Ocugen: Will this Biopharma achieve its vision?
I am neutral on Ocugen (OCGN), as its strong growth potential, general support from Wall Street analysts, and high upside potential over its consensus price target are offset by its current large losses and highly speculative outlook.
Ocugen is a biopharmaceutical company involved in the discovery, development and commercialization of gene therapies designed to cure diseases causing blindness and in the development of a COVID-19 vaccine.
Ocugen’s innovative modifying gene therapy platform strives to treat multiple retinal diseases with a single drug, a candidate that will target a variety of eye diseases. The Company’s new biologic product candidate is designed to provide improved therapy for patients with complex and underserved diseases such as age-related wet macular degeneration, diabetic retinopathy and diabetic macular edema.
The company is also developing a COVID-19 vaccine, COVAXIN, in partnership with Bharat Biotech, for the US and Canadian markets.
In the third quarter of 2021, Ocugen Inc. filed for emergency use authorization with the FDA for the use of COVAXIN in people aged 2 to 18 years. The company believes that its vaccine candidate may meet an unmet need. by other U.S.-based COVID-19 vaccines.
In September, Ocugen intensified its collaboration with a Chinese vaccine company, CanSino Biologics, on the development of a new gene therapy candidate, OCU400, to include candidate OCU410. The Chinese company will be responsible for chemicals and development, and will manage the costs associated with these activities.
Ocugen’s research and development expenses amounted to $ 6.3 million, compared to $ 1.5 million incurred at the end of September 30, 2020. The general and administrative expenses of the company for the three months of quarter amounted to $ 4.5 million compared to $ 1.7 million, year on year. -on an annual basis.
The company reported a net loss of $ 0.05 per share for the quarter, up from $ 0.07 in the quarter a year earlier.
At the end of the third quarter of 2021, the company had cash, cash equivalents and restricted cash of $ 107.5 million. This compares to $ 24.2 million as of December 30, 2020. The company had 198.9 million common shares outstanding as of September 2021.
OCGN stock is very difficult to value, due to the fact that it is not always profitable, does not have a long trading history, and grows rapidly with rather unstable results. The company is currently recording substantial losses, but is expected to quickly become profitable in 2022. Its 2022 normalized price-to-earnings ratio is 12.3 times, which seems very reasonable for a company with its growth profile.
The Taking of Wall Street
From Wall Street analysts, OCGN obtains a moderate buy analyst consensus based on 2 buy ratings, 2 hold ratings and 0 sell ratings in the past 3 months. Additionally, the OCGN’s average price target of $ 8.75 places the upside potential at 65.09%.
Summary and conclusions
Ocugen is a high risk, high reward bet on the ability of the company’s research and development team to deliver its pipeline of promising products. Right now, the company is making significant losses, but has a very strong pipeline and is expected to generate significant profits from 2022.
Although the stock appears to be reasonably priced based on earnings projections for 2022, the sustainability and future growth of that profitability largely depends on the skill of the research and development team. Unfortunately, they are relatively unproven, as the company has yet to reach profitability. Accordingly, investors should keep in mind that OCGN stock is highly speculative.
Disclosure: At the time of publication, Samuel Smith does not have a position in any of the titles mentioned in this article.
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