Ocugen (NASDAQ:OCGN) was an auspicious stock last year. However, it lost most of its steam when the U.S. Food and Drug Administration (FDA) shot down its coronavirus vaccine. Since then, it looked to salvage its situation by pushing for a breakthrough in the North American region. Now everything is up in the air with OCGN stock, which makes it a highly unattractive bet.
OCGN stock skyrocketed last year when it announced its entry into the lucrative Covid-19 vaccine market. It partnered with Bharat Biotech, the company developing the Indian version of the coronavirus vaccine called Covaxin.
However, Ocugen has failed to commercialize Covaxin for North America. The market has little faith in its prospects as it continues to lose value. There are a few green flags that might seem like a turning point for the company, but the chance of a turnaround seems unlikely.
Ocugen Is Running Out of Time
Ocugen has yet to receive an Emergency Use Authorization (EUA) from the United States. Without a EUA, it can’t commercialize Covaxin in the U.S., undoubtedly the company’s biggest market.
Its agreement with Bharat Biotech can only commercialize its vaccine in the U.S. and Canada. Moreover, it’s now focusing on the Canadian market, but the chances of approval appear slim.
Ocugen received an EUA from the World Health Organization (WHO) back in November. However, it doesn’t provide a pathway into the U.S. market. On top of that, you have multiple players already in the U.S. who have established a strong positioning in the sector.
Furthermore, during the first nine months last year, the company’s net earnings loss was at a whopping $43.8 million. This is roughly $13.2 million less than the same period last year.
If the company fails to make any inroads on the regulatory front, investor hopes will start to diminish even more. Other coronavirus vaccine manufacturers are already producing massive doses and generating millions in revenue.
On the flipside, Ocugen has failed to generate any sales in the past couple of years. With no revenue-generating products, it will accumulate more losses and put its financial flexibility in major jeopardy.
An Uncertain Outlook for OCGN Stock
All isn’t lost for Ocugen. A phase three study conducted in India for Covaxin showed that the vaccine was 77.8% effective overall and 100% effective against severe cases that require hospitalization. Moreover, it also released a study showing Covaxin has strong efficacy against the delta and omicron variants.
However, these positive developments haven’t borne any fruit for the company. It could perhaps carve a small niche for itself in Canada, but it’s unlikely to generate a meaningful amount of sales. Moreover, it will share only 45% of the revenue via its agreement with Bharat Biotech.
Furthermore, Ocugen’s other programs are unlikely to move the needle for the company, at least for the foreseeable future. It’s a long road ahead for its product pipeline, which should test investors’ patience.
Ocugen isn’t profitable by a long shot and has generated zero revenues so far. It’s tough to feel excited about it. OCGN stock remains a remarkably risky investment for most investors at this time.
The Bottom Line on OCGN Stock
There are a lot of “ifs” surrounding Ocugen at this time. Its failure to enter the mature Covid-19 vaccine market is a major cause for concern and weighs down its long-term prospects.
It will continue to push for a regulatory breakthrough, but the outcomes remain highly uncertain. Hence, it’s tough to invest in OCGN stock at this time.
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.
