in India.
Moreover, COVAXIN is now part of a Phase 3 clinical trial in India. That trial involves 26,000 volunteers.
A Vaccine with a Difference
Now I’m going to guess what you might be thinking: there are already Covid-19 vaccines being distributed by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA).
To counter that, I’ll suggest that Bharat and Ocugen’s proposed Covid-19 vaccine isn’t quite the same as those of Pfizer and Moderna.
I’ll let InvestorPlace contributor Sarah Smith explain it much more intelligently than I ever could:
“Bharat Biotech is using a more traditional vaccine approach with COVAXIN, using an adjuvanted inactive virus. This means that it has taken an inactive form of the novel coronavirus and supplemented it with an adjuvant, something which enhances an immune response.”
The result, potentially, is a Covid-19 vaccine candidate that’s different from others currently available in the U.S. market “with potentially broader coverage against multiple protein antigens of the virus,” according to Ocugen Vaccine Scientific Advisory Board member Harvey Rubin.
Fair enough; COVAXIN could offer protection that other vaccines don’t. That’s exciting, but the prospect of a highly successful vaccine seems to already have been priced into OCGN stock.
The Bottom Line
Ocugen is tough to assess. I really appreciate the efforts of Bharat and Ocugen to develop a unique vaccine candidate to combat Covid-19.
And the stock is cheap; yet it’s expensive at the same time after its recent price explosion. With that in mind, it might be best to hold off on buying OCGN stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
