I ought to know higher than to make value predictions about biotech shares like Ocugen (NASDAQ:OCGN). Clearly, I don’t have a clue the place OCGN inventory is headed.
In early Might, I wrote a chunk in regards to the Covid-19 vaccine candidate, suggesting that it seemed able to blow through $18 a share. It had simply doubled in value throughout April. Things were going well for Bharat Biotech, its Indian accomplice. The U.S. potential looked real, if not as explosive as as soon as thought.
In my protection, I did end my Might 5 article by offering a significant caveat.
“For me, uncertainty nonetheless lingers. Thus, for those who’re a speculative investor, I might attempt to see if OCGN inventory comes again to single digits earlier than pulling the set off,” I wrote.
“After all, I believed it was nothing greater than a penny inventory lower than two months in the past, so what do I do know?”
Given it has come again to single digits, I should be ready to make it a speculative purchase at this level of the proceedings. So, why can’t I?
Properly, because the headline states, it appears with regards to OCGN, I’m damned if I do, and I’m damned if I don’t.
With that in thoughts, let’s have a look at each arguments.
OCGN Inventory Is a Purchase in Single Digits
Ocugen announced on June 3 that Bharat Biotech had prolonged its co-development, provide and commercialization settlement for Covaxin to incorporate Canada in addition to its present rights for the U.S. market.
“As we work in the direction of the submission of the emergency use software within the US, we’ll concurrently search authorization beneath interim order for emergency use in Canada,” Ocugen’s press launch said.
“We imagine COVAXIN has the potential to play a key position in saving lives from COVID-19 within the US and Canada, in addition to throughout the globe, because of the robust immune response it generates towards a number of antigens.”
In the same association to its U.S. deal, Ocugen pays Bharat Biotech an upfront cost, one other cost upon the primary sale of Covaxin in Canada, after which will share 55% of the longer term earnings from the vaccine’s sale in Canada.
I all the time questioned why Canada wasn’t included within the authentic settlement. The 2 nations are working collectively on a vaccine-sharing plan. Ought to the U.S. Meals and Drug Administration (FDA) grant Covaxin emergency use authorization (EUA), Canada would fall into line shortly thereafter.
Ought to Ocugen win EUA approval within the U.S., Canada could be like gravy.
On Might 26, Ocugen mentioned it was on observe to submit its EUA application in June. As soon as submitted, it should undertake additional pre-biologics license software (BLA) discussions with the FDA.
Within the case of Moderna (NASDAQ:MRNA), the vaccine maker submitted its EUA application on Nov. 30. It was approved on Dec. 18 for emergency use on folks aged 18 or older. So, it took barely lower than three weeks.
Assuming the FDA is now extra environment friendly at approving vaccines for EUA, let’s assume it takes two weeks to approve Covaxin. Which means will probably be authorized to be used no later than mid-July.
That’s good news.
It’s Headed Again to Penny Inventory Standing
The largest downside that Ocugen has proper now’s that the FDA has moved the purpose line. By that, I imply it’s revised its tips for EUA approval.
The Motley Idiot’s Keith Speights, who writes about healthcare for the publication and consults and has worked in the sector for many years, believes that these new guidelines carry into actual query whether or not or not the FDA will even think about it Ocugen’s EUA software.
“In Ocugen’s press launch saying its intention to file for EUA in June, the corporate mentioned that it’s ‘awaiting suggestions’ from the FDA on its grasp file submission. That doesn’t sound like ‘FDA suggestions early and all through the event course of,’” Speights wrote on June 3.
If I had been to advocate speculative buyers purchase shares at present costs close to $9 and the FDA closed the door on a fast EUA approval course of, anybody who adopted my suggestion would nearly actually be a share value close to or at penny inventory standing.
Again in March, I mentioned Novavax (NASDAQ:NVAX) in relation to Ocugen, stating that Novavax expected EUA approval someday in Might. Nevertheless, as we now know, Novavax pushed its timeline back to the third quarter or someday between July and September.
So, what’s to say Ocugen received’t do the identical? I’d say the chances are excessive we received’t see a EUA software till at the very least July.
Why? As a result of Ocugen is aware of it’s solely bought one shot (pardon the pun) to get it proper with the FDA.
The Backside Line
At this level, I do not know whether or not Ocugen will get the inexperienced gentle from the FDA this summer season. Or in any respect, for that matter.
What I do know is that I can’t in good conscience advocate OCGN inventory wherever above $5 at this level as a result of, with each passing day, it turns into much less possible Ocugen shall be profitable.
As I mentioned on the high, I’m damned if I do, and I’m damned if I don’t.
On the date of publication, Will Ashworth didn’t have (both immediately or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications the place he’s appeared embrace InvestorPlace, The Motley Idiot Canada, Investopedia, Kiplinger, and a number of other others in each the U.S. and Canada. He significantly enjoys creating mannequin portfolios that stand the take a look at of time. He lives in Halifax, Nova Scotia. On the time of this writing Will Ashworth didn’t maintain a place in any of the aforementioned securities.