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Source: Bharat Biotech

Ocugen Stock Has Run Ahead of Its Fundamentals, Explained

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Apr. 8 2021, Published 10:13 a.m. ET

Ocugen is a biopharmaceutical company that focuses on discovering, developing, and commercializing therapies to treat diseases that cause blindness. Lately, the company has been getting global attention for its joint development of the COVID-19 vaccine COVAXIN with its Indian partner. Based on Ocugen's (OCGN) stock forecast, is it a buy or a sell?

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One of the key catalysts for Ocugen stock could be the approval of COVAXIN’s use in the U.S., which is doubtful.

Why Ocugen stock is rising

Ocugen stock has gained an impressive 277 percent YTD. The company’s Indian partner, Bharat Biotech has developed the COVID-19 vaccine, COVAXIN. The vaccine has been one of the key drivers for the stock rally this year. COVAXIN has been approved for use in several countries. On April 7, the stock gained 9 percent. 

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moderna vaccine
Source: Facebook, Moderna

On April 6, Mexico’s health regulator, Cofepris authorized the emergency use of India’s COVID-19 vaccine COVAXIN. Mexico already has other approved vaccines for use in the country. Governments around the world are looking for multiple vaccine options due to production and logistics issues. 

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Will COVAXIN get approved in the U.S.?

After Mexico’s approval, Ocugen investors hope to get approval in countries like the U.K. and the U.S. Ocugen has already inked a deal with Bharat Biotech to bring COVAXIN to the U.S. According to the agreement between Ocugen and Bharat Biotech, Ocugen will keep 45 percent of COVAXIN profits in the U.S. and Bharat will keep the rest. 

However, the biggest challenge for Ocugen to sell COVAXIN in the U.S. will be getting FDA approval. The company plans to meet with the FDA and discuss the regulatory pathway after the safety data of 60 days following the second dose becomes available. According to H.C. Wainwright analyst Swayampakula Ramakanth, this could happen sometime in April. 

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While approval from the regulator that allows applying for EUA (emergency use authorization) could be the next catalyst for OCGN, it remains doubtful. The U.S. government has already bought enough vaccine doses from Pfizer and Moderna to vaccine the whole U.S. population. This makes it challenging for a new player to enter the market. 

It still isn’t clear how often people will need to get vaccinated to maintain immunity against the coronavirus. Even if it becomes an annual exercise, the U.S. might continue to source the vaccines from Moderna and Pfizer. The efficacy of Moderna and Pfizer is more than 90 percent after the second dose compared to COVAXIN’s more than 80 percent efficacy. 

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ocgn stock price performance
Source: Koyfin

OCGN stock forecast

Currently, four analysts cover Ocugen, according to Market Beat. There are three buy ratings and one hold rating for the stock. The average target price for the stock is $4.8, which implies a downside potential of nearly 30 percent. 

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On March 4, Roth Capital increased the target price for OCGN from $9 to $10. According to Roth Capital analyst Zegbeh Jallah, the EUA in India increases the chances of the FDA granting COVAXIN the EUA. 

Wait to buy OCGN stock

Apart from COVAXIN, Ocugen’s other candidates are all in the pre-clinical stage and the company will have to wait for years to have a shot at any revenues. The major catalyst for the stock would be approval from other countries. The EAU by the U.S. could boost the stock. However, since the U.S. has already secured enough COVID-19 vaccine doses and COVAXIN has a lower reported efficacy rate, the approval might be tricky. A lot of the optimism from the U.S. approval is already priced in the stock. Therefore, this might not be the right time to enter the stock.

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