Small biotech companies can be explosive. Massive gains above 100% in relatively short periods aren’t that rare. That’s what happened to Ocugen (NASDAQ: OCGN) this year. The company’s shares are up 229% since January (as of this writing). As per usual, Ocugen owes this recent run to meaningful clinical progress.
However, despite recent developments, the biotech remains far too risky for most investors. Here is why Ocugen’s shares aren’t worth the trouble right now.
Promising pipeline programs
Some will remember Ocugen for its failed attempt to become a major player in the COVID-19 vaccine market. The biotech is turning a new leaf, though, and it is pushing several candidates through their later developmental stages. The lead asset in Ocugen’s portfolio is OCU400, a potential retinitis pigmentosa (RP) therapy. This group of rare eye-related genetic diseases erodes patients’ visions, eventually causing blindness, or at least highly compromised sight.
If approved, OCU400 could be a one-time curative gene therapy for RP. Ocugen has started a phase 3 clinical trial for the treatment. It plans to pursue approval in the U.S. and Europe.
What is OCU400’s market potential? If we take Ocugen’s estimates seriously, it is mouthwatering. The biotech projects that OCU400 could earn approval in 2026. Ocugen thinks the therapy could generate between $30 billion and $47 billion in total revenue in the five years after approval. The company’s market cap is about $488 million as of this writing. So by any standard, if these projections work out, Ocugen is severely undervalued.
And that’s without considering the rest of the company’s pipeline. The biotech is developing OCU410 as a potential treatment for dry age-related macular degeneration, another eye-related disease. Ocugen projects sales of $75 billion in the first five years for OCU410, which is currently in phase 1/2 testing.
But there is more to the story
With projections like those for some of its leading candidates, why isn’t the market adjusting accordingly and sending Ocugen’s share price higher than it already has this…
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