Ocugen action: bull against bear


When it comes to disputed stocks, Ocugen (NASDAQ: OCGN) is probably one of the market leaders. The company is trying to commercialize its coronavirus vaccine candidate and also has long-term growth potential stemming from its developing gene therapy group for eye disorders. It’s easy to see why there is so much interest in its value as an investment.

With a market cap of just $ 1.6 billion, it could have a huge amount of leeway. Let’s take a look at an argument for buying Ocugen shares and an argument against to get a better idea of ​​if it would be a good choice for your portfolio.

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A better approach to gene therapy

Patrick Bafuma: Ocugen is undervalued and underrated compared to his peers.

Let’s talk about Covaxin first. The nascent biotech COVID-19 vaccine candidate has already been filed for emergency use authorization (EUA) in the United States for patients between the ages of two and 18. Not only is this a younger age group than the Modern (NASDAQ: mRNA) and Pfizer (NYSE: PFE) The mRNA vaccines have been authorized, but it is also a totally different form of vaccine.

Covaxin uses an inactivated viral platform – the type we all grew up with that has been used for decades in the pediatric population. Sure, the two mRNA vaccine makers have a head start, but with a market cap of $ 1.7 billion, it won’t take much revenue to impact Ocugen. Despite concerns about decreased effectiveness and increased risk of some types of rare blood clots, even Johnson & johnson‘s (NYSE: JNJ) The single-dose, mRNA-free, adenovirus vaccine generated $ 421 million in the United States in the first nine months of 2021. People who are hesitant about the risks of clotting and the decreased effectiveness of the Johnson & Johnson vaccine, as well as the novelty of mRNA vaccines may be willing to accept the OcuGen vaccine. In addition, being able to be stored for about two years at 2 ° to 8 ° C and three months at room temperature, Covaxin is easier to administer in doctor’s offices.

But at the end of the day, any money for the COVID-19 vaccine is likely a path to fuel its goal of becoming an ocular gene therapy solution. The company believes it can treat multiple types of genetic retinal degeneration with just one drug. In advanced stages of the disease, these rare eye disorders can cause blindness, but Ocugen’s flagship treatment, OCU400, aims to change that. And the one-drug approach to treating multiple rare genetic eye diseases might be a better business plan than competitors chasing them one at a time.

Using the well-researched adenovirus delivery system, early studies in mice suggest that OCU400 may halt disease progression and save vision in both early and late stages of the disease. If – and this is a big if – he can replicate that in human trials, it will be more promising than Nightstar Therapeutics when it was bought by Biogenic for $ 877 million in 2019. In these phase 1/2 trials, Nightstar treatment was not curative, showing only signs of improvement in visual acuity in some patients and possibly slowing progression of disease. Spark Therapeutics, acquired by rock for $ 4.8 billion in 2019 after its treatment for rare eye diseases was approved, tackled rare genetic eye diseases one by one.

Ocugen has a better mousetrap than other ophthalmic gene therapy companies today and costs a fraction of the price. In addition, it has potential income from vaccines close to the EUA to reduce research and development costs.

Vaccine market share is not guaranteed

Alex Carchidi: Ocugen’s coronavirus vaccine could be a winner for shareholders, but it will have to overcome a few key hurdles that I doubt it will.

More importantly, his Covaxin jab is only cleared for development in the United States and Canada. Both of these markets are already teeming with highly effective products from strong competitors such as Pfizer, Moderna and Johnson & Johnson.

And, by the time Covaxin is approved for sale, Ocugen could be in competition with other vaccine laggards like Novavax too much. It might be difficult for Ocugen to sell its product to the US and Canadian governments, which have already had purchase agreements with major manufacturers for over a year.

Of course, this assumes that Ocugen’s jab is approved, which is not guaranteed. Because they are relying on clinical trial data from Bharat Biotech rather than conducting their own efficacy studies in people between the ages of two and 18, US regulators may be inclined to dismiss the petition. Ocugen for an Emergency Use Authorization (EUA) for children. A request for more data wouldn’t mean Ocugen’s jab is doomed, but it would almost certainly be a blow to the stock.

The other problem is that Covaxin is formulated against the original SARS-CoV-2 virus rather than the destructive variant Delta, which probably makes it only 65.2% effective. The same goes for the company’s competitors, but especially for heavyweights like Moderna and Pfizer, variant-specific vaccine candidates have been in the works for some time now.

So, they will likely release anti-variant booster shots while Ocugen will likely market his jab against the original version of the virus, assuming he will have to do a few more clinical trials before getting an EUA from the regulators. This will not be favorable to its sales potential, to say the least.

Aside from those issues that could hamper his jab’s adoption timeline, Ocugen has all of the standard risks, issues, and warnings of every biotech startup. While its ocular gene therapy platform could one day produce some great value programs, as of yet, it has absolutely not been proven to work. The company does not have commercial stage programs that have been developed in-house, which means that investors take a very large part of the risk of potential failures during the clinical development process. It will be years before any of his in-house programs even have a chance to generate income, if they ever do.

This stock is not for everyone

It’s entirely possible that investors will see Ocugen shares soar as a result of its vaccine work, and the company could easily use the proceeds from jab sales to fund the development of its pipeline programs. gene therapy down the line.

Hence, it is a great option for people looking to make a speculative buy. But, in light of the difficulty it will face in gaining market share and its lack of mature pipeline programs, more conservative investors should probably ditch this stock in favor of something less risky.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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