OCGN - Ocugen stock price analysis: good progress but a risky pattern forms
2024-05-29 12:53:53 ET
Ocugen (NASDAQ: OCGN) stock price is doing well this year as investors focus on its ongoing drug trials and its milestones. It has soared by over 177% this year, outperforming the S&P 500, Nasdaq 100, and the iShars Biotechnology ETF (IBB), which has dropped by 2.70%. Ocugen shares have soared by over 270% in the past 12 months, giving it a market cap of over $440 million.
Good progress but risks remain
Ocugen is a small biotech company that is working on gene and cell therapies to treat rare eye disorders.
It also became a popular name among the investment community during the Covid-19 pandemic when it developed the Covaxin vaccine. However, it dropped its emergency-use authorization and opted for a full regulatory approval.
Ocugen has pivoted its business from the Covid vaccines to creating therapies to treat rare blindness conditions that affect millions of people globally.
Its OCU400 drug, which received orphan drug designation, aims to treat retinitis pigmentosa, a disease that affects the retina and can lead to vision loss. It has now moved to the third phase of its trial. It is also trialing the drug for treating Leber congenital amaurosis, which leads to blindness in children.
OCU400 drug has made substantial advancement in its trial. If it is approved, it will compete with LUXTURNA, a drug that costs about $850,000 in the United States.
Ocugen is also developing OCU410 drug that focusres on dry age-related macular degeneration (AMD), a condition where retina cells die and are not renewed. This drug is in the ½ phase of its trial.
Its other programs are the OCU410ST for treating stargardt and OCU200 for treating diabetic macular edema. OCU200 was placed in a clinical hold, preventing further trial for a while.
Therefore, as I have written before , Ocugen is a high-risk and high-reward investment. As with other biotech companies, receiving an approval for its OCU400 therapy will lead to a sharp surge in its stock and vice versa.
A potential near term risk for the company is that it may need to raise money to boost its balance sheet. Ocugen recorded a net loss of over $11 million in the first quarter. It has lost over $70 million in the last five quarters.
At the same time, it ended the quarter with about $26.4 million in cash and equivalents, down from $39.5 million in December. The management has committed to boost its balance sheet using ‘shareholder-friendly opportunities.’
Ocugen stock price analysis
Technically, things are not looking good for the OCGN share price. As shown above, the stock has formed a triple-top pattern at $2.07 and a neckline at $1.10. In most cases, this is one of the top bearish signs in the market.
Ocugen’s Average Directional Index (ADX) has also tilted downwards, signaling that the bullish momentum is losing steam. Therefore, the stock’s outlook is bearish, with the next point to watch being the neckline at $1.10, which is about 30% below the current level. This view will be confirmed when the stock crashes below the 50-day and 100-day moving averages levels.
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