Ocugen Is a Crisis Trade That Just Might Pan Out
While we’ve seen some crazy moves over the trailing year, one company I didn’t expect to light up the performance leaderboard is Ocugen (NASDAQ:OCGN). True, it’s under fire right now, but let’s look at the broader context. On a year-to-date basis, OCGN stock is up over 270%, currently priced just below $7. That’s a huge step up from what it was last year, when at one point you could pick up a share for less than a quarter.
Today, you can buy a quarter pounder with some fries with OCGN stock. But that also segues into why I never thought I’d see shares of this biotechnology firm up this high.
It’s not that I hated the business. Ocugen works on advanced therapeutic solutions for rare eye diseases, which is an incredibly noble effort. I do wish them well in that department. But Ocugen never seemed to gain meaningful traction.
Of course, that changed with social media and the meme stock phenomenon. Whether it’s because a particular company is under attack from short traders or because it’s just a cheap stock, people have been piling in. Not only that, social media forums post incredibly colorful comments – apes together strong – and all that jazz. It’s not hard to see why OCGN stock attracted many, presumably mostly young investors.
However, we’re not just talking about mindlessly following the crowd. OCGN stock has real substance to its name thanks to the underlying company’s partnership with Bharat Biotech to develop Covaxin, a novel coronavirus vaccine that clinically demonstrates an 81% efficacy rate.
Nevertheless, that hasn’t stopped people from criticizing OCGN stock and I don’t blame them. For one thing, new daily Covid-19 cases have plummeted from their peak in early January of this year. Second, OCGN is a penny stock that seems ripe for a correction after a moment of irrationality.
A Covid Comeback Could Mean Big Moves for OCGN Stock
Before I get into it, let me caveat by saying that you should only trade OCGN stock with money you can afford to lose. This is such a dynamic narrative – and that’s putting it politely – that anything can happen. Still, if you recognize this, you may be surprised that Ocugen isn’t quite so crazy.
Primarily, the underlying Covaxin solution is an inactivated vaccine. As the name suggests, this approach utilizes either an inactivated or dead form of the SARS-CoV-2 virus and injects it into the body. From there, the immune system “learns” from the provided blueprint. Therefore, should an infection occur, the immune system can respond rapidly and effectively.
If this has a familiar tone to it, that’s because this type of vaccine has been used for decades. Indeed, inactivated vaccines have the longest track record, unlike nucleic-acid-based vaccines such as the ones developed by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). While RNA vaccines in this case have the advantage of rapid-fire manufacturing speed, they’re unproven.
Evidence suggests that people (Americans in particular) pay attention to such nuances. Last year, Reuters reported that many in the U.S. worried about safety concerns associated with rushed experimental vaccines. Fast forward to 2021 and it’s the same hesitation.
The Washington Post interviewed a diverse set of supporters of former President Trump and discovered that while no one thought the pandemic was fake, many participants used words like “experimental,” “rushed” and “unproven” to describe the vaccine rollout.
Personally, I think the hesitation cuts across the political spectrum. Therefore, Ocugen has an in with Covaxin – there’s no weird science going on with inactivated vaccines.
Further (and I’m going to get in trouble for this) but Americans are freaking nuts. I’m not saying every American. But a good portion of our society just can’t seem to control themselves, which may mean an upswing in Covid-19 cases. And that could open the door for U.S. approval of Covaxin.
New Strains Presents New Opportunities
According to a recent report from Livemint.com, Bharat claims that Covaxin demonstrates “significant immunogenicity against the rapidly emerging variants.” This includes the U.K. variant and other strains. That’s good news, considering that media reports indicate that the U.K. variant – known as B.1.1.7 – is more contagious and spreading quickly in the U.S.
Also, Florida is getting the trifecta, finding more U.K., Brazil and South America Covid-19 variants on its turf. And with that state’s spring break fiasco, we have a messy situation that potentially could get worse.
Obviously, it’s not what any of us want to hear. Unless, of course, you’re a stakeholder of OCGN stock. Then, you have a cynical reason to smile.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
