How Risky Is Ocugen After Its Recent Setback?

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Investors cheered on Ocugen (NASDAQ:OCGN) earlier this year when it signed a deal to co-commercialize Bharat Biotech’s vaccine candidate in the U.S. The company recently abandoned the idea of a quick authorization, though. In this Motley Fool Live video recorded on June 22, healthcare and cannabis bureau editor and analyst Olivia Zitkus and Fool.com contributor Adria Cimino discuss what happened — and what this means for the stock.

Olivia Zitkus: Let’s turn it over to Ocugen for a few minutes. This was a highflier, at least through the start of the year. A couple of things have changed. But Ocugen hasn’t quite made it to the vaccine race finish line yet either, but it’s one a lot of investors have been betting on. It climbed as much as 700%, I think, earlier this year after signing a deal to co-commercialize Bharat Biotech’s vaccine candidate in the states, but it recently dropped its plan to file for an EUA, for Emergency Use Authorization, and the stock fell. Why did they do that? Can you explain to us what happened?

Adria Cimino: Sure. Well, the FDA actually recommended that to Ocugen, they recommend that Ocugen file for regular authorization versus an EUA. This really extends the timeline because the EUA as we’ve seen with Pfizer, Moderna, and even in Johnson & Johnson was a matter of few weeks from when they applied to when they actually got the authorization. The regular authorization, regular approval, review usually takes six to 10 months. Of course, a longer timeline. Then the FDA also asked for more information. Again, that’s going to add on some time. Ocugen says it may even have to do a new trial. Right now, that candidate is in a phase 3 trial in India. What that implies is — they’ve already started to report data from that trial — that implies that that data isn’t enough and that they’re going to have to do, as they said, perhaps a new trial. Again, that adds even more time. Really, right now, I think investors, this wasn’t what they bargained for. They were thinking, “this is a close-to-market product, it’s going to be out soon.” The stock really rose a whole lot. Now, they’re realizing that, well, this is something that if it’s going to be out, if it’s approved at all, it’s going to be a lot later. It’s a very risky bet right now. We don’t really have any clarity as far as what is going to happen. If it’s going to be approved, when? The stock is very risky right now.

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Zitkus: Yeah, I can imagine on top of the delay to commercialize, the cost of re-upping a brand new clinical trial, that’ll be very significant too, right?

Cimino: Right.

Zitkus: It’s not just the timeline that’s the problem.

Cimino: Right. That’s another thing that investors are probably thinking of is what is this going to cost Ocugen to get this to market, that’s another good point.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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