Red-hot Ocugen (NASDAQ:OCGN) stock has cooled off a bit lately. Right now, it appears that investors in OCGN stock are in wait-and-see mode. What are they waiting for? A few key catalysts that could take this stock much higher.
Indeed, shares of the pre-clinical biopharmaceutical company have traded sideways over the past month. But, investors shouldn’t forget that OCGN stock has more than doubled year-to-date. It’s also up more than 2,400% over the past year. A breather is likely in order for any stock with this kind of movement.
So, without further ado, here’s why Ocugen shareholders should be bullish right now.
OCGN Stock: Indian Authorization Offers a Big Boost
On Mar. 11, OCGN stock received a big boost from an announcement that the Indian government would be removing the “clinical trial mode” label from Bharat Biotech’s Covaxin Covid-19 vaccine. Ocugen is the American partner of India-based Bharat.
This move was a massive deal for the company. By removing the label, Bharat is confident it will be able to boost vaccination numbers, with more people willing to take the vaccine sans an uncertainty-creating label. As a result of the news, shares moved substantially higher, then settled back down.
However, it appears that Covaxin could also potentially become a key player in the global mass vaccination effort. Initial reports show that there were “high levels of antibody response and no serious side effects in a Phase 2 study” of the vaccine. Additionally, a key benefit of Covaxin is its ability to be stored at 36 to 46 degrees Fahrenheit. Other vaccines need much colder temperatures. So, this fact may help remedy the logistical problems in vaccine distribution we see today.
Furthermore, more news surfaced in early March about the global effort to finance vaccine manufacturing. The Quad group of countries — Japan, India, the U.S. and Australia — announced a planned investment in Indian vaccine manufacturing in particular. While currently focused on other vaccines from Novavax (NASDAQ:NVAX) and the Astrazeneca (NASDAQ:AZN), Covaxin could be in the mix now due to its Indian connection.
Solid Earnings and U.S. Authorization Hope
Another reason to be bullish on OCGN stock is its recent earnings. On Mar. 18, the company reported earnings.
For one, the net loss of 31 cents per share beat analyst expectations. The company’s cash and cash equivalents also swelled to over $24 million, up from $7.4 million the year earlier. This comes as a result of capital raises that Ocugen has engaged in to provide runway for its vaccine development as well as clinical trials on other key drugs.
Of course, that’s good news in its own right. However, the bigger news in the release is the company’s move to work with U.S. regulators on gaining a similar emergency use authorization in the States. The company is hopeful it can gain traction in the U.S. Covid-19 race, given its success in India. No doubt, that would be a huge boon for OCGN stock.
Longer-Term Growth Prospects Enticing
Finally, in addition to the Bharat vaccine, there’s also a lot to like about Ocugen’s OCU400 drug. This drug is “aimed at inherited retinal disorders.” The company also has other ophthalmology-related drugs in its pipeline.
In the same earnings release, Ocugen had an additional update: “[OCGN is] preparing to file and Investigational New Drug application to initiate our first two clinical trials of OCU400 in the second half of the year.” That’s important, for two reasons.
First, it allows investors to project a timeline for the development of this key drug. Timelines are extremely important for investors in biotechs. Any sort of opaqueness with respect to timelines can be viewed negatively, so folks now have a clearer line of sight into how things are going with the company’s drug pipeline.
Second, this reduces the execution risk that many investors may be pricing into OCGN stock. As this is still an early-stage biopharma company, the stock price is a relative function of investor expectations. Thus, improved sentiment goes a long way.
Conclusion on OCGN
At the time of this writing, Ocugen has a $1.4 billion valuation. Given the fact that the company has yet to produce meaningful revenue, though, investors are pricing in a lot of potential growth into the stock today.
That said, there’s a lot to like about this company’s prospects, especially given the aforementioned catalysts.
As far as clinical-stage biotech companies go, OCGN stock looks attractive right now. This is likely to be a highly volatile name moving forward as additional announcements come out. However, if the company does in fact get U.S. emergency use approval for Covaxin, all bets are off as to how high it could go.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.