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Shares in US biopharma group Ocugen (NASDAQ:OCGN) have posted some incredible gains in the last few weeks off the back of its deal to market Indian Covid-19 vaccine candidate Covaxin in the United States.

While there is much to commend the stock and the vaccine could be a game changer in the battle against Covid, we think, for now, there are too many risks.

It’s easy to build a case for buying Ocugen, which until recently was a little known developer of treatments for retinoid disease and yet to bring a product to market and hence turn a profit. Certainly its astronomical gains – the share price, which had been under $1 and risked losing its Nasdaq listing, has shot above $18 and is now about $11 – has convinced plenty of investors.


The vaccine has already been approved for emergency use in India and clinical data show its multiple viral proteins provide additional immunity vis-à-vis its rivals. (A recent research paper shows it is effective against the UK variant.) It’s also easily stored, requiring refrigeration at 2-8° (the Pfizer rival needs to be stored at -60° to -80°). Ocugen says it has the potential to treat all age groups.

Under the terms of the deal with Bharat Biopharma, Ocugen will see the vaccine candidate through the regulatory processes, including the clinical trials, and commercialisation in the United States and reap a 45% profit share. Ocugen said the vaccine has “significant revenues potential this year” and that its target is 100 million doses administered annually in the US starting this year.

Ocugen is well-equipped for the challenge

The company looks well-equipped for the task. Chief executive and founder Shankar Musunuri, ex-Pfizer, has seen through a string of successful commercialisations. There’s also insider ownership (usually a good sign). In February, Ocugen raised $23 million in a share offering (capitalising on the share gains), giving it extra cash for the already announced vaccine collaboration.

So far so good but as yet there is no authorisation in the States and while Covaxin is advanced in its clinical trials in India, there is no reason to believe this would enable the company to skip any parts of the process in the US and catch up some valuable time in the vaccine race. When we gave a thumbs up to Moderna, it was only days away from a much expected emergency use authorisation from the US regulator.

Analysts bullish but emphasise downside potential

There are plenty of upsides which have indeed prompted most of the analysts covering the stock to issue ‘buy’ recommendations. Analysts have nonetheless been upfront about this being pretty much a risky Covid play.

Cantor Fitzgerald’s Kristen Kluska initiated coverage in October last year with an overweight rating and $1 target price. She upped this to $4 at the start of February, keeping her rating, because of the potential for Covaxin.

“That said,” added Kluska, “we stress that much of our target price is now derived from the near-term opportunity for Covaxin. Negative data or inability to secure an EUA (Emergency Use Authorisation) is a key downside risk to the stock from current levels.”

Chadran’s Keay Nakae raised his target price to $13 from $0.70, although he cut his rating to ‘neutral’ from ‘overweight’. He noted that getting a EUA might not be a certainty and that the company might have to do an additional US study.

As a Covid play (and certainly such a share price is not justified by other Ocugen pipeline products which still have some way to go), we see a lot of risk and conclude that it’s definitely one to watch as it embarks on its journey towards regulatory approval in the States but that it’s definitely far too early to put our eggs in this basket.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Emma Portier

Emma Portier

Emma Portier has more than 20 years’ experience as a financial journalist, starting out as a regulatory correspondent for Euromoney and then joining the Financial Times group as a wealth management writer. She has spent several years as a financial markets reporter for AFX News in Stockholm and then as an EU antitrust reporter in Brussels where she then joined Reuters.

Emma’s core expertise is following EU regulatory developments and how these affect financial markets. She set up the climate change and energy news service for the regulatory risk news agency MLex and then worked as a special EU correspondent for the Bureau of National Affairs. Emma has advised key players in Brussels on their media relations strategy and provides content to a range of private and institutional clients.

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