Stocks to sell

After reviewing the statements of experts on the state of the pandemic in the U.S., reading CDC projections on the course that the coronavirus is likely to take and analyzing Ocugen’s (NASDAQ:OCGN) recent first-quarter earnings conference call, I remain extremely bearish on OCGN stock.


Ocugen has said that it is trying to get Covaxin, a coronavirus vaccine made by Indian pharmaceutical company Bharat Biotech, approved by the Food and Drug Administration. Ocugen would get 45% of any profits that Covaxin generates in the U.S.

Experts are saying that the virus may be waning in America. A senior White House official went further, saying that the U.S. has “turned the corner” on the virus, while the CDC expects coronavirus cases to drop sharply in the U.S. starting in July.

Meanwhile, deaths and hospitalizations caused by the virus have dropped noticeably in recent weeks and the CDC recently said that Americans who have been vaccinated do not have to wear masks in most places.

Further, speaking on Ocugen’s May 7 earnings conference call, CEO Shankar Musunuri failed to provide important information about critical issues linked to Ocugen’s efforts to get Covaxin approved by the FDA and its plans to manufacture doses of the vaccine following a potential approval by the agency.

Finally, I remain convinced that, for America, Bharat’s vaccine seeks to remedy issues that are not currently causing major problems for the country and are not expected to do so in the foreseeable future.

Experts and the CDC

Musunuri said that “Covaxin’s potential effectiveness against multiple variants (of the coronavirus) reduces the possibility of mutant virus escape,” while the vaccine “could be a more powerful weapon that is more likely to remain effective as the virus continues to mutate.”

But despite the presence of multiple variants in the U.S. now, America is “turning the corner” on the coronavirus, said White House coronavirus response coordinator Jeffrey Zients in an interview with CNN recently. Interestingly, he added that the U.S. has already obtained enough vaccine doses to inoculate every American.

Meanwhile, “a growing number of epidemiologists, infectious disease researchers and public health experts think that the vaccination campaign may be helping the country win the race against the coronavirus, The Economic Times reported on May 2, citing an NPR report.

Also showing that America’s current vaccines are winning the war against the coronavirus, hospitalizations and deaths have dropped sharply in recent weeks, while the CDC recently announced that those who are fully vaccinated no longer have to wear masks, except on public transportation and in crowded places.

For its part, the CDC expects cases to jump this month due to “the highly contagious B.1.1.7 variant,” CNBC reported on May 5. But importantly, the agency expects “hospitalizations and deaths (to) likely remain low nationally” and predicts that case totals will sharply fall by July, CNBC stated.

Using the vaccines currently approved by the FDA, Covid-19 variants are expected to drive an increase in cases, but hospitalizations and deaths, which are the main issues that worry governments, are expected to stay low. And over the next two months, before Ocugen would likely be able to get Bharat’s vaccine approved and manufacturing of it ramped up, case totals are poised to decline.

Speaking on Fox Business on May 5, Johns Hopkins health policy expert Dr. Marty Makary said that the case fatality rate of Covid-19 in the U.S. is now “similar to the seasonal flu.”

Taken together, all of this information strongly suggests that America’s current vaccines are performing quite well against the variants and will continue to do so.

Ocugen’s Lack of Details and Key Omissions

Even Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ), which are among the world’s largest pharmaceutical companies, have used multiple partners to manufacture and distribute their coronavirus vaccines.

But during the Ocugen earnings conference call, Musunuri and CFO Sanjay Subramanian did not mention details regarding its recruitment of partners to assist with manufacturing or distributing Covaxin in the U.S.

Musunuri has said that Ocugen intends to start out using imported Covaxin doses from Bharat before producing doses in the U.S., I haven’t seen any information suggesting that Bharat would handle distribution of Covaxin in the U.S.

Answering the last question of the conference call, the CEO did say “we are…working with U.S. contract manufacturers.” But he did not go into any detail on manufacturing partners beyond that phrase on the call, and he did not address the issue of distribution partners at all.

And asked directly about the rollout of Covaxin, Musunuri said, “we’re anticipating it’s going to be a similar process to other companies.” But he did not address Ocugen’s recruitment of partners or any details of its launching plans.

At other points in the call, Ocugen officials referred to additional employees that the company has hired to assist with the rollout (as of last month, it had a total of 26 employees) and the $100 million it raised by selling OCGN stock. But they failed to provide any details about how they would accomplish the launch. 

Similarly, Musunuri was vague when it came to discussing the FDA’s feedback on Covaxin and the timeline for obtaining an emergency approval for the vaccine. He did not directly answer a question about when the company expected to get feedback from the FDA. And he acknowledged the FDA has not asked for Covaxin data from U.S. trials.

As I pointed out in my previous column on OCGN stock, the FDA’s written protocols say that it should carry out visits to the sites at which Phase 3 trials are being carried out. But the only Phase 3 trials on Covaxin are being conducted in India, and the U.S. has placed a travel ban on that country because the coronavirus outbreak continues to accelerate there. As a result, site visits by FDA officials in India may be impractical.

And in my previous article, I reported that U.S.-based Phase 3 trials have been conducted on every coronavirus vaccine that the FDA has either approved or has indicated that it is considering.

The Bottom Line on OCGN Stock

Thankfully, deaths and hospitalizations caused by the coronavirus have dropped recently and are expected to continue doing so, despite the advent of mutated forms of the virus. Considering Covid-19 cases are dropping in the U.S. and vaccinated people no longer are advised by the CDC to wear masks, it seems vaccines already approved by the U.S. are working well against the mutations.

Meanwhile, as I pointed out in my previous column, the Phase 3 trials of Covaxin seem to lack attributes considered important by the FDA, while no senior U.S. official has indicated that the country is considering approving Covaxin.

And the vagueness of Ocugen’s leadership on key issues regarding Covaxin further undermines my confidence in the shot’s prospects in the U.S.

And finally, although the drugs being developed by Ocugen itself are years away from generating revenue, OCGN stock still has a very large market capitalization of $1.7 billion.

Given all of these points, I continue to recommend that risk-tolerant investors short OCGN stock with a very small percentage of their portfolios.

On the date of publication, Larry Ramer held a short position in OCGN. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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