It still surprises me that Ocugen (NASDAQ:OCGN) stock, at best a long-shot Covid-19 vaccine play, has held on to so much of its gains from this catalyst.
Its chances of successfully bringing Covaxin, developed in India by Bharat Biotech, to the U.S. and Canada, are slim. Yet speculators keep finding reasons as to why this underdog will prevail.
In recent weeks, it’s been the prospects of Covaxin getting an emergency-use listing, or EUL, from the World Health Organization (WHO), that’s helped it trade between $7 and $8 per share.
Some reports have said the WHO could reveal whether it’s approved for EUL in a matter of days.
I think the WHO buzz is all hope and hype with no substance because even though an EUL will likely result in this vaccine becoming widely used overseas, that does not equal big benefits for Ocugen.
That is, it may not lead to U.S. and Canadian health authorities giving the go-ahead for Covaxin.
What’s even worse is there’s likely not a big market waiting for it, assuming it finally gets approved in North America.
The short side has been wrong many times this year, but it isn’t wrong in betting big against this name. Expect OCGN to make a trip back below $1 per share (87% below current prices) once investors bullish on it have no more straws to grasp.
WHO Approval and OCGN Stock
Some looking at Ocugen today may be well aware of its long-shot chances of profiting from Covaxin. But that may not be stopping them from approaching it as a trade.
Risk-hungry speculators may find it worthwhile to take a gamble on it at $7.69 per share. If WHO go-ahead rumors become fact it may have room to see a high double-digit, or even a triple-digit, percentage spike in price.
Outside of that, you shouldn’t buy OCGN stock. Possible WHO approval doesn’t mean U.S. and/or Canadian regulatory approval is just around the corner.
Sure, there’s a chance Canada may take a decision from the WHO into account and give Covaxin Emergency Use Authorization (EUA).
Even if it gets EUA there, though, with nearly 70% fully vaccinated, it’ll be going after a small slice of what’s already a small market. Success in America is what’s going to make or break Ocugen’s Covaxin gambit.
A big problem though is that the earliest it could possibly get approval stateside is either in late 2022, or early 2023.
It’s also out of the running when it comes to getting EUA. WHO’s approval won’t do much to shorten this timeline.
As my InvestorPlace colleague Larry Ramer previously wrote, the company isn’t making any progress with Covaxin until it completes a U.S. clinical trial.
Worse yet, with the high chances that U.S. vaccination rates pick up, the risk of this stock’s ultimate collapse keeps on rising.
Recent Mandates Further Dent Occugen’s Prospects
Earlier this year, Ocugen said it planned to sell 100 million Covaxin doses domestically, but according to President Biden in a recent speech, only 67 million are not vaccinated.
Expect that number to continue coming down, as the “vaccine-or-test” mandate on U.S. employers fully comes into effect.
Given that after this mandate, everyone who wanted a vaccine, and most who were hesitant to get one will have relented and gotten one. To whom in the U.S. will the company sell Covaxin?
With a market capitalization of around $1.53 billion, OCGN stock still trades as if the company will hit its 100 million dose goal. With much saying otherwise, it’s only a matter of time before shares fall to a price more reflective of its prospects.
As I wrote back in August, likely back down to its pre-Covaxin prices. In other words, $1 per share and below, more than 86% below where shares change hands today.
It was Covaxin alone that sent this stock out of penny stock territory. Without this catalyst, it’s likely heading back to where it started.
Bottom Line on Ocugen
WHO authorization bodes well for Covaxin’s developer, Bharat Biotech. Unfortunately, it does little to improve the situation for Ocugen. It remains far away from getting this underdog vaccine approved and sold within the United States.
Admittedly, one last boost may still be on the table, if meme traders use subsequent WHO news as a reason to send OCGN stock back to double-digit prices. But with its high chances of ultimately collapsing in price, it’s a stock most investors should avoid.
On the date of publication, Thomas Niel 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.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.