Ocugen stock (OCGN) soared 173 percent on Dec. 22 and was trading sharply higher early on Dec. 23. Why is Ocugen stock rising and should you buy it despite the recent surge?
Ocugen is a clinical-stage biopharmaceutical company that is working on several therapies. It isn't unusual for clinical-stage pharmaceutical companies to see volatility, especially around the release of trial results. Earlier in December, two clinical-stage pharma companies — Sellas Life Sciences and Greenwich Lifesciences — rallied after the latter released trial results.
Ocugen on Stocktwits
Many users on Stocktwits are discussing Ocugen stock after the sharp rally. Most of the users are optimistic about the stock and expect it to rise more. Username JP1st wanted to add more shares but was waiting for better prices.
Looking at the price action on Dec. 23, it doesn't look likely that you would be able to get Ocugen stock at a lower price. Another user chris76mba sees Ocugen stock rising to $5 on Dec. 23, which would mean the stock rising six-fold from its closing prices on Dec. 22.
Ocugen doesn't pay dividends
Since Ocugen is a clinical-stage company, it won’t be prudent to expect dividends. Clinical stage pharma companies burn a lot of cash towards R&D and make negligible revenues. A dividend would be the last thing on management's mind.
Ocugen's stock forecast
Since Ocugen is a penny stock, not many analysts cover the stock. According to the estimates compiled by CNN, only three analysts cover the stock. Ocugen stock has a median target price of $1, which is a premium of 24 percent over its closing prices on Dec. 22. Analysts might take a new look at the stock after the deal with Bharat Biotech.
Ocugen and Bharat Biotech deal
On Dec. 22, Ocugen and India-based Bharat Biotech entered an agreement to co-develop the inactivated vaccine candidate, COVAXIN™. The vaccine candidate reported positive trial results in its Phase 1 and Phase 2 trials. As part of the agreement, Ocugen would have the rights for the vaccine candidate in the U.S. Both of the companies would be jointly responsible for the registration and commercialization of COVAXIN™ in the U.S. market.
Ocugen stock is risky for investors
The FDA has approved the emergency use of Pfizer’s and Moderna’s vaccine candidates. If COVAXIN™ also manages to get approval in the U.S. after the final trials, it could be a big game-changer for Ocugen. The company's COVID-19 vaccine is expected to be much cheaper than the Pfizer and Moderna vaccines.
Like all clinical-stage companies, Ocugen is a risky bet. The risks include the success of COVAXIN™ trials and whether the U.S. government approves the COVID-19 vaccine candidate. Also, being a penny stock, Ocugen is a riskier investment than large-cap companies.
Looking at Ocugen’s current market cap of only $130 million, the agreement with Bharat Biotech looks like a major milestone for the company. If the COVID-19 vaccine candidate gets approved in the U.S., Ocugen could rise even more from these levels.