Is Ocugen Stock a “Buy” Right Now?
Ocugen (Nasdaq: OCGN) recently saw a staggering gain of more than 800% over the trading period between December 21 and December 23, thanks to news of its co-development of a COVID-19 vaccine. But is this rally for real? And what does it mean for the future of Ocugen stock?
In this article, we’ll take a closer look at the company’s recent binding agreement to develop this vaccine, and we’ll dive into some fundamentals regarding the stock itself.
Ocugen Stock Rallies on Vaccine News
Ocugen stock’s 800% rally occurred on the news that the biopharma company is co-developing a new COVID-19 vaccine. The company signed a binding letter of intent to develop the vaccine with Bharat Biotech, an India-based firm.
Bharat’s Covaxin vaccine is already in development, and the first two rounds of clinical trials have shown some promise. The company is now working on enrollment for Phase 3 trials of its potential vaccine.
The two firms have not worked out all the details of their agreement, but it’s clear that Ocugen would hold the rights to Covaxin for distribution in the United States.
H.C. Wainwright analyst Swayampakula Ramakanth has commented…
Broad immunity targeting different components of the virus could potentially provide better protection against emerging mutant viruses, such as the one currently circulating in the UK. More importantly, Covaxin also induces comparable levels of neutralizing antibodies to those in human convalescent serum, which bodes well for the success of the ongoing Phase 3 trial in India.
It should be noted, however, that Ramakanth still rates Ocugen stock as neutral, because the final details of the agreement have not been hashed out.
The Fundamentals of Ocugen
Ocugen stock is a biopharmaceutical company penny stock that – until recently – had been trading around $0.30. However, the recent rally has bumped its price up to $2.25 as of yesterday’s close for a total gain on the week of about 650%.
That said, for a stock that has reached as high as $268 in the past five years, it has been a long fall for Ocugen. But what do the company’s current financials say about its future?
Unfortunately and most tellingly, the firm hasn’t generated any sales over the past year. This has resulted in net losses as high as $10.4 million in the third quarter of 2020.
And while the company has been able to raise some cash from stock issues, it’s bleeding cash from its pharmaceutical operations. It has seen decreases in operating cash of more than $15 million for each of the last four quarters.
So can the development of the new vaccine stop this hemorrhaging? And will it be enough to turn the fortunes of a once-promising biopharmaceutical company around?
The Verdict on Ocugen Stock
By now, you’re likely wondering if Ocugen stock is a “Buy.” Of course, nobody can know for sure, but most certainly the new COVID-19 vaccine development leaves room for optimism where there was little before.
Nevertheless, it’s still possible that the vaccine won’t pan out. In that case, it would be tough to see where the future value for Ocugen would come from.
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About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.