Ocugen Inc.: From treating ocular conditions to co-developing a remedy for the COVID-19 pandemic

written on May 27, 2021

A previously, little-known biopharmaceutical company with the mission to cure a range of eye diseases, Ocugen has been thrust into the limelight, becoming one of the hottest biotech stocks everyone has been talking about in recent months.

With its share price hovering below $1 for years, the company grabbed investors’ attention for partnering with India’s Bharat Biotech to bring a COVID-19 vaccine candidate to the U.S. market. Since then, it has been rocketing a double-digit share price, soaring more than 400% so far this year and moving away from its penny stock status. Sporting a cutting-edge technology pipeline that includes a modifier gene therapy platform and novel biologic therapies for retinal diseases in addition to the coronavirus vaccine, the company has investors excited about what‘s next.

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A brief history of Ocugen

Founded in 2013 by current chairman and CEO Shankar Musunuri and director Uday Kompella, prior to co-founding the company, Musunuri held leadership roles at companies ranging from Big Pharma firms like Pfizer (PFE) to biotechnology startups, while Kompella is a professor of Pharmaceutical Sciences, Ophthalmology and Bioengineering at the University of Colorado-Anschutz Medical Campus.

Focused on discovering, developing and commercialising gene therapies to treat inherited, age-related and diabetic degenerative eye conditions, Ocugen is a clinical-stage biopharmaceutical company. Its breakthrough modifier gene therapy platform has the potential to treat a number of retinal diseases with one sole medication, while its biologic product candidate aims to offer patients a better therapy to what is currently available.

In 2019, Ocugen entered into a strategic partnership with China’s CanSino Biologics to help develop further its pipeline. A legitimate player in the industry, CanSino Biologics funded much of the development of OCU300, Ocugen’s flagship product that targets ocular graft versus host disease, also known by its abbreviation, oCVHD - a common complication of bone marrow transplants. If approved, the oVCHD candidate will be the first and only treatment for this orphan disease. The same year, the company merged with Histogenics Corporation in a reverse merger.

And while Ocugen has been known for being a clinical-stage biopharmaceutical company specialising in severe eye diseases, in December 2020 Ocugen changed its trajectory and decided to join the race for a COVID-19 vaccine, shifting its focus and business model. Partnering with Bharat Biotech, an Indian biotechnology company headquartered in Hyderabad, India, engaged in the drug discovery, drug development and manufacture of vaccines, as well as bio-therapeutics, pharmaceuticals and health care products, the companies set off to co-develop their candidate vaccine COVAXIN for the U.S. market. A highly purified and inactivated vaccine, in addition to generating strong immune response against multiple antigens, the vaccine has also shown to generate memory T cell responses, potentially reflecting longevity and a rapid antibody response to future infections.

When did Ocugen go public?

Following the merger with Histogenics Corporation, the newly renamed Ocugen Inc., debuted on the Nasdaq on September 30, 2019. Ocugen sold $25 million of stock in a private placement before the merger, while Histogenics shareholders eventually received about 14% of the company, according to the merger prospectus.

Is Ocugen a buy?

Ocugen recently announced that a new study by scientists at the Indian Council of Medical Research (ICMR), National Institute of Virology found that COVAXIN demonstrated potential effectiveness against the Brazil variant of COVID-19 which has spread to more than 10 other countries, including the UK. At the same time, the vaccine candidate has also proven to be effective against the UK variant, as well as the Indian double mutant variant. According to second interim results of the Phase 3 clinical trial, COVAXIN registered an 81% overall efficacy and 100% in severe COVID-19 disease.

The news drove the stock to new heights, soaring as much as 46.9% on Friday, April 23. In fact, Ocugen appears to be a 2021 success story so far, benefitting from the lucrative coronavirus stocks. The stock began trading on January 4, 2021 at $3.07 following the news that partner Bharat Biotech received emergency use authorisation (EUA) in India, already marking a huge gain from December 16th, 2020 when it was trading at just $0.30 apiece. Then, the stock shot up in February, reaching a 52-week high of $18.77 per share. Since the beginning of May, the stock has pulled back, yet nonetheless, it has surged 373% so far this year, till May 21.

And whereas a number of biopharmaceutical companies just like Ocugen have been focused on developing a vaccine against the coronavirus in record time, the Nasdaq Biotechnology Index is up by 2.81% year-to-date and has gained 28.1% in 2020. But competition is stiff. There are currently 90 COVID-19 vaccines in various stages of clinical trial, with just 8 vaccines having been approved.

With none of its product officially ratified, the company registered no revenue in the first quarter of 2021, however, in April 2021, it sold an aggregate of 10.0 million shares of its common stock, priced at a premium to market at $10.00 per share in a registered direct offering. The offering generated net proceeds of $93.4 million, strengthening Ocugen’s balance sheet, while extending its cash runway.

What’s next for Ocugen?

The question remains as to whether Ocugen will be able to sustain its momentum. In part, this will depend on whether it will manage to obtain EUA in the U.S. According, to the company, Ocugen is in discussions with the U.S. Food and Drug Administration (FDA) regarding the vaccine’s development and it has submitted key information and data for review prior to a planned EUA application. It is also in talks with the Biomedical Advanced Research and Development Authority (BARDA) regarding the U.S. government’s support of the vaccine.

Yet, despite all the hype surrounding COVAXIN, Ocugen has a robust ophthalmology pipeline which continues to advance. For instance, the company is set to initiate four Phase ½ clinical trials by the end of 2022, including OCU400, its lead gene therapy candidate, while the company has continued to make progress in preclinical development with OCU200. Its product candidate to treat a range of ocular conditions ranging from diabetic macular edema (DME) to diabetic retinopathy (DR) and wet age-related macular degeneration (Wet-AMD), OCU200 is a welcome alternative to patients with little to no response to current therapies.

On the other hand, its OCU300 that targets oGVHD, if approved, will open Ocugen to a fairly large market. Indeed, the company estimated that the medication could have as many as 63,000 potential patients.

And while biopharmaceutical startups like Ocugen are prone to dramatic share price moves based on the outcome of the clinical trials for their products as we’ve seen in the past year, some analysts maintain that its stock has the potential to return to double digits.

How to invest in Ocugen (OCGN) stock with Moneybase Invest

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