Here’s why OCGN Stock might be all bloom and gloom

Ocugen Inc Overview: Ocugen Inc is a biopharmaceutical company focused on developing gene therapies to cure blindness diseases and developing a vaccine to save lives from COVID-19. Their product offerings include: COVID-19 Vaccine — COVAXIN is a whole-virion inactivated COVID-19 vaccine candidate developed by Bharat Biotech to prevent COVID-19 infection in humans. Ocugen is co-developing COVAXIN with Bharat Biotech for the U.S. and Canadian market. Modifier Gene Therapy Platform — Ocugen anticipates that their gene therapy platform has the potential to address many retinal diseases, including retinitis pigmentosa ("RP"), leber congenital amaurosis ("LCA"), and dry age-related macular degeneration (“AMD”). Novel Biologic Therapies for Retinal Diseases — Ocugen is developing OCU200 to treat diabetic macular edema (“DME”), diabetic retinopathy (“DR”), and wet AMD. Ocugen’s Growth Strategy: Ocugen is currently focused on obtaining BLA from FDA for COVAXIN and commercialising it in the US and Canada. Establishing their modifier gene therapy platform and advancing into clinical development. Advancing OCU200 into clinical development from preclinical phase. Risks with OCGN Stock: Ocugen Inc has incurred significant losses from operations and negative cash flows from operations since its inception and may continue to incur net losses over the next several years. Ocugen has used almost all its unreserved, authorised shares and may need substantial additional funding. Failure to raise the funding may force the company to delay or eliminate the product development program. There is heavy regulatory requirement around approval of company’s product candidates and failure to obtain approval would prevent the company from commercialization and gaining revenues/profitability.  There is uncertainty around the time and cost of product development making the investment in OCGN Stock highly risky. Ocugen can potentially become involved in lawsuits, exacerbating the financials of the company and causing delays in predicted timelines. Upheaval in investor sentiment: Ocugen had been a steady company with focused research on Gene therapy for a long time and investors had not been expecting very high profit margins so soon. The turbulence started when Ocugen announced its partnership with Bharat Biotech for commercialisation of COVAXIN in the US, since the company had changed its direction from Gene therapy and aimed to benefit from the pandemic. It was a good surprise for a few investors to learn that Ocugen Inc will be working towards getting an Emergency Use Authorization(EUA) from FDA. The $OCGN stock soared up 339% to $15.81 per share in February 2021. Ocugen had missed its targets for three quarters out of trailing four in Q2 2021. But the prospect of EUA for COVAXIN getting approved kept investor expectations and projected $OCGN Stock price high. However, following the rejection of EUA by the FDA on 11th Jun 2021 and Ocugen’s change in direction to pursue BLA rather than continuing with its plan to obtain EUA pushed the stock price down. Currently it is one of the most volatile stocks with a short interest of ~27%. Potential returns from COVAXIN: OCGN is targeting a vaccination market and COVAXIN could be more desirable for administer because of its ease of storage and stocking, but the partnership is skewed sharply in Bharat’s favor. Ocugen only has rights to distribution in the US and Canada while incurring all the financial and operational costs to get Bharat’s Covaxin to market. In return, the company receives just 45% of any profits. So the idea that OCGN stock is next to Moderna or Pfizer is a bit far fetched.  It is also to be noted here that the U.S. has still not approved AstraZeneca and will have sufficient vaccination supplies from the approved vaccines(Moderna, Pfizer and J&J). In addition to this, BLA is targeted to be submitted by the end of 2021 and takes ~10 months to get approved. The demand of Covid-19 vaccine in late 2022 in the US and Canada remains uncertain. Competitors: Deciphera Pharmaceuticals, Inc.($DCPH): Deciphera Pharmaceuticals, Inc., a biopharmaceutical company, develops drugs to enhance the lives of cancer patients by addressing key mechanisms of drug resistance that limit the rate and durability of response to existing cancer therapies. Aurinia Pharmaceuticals Inc($AUPH): Aurinia Pharmaceuticals Inc., a biopharmaceutical company, develops and commercializes therapies to treat various diseases with unmet medical need in Japan and China. Dicerna Pharmaceuticals, Inc($DRNA): Dicerna Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercializing of ribonucleic acid interference (RNAi)-based pharmaceuticals. Avid Bioservices, Inc.($CDMO): Avid Bioservices, Inc., a contract development and manufacturing organization, provides process development and current good manufacturing practices (CGMP) clinical and commercial manufacturing services focused on biopharmaceutical drug substances derived from mammalian cell culture. Inovio Pharmaceuticals, Inc.($INO): Inovio Pharmaceuticals, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of DNA medicines to treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases. OCGN Stock Fair Valuation: Typical valuations such as DCF, P/E, P/S and EBITDA multiples would not be accurate for Ocugen Inc, because OCGN has always been in the research stage and generated no revenues since inception. Thus its sales are zero and EBITDA and earnings are negative making the above listed multiples uninsightful. Besides this Ocugen has not provided any specific timeline by which it would be able to commercialize its products in the latest investor call. OCGN has not provided any estimates on its growth rate projections. Thus to get a fair idea of where OCGN should currently stand in the industry we can compare ratios such as ROA and ROE to its competitors. Price/Book Value: By comparing Ocugen’s Price/Book Value to that of competitors, fair value for the OCGN stock from $1.59 to $10.93, averaging at $4.96. ROA: Ocugen has a Return on assets of -32.56% as compared to the peer average of -17%. Thus giving lesser returns as compared to peers in the industry. ROE: Ocugen has lower Return on equity -72.18% as compared to the competitors average of -43%. Latest Developments: On August 13th 2021, Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, filed a class action lawsuit against Ocugen, Inc. on behalf of the investors.  The Ocugen class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) the information that Ocugen submitted to the U.S. Food and Drug Administration (“FDA”) was insufficient to support an EUA; (ii) Ocugen would not file an EUA with the FDA; and (iii) as a result, Ocugen’s financial statements, as well as defendants’ statements about Ocugen’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis. OCGN Stock Analysis Summary: OCGN currently relies solely on the worsening pandemic to stay afloat. Even if it has the exclusive rights to administer COVAXIN in the US and in Canada, the BLA might take up to the end of 2022 to get approved and demand of COVAXIN in US and Canada with Pfizer, Moderna and J&J available might be insignificant if any. The other product lines that Ocugen Inc boasts are not even in clinical trial phase yet, and would take years to be commercialised. Even if OCGN has promising products to offer, with no revenue and soured investor relations, it will be difficult for the company to maintain current share price.

back
photo-url-https://api.utradea.com/profile_pictures/60f8a51a4936b150383f358f.png

HiralKeshwala

Aug 17, 2021

-10.61%

Change % Since Posting

7.16

Price When Posted

-0.76

Change Since Posting

OCGN

Ocugen Inc

7.92

0.38
5.04%
Current Price

Here’s why OCGN Stock might be all bloom and gloom

bearish

Ocugen Inc Overview:

Ocugen Inc is a biopharmaceutical company focused on developing gene therapies to cure blindness diseases and developing a vaccine to save lives from COVID-19. Their product offerings include:

  1. COVID-19 Vaccine — COVAXIN is a whole-virion inactivated COVID-19 vaccine candidate developed by Bharat Biotech to prevent COVID-19 infection in humans. Ocugen is co-developing COVAXIN with Bharat Biotech for the U.S. and Canadian market.
  2. Modifier Gene Therapy Platform — Ocugen anticipates that their gene therapy platform has the potential to address many retinal diseases, including retinitis pigmentosa ("RP"), leber congenital amaurosis ("LCA"), and dry age-related macular degeneration (“AMD”).

Novel Biologic Therapies for Retinal Diseases — Ocugen is developing OCU200 to treat diabetic macular edema (“DME”), diabetic retinopathy (“DR”), and wet AMD.

Ocugen’s Growth Strategy:

  1. Ocugen is currently focused on obtaining BLA from FDA for COVAXIN and commercialising it in the US and Canada.
  2. Establishing their modifier gene therapy platform and advancing into clinical development.
  3. Advancing OCU200 into clinical development from preclinical phase.

Risks with OCGN Stock:

  • Ocugen Inc has incurred significant losses from operations and negative cash flows from operations since its inception and may continue to incur net losses over the next several years.
  • Ocugen has used almost all its unreserved, authorised shares and may need substantial additional funding. Failure to raise the funding may force the company to delay or eliminate the product development program.
  • There is heavy regulatory requirement around approval of company’s product candidates and failure to obtain approval would prevent the company from commercialization and gaining revenues/profitability.
  •  There is uncertainty around the time and cost of product development making the investment in OCGN Stock highly risky.
  • Ocugen can potentially become involved in lawsuits, exacerbating the financials of the company and causing delays in predicted timelines.

Upheaval in investor sentiment:

Ocugen had been a steady company with focused research on Gene therapy for a long time and investors had not been expecting very high profit margins so soon. The turbulence started when Ocugen announced its partnership with Bharat Biotech for commercialisation of COVAXIN in the US, since the company had changed its direction from Gene therapy and aimed to benefit from the pandemic. It was a good surprise for a few investors to learn that Ocugen Inc will be working towards getting an Emergency Use Authorization(EUA) from FDA. The $OCGN stock soared up 339% to $15.81 per share in February 2021.

Ocugen had missed its targets for three quarters out of trailing four in Q2 2021. But the prospect of EUA for COVAXIN getting approved kept investor expectations and projected $OCGN Stock price high. However, following the rejection of EUA by the FDA on 11th Jun 2021 and Ocugen’s change in direction to pursue BLA rather than continuing with its plan to obtain EUA pushed the stock price down. Currently it is one of the most volatile stocks with a short interest of ~27%.

Potential returns from COVAXIN:

OCGN is targeting a vaccination market and COVAXIN could be more desirable for administer because of its ease of storage and stocking, but the partnership is skewed sharply in Bharat’s favor. Ocugen only has rights to distribution in the US and Canada while incurring all the financial and operational costs to get Bharat’s Covaxin to market. In return, the company receives just 45% of any profits. So the idea that OCGN stock is next to Moderna or Pfizer is a bit far fetched. 

It is also to be noted here that the U.S. has still not approved AstraZeneca and will have sufficient vaccination supplies from the approved vaccines(Moderna, Pfizer and J&J). In addition to this, BLA is targeted to be submitted by the end of 2021 and takes ~10 months to get approved. The demand of Covid-19 vaccine in late 2022 in the US and Canada remains uncertain.

Competitors:

  • Deciphera Pharmaceuticals, Inc.($DCPH): Deciphera Pharmaceuticals, Inc., a biopharmaceutical company, develops drugs to enhance the lives of cancer patients by addressing key mechanisms of drug resistance that limit the rate and durability of response to existing cancer therapies.
  • Aurinia Pharmaceuticals Inc($AUPH): Aurinia Pharmaceuticals Inc., a biopharmaceutical company, develops and commercializes therapies to treat various diseases with unmet medical need in Japan and China.
  • Dicerna Pharmaceuticals, Inc($DRNA): Dicerna Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercializing of ribonucleic acid interference (RNAi)-based pharmaceuticals.
  • Avid Bioservices, Inc.($CDMO): Avid Bioservices, Inc., a contract development and manufacturing organization, provides process development and current good manufacturing practices (CGMP) clinical and commercial manufacturing services focused on biopharmaceutical drug substances derived from mammalian cell culture.
  • Inovio Pharmaceuticals, Inc.($INO): Inovio Pharmaceuticals, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of DNA medicines to treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases.

OCGN Stock Fair Valuation:

Typical valuations such as DCF, P/E, P/S and EBITDA multiples would not be accurate for Ocugen Inc, because OCGN has always been in the research stage and generated no revenues since inception. Thus its sales are zero and EBITDA and earnings are negative making the above listed multiples uninsightful. Besides this Ocugen has not provided any specific timeline by which it would be able to commercialize its products in the latest investor call. OCGN has not provided any estimates on its growth rate projections.

Thus to get a fair idea of where OCGN should currently stand in the industry we can compare ratios such as ROA and ROE to its competitors.

Price/Book Value:

By comparing Ocugen’s Price/Book Value to that of competitors, fair value for the OCGN stock from $1.59 to $10.93, averaging at $4.96.

ROA:

Ocugen has a Return on assets of -32.56% as compared to the peer average of -17%. Thus giving lesser returns as compared to peers in the industry.

ROE:

Ocugen has lower Return on equity -72.18% as compared to the competitors average of -43%.

Latest Developments:

On August 13th 2021, Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, filed a class action lawsuit against Ocugen, Inc. on behalf of the investors. 

The Ocugen class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) the information that Ocugen submitted to the U.S. Food and Drug Administration (“FDA”) was insufficient to support an EUA; (ii) Ocugen would not file an EUA with the FDA; and (iii) as a result, Ocugen’s financial statements, as well as defendants’ statements about Ocugen’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis.

OCGN Stock Analysis Summary:

OCGN currently relies solely on the worsening pandemic to stay afloat. Even if it has the exclusive rights to administer COVAXIN in the US and in Canada, the BLA might take up to the end of 2022 to get approved and demand of COVAXIN in US and Canada with Pfizer, Moderna and J&J available might be insignificant if any. The other product lines that Ocugen Inc boasts are not even in clinical trial phase yet, and would take years to be commercialised. Even if OCGN has promising products to offer, with no revenue and soured investor relations, it will be difficult for the company to maintain current share price.

update-select
update-select
update-select
update-select
Comments

Write your comment....

Sign in to comment

read-time
5 min

4.96

Target Price

7/ 10

Confidence

1-3 Years

Timeframe
catalyst icon
Earnings Per Share
catalyst icon
Financials
catalyst icon
Management
catalyst icon
Price to Earnings Ratio
catalyst icon
Dividend
catalyst icon
Other Catalyst

OCGN Channel

Start new chat
next