What happened
Shares of Ocugen (OCGN 1.70%) dropped more than 3% on Friday. The stock opened at $7.46, but by 2:30 p.m., it was down to $7.25. Ocugen's stock is still up more than 295% for the year.
IMAGE SOURCE: GETTY IMAGES
So what
The biggest driver for the move is likely the uncertainty around the company's partnership deal with India pharmaceutical company Bharat Biotech regarding Covaxin, an anti-coronavirus vaccine that is already being administered in India.
Ocugen, a company known more for its eye-disease therapies, is entitled to 45% of the profits generated by the vaccine in the U.S.-- provided it is approved here.
According to a report in The Hindu, the World Health Organization (WHO) will make a decision on Emergency Use Listing (EUL) for the drug within four to six weeks, WHO Chief Scientist Soumya Swaminathan said on Friday. An EUL would open the drug to other nations beyond India.
The news that the WHO may be slow-walking its EUL on top of the cold shoulder that the Food and Drug Administration (FDA) seems to be giving the drug here may be concerning investors. Last month, the company said the FDA had suggested that Ocugen should file a Biologics License Application (BLA) for Covaxin instead of requesting an Emergency Use Authorization.
This means a much longer timeline before Covaxin could be used in the U.S. With COVID-19 cases already trending downward, Ocugen can anticipate fewer potential sales.
The stock had recently rallied after positive news regarding the drug's phase 3 trials that showed nearly 65.2% effectiveness against the COVID-19 Delta variant.
Now what
The hope was that Covaxin sales would give Ocugen some much-needed revenue to pursue its other therapies. It appears the company may have to wait a while before that happens. In the meantime, Ocugen has $44.7 million in cash and lost $7 million in the first quarter.
The long-term prognosis shows the company has, at its current burn rate, six years to come up with a profitable drug. If Covaxin isn't approved quickly, the company can expect to undergo only a temporary setback. The stock is likely to bounce back.
