Ocugen (NASDAQ:OCGN) stock was once one of the hottest stocks on the market.
After bottoming out around 18 cents, the stock skyrocketed to a high of $17.65 for a 9,706% return. Every $1,000 risked was now worth just around $98,000.
Nowadays, I wouldn’t touch it.
In fact, as I noted on Feb. 9:
It’s burning through cash. It’s not generating revenues. In addition, unless it can get emergency use authorization in the U.S. and Canada, it’s not likely to make money. For now, avoid the stock.
Not long after, the stock would slip from about $4 to about $2.50 — and I still won’t buy it.
Why OCGN Stock Should Be Avoided
Around Feb. 18, the U.S. Food and Drug Administration (FDA) lifted its clinical hold on the company’s Investigational New Drug application for a Phase 2/3 clinical trial of its vaccine. The company was even hopeful the FDA could advance its Emergency Use Authorization (EUA) for Covaxin for children.
That news sent the OCGN stock from about $3.40 to $4.53. Unfortunately, the excitement wouldn’t last.
Shortly after, the FDA decided not to issue an EUA for children.
Sure, the company could receive an EUA for Covaxin in Canada, given its 77.8% overall effectiveness with COVID-19. However, Canadian authorities have yet to make a ruling.
In addition, as noted by TheFly:
After Ocugen announced that the pediatric EUA for its COVID vaccine Covaxin had been denied by the FDA, Roth Capital analyst Zegbeh Jallah said the denial ‘does not come as a complete surprise,’ but it also ‘completely takes off the table’ all accelerated paths that could support Covaxin’s entry into the U.S. market during 2022.
We also have to remember the company is still not profitable. It’s burning through cash. It posted a net loss of about $14.6 million, as compared to a year-earlier loss of $3.79 million. Plus, heavier losses could be on the way.
The Company Is Far Behind Its Competition
Right now, Ocugen has a commercialization agreement with Bharat Biotech that only covers the United States and Canada. That means OCGN only makes money from the vaccine from any sales in the U.S. and Canada.
So a lack of authorizations in both countries is definitely not helping here.
Plus, with about 76% of the U.S. population already vaccinated at least once, it’s hard to imagine Ocugen gaining any market share. Even Canada seems to be well covered at over 80%.
Unfortunately, there are far too many negatives here to get excited about OCGN vaccines.
Fortunately, Ocugen Does Have Other Catalysts
Ocugen still has biologics and therapies in pre-clinical trials for: dry age-related macular degeneration, diabetic macular edema, diabetic retinopathy and wet age-related macular degeneration.
In addition, the FDA accepted the company’s Investigational New Drug application (IND) to initiate clinical trials of its gene therapy treatment for retinitis pigmentosa.
If those candidates are successful, Ocugen could have a fighting chance.
Unfortunately, it’s still too early to tell. For right now, Ocugen’s story is fully vaccine dependent. That’s why it’s best to just avoid the stock for now. We can always revisit the Ocugen stock if the company sees further progress with its various other eye treatments.
Bottom Line on OCGN Stock
Right now, the company is still burning through cash. There’s no revenue. It’s still not sure if it will receive authorization in the U.S. or Canada. It’s not sure it can carve out a piece of a crowded vaccine market. Plus, its current agreement with Bharat Biotech isn’t so hot.
Sure, shares of Ocugen are cheap, but they could get cheaper. With far too many negatives, look for opportunity elsewhere.
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On the date of publication, Ian Cooper 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.