Because the novel coronavirus pandemic has more twists and turns than the Monaco Grand Prix, my take on biotechnology firm Ocugen (NASDAQ:OCGN) stock has been admittedly all over the map.
Still, it’s very possible that the recent volatility in OCGN stock finally provided some much-needed clarity.
First, let’s back up for a moment. Prior to the Covid-19 catastrophe, OCGN stock was itself a disaster. Though the underlying company features a compelling business — using the latest advancements in biomedicine to address rare eye diseases — Ocugen for years suffered from a credibility problem.
It’s helpful to remind ourselves that going into 2020, you could buy OCGN stock for less than a dollar a pop. Throughout most of last year, Ocugen never gave an inkling that it was about to go on a mercurial ride.
However, a partnership with Bharat Biotech to deliver whole-virion inactivated Covid-19 vaccines quickly changed the narrative.
Out of nowhere, OCGN stock jumped into single-digit territory, then into double digits in early February of this year. As shares tumbled down from their wild peak, I noted on March 30 that OCGN could be a crisis trade that might pan out.
At the time, new strains of the SARS-CoV-2 virus threatened to sink the world back into lockdown.
While it took an initial dive, OCGN stock would find itself again in double-digit territory. But on May 3, I warned that if you’re profitable on Ocugen, now would be the time to take profits. Essentially, the U.S. has too many vaccines. There’s plenty of supply for those who want to be protected, and contrary to conspiracy theories, no one is forcing never-vaxxers to get the jab.
Therefore, yet another Covid vaccine seemed utterly superfluous. While I don’t mean to toot my horn, my cautionary take came out on a high note for OCGN stock. Since then, shares have looked very ugly.
Take the Commonsense Approach With OCGN Stock
Admittedly, what makes Ocugen intriguing for speculators right now is the terrible situation that’s afflicting India, Bharat Biotech’s home market. Clearly, a desperate need exists to inoculate the population. Further, other countries have requested doses of Bharat’s vaccine, called Covaxin. This possibly opens the door to additional opportunities for Ocugen.
Still, the point remains that Ocugen’s deal with Bharat is to “co-develop, supply, and commercialize the Indian vaccine maker’s Covid-19 vaccine Covaxin in the US market.” Therefore, it’s not entirely clear that OCGN stock will benefit from expansion into non-U.S. markets.
Nevertheless, even if it did, the advantage might be short-lived for Ocugen. Mainly, this is due to the competition. While the marshaling of resources to produce multiple solutions for Covid-19 represents the power of the human spirit against overwhelming odds, the reality is that there will be few sustained winners following this mess.
For example, Novavax (NASDAQ:NVAX) was a massive standout early in the pandemic. Through its proven subunit approach, Novavax had the potential to deliver a trusted solution (the hepatitis B vaccine is a subunit) to a leery public.
Unfortunately, it just couldn’t beat Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), which punched their way to the finish line first.
It’s the same narrative with Ocugen. Going with a more traditional inactivated virus approach, Ocugen has gone with a proven, trusted approach. But a track record wasn’t just the only issue here — the world needed a solution quickly. That’s where Pfizer and Moderna, which both utilized a messenger-RNA approach, enjoyed the pivotal advantage.
“[E]ven with modern fermentation equipment, reaching adequate biomass to begin manufacture of a viral vaccine takes about four to six weeks. Once underway, each growth and production cycle might take a week. An mRNA vaccine is synthesized in a matter of minutes,” said Dr. Simone Blayer, global head of chemistry, manufacturing, and control at PATH’s Center for Vaccine Innovation and Access
It’s Time to Sell Ocugen
Typically, I don’t like to make a declarative statement to buy or sell stock. I lean toward one direction or another, which helps to cut down on the hate mail, but with OCGN stock, I think it’s time to sell while you still can.
Please don’t get me wrong — I’m not speaking out of malice or ill intent. Rather, with so much competition in the space, and with mRNA vaccines having proven themselves brilliantly in the face of much scientific and public scrutiny, the case of OCGN seems rather anachronistic.
Essentially, Ocugen took the field goal instead of going for six. It may have been a smart move. But with Pfizer and Moderna taking the risk and converting, it’s only a matter of time before investors lose interest in speculative ideas like OCGN. That’s especially the case now that the storyline has become even riskier.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.