Ocugen, Inc.

Ocugen, Inc. (NASDAQ: OCGN) is a biopharmaceutical company focused on discovering, developing and commercializing transformative therapies to cure blindness diseases. The Company is located in Malvern, Pennsylvania, and manages its business as one operating segment.

Key Updates:

• COVAXIN™ update: The company received licensed rights from Bharat Biotech for the US market, which promises safety and immunogenicity demonstrated by the Phase 1/2 trials in India. Moreover, the group enrolled its Phase 3 clinical trial in India, which includes 25,800 volunteers. The above vaccine also neutralizes UK variant of SARS-Cov-2, reducing the possibility of mutant virus escape.
• Modifier Gene Therapy Platform: The company is working on two segments OCU400 (AAV-NR2E3 and OCU410 (AAV-RORA). OCU400 is intended to treat broad Retinitis Pigmentosa (RP), which has over 150 gene mutations, in lieu of developing separate therapies for each mutation under traditional gene therapy – initiation of Phase 1/2a this year. On the other hand, OCU410 has the potential to treat dry age-related macular degeneration (Dry AMD) through a multi-factor treatment approach and is expected to initiate its Phase 1/2 in 2022.

Q3FY20 Financial Highlights:

• OCGN announced its quarterly results, wherein the company posted total operating expenses of USD 10.181 million, significantly higher than USD 2.713 million in the previous corresponding period (pcp). The increase was primarily due to the inclusion of in-process research and development amounting USD 7 million, along with a higher general and administrative expense (USD 1.704 million versus USD 1.408 million in pcp).
• The group reported a net loss of USD 10.473 million, stood lower than the net loss of USD 22.773 million in Q3FY19.
• Cash and cash equivalents were recorded at USD 19.105 million, while total assets were recorded at USD 20.539 million.

Q3FY20 Income Statement Highlights (Source: Company Reports)

Risks: The company is in the early phase of its trials and is yet to commercialize its medicines. Thus, the current scenario does not guarantee any revenue generation, which might lead to operating losses.

Stock Recommendation:

The company’s products are related to COVID 19 vaccine and are in the trial phase. Any positive news would likely to report strong operating performance for the coming quarters or vice versa. The stock of OCGN soared ~2,639% and ~1,869% in the last three months and six months, respectively, as investors were leaning towards the stock due to COVID 19 vaccine trials. However, the group is yet to report revenue and future revenue is depends on the success of its candidate, which is uncertain. Moreover, on the valuation front, the stock of OCGN is available at a significantly higher valuation multiple of price to book value of 104.3x on TTM basis, as compared to the industry (Pharmaceuticals) average of 35x. Considering the aforementioned facts, valuation and current price movement, we recommend an ‘Expensive’ rating on the stock at the closing price of USD 8.00 on February 25, 2021.

OCGN Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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