We are now firmly in the home stretch of the Covid-19 vaccine race. As a result, major players in the pharma space are losing steam. Against this backdrop, it’s a tough task to advocate for Ocugen (NASDAQ:OCGN) stock.
Ocugen is a biotech looking to bring Covaxin, a Covid-19 vaccine manufactured by India’s Bharat Biotech, to American shores. This ambition rewarded OCGN stock handsomely until last month when it dropped more than 34%.
Covaxin is an inactivated vaccine that works by teaching the immune system to make antibodies against the virus.
Ocugen is planning to sell 100 million doses of the two-dose vaccine in the U.S. this year. It will file for emergency use authorization (EUA) in April.
Ocugen aims for a second-quarter launch, starting with imported shots before ramping up production in the U.S.
At this point, the main catalysts for OCGN stock are updates on vaccine news. Its other products focusing on gene therapies to treat blindness diseases are interesting, but Ocugen has never had a drug approved as of yet.
A speculative play at this stage, you will have to chart this one and time your exit and entry positions.
OCGN Stock Is a Gamble, but a Good One
There are no merits in talking about Ocugen’s fundamentals. Every operating metric is in the red. However, as we’ve established in the intro, if you invest in this one, it has to be mainly for Covaxin.
The National Institute of Virology and the Indian Council of Medical Research partnered with Bharat Biotech to develop the inactivated coronavirus vaccine.
On Jan. 3, India authorized the vaccine for emergency use, making Covaxin just one of two vaccines approved by the government for the world’s second-biggest country.
Trial results showed the efficacy of Covaxin stood at 80.6%. Out of all the major vaccines out there, only Johnson & Johnson’s (NYSE:JNJ) vaccine has a lower efficacy rate than Covaxin, 66%.
Meanwhile, Pfizer’s (NYSE:PFE) vaccine has an efficacy rate of 95%, and the Moderna (NASDAQ:MRNA) vaccine is at 94.5%. All things considered, an 80.6% efficacy rate is not that bad.
Interim Phase 3 trial data is encouraging, and Bharat Biotech’s Phase 3 trials have recruited 25,800 participants, the largest clinical trial in India.
CEO Shankar Musunuri also believes the vaccine could initially focus on children, as it is likely safe for those over 12. Additionally, Musunuri believes the vaccine can be used as a booster shot.
In summary, the demand for vaccines will not erode in the coming months. If you are fearful of oversaturation, then you shouldn’t be.
Important to Hold on for the Moment
At the moment, the only reason to hold onto OCGN stock is for Bharat Biotech. On its own, there are very few catalysts that you can exploit. That makes this company kind of a one-trick pony.
Remember, things can always go south when you are dealing with such companies. We need to only look towards the example of Workhorse Group (NASDAQ:WKHS), an electric delivery van maker with a roller coaster year.
For months there was rampant speculation that the company would get a slice of the U.S. Postal Service contract to replace their white, right-hand drive delivery trucks. When they didn’t get it, the stock tanked.
Bottom line, trading these high-risk, high-return investments is a precarious proposition. However, in this case, there is more going in favor of the company than against as a trade.
In the coming weeks, we will likely see data from the Phase 3 trial, and there will be more traction on the vaccine. These will push the stock upward. Beyond that, OCGN stock lacks a long-term story. Once the stock surges, you should take profits and invest them elsewhere.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
