There are at least three good reasons to believe Ocugen (NASDAQ:OCGN) will continue to move upward. All three of the reasons are related to hope. The hope is that OCGN stock can at some point derive revenues from its rights to Bharat Biotech’s Covaxin vaccine.
I’ll get to those three reasons in just a moment. However, there’s another reason that shares ought to remain high as well. That is the simple fact that there is significant short interest in OCGN stock. Current short interest stands above 22%. Therefore, Ocugen is in the range in which a short squeeze could be affected. So, even if there weren’t other catalysts propping Ocugen up, short interest would by itself.
That aside, let’s get back to the other three reasons OCGN shares shouldn’t go down soon.
Commercialization Rights Expansion
The first relates to rights and revenues. Indian biopharma company Bharat Biotech already gave Ocugen sole commercialization rights for its Covaxin vaccine in the United States. That happened back in early February causing a massive spike in prices. Since then, Ocugen shares have been volatile. Speculation surrounding the viability of Covaxin as a US vaccine candidate have ebbed and flowed on any number of catalysts. But it was all dependent upon Ocugen securing the legal authorization to sell Covaxin in the U.S.
Fortunately for the company, its prospects aren’t solely tied to future US-based revenues. That’s because on June 3 Ocugen secured the commercialization rights for Covaxin in Canada.
Given that Canada has a much smaller population than the United States, the news isn’t as groundbreaking. However, Canada’s population is far from insignificant. Canada’s 38 million residents, combined with the 332 million in the U.S., bring Ocugen’s total addressable market for Covaxin to 370 million people. That roughly means that its potential revenues increased by 11.45% on June 3.
EUA to BLA
A big part of the narrative surrounding Ocugen’s ascendancy was that it was in position to receive Emergency Use Authorization (EUA) from the Food and Drug Administration (FDA).
In late May Ocugen submitted the necessary paperwork to the FDA to receive EUA. However, sometime between then and June 10 the FDA recommended that Ocugen instead pursue a biologics license application (BLA) for Covaxin. It was on June 10 that Ocugen announced it will no longer be pursuing an EUA for Covaxin, and will move forward with the FDA’s suggestion of a BLA.
Ultimately this means that Ocugen’s revenue prospects are getting pushed out farther for Covaxin. Ocugen CEO Dr. Shankar Musunuri implied as much stating “While this will extend our timelines, we are committed to bringing COVAXIN™ to the US. This differentiated vaccine is a critical tool to include in our national arsenal given its potential to address the SARS-CoV-2 variants, including the delta variant, and given the unknowns about what will be needed to protect the US population in the long term.”
The narrative here is that Ocugen shares should be able to tread water as long as hope remains. This news clearly extends hope for the company.
The last piece of news that indicates Ocugen is in a strong position relates to manufacturing. On June 15 the company announced that it had secured a manufacturing deal.
Jubilant HollisterStier of Spokane, Washington will be manufacturing Covaxin for both the U.S. and Canadian markets. The news is clear that commercial manufacturing will not begin immediately. It is the announcement of a partnership that should bolster Ocugen in the short-term.
That Ocugen has found a manufacturing partner should impact it positively. It signals the market that Ocugen fully intends to continue to seek the commercialization of Covaxin.
And it is because of the three reasons mentioned above that I think OCGN stock prices should remain moving upward for the immediate future. Hope springs eternal and in biotech the hope of future revenue spurs stocks like Ocugen on.
On the date of publication, Alex Sirois 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.