On Dec. 21, 2020, Ocugen (NASDAQ:OCGN) stock was trading at $0.29. As a matter of fact, OCGN stock had traded below the $1 level for more than a year. The clinical-stage biopharmaceutical company didn’t have any positive news trigger.
Things changed for the company on Dec. 22. Ocugen announced that the company has partnered with Bharat Biotech to co-develop Covaxin (the inactivated vaccine against Covid-19).
This news, coupled with the news that Covaxin was approved for emergency authorization use in India, triggered a scintillating rally for OCGN stock. In February 2021, the stock touched a high of $18.77.
Profit booking was likely after a massive rally and OCGN stock has corrected significantly. However, I would be cautious on exposure to the stock even at current levels around $7.50.
Let’s discuss the factors that make OCGN stock unattractive among vaccine plays against Covid-19.
A Crowded Vaccine Space and OCGN Stock
In March 2021, Ocugen announced that the company is in talks with the U.S. regulators for emergency use authorization of the vaccine. However, it seems to me that U.S. already has a vaccine glut.
In the first 100 days of assuming office, Joe Biden administration seems to be on target to reach a goal of 100 million Covid-19 vaccine shots. U.S. population is approximately 330 million and this implies one-third coverage.
The U.S. government has already ordered 200 million does of the Moderna (NASDAQ:MRNA) vaccine. The government has an option to purchase an additional 300 million doses.
Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) will be supplying 200 million doses of the vaccine by July 2021, which will allow 100 million people to be vaccinated.
Johnson & Johnson (NYSE:JNJ) vaccine has also been authorized by the U.S. Food and Drug Administration. The company will be supplying 100 million doses of the vaccine in the first half of fiscal 2021.
Additionally, the Novavax (NASDAQ:NVAX) vaccine has been found to be 96% effective against the coronavirus. The vaccine is also 86% effective against the British variant of Covid-19. The company therefore has a high likelihood of U.S. FDA emergency use approval.
The AstraZeneca (NASDAQ:AZN) has been found to be 79% effective in U.S. trials with 100% effectiveness in preventing serious illness. However, the outlook for the company’s vaccine authorization in the U.S. seems uncertain.
With these major pharmaceutical companies in the fray, it might be a challenge for Ocugen to receive approval. In particular, for a vaccine with trials conducted just in India.
In February 2021, it was reported that Covaxin is “not finding international takers even when supplied free of cost by India.”
I am not making a case against the vaccine. It’s just a fact that’s not very encouraging.
Concluding Analysis
It’s worth noting that at the beginning of March, Ocugen announced that Covaxin has demonstrated 81% efficacy. The results have found the vaccine to be effective against the U.K variant. OCGN stock did surge on this news. However, the stock is still trending lower over the last few weeks. The stock price action might be telling the story.
The concern for me is that Ocugen does not have anything to offer in the medium-term if the company does not receive U.S. FDA authorization.
The company is working on gene therapies to cure some of the diseases that cause blindness. However, the company’s research and development pipeline has just crossed the pre-clinical milestone. Considering this fact, I would not be surprised if OCGN stock plunges lower if the company fails to secure U.S. FDA approval.
Therefore, OCGN stock is certainly not the Covid-19 vaccine play that I would be considering for investment.
If I am looking at relatively lesser-known names or potential hidden gems, Valneva SE (OTCMKTS:INRLF) looks attractive. The company is planning a U.S. initial public offering and might be in limelight soon.
However, I would stay way from OCGN stock. If there is confirmation from the FDA on emergency use approval for Covaxin, exposure to the stock can be considered. Even if it means buying the stock at higher levels.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
