With mass vaccination campaigns picking up steam globally, all eyes are on how quickly we can all get vaccinated. We all want a return to normal, as fast as possible. Indeed, investors in Ocugen (NASDAQ:OCGN) stock certainly have an optimistic landscape today.
Ocugen is the U.S. arm of Bharat Biotech, an Indian company specializing in vaccine development. Bharat’s Covaxin Covid-19 vaccine is currently approved for use in India. The company’s Covaxin vaccine has also had its “clinical trial” label removed recently. As many investors are already aware, India is currently being ravaged by the coronavirus, so the more vaccines, the better.
However, the real issue with Pennsylvania-based Ocugen is whether or not the company can bring this vaccine to the U.S. After all, the AstraZeneca (NADSAQ:AZN) vaccine has not yet been approved in the U.S. Indeed, the FDA has been extremely scrupulous with which vaccines it has approved thus far. The bar is set high, and the question is – will Covaxin pass the test?
Ocugen shareholders remain hopeful. Here are two reasons why.
Hopes for U.S. Approval Driving OCGN Stock Higher Recently
On April 21, Ocugen announced the results of its Phase 3 study. The stock popped approximately 25% (including after-hours trading) on the day, on this news.
Why the excitement?
Well, the results were overly positive. The study found a 100% efficacy rate among severe Covid-19 disease following the shot. Asymptomatic infection was reduced by 70%, and an overall efficacy rate of 78% was noted. This is higher than that of AstraZeneca (76% efficacy rate), as per a recent announcement from a large-scale Phase 3 trial in the U.S..
Yet, questions still remain as to whether either or both will ultimately be approved.
After all, previous concerns have proliferated about the speed at which Covaxin was approved in India. Some eyebrows were raised at how fast this vaccine was approved by the Indian government. Other countries, like Brazil, have already said “no” to Covaxin.
That said, countries like Mexico have granted emergency use authorization of the Covaxin vaccine. The hope is that Ocugen, Bharat’s U.S. partner, will be able to work its magic domestically.
Ocugen Ready to Go Full Steam Ahead in U.S.
According to Ocugen’s CEO Shankar Musunuri, Ocugen is ready to go into the U.S. market in a big way.
A report released a month ago indicates as many as 100 million vaccines could be available in the second quarter of this year. That is, if Covaxin is granted emergency approval by the FDA. These vaccines would initially be shipped to the U.S., before domestic production would begin.
Now, it’s clear Ocugen is doing everything in its power to get its vaccines in the hands (or rather, arms) of Americans. Additionally, the Biden administration has shown that tackling the coronavirus pandemic is priority No. 1. If the FDA is indeed in preliminary discussions with Ocugen on the topic, it’s possible we could hear some news soon.
Accordingly, Ocugen’s future really rests in the hands of the FDA right now. There’s a significant amount of speculation required to value this stock today. In essence, it’s really a binary problem with probabilities changing on a daily basis. As such, investors can expect volatility on the horizon with OCGN stock.
I think there’s definitely reason investors should get excited about Ocugen. The company’s Covaxin vaccine certainly has potential to be approved. If the FDA does indeed grant emergency use authorization for this vaccine in the U.S., I’d expect OCGN stock to absolutely take off.
Additionally, given India’s population, the rate of spread of Covid-19 within India, and Covaxin’s market share in the Indian market, this may be the more important driver of this stock’s performance in the near-term investors should keep their eye on.
There’s a lot of uncertainty with this stock right now. The exact probability of U.S. approval remains uncertain. Accordingly, I believe investors appear to be correctly pricing in risks correctly with this stock today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.