Despite Big Disappointment, There’s Still Potential With Ocugen Stock

Put simply, the situation does not look good for Ocugen (NASDAQ:OCGN) right now. The biotech firm continues to struggle bringing its Covid-19 vaccine to the U.S. and Canadian markets. Add in the volatility we’re seeing now, and investors have bailed on OCGN stock.

Smartphone with logo of US biopharmaceutical company Ocugen Inc (OCGN) on screen in front of website Focus on left of phone display
Source: Wirestock Creators / Shutterstock.com

With this combination of disappointment and uncertainty, shares have tumbled more than 80% from their highs. Although far cheaper now than it was just a little over two months ago, challenges could continue for the stock.

Yet, while that’s been bad news for investors who dived at prices far above where it trades today (around $3.35 per share), as was the case last month, Ocugen is down but not out. That is, there’s still some potential with Covaxin, developed in India by Bharat Biotech. Massive success selling it in North America may be beyond reach. However, it may ultimately be able to generate some sort of profit from doing so.

Even if Covaxin completely fizzles away as a catalyst, other catalysts may help pick up the slack. Given its high cash position, it may be able to put this money to work to make progress with the eye/vision-related treatment candidates in its pipeline.

Why OCGN Stock Continues To Slip

Many things are playing a role in Ocugen’s continued decline in price. What’s playing out right now in the markets is playing a role for sure. The market’s changing view in the near term for more speculative stocks like this one is adding fuel to the fire.

This is on top of the fact that investors were already souring on vaccine stocks. Even as the pandemic continues to impact the world, there’s a growing belief that vaccinations have peaked in high-income countries. Companies that finished first in the “vaccine horse race” may see lower-than-expected sales/earnings this year compared to their respective 2021 windfalls.

As for the vaccine plays perceived to be “also-rans,” like OCGN stock, sentiment is far more bearish. For the vaccine companies a little late to the game? There may be a more limited market for them to sell into. This same negative view has had an impact on another prominent vaccine stock as well. Yet while this perception has affected its performance in recent months, I wouldn’t jump to the conclusion it has zero chance of making money from launching Covaxin in the U.S. and Canada.

It’s very close to the finish line in terms of getting approval from health authorities in both countries. There are still a few more niche markets where it could still find demand. For instance, as a protein-based vaccine, those hesitant to get one of the mRNA ones may decide to get this one instead. Ocugen may also find some demand for variant-specific vaccines, or perhaps providing vaccines for the children’s market.

Non-Covid Candidates Could Save The Day

It’s still too early to write off the Covid-19 catalyst with OCGN stock. But let’s just say it completely fades as a possibility. Are shares destined to return to their past rock-bottom prices? Maybe, maybe not.

Even if Covaxin proves to be a complete bust for Ocugen, you can argue it’s better off today than it was before it made the initial deal with Bharat to bring its candidate to North America in late 2020. Although dilutive to existing shareholders, the excitement over this candidate enabled the company to raise high amounts of capital through secondary offerings.

As a result, it’s sitting on a cash position of around $107.1 million. Instead of using this money to advance Covaxin, the clinical-stage biotech company may have another good use for it. It could use it to further the progress with the multiple non-Covid treatments still making their way through its pipeline.

All are eye/vision-related, and include OCU200, OCU400, and OCU410. It’s going to be awhile before it’s clear if any, some, or all of these candidates will make it to the next stage of testing and development. Still, one of them did have a bit of positive news last month. The outcome for its non-Covid candidates could go a lot more smoothly than it has for its vaccine candidate.

The Takeaway on OCGN Stock

Earning a “B” rating in Portfolio Grader, there may remain an opportunity for risk-tolerant investors with Ocugen. Following its massive sell-off since November, any sort of progress with Covaxin will be good news for shares.

Better yet, a path back to higher prices may not necessarily depend on it finding success in the vaccine market. The company’s “payoff moment” could instead arrive from one of its non-Covid candidates.

I would take a closer look at the rest of its pipeline before buying, but consider OCGN stock one to keep on your watchlist.

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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