Shares of biotech Ocugen (NASDAQ:OCGN) have been on a rollercoaster ride this month. Several days of 50%-plus gains — along with double-digit drops — have made OCGN stock one to watch.
It’s bringing forth another Covid-19 vaccine candidate to the U.S. market, which could reverse its fortunes.
The company announced it had reached an agreement with Bharat Biotech to release the Indian Covid-19 vaccine, called Covaxin. Both companies will work together on the supply-side activities and the vaccine commercialization for the U.S. market.
Though a fantastic growth opportunity, the scant details about Covaxin’s efficacy and other related risks complicate the outlook on OCGN stock. Mean estimates suggest that it is trading at a 32.4% premium to its current price.
Market enthusiasm will quickly fade if it fails to make it to the U.S. market. It is already in talks with the U.S. Food and Drug Administration (FDA) about Covaxin’s approval. It will be interesting to see how things progress, but at this point, OCGN stock has little to offer investors.
OCGN Stock Riding India News
In the collaboration on commercializing Covaxin in the U.S., Ocugen will have the U.S. rights to the vaccine and be responsible for its clinical development and regulatory approval. It will receive the initial batch of Covaxin once the vaccine gets receipt of emergency use authorization (EUA).
Ocugen retains 45% of the profits from the vaccine’s sale in the U.S., with Bharat Biotech. It has a head start in India, as the country’s Central Licensing Authority awarded the vaccine a EUA for restricted use.
Apparently, the vaccine has some unique benefits which set it apart from the competition. It claims to induce broader immunity, focusing on multiple viral proteins, resulting in more robust protection against mutant viruses. Moreover, it typically requires standard temperatures for storage compared to the more stringent requirements for other Covid-19 vaccines.
Hence, Covaxin could prove to be highly effective in fighting the pandemic, much more so than other vaccines.
Risks Associated With Covaxin
Despite the benefits of Covaxin, there are a few aspects that need to be considered with the vaccine. First up, the vaccine’s efficacy results are still weeks away as it is currently in its late-stage trial. Bharat Biotech has posted on its website about the need to take proper precautions for its recipients as efficacy is yet to be established.
Moreover, Bharat has seemingly failed to mention a few side-effects of the use of the vaccine. Specifically, these include antibody-dependent enhancement (ADE) and vaccine-associated enhanced respiratory disease (VAERD).
Volunteers have complained that the company misled them about the possibility of an exacerbated disease. The limited information about the vaccine’s efficacy results will affect its EUA status in the U.S.
Bottomline on OCGN Stock
The big gains in OCGN stock don’t seem justified. Covaxin is still in the third phase of its clinical trial, and little information regarding its efficacy. Therefore, EUA in the U.S. market seems unlikely till then.
Moreover, the risks associated with the vaccine are considerable, limiting Ocugen’s attractiveness at this time. Hence, OCGN stock is remarkably risky offering little value to investors.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
