Over the last few weeks, shares of Ocugen (NASDAQ:OCGN) stock rocketed nearly 420% to a July 2020 high of about 96 cents. Then it was more than halved to 40 cents.
So is the life of a volatile penny stock.
The only reason the stock popped was because its lead gene therapy drug, OCU400, received orphan drug designation from the U.S. Food & Drug Administration. OCU400 is designed to treat PDE6B gene mutation-associated retinal diseases such as retinitis pigmentosa (RP).
As the company progresses with OCU400, the OCGN stock could certainly run higher on clinical news. So, there’s always an opportunity to make money from those. Unfortunately, we won’t see potential approval of OCU400 for another five or six years from now.
At the moment, in my opinion, it’s better to just avoid this penny stock. There are far better opportunities in the market. This one isn’t one of those, and could head lower.
Ocugen’s Drugs are Still in the Early Stages
At the moment, the company has three drugs in its pipeline.
OCU400 for retinal degeneration just received orphan drug designation from the FDA, and could soon begin Phase 1/2 trials shortly, we hope. At the same time, the addressable market here is small, as you can see in the company’s pipeline overview.
OCU410 for dry age-related macular degeneration is still in the discovery phase for the company. And OCU200 for diabetic macular edema, diabetic retinopathy, and wet age-related macular degeneration is still in pre-clinical trials.
Its OCU300 for ocular graft vs. host disease was discontinued. “After review of a pre-planned interim sample size analysis which indicated the trial was unlikely to meet its co-primary endpoints upon completion, Ocugen discontinued the Phase 3 trial and initiated a workforce reduction,” according to the company.
In short, the company still has a way to go with everything in its pipeline.
However, according to CEO Shankar Musunuri:
“We continue to be really excited about our modified gene therapy platform, which has the potential to treat a variety of inherited retinal diseases with a single gene therapy product. One of the biggest advantages of our modified gene therapy platform is that it has the potential to eliminate the need for individual gene replacement and gene editing strategies, and may therefore be highly differentiated from traditional gene therapy for eye diseases.”
OCGN Stock Could be Delisted
As noted by InvestorPlace contributor Chris Markoch, “The company received a delisting notice from the Securities & Exchange Commission (SEC) on Dec. 27, 2019. The 180-day deadline has come and gone. Ocugen did not execute a reverse stock split.”
Plus, it’s not as if the company’s earnings reports are worth writing home about.
Ocugen just reported a net loss of $3.6 million, or 19 cents a share for the second quarter of 2020, as compared to a net loss of $3.5 million, or 58 cents a share year over year. R&D expenses for the quarter rose to $1.6 million from $1.2 million year over year as well. In addition, the company now has $15.1 million in cash on hand from $7.6 million year over year.
The Bottom Line on Ocugen
For the time being, avoid the Ocugen stock. Until we begin to see solid trial results in its drug pipeline, the stock could easily plunge back to 20 cents a share. Hopefully, the company can also avoid being delisted at this point, as well. But that be unavoidable unless it does a reverse stock split to get its shares well above the required threshold.
Avoid OCGN stock at the moment. There are far better opportunities to consider.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.