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Don’t Even Think About Ocugen Stock Until It Approaches the $4 Mark

Since I last wrote about Ocugen (NASDAQ:OCGN) stock on March 8, the company had provided investors with full-year results and a business update.

Source: Shutterstock

That’s done little since for OCGN stock. It’s down 26% in the past month, most of the fall after announcing the news. 

In my last article, I said that investors shouldn’t buy its stock until OCGN stock fell back to $5 and penny-stock status. As I write this, it’s only about $1.30 away from that level.

Did the March 18 business update provide any light at the tunnel? I’ll have a look. 

Covaxin’s Efficacy and OCGN Stock

The headline’s a bit of an exaggeration. We already knew on March 3 that Bharat Biotech’s interim Phase 3 trial results showed that Covaxin was 81% effective after the second dose. It added that the vaccine’s proven to be effective against the new variants that spread faster. 

The company also said that it had established a vaccine scientific advisory board of industry experts working with the Food and Drug Administration (FDA) to get Covaxin approved for emergency use authorization (EUA) as quickly as possible. 

Of course, we already knew that the company expected U.S. EUA approval in May. I guess you could say that it’s steady as she goes. Nothing’s knocked it off stride, which isn’t the same as an approval’s having been given, but it’s the best shareholders can ask for at this point. 

As for the rest of its business, including gene therapy candidate OCU400, it’s business as usual. 

2020 Is in the Books

Ocugen finished December with $24.2 million in cash. Thanks to at-the-market share sales, its cash position was almost double at $46.6 million by the end of February. 

What’s this mean for the year ahead? It means it ought to be able to fund another year of operations.

In 2020, it had an operating loss of $21.3 million on $42,620 in revenue. A year earlier, it had zero revenue and an operating loss of $14.2 million. With all the work to be done on the EUA for Covaxin, I’d guess that its operating loss without any additional revenue would double in 2021 to $42 million.

That doesn’t leave much for the future development of its Phases 1 and 2  clinical trials for its ophthalmology pipeline. Nonetheless, it appears as though 2021 could be a defining year for the company. 

Regardless, it should have enough cash to get through 2021 and into 2022, and I’d be shocked if it didn’t make some more at-the-market share sales as we progress through the year.

Why Not Buy OCGN Stock Today?

The difference between where it’s currently trading and $5 doesn’t seem like a lot. However, 31% is a big deal when you consider it has little in sales and might not have anything to show for its efforts for the remainder of 2021 and into 2022.

That’s why it’s considered a speculative stock and not something worth gambling your retirement savings on. Just because it’s speculative in nature doesn’t mean you should be willy-nilly about your purchase price. 

OCGN stock traded below $2 between October 2019 and January 2021. That’s 16 months at the low end of penny-stock status. 

On March 31, InvestorPlace Assistant News Writer Brenden Rearick reported that Ocugen participated in a Cantor Fitzgerald fireside chat about its vaccine’s development. I don’t know if that’s to emulate the upcoming Masters’ golf tournament, but as far as I can tell from the slide presentation, nothing that hasn’t already been made available was brought up on the call.

A bigger concern as it relates to OCGN stock is one of its competitors for a vaccine.

In mid-March, Novavax (NASDAQ:NVAX) revealed that the company’s Phase 3 clinical trial in the UK was 96% effective in preventing the original strain of Covid-19 and 86% effective against the more contagious variant of the coronavirus. Overall, that puts the company’s vaccine effectiveness at 90%.

The news sent NVAX stock to $330 and higher. Shortly thereafter, its share price plummeted on the news it was having difficulties procuring raw materials for its vaccine. 

That’s not surprising. The global supply chain is a mess. It will get sorted. 

To that end, Novavax announced on March 29 that GlaxoSmithKline (NYSE:GSK) would support it in the production of 60 million doses for the UK population. That helped stabilize its stock at $175. 

I mention this because, from where I sit, if you’re going to speculate on a vaccine stock at this point, NVAX at $175 makes a lot more sense than OCGN at $6 or so.

Don’t even think about Ocugen until it’s in the $4s.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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