Ocugen (NASDAQ:OCGN) is a bit of an odd duck. The biopharmaceutical company has a focus on using gene therapy to treat genetic eye disorders. But it’s also in the Covid-19 vaccine game, partnering with India’s Bharat Biotech in the commercialization of Covaxin in the U.S. and Canada. It’s Covaxin that made OCGN a meme stock and turned 2021 into a roller coaster for investors. But it’s the long term potential, not the meme status, that should interest investors.
Covaxin news has set OCGN stock surging on three occasions this year, but it’s been in a tailspin since the start of November. At this point, OCGN is down over 60% since closing at $15.67 on Nov. 2.
The latest catalyst was notification that the Food and Drug Administration (FDA) put the approval process for Covaxin in the U.S. on hold. That news sent shares down 10%. At this point, there is an opportunity for investors to pick up OCGN stock at prices not seen since April. However, they are still running a massive 1,890% higher than a year ago. At that time, Ocugen was a biopharma with genetic treatments for inherited retinal diseases in its pipeline. Which is it for OCGN? Is this a buying opportunity to get in on Covid-19 vaccine action, or a gene therapy stock on its way to a big price correction?
The FDA Puts a Hold on Covaxin Trial
The big news at the end of November was that the FDA had put a clinical hold on Ocugen’s application for approval for use of Covaxin in America. There were no specifics given for the hold other than mention of “deficiencies” to be addressed.
Until the application is either denied outright or, more likely, moves forward once Ocugen addresses the FDA’s concerns, the market reaction has been to continue to punish OCGN stock.
Gene Therapy for Inherited Eye Conditions
All of the excitement about OCGN stock in 2021 has been directly related to Covaxin. Let’s face it, Covid-19 vaccines have been behind some of the biggest stock market moves of the past year and a half. And they’re catnip to retail investors. However, if you step back and forget about Covaxin for a moment, you’re left with Ocugen’s non-Covid product pipeline. That includes a series of gene therapy treatments like OCU400, in testing for treatment of inherited retinal diseases.
That in itself is a potentially lucrative market. A 2020 study found that inherited retinal diseases have an economic burden of up to $31.7 billion in the U.S. alone. There are currently no cures for these degenerative eye conditions. There is some competition in the race for gene therapy that will halt the progression of the disorders, but if Ocugen succeeds with its gene therapy treatments, the revenue potential is considerable. Covaxin goes for about $19 per shot. Current gene therapy treatments for other conditions range in price from $373,000 to $2.1 million.
Bottom Line on OCGN Stock
I last wrote about Ocugen in November, when shares were just over two weeks into their slide. I suggested that if you were willing to ride out the volatility inherent in being a meme stock, an investment in the company was worth considering. Especially with its application for approval to have Covaxin used in the U.S. to vaccinate children.
At that time, OCGN stock was going for $7.72 and it’s slipped a further 24%. The FDA’s hold on Ocugen’s Covaxin application is a big part of that. Assuming this gets sorted out — and there’s a good chance it will be given that Covaxin has already been administered to 100 million people in 17 countries — any positive news is bound to trigger another spike in OCGN shares.
Remember, we’ve seen three big surges this year. Each of these saw OCGN stock flirting with $16 as a result of positive Covaxin developments.
That’s the other side of the volatility I mentioned. I wouldn’t buy this Portfolio Grader “B” rated stock in a speculative bid for a quick payday. Any such win is likely to be short-lived. But as a long-term growth stock for your portfolio, Ocugen has real potential. If you decide it’s right for you, picking up OCGN stock while the price has been weakened by market reaction to disappointing news about Covaxin is probably the time to make the move.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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