With the U.S. committing to buy much more of Johnson and Johnson’s (NYSE:JNJ) vaccine for the novel coronavirus, and the country potentially on the verge of herd immunity, Ocugen (NASDAQ:OCGN) looks like it’s in trouble. Therefore, investors should sell OCGN stock immediately.
In recent months, the drug maker’s shares have soared thanks to a deal it made to obtain the U.S. rights to a coronavirus vaccine made by India’s Bharat Biotech. However, at this point, the chances of the U.S. government buying any of the vaccine appear to be extremely low.
100 Million More Shots From Johnson & Johnson
On Mar. 10, President Joe Biden announced that the U.S. would purchase 100 million more shots of Johnson & Johnson’s vaccine, which requires only one dose.
In a previous statement, made when JNJ’s shot was first approved by the Food and Drug Administration (FDA), Biden said “that the U.S. was on track to have enough vaccine doses for every adult in the country to get vaccinated by the end of May,” NBC reported. The president’s decision to buy 100 million more shots from the drug maker will likely ensure that America will be able to meet his previously disclosed timetable.
Meanwhile, multiple knowledgeable sources agree that vaccines will be available to a majority of Americans within two to three months.
For example, on Feb. 16, Dr. Anthony Fauci said, “Most Americans will have access to a Covid-19 vaccine by mid- to late May or early June,” as reported by CNBC. And on Mar. 8, Stat, a publication that covers the pharmaceutical sector, was even more upbeat, stating that, “By early summer, barring a manufacturing catastrophe, there should be enough vaccine for every American.”
In summary, due to the success of the shots from Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ), the U.S. will, in all likelihood, have enough doses to vaccinate the vast majority of Americans in 10 to 12 weeks.
In other words, by the time the FDA examines the data on Bharat’s vaccine, the agency approves it and the shot starts to get out the door, there will almost certainly be little to no need for it in the U.S. Plus, the FDA appears to be biased in favor of vaccines developed at least partly by American companies.
As a result, I do not expect the FDA to even bother considering Bharat’s shot. That, of course, would be very bad news for Ocugen and OCGN stock.
Early Herd Immunity Would Be Even Worse
Multiple experts are now suggesting that the U.S. could reach herd immunity within the next month or two. On Feb. 15, Dr. Marty Mackary of the Johns Hopkins School of Medicine and Bloomberg School of Public Health gave his opinion: “At the current trajectory, I expect Covid will be mostly gone by April, allowing Americans to resume normal life.”
Meanwhile, epidemiologist Suzanne Judd estimates that the U.S. will reach herd immunity by May.
When herd immunity is reached, the coronavirus will not spread significantly, making vaccines much less critical. Therefore, in such a situation, the FDA would be highly unlikely to approve a new, foreign-made vaccine.
Consequently, if coronavirus cases continue to sink, and the U.S. reaches herd immunity within the next month or two, I expect OCGN stock to tumble.
The Bottom Line on OCGN Stock
Since December, the shares have soared an incredible 29 times on hopes that Bharat’s shot will be approved in the U.S. With those hopes likely to be dashed soon, Ocugen is likely to tumble sharply.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.