Editor’s note: This article was updated on March 3 to correct the value of the Brazilian supply deal in U.S. dollars.
Ocugen (NASDAQ:OCGN) is making a big move on Friday, with OCGN stock up more than 20%. For investors bullish on the red-hot biotech name, it looks like there are two reasons for the spike. So what are they? And what else do you need to know now?
To start, investors should know that the company primarily specializes in rare conditions that cause blindness. In fact, its lead candidate OCU400 hit a new milestone earlier this week. The European Commission chose to extend it orphan drug designation for its potential as a treatment for two rare genetic conditions. OCGN stock was up slightly on the news.
However, many investors like Ocugen for its newer role as a Covid-19 play. The company is partnered with Bharat Biotech, an Indian firm that specializes in vaccines. Through the deal, Ocugen will handle development and commercialization of the vaccine COVAXIN in the United States.
So why is OCGN stock on the move today? It looks like COVAXIN is to thank… and that there are two separate stories worth watching.
The first comes from Brazil. Last night, Bharat Biotech confirmed that it struck a vaccine supply deal with the Brazilian Health Ministry. The contract has Brazil purchasing 20 million doses of COVAXIN, which will be delivered between March and May. Additionally, the Health Ministry confirmed that the deal is worth about 1.6 billion reais. At the time of writing, this is roughly $290 million.
For those unfamiliar, Bharat Biotech is operating under an emergency-use basis in India, and also working to ensure its COVAXIN has a greater reach. Although Ocugen is primarily concerned with use in the United States, it is a good sign that other countries are signing on.
Why OCGN Stock Is Soaring Today
Importantly, there is one other reason that OCGN stock is on the move today. And in fact, it ties into the role of COVAXIN in the U.S.
A new article from Motley Fool contributor Adria Cimino today suggests that Ocugen may be close to the finish line so to speak in the U.S. In other words, Cimino thinks that the U.S. Food and Drug Administration may be almost ready to grant it emergency-use authorization. If it does that, Ocugen could take market share as the country ramps up its vaccine rollout and tries to cover its population.
What should investors make of this news? The last update from the company on its COVAXIN in the U.S. came in early February. At the time, Ocugen shared that it has initiated talks with the FDA and Biomedical Advanced Research and Development Authority (BARDA) to prep for an emergency-use authorization. Further updates on this front would be a huge boost for OCGN stock.
Cimino recommends that investors keep this biotech play on their radar, and that feels like a wise move here. The path forward is not necessarily smooth, but the Bharat Biotech deal with Brazil is reason for optimism.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.