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Ocuphire Pharma: A High-Risk, High-Reward Stock
Stock Analysis & Ideas

Ocuphire Pharma: A High-Risk, High-Reward Stock

Ocuphire Pharma Inc. (OCUP) is a biopharmaceutical company that develops therapies for patients diagnosed with ophthalmic disorders. The company’s pipeline includes two small molecular products that target the front and back of the eye indications. Its Nyxol candidate is meant for dim light disturbances, presbyopia, and the reversal of mydriasis (induced due to pharmacological intervention).

I am neutral on Ocuphire Pharma as it is an extremely high-risk, high-reward investment that could either earn shareholders fantastic returns or lose them their entire investments.

Nyxol eye drops are currently in late-stage clinical development. The company’s main strategy is to explore new opportunities for acquiring additional ophthalmic assets for the eyes. It is currently seeking strategic partners for the commercialization of its products on an international scale.

Strengths

The primary value of OCUP comes from the potential efficacy of its therapies currently in the pipeline. There are hopes that this will eventually turn into a reliable source of cash flow in the future. Some of the main advantages of using Nyxol eye drops are that they only need to be used once a day and are free of preservatives. This makes them drops highly effective in treating certain eye conditions.

OCUP is also working on APX3330 to maximize its profitability. The treatment is a twice-a-day oral tablet that is used to treat retinal and choroidal diseases by targeting various pathways.

With that said, these products remain highly speculative investments and will require strong investor confidence. Like most pharmaceutical companies, OCUP is burning through cash.

Recent Results                               

As of September 30, 2021, Ocuphire had cash reserves of $22.2 million. OCUP used $13.7 million for a period of nine months to maintain its operational activities. Collaborations revenue was $0.5 million and $0.6 million for three months and nine months, respectively.

Valuation Metrics

OCUP stock is very difficult to value given that it is not generating any profits and has high growth potential. In 2022, it is not expected to generate any revenue but is expected to generate losses of over $20 million.

As a result, the company is entirely dependent on the success of its drug pipeline. If it can successfully develop and market products from its pipeline, the stock could generate phenomenal returns for shareholders. Otherwise, the company will face challenges to its ongoing viability.

Wall Street’s Take

Turning to Wall Street, OCUP earns a Moderate Buy rating based on just one Buy rating assigned in the past three months. Additionally, Ocuphire Pharma’s price target of $26.00 puts the upside potential at 653.6%.

Summary and Conclusions

OCUP stock is a very speculative bet right now, given that its future prospects hinge on whether or not its research and development pipeline can generate a successful product.

That said, despite not generating any revenue at the moment, the only Wall Street analyst that covers the company is bullish on it, and their price target indicates that the stock could be a multi-bagger over the next year alone.

However, investors should keep in mind that this stock is extremely risky and – should they decide to invest at all – it might be prudent to size their position accordingly.

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