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OCGN Stock is a fairy tale that needs a happy ending

The moral of the fable “The Tortoise and the Hare” is that slow and steady can win the race. Victory, in from Ocugen (NASDAQ:OCGN) case, is the United States Food and Drug Administration (FDA) approval for Covaxin in the United States. However, if you invest in OCGN stock, you have to ask yourself: does exactly what does victory look like? And what advantage will it give to the title?

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Covaxin is a Covid-19 vaccine candidate manufactured by Bharat Biotech. Ocugen has an agreement with Bharat in which it will oversee the approval, manufacture and distribution of Covaxin in the United States and Canada. However, it plans to sell only 100 million doses of Covaxin in the United States.

This presents investors with a mostly binary calculation. Do you believe that the Bharat Biotech vaccine – which is a more traditional vaccine candidate – will become the standard for Covid-19 vaccinations in the future? Or do you believe that the war against Covid be over by the time Ocugen even wins his battle?

Why OCGN Stock has a slim chance

OCGN stock got a big boost on February 15 when the results of a Harris poll were released. The poll, which was conducted on behalf of Ocugen, found that 73% of Americans wanted additional, more traditional Covid-19 vaccines. Covaxin is a viral vector-based vaccine that most closely resembles the Johnson & Johnson (NYSE:JNJ) vaccine.

This is a specific reaction against the Pfizer (NYSE:DFP) and Modern (NASDAQ:mRNA) vaccines that use messenger RNA (mRNA). Their vaccines are among the first major cases of the technology used.

The survey results also showed that, by a significant percentage, a more traditional vaccine would alleviate parents’ reluctance to vaccinate their children of all ages. However, with each passing day, week, and month, the United States and the world at large are heading toward an endemic stage of this virus regardless.

Are we pulling the troops?

I recently overheard a doctor remark that while we still need to be vigilant about Covid, there is no need to stay on a war footing. Although a bit hyperbolic, I think that’s a pretty apt description. And in all likelihood, we have the virus itself to thank for that.

The omicron variant has been the most contagious strain of Covid-19. When he swept through our communities, it seemed like everyone was positive, regardless of vaccination status. In fact, one of the marked differences with this variant was the number and rate of breakthrough infections (i.e. individuals contracting the virus even after receiving two or, in some cases, three doses vaccine).

However, by many accounts, it seems to have given society a degree of natural immunity. Don’t get me wrong, a lot more data needs to be collected. It’s anecdotal. In addition, any potential natural immunity nor does it mean that future vaccines are lost. Even at an endemic stage, vaccines are needed, especially for the immunocompromised.

Yet if the Covid vaccine looks more like a flu vaccine, the amount of shots needed could also drop significantly, especially as more therapeutics enter the market. This means that unless a new, more virulent strain of Covid emerges, OCGN stock is looking more and more like a gamble.

You can wait on Ocugen

I understand the appeal of speculating on OCGN shares. Trading around the $3.40 level at the time of this writing, the biotech stock is now in penny territory. And if Covaxin is approved, Ocugen may shed the label of a “pre-revenue” company. That alone would be a catalyst for stocks.

However, generating meaningful revenue from its Covid-19 vaccine is increasingly looking like a fairy tale. Therefore, as an investment, I would look for answers in the rest of the business pipelineWhich one is primarily comprised of gene therapy treatments for rare eye diseases.

Currently, none of these treatments in Ocugen’s pipeline are in clinical trials (several are in preclinical trials). Thus, with nothing to report been there for a while, the OCGN stock could drop further.

As of the date of publication, Chris Markoch did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to Publication guidelines.

Chris Markoch is a freelance financial writer who has covered the market for over five years. He has been writing for InvestorPlace since 2019.

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