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Why Ocugen Sank Friday After Soaring Thursday

By Eric Volkman – Dec 31, 2021 at 10:01PM

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There has been very good news about the COVID vaccine; however, the jab still hasn't been approved where it counts for the biotech.

What happened

What a difference a day can make in the biotech world. On Friday, shares of Ocugen (OCGN 3.59%) fell by 5.8%, quite a contrast from the 10%-plus gain of the preceding day. Investors might have been looking at the big picture of the coronavirus vaccine the company is linked to, and not enjoying the view.

So what

Thursday's news from Ocugen was inarguably positive. The company happily reported that the Covaxin jab developed by its partner, India-based Bharat Biotech, had shown excellent results in phase 2/3 testing on children aged 2 to 18. The vaccine produced a strong neutralizing antibody response from their young systems, and overall delivered a 93%-plus reduction in severe disease with no severe adverse events.

Doctor seated with head in hands.

Image source: Getty Images.

So it looks like Covaxin's path toward authorization, or even approval, is clear. There are some caveats, however.

The first and most significant is that Ocugen only holds North American commercial rights for the vaccine. So even in the likely case that Covaxin is authorized or approved in India, the U.S. biotech will not directly benefit from sales in the massive sub-continent.

Second, all biotech investors understand that performance in the lab is no guarantee of authorization or approval from a healthcare authority. Regulators must consider a host of factors during the authorization process. In addition, the U.S. Food and Drug Administration isn't necessarily eager to accept data from clinical trials conducted far outside our borders.

Now what

All this means that certain investors woke up Friday morning with a bit of a Covaxin hangover, starkly aware that the vaccine is still an unknown distance from being granted authorization in the United States. We shouldn't expect significant upward movement in Ocugen stock until there's some activity on that front.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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