Ocugen Stock Is A Bust After Covaxin’s Emergency Use Rejection

Editor’s Note: This article was updated on July 2, 2021, to correct information around Ocugen’s EUA request.

Shares of small drug makers and emerging Covid-19 vaccine play Ocugen (NASDAQ:OCGN), tanked this month. It was flying high, with its shares up over 400% more than its debacle on June 10. OCGN stock lost more than 28% of its value in just one day after the FDA suggested it withdraw its emergency use authorization (EUA) request.

hands of medical professional holding a syringe, symbolizing vaccine
Source: shutterstock.com/PhotobyTawat

It appears that the game is up for OCGN stock.

Ocugen was biotech with a preclinical portfolio focused on eye disease assets back in December. However, in a dramatic turn of events for the company, it struck a deal with Indian Bharat Biotech to commercialize its Covid-19 vaccine, Covaxin, in the United States. As a result, its six-month returns shot up over 2,100%.

However, after the FDA’s snub, its prospects look incredibly bleak.  It’s more of a speculative stock that is ideal for short sellers. With that being said, let’s dive a little deeper into the Ocugen story to assess its future.

The FDA Blow

Many hoped for a quick EUA win for Ocugen, followed by strong U.S. sales for Covaxin. However, that’s all a fantasy now, as Ocugen’s EUA request has been withdrawn at the FDA’s suggestion.  In response, the company stated that it would pursue a full FDA approval that would entail another late-stage clinical study.

Ocugen’s management revealed that the FDA sought additional data about Covaxin. Moreover, the Phase 3 trials conducted by Bharat did not meet the FDA’s requirement of having a minimum of 30,000 participants and at least one site in the United States.

Ocugen has yet to start a late-stage study. The FDA typically takes two months to accept a filing and then another 10 months to approve. Realistically, if Covaxin is shown the green signal, it will probably be in mid-2023 at the earliest.  Moreover, even if it wins approval, commercial success will be a major challenge for the company.

It’s difficult to predict the dynamics of the Covid-19 market two years from now. However, with several players in the mix already, they are likely to chomp away at the market share, leaving little for Covaxin.

Possible Options For Ocugen

There are a couple of scenarios apart that could play out with Ocugen at this time. First, it could seek a EUA in Canada. However, it seems unlikely for Canadian regulators to feel confident approving a vaccine that the FDA suggested not go that route in the U.S. Moreover, with a relatively sparsely populated country like Canada, the hope of generating many profits is not that high.

The other option for Ocugen is to revert to its gene therapy activities. It does have $145 million cash to invest in its pipeline if Covaxin is a failure. However, all its assets are preclinical stages and target eye diseases. Its gene therapies are complex to develop and involve many safety concerns that will impact their development times.

Moreover, it hasn’t made it to the Investigational New Drug-enabling stage with any of its candidates thus far.

Bottom Line on OCGN Stock

Ocugen had been in the news for months now as a prospective Covid-19 play. It has been on fire in the past few months and was set for big splash in June. However, all that hype has now died down.

The stock now seems highly unattractive given the tricky scenarios in front of it at this time. Investors with a long-term view should dump OCGN stock.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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