Ocugen (NASDAQ:OCGN) stock jumped nearly 20% over the weekend following positive results for its Covid-19 vaccine in the U.S. OCGN stock has since dropped back down to about 2% up during the morning’s trading session.
The company hopes to commercialize a traditional vaccine made by Bharat Biotech of India: Covaxin.
Covid Is Still Here
Despite global reopening, Covid-19 remains a threat. Autopsies reveal the virus spreads through the whole body. A new variant, XBB 1.5, is causing a new wave of infection. Reinfections are increasingly common, as are “long-COVID symptoms.”
Stocks in vaccine makers haven’t reacted. Moderna (NASDAQ:MRNA) is up 2% in the last month. Pfizer (NYSE:PFE) is down almost 4%. Novavax (NASDAQ:NVAX), which sells no other product, is down by 26%.
Why then should Ocugen rise? It has a tiny market capitalization of less than $300 million. Any sales for its Covaxin would help, as it has no revenue. Covaxin is also a traditional inactivated vaccine and is therefore not made using the newer messenger RNA (mRNA) techniques.
In the random study of 419 patients, Covaxin was well-tolerated both by people previously unvaccinated and those given mRNA-based injections. There were also no serious side effects reported.
Covaxin has been administered 350 million times, all outside the U.S., and 85 countries have recognized those who get it as having a valid vaccination. The Food and Drug Administration (FDA) application is one of 60 authorizations Bharat Biotech is pursuing around the world. Its use, however, was suspended last year after the World Health Organization found problems at its factory.
The Covid vaccine market is also changing. Government support for shots is expiring. This means price competition could be coming. Patients frightened of mRNA-based vaccines may also find a traditional vaccine more acceptable.
OCGN Stock: What Happens Next?
Novavax expects $2.4 billion in revenue for 2022. Ocugen would compete with it and benefit from Bharat’s low costs. The overnight rise in Ocugen briefly brought its market cap to just over $500 million.
If Ocugen can make a profit on even a fraction of Novavax’s sales, the stock looks undervalued.
On the date of publication, Dana Blankenhorn held long positions in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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