The gene therapy market is poised for a considerable shift, driven by a surge in interest in genetic and cell therapies. This change is underpinned by progressive technological developments, a rise in investment and clinical activity, and a favorable regulatory landscape. It’s an environment ripe for the emergence of companies like Ocugen (NASDAQ:OCGN), a biotech company focused on commercializing novel gene and cell therapies. The stock is up nearly 176% year-to-date and is poised for bigger and better things. OCGN is a highly speculative stock but worth consideration for aggressive biotech investors.
The Eyes Have It
Ocugen is a clinical-stage biopharmaceutical company that engages in the creation and distribution of treatments for various eye diseases. Its development pipeline includes OCU400, OCU410, OCU200, OCU100, and OCU300. The firm’s primary emphasis is on the development of gene therapies to address blindness-causing diseases.
The lead candidate in the treatment pipeline is OCU400, a novel gene therapy that targets restoring retinal integrity and function across a wide array of genetically diverse inherited retinal diseases such as retinitis pigmentosa (RP), which affects approximately 100,000 people in the US and 1.6 million people worldwide, and Leber congenital amaurosis. The company has recently achieved alignment with the FDA on the Phase 3 clinical trial, making this the only gene therapy Phase 3 trial with a broad RP designation from the FDA.
In addition, Ocugen has treatments for age-related macular degeneration (AMD) in the form of OCU410 and OCU410ST. The company is also developing OCU200 as a fusion protein to treat diabetic macular edema, diabetic retinopathy, and wet AMD, which is currently still in the preclinical development phase.
According to the company’s research, the global gene therapy market is projected to exceed $30 billion by the end of the decade. This sizable market potential underscores the significant growth opportunities for Ocugen and its investors.
Ocugen’s Financial Outlook
Ocugen’s recent financial results are difficult to parse at this time. The company recently announced plans to restate its consolidated financial statements for the year ending December 31, 2022. This restatement will be made in conjunction with the filing of its 2023 Form 10-K. Additionally, it will include restated unaudited financial information for each of the first three quarters of 2022 and 2023 in this filing.
As a start-up biotech that has yet to bring a treatment to market, Ocugen is in cash-burn mode. The concern is how fast that burn is taking place. As of December 31, 2023, the company held a total of $39.5 million in cash, cash equivalents, and investments. This marks a substantial decrease compared to $90.9 million at the end of December 2022.
OCGN maintains that current levels of cash, cash equivalents, and investments are sufficient to fund operations into the fourth quarter of 2024, though that seems optimistic given last year’s expenditures and this year’s expectations of ramping up clinical trials.
It is likely that Ocugen will need to find additional funding sources soon, either through an equity offering or debt financing. This would likely dilute existing stockholders’ shares and potentially depress the stock price.
What is the Price Target for OCGN Stock?
OCGN stock has been on an upward climb for the past six months, rising over 290%. It currently trades at the upper end of its 52-week price range of $0.34-$2.10 and shows ongoing positive price momentum trading above the 20-day (1.29) and 50-day (0.99) moving averages.
As you might expect, Wall Street is thinly following the company. However, the analysts who do monitor it are bullish on its prospects. For example, H.C. Wainwright analyst Swayampakula Ramakanth recently issued a Buy rating with a $7 price target for the stock. He cited OCGN’s promising clinical pipeline and revenue growth potential.
Ocugen is rated a Moderate Buy based on two Buy recommendations in the past three months. The average price target for OCGN stock is $7.50, which represents a 364.40% upside from current levels.
Final Analysis on Ocugen
Ocugen is enjoying the upswing in the gene therapy market and is poised for substantial growth. Even as the outlook appears murky due to the company’s need for financial resources to see OCU400 through Phase 3 trials, there is a substantial upside if they can make it through that point. It is a highly speculative investment, but one that could be a home run for risk-taking biotech investors in time.
