Could this news spark a turnaround for Ocugen?

Occugen (NASDAQ: OCGN) stocks were flying high earlier this year. The company has signed an agreement with India’s Bharat Biotech for the co-marketing rights for its coronavirus vaccine candidate in the United States. The Bharat product was close to the market. And the data looked good. Since then, Ocugen has learned that he would not earn the right to sell the vaccine in the United States as quickly as he had hoped. And stocks suffered.

In recent days, however, the Ocugen stock has made a comeback. The stock even gained up to 15% in one trading session on a particular news item. Now the question is whether this news could lead to a permanent reversal in Ocugen shares. Let’s take a closer look.

Image source: Getty Images.

New in the vaccine industry

First, some information on the history of Ocugen. The biotech company is new to the vaccine business. Its core program is gene therapy for eye diseases. Ocugen has three programs in the works, all at the preclinical stage. I like the idea of ​​investing in a candidate close to the market to generate income to finance the development of the pipeline. The problem is, this particular investment seemed risky from the start.

Ocugen finalized his agreement with Bharat earlier this year. At that time, vaccine manufacturers Pfizer and Modern were already in the process of becoming owners of the American market. The vaccine rollout had only started a few weeks earlier – and the United States increased its order for doses of Pfizer and Moderna. In fact, he bought enough doses to immunize all Americans.

Why is this a problem for Ocugen? Because the Ocugen agreement involved the co-marketing of Covaxin from Bharat alone in the United States And clearly, it would be difficult for the company to sell a lot of doses when the United States already had a lot.

FDA Notice

To make matters worse, in June, the United States Food and Drug Administration (FDA) advised Ocugen to aim for a traditional regulatory submission instead of an Emergency Use Authorization (EUA). This adds considerably to the timeline. For example, Pfizer and Moderna won EUAs in about three weeks. The traditional exam takes six to ten months. And Ocugen mentioned he may have to conduct a new clinical trial. Bharat recently completed its final analysis of a Phase 3 trial of Covaxin in India.

I didn’t expect Ocugen to gain much from the US market in the near term due to the dominance of Pfizer and Moderna. But this news has completely eliminated the short-term possibilities and weighed on investor sentiment.

Fortunately, in June, Ocugen and Bharat expanded their deal to include Canada. It’s positive. Canada first struggled with the vaccine supply. This may make the country more willing to purchase additional doses just in case.

But here’s why the news from Canada doesn’t make me too optimistic. Canada has already invested heavily in the purchase of vaccines. In fact, it has committed over $ 9 billion and ordered a total of over 400 million doses from eight different vaccine manufacturers. Now here is my concern. The population of Canada is 38 million. This compares to around 330 million for the United States. The fact that Canada orders many players means smaller orders for everyone. I am not convinced that Ocugen will generate significant revenues in the Canadian market.

The last news

Now on to the latest news … Bharat has asked the World Health Organization (WHO) to add Covaxin to its emergency use list. The WHO vaccine advisory group will consider the request at a meeting on Oct. 5, according to news reports last week.

The WHO authorization is a positive step for companies. It facilitates the deployment of a vaccine around the world. But that doesn’t give companies permission to actually sell their products in individual countries. And a WHO emergency list is unlikely to put pressure on a regulatory body – like the FDA – to speed up its review process for a particular candidate.

So, is this a non-event for Ocugen? Rather. That won’t change the fact that a regulatory decision in the United States is going to take some time – and possible commercialization in Canada may not be a massive revenue generator.

That said, a nod from the WHO could offer Ocugen’s actions a boost. Does that mean you should buy the stock now? Not if you are a long term investor. The coronavirus vaccine space is competitive. Pfizer and Moderna are leaders. Johnson & johnson also has a product on the market. And Novavax aims to complete its EUA submission in the fourth quarter. At the same time, these companies are already working on vaccine updates or next-generation candidates. In this environment, a latecomer like Ocugen can struggle to win even a small part of the market.

So even though the positive news from WHO does lift Ocugen’s stock, I’m not ready to buy it. I’m still as concerned about the long-term outlook as I was a few months ago.