The COVID-19 pandemic resulted in a race to develop effective vaccines for the virus. This also brought to the forefront COVID-19 vaccines based on various platforms.
According to a Market Study Report, the market for the COVID-19 vaccine could be worth $25 billion by 2024 on a global basis.
Using the TipRanks stock comparison tool, let us compare two pharmaceutical companies, Moderna and Ocugen, and see how Wall Street analysts feel about these stocks. We will be also looking at the risk factors for these stocks.
Moderna first came into the limelight after it developed the COVID-19 vaccine based on mRNA, which is the messenger ribonucleic acid platform. The company is looking at creating mRNA medicines for different applications.
The company expects to manufacture 800 million to 1 billion vaccine doses in 2021. In Q2, MRNA expects to supply between 200 million and 250 million doses.
Moderna had the first profitable GAAP quarter in its history in Q1 with a net income of $1.2 billion versus a loss of $124 million in the same quarter last year. The company posted revenues of $1.9 billion versus $8 million in the same period last year.
Last month, the company initiated the rolling submission process for a Biologics License Application (BLA) with the U.S. Food and Drug Administration (FDA) for its COVID-19 vaccine.
On July 7, the company announced that the first participants had been dosed in a Phase 1 study with mRNA-1010, Moderna’s first seasonal quadrivalent flu vaccine targeting A H1N1, H3N2, and influenza B Yamagata and Victoria lineage viruses. The company is looking at enrolling 180 participants in the study. (See Moderna stock chart on TipRanks)
Following the announcement, Brookline Capital Markets analyst Leah R. Cann reiterated a Buy with a price target of $224 (3.8% downside) on the stock. Cann stated, “For a company at Moderna’s stage of development, which is largely pre-approval, we primarily focus on potential future revenue to value the company.”
“Based on our expectation that in addition to its already launched COVID-19 vaccine, Moderna will launch several of its development-stage products in the next six years, we estimate that Moderna’s total revenue will increase to $100.1 billion in 2030. However, as is the case with development-stage companies, these estimates do carry a degree of risk,” Cann added.
Now let’s look at the risk factors that could pose a risk for the stock. According to the new TipRanks Risk Factors tool for the company, the MRNA stock is at risk mainly from three factors: Tech and Innovation, Finance and Corporate risk, and Regulatory and Legal risk, which contribute 29%, 22%, and 19% each to the total risk for the stock. Within the Tech and Innovation category, the company has 28 risks, which are described in detail on the TipRanks website.
However, analyst Cann believes that the company’s technological and biological risks have diminished with MRNA’s pivotal Phase 3 study data for mRNA-1273. According to Cann, with the launch of mRNA-1273, the financial risk has also been reduced substantially.
According to the analyst, the biggest risk for the company could be “in getting clinical-stage therapies to market.”
In its company filings, the company did state that considering the novel nature of the mRNA class of medicines, “mRNA drug development has substantial clinical development and regulatory risks.”
Consensus among analysts on Wall Street is a Moderate Buy based on 7 Buys, 4 Holds, and 2 Sells. The average Moderna price target of $192.82 implies approximately 17.2% downside potential to current levels.
Ocugen is a biopharmaceutical company that has developed a COVID-19 vaccine, Covaxin, with its co-development partner, Bharat Biotech. It is now looking at bringing the vaccine to the United States and Canada.
Around ten days back, Ocugen announced results from a Phase 3 study of Covaxin by its co-development partner, Bharat Biotech. The results indicated a 93.4% efficacy against severe symptomatic COVID-19 and a 77.8% efficacy in mild, moderate, and severe COVID-19 disease.
In June, OCGN had announced that it will pursue the submission of a biologics license application (BLA) with the U.S. FDA for Covaxin and will not pursue an Emergency Use Authorization (EUA), due to a recommendation from the FDA.
Following the news, Chardan Capital analyst Keay Nakae reiterated a Hold and lowered the price target from $8 to $4.50 on the stock. The analyst stated that OCGN could be expected to submit the BLA for Covaxin early next year, and the FDA could potentially approve it around the end of next year. As a result, analyst Nakae expects OCGN to start earning revenue from Covaxin in 2023.
Now let’s look at the risk factors that could pose a risk for the stock. According to the new TipRanks Risk Factors tool for the company, the OCGN stock is at risk mainly from three factors: Tech and Innovation, Finance and Corporate risk, and Regulatory and Legal risk, which contribute 30%, 25%, and 22% to the total risk for the stock. Details about these risks can be found on the TipRanks website.
Ocugen is a development stage company that has not earned any revenues so far. The company’s net loss widened to $7.1 million in Q1 from $3.9 million in the same quarter last year. (See Ocugen stock chart on TipRanks)
The company’s products are based on its key gene therapy platform and according to the company filings, there could be development problems related to this gene therapy platform or regulatory delays for approvals.
According to analyst Nakae, “There is no assurance that the Company’s issued and licensed patents, and patent applications that could result in granted patents, will ultimately provide protection against competitors with similar technology.”
OCGN has incurred significant losses since inception and may continue to accrue losses, as it currently lacks revenue-generating products. Analyst Nakae believes that this could lead to the need for the company to raise capital, and considering the current financial environment, external financing could be difficult. The analyst stated that equity financing could prove to be dilutive for its shareholders and obtaining debt financing could include restrictive covenants.
The analyst pointed out other risks for OCGN, including intense competition in the gene therapy space and the possibility of its gene therapy products failing to meet clinical efficacy standards.
Consensus among analysts on Wall Street is a Hold based on 1 Buy and 3 Holds. The average Ocugen price target of $7.88 implies approximately 8.4% upside potential to current levels.
Bottom Line
While analysts are sidelined about Ocugen, they are cautiously optimistic about Moderna. It is important to note here that while Moderna’s COVID-19 vaccine has proved to be a success, whether the company’s other mRNA drugs would be as effective remains to be seen.
Meanwhile, Ocugen has still not brought Covaxin to the U.S. and Canadian markets and has not earned any revenues to date.
Compared to a sector average Tech and Innovation risk factor of 24%, MRNA is at 29%, while for OCGN it is 30.1%. Based on this risk factor, it appears that OCGN is a slightly riskier bet than Moderna.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
