Ocugen (NASDAQ:OCGN) has suffered multiple setbacks in commercializing the Indian variant of the coronavirus vaccine in North America, and it’s kept the OCGN stock price from breaking out.
Many experts, including me, felt that the odds were firmly against the troubled biotech.
However, it appears it has an ace up its sleeve with a likely emergency use listing (EUL) from the World Health Organization (WHO). Even with the EUL, Ocugen won’t sway its target markets, which weakens OCGN stock.
The clinical-stage biotech focusing on various gene therapies shifted strategies when it announced its partnership with Indian biotechnology company Bharat Biotech.
Bharat developed the Indian variant of the coronavirus vaccine called Covaxin, which demonstrated 77.8% efficacy against the virus.
Subsequently, OCGN stock rose more than 250% this year, but those gains were wiped away once the FDA denied its emergency use authorization request.
OCGN stock now is back in the doldrums as the company has to go through a more comprehensive and arduous approval process. This limits its attractiveness.
The bulls believe that the stock is now back in business after the WHO’s nod of approval and the company’s plans for an accelerated submission in Canada. However, it’s just wishful thinking at this point.
The Impact of an EUL
Naturally, an EUL gives COVAXIN some legitimacy. There are currently just six vaccines that have received this distinction, and all of them have exhibited robust phase 3 data.
It could be a strong endorsement for Bharat Biosciences and could positively affect domestic sales of the vaccine.
However, it would have a major effect on regulatory agencies operating outside India would be an overstatement. Especially with the stringent requirements of the FDA, the WHO’s nod of approval wouldn’t mean much at this point. The FDA has refused to accept any clinical trial data that has been run outside of the United States.
Furthermore, the EUL is not a done deal either. The WHO recently sent several technical queries to Bharat, which should delay proceedings.
This news follows the reassurances from the company that they had submitted all the required documents for WHO clearance.
Outlook and Bottom Line on OCGN Stock
In the best-case scenario, Ocugen might get clearance for Covaxin by 2022. Even with the assumption that the vaccine boasts similar efficacy levels to its competition, carving out a niche for itself will be tough.
It’s hard to foresee a situation where it could jump the line when so many alternates are already in the market and have gained a strong foothold.
Perhaps the prospects may be more encouraging; however, Ocugen will need a major supply deal to justify its lofty valuation. Striking a supply deal would be tough, though, as several vaccine makers are looking to ramp up production.
There are more than 20 different Covid 19 vaccines approved by at least one country. It’s tough for new entrants such as Covaxin to stand out. In countries such as the U.S., where a little more than half of the population has been vaccinated already, it’s fair to question how many people switch vaccine brands at this time.
On top of that, the outlook of the pandemic itself is uncertain at this time. It’s unclear how big of a threat it would be beyond 2022. Even if it is a threat, its demand is far from certain at this stage.
Therefore, OCGN stockholders are likely to have a torrid time ahead. The lack of strong catalysts indicates that it won’t be able to achieve its goals. Therefore, it’s best to sell the stock and invest in other brighter prospects in the coronavirus vaccine industry.
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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.