Despite the pause of Johnson & Johnson’s (NYSE:JNJ) vaccine recently imposed by the U.S. government, Ocugen (NASDAQ:OCGN) and OCGN stock remain very poorly positioned. A significant amount of evidence suggests that, even in the wake of the pause, the U.S. will have enough novel-coronavirus vaccines for its entire adult population. Meanwhile, two made-in-America vaccines look much better positioned than Ocugen to make up for any vaccine shortfall that America suffers in the future.
Consequently, Ocugen probably will, in all likelihood, not generate any revenue from the shot made by India’s Bharat Biotech. Last year, Ocugen obtained the U.S. rights to the vaccine, sending OCGN stock on a huge rally. In fact, over the last year, the shares have soared more than 20-fold.
It appears that the shares are baking in a great deal of revenue and profit from Bharat’s vaccine. However, as I explained in previous columns and as you’ll see from additional evidence that I will present in this article, that’s not a realistic projection.
As I noted in my previous column on OCGN stock, President Joe Biden, in NBC’s words, said last month that “the U.S. was on track to have enough vaccine doses for every adult in the country to get vaccinated by the end of May.” Check the calendar; it’s already mid-April, and Bharat’s vaccine hasn’t been approved yet. Plus, it would likely take at least a few weeks after the shot is approved for Ocugen to produce and distribute even a few hundred thousand doses of it.
And even after the Johnson & Johnson shot was put on hold, the White House’s Covid-19 coordinator, Jeff Zients, said the pause would not result in “a significant impact on our vaccination plan.”
Plus, as of April 1, Bharat was still studying whether its shot was safe and effective for children, so there’s a great chance that Ocugen will not be able to obtain an emergency use authorization from the FDA for the shot in children by the time U.S. high school students are vaccinated in early fall. Also, discouragingly for Ocugen on this front, India, Bharat’s home government, in February “rejected (the company’s) request to conduct clinical trials of Covaxin on children,” according to The Strait Times.
American Vaccine Makers Can Fill Any Void
In a note written after Johnson & Johnson’s vaccine was paused, Sel Hardy, an analyst at CFRA, predicted that a Covid-19 vaccine developed by U.S. based Novavax (NASDAQ:NVAX) would obtain emergency authorization from the FDA soon. Barron’s reported that the company’s jab had demonstrated 96.4% efficacy against all symptomatic Covid-19 cases caused by the original strain of the virus in a large U.K. study.
Meanwhile, Phase 1 trial data presented by another U.S.-based company, Inovio (NASDAQ:INO), “showed INO-4800 was effective against the U.K., South Africa and Brazil SARS-CoV-2 variants,” while the shot’s “Neutralization levels for the U.K. and South Africa variants seen with INO-4800 were similar to those seen with mRNA and viral vector vaccines,” Seeking Alpha reported on April 15. Finally, the shot was able to effectively combat the Brazil variant, as its results against that strain were better than existing vaccines.
The company expects to launch a Phase 3 trial of its vaccine this quarter.
With Biden having pledged that, under his leadership, the federal government would “buy American” as much as possible, these two companies’ vaccines have the edge over the shot developed by Bharat. Moreover, as I’ve said in the past, I believe that history indicates that the FDA prefers vaccines developed by U.S. drug makers over those made by overseas firms.
The Bottom Line on OCGN Stock
Reading between the lines, American officials have more or less said that the U.S. will enough vaccine doses from its existing shots to meet its needs. So in all probability, Ocugen will be left out in the cold.
With OCGN stock still reflecting a great deal of revenue from Bharat’s vaccine, I believe that the shares are tremendously overvalued at this point. In case anyone misunderstands, I’m not against the coronavirus vaccines. In fact, I already received my first Pfizer (NYSE:PFE) shot. But I think it’s pretty clear that the U.S. does not need or want Bharat’s vaccine and is highly unlikely to do so in the future.
Consequently, I recommend that risk-tolerant investors who are willing to sell shares short devote a small amount of their portfolios to shorting OCGN stock.
On the date of publication, Larry Ramer held a short position in OCGN.