Biopharma firm Ocugen (NASDAQ:OCGN) joined the Covid-19 vaccine race last month after announcing its partnership with Indian company Bharat Biotech. OCGN stock jumped 9% after Bharat reported strong efficacy results in its interim trial report on its Covaxin, which is currently in the third stage of clinical trials.
Both companies will co-commercialize Covaxin for the U.S. population, with Ocugen keeping 45% of the profits. Despite the positive results, there is still a long way to go before Covaxin could be considered a significant player in the US market.
OCGN stock has been on fire ever since announcing its partnership with the Indian biotech. It had already been rallying on the back of rumors surrounding the agreement. The stock is up a whopping 2,720% in the past three months, a mind-boggling figure considering its struggles previously.
The immense growth in the stock has taken its valuation past $1.5 billion. The reality is that most of these gains are unjustified at this time, considering the variables surrounding its plans. Therefore, with little upside at this point, it’s best to avoid the stock.
Positive Interim Results
Bharat Biotech released interim vaccine efficacy results for Covaxin last week. The company reveals that the vaccine has shown 81% efficacy in its late-stage clinical trials. Previously, it had guided toward a 60% efficacy.
The trials included 25,800 participants in conjunction with the government’s medical research body called the Indian Council of Medical Research (ICMR). Additionally, the company also states that the vaccine candidate is highly effective against the virus’s emerging variants. The National Institute of Virology found that the antibodies developed by the vaccine could neutralize the UK variants.
The participants involved received a placebo or the vaccine in a 1:1 ratio which was well tolerated. Bharat will be sharing more details about the trial as more data becomes available. Another interim analysis is in the cards for 87 cases, and the final one will be based on around 130 cases. All the data from these trials will be available via pre-publication servers and published in peer-reviewed journals.
The details are still scant, though, and it would be best to wait for the final results to form an opinion about the vaccine. It is, however, a step in the right direction.
Challenges Ahead
It’s been so far, so good for Covaxin, but its acceptance in the U.S. market could face a few roadblocks. Firstly, I suspect that the FDA would want Ocugen to have a study conducted in the U.S. It would be tough to assume that the authorities could authorize the vaccine based purely on the Indian trial. Additionally, results from the Indian trial are not enough either for the FDA to approve the vaccine.
The other problem is competition, especially in the U.S. market. Washington has already bought out vaccine doses from Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE). Moreover, the Johnson & Johnson (NYSE:JNJ) vaccine got the greenlight to ship up to 100 million doses within the U.S. last month. On top of that, the government has also ordered 100 million doses from Novavax (NASDAQ:NVAX) as well. Therefore, there won’t be an immediate need for other vaccines in the country.
Of course, there will be a need for more vaccines much further down the road. However, in the near-term, Ocugen will have trouble generating revenue even if Covaxin is authorized. Hence, emerging vaccine candidates will have to stand out from the pact. Moderna and Pfizer have produced 94% efficacy during their respective vaccine trials. Moreover, their vaccine candidates are effective against the newer variants. Therefore, carving a niche for Ocugen and other companies wouldn’t be easy.
Final Word on OCGN Stock
The buzz surrounding OCGN stock is understandable considering the market opportunity ahead of it. However, things are still premature for it to be considered a viable investment in the biopharma space.
Covaxin is still in the final stages of its trials in India and could be tested again in the U.S. The limited available details are encouraging, but it faces stiff competition in the market. Therefore, OCGN stock is only a speculative Covid-19 vaccine play.
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. He does not directly own the securities mentioned above.
