How To Make A Background Clear In A Picture

Shares of Ocugen (NASDAQ:OCGN) have climbed most 180% in the last month. However, OCGN stock is still trading at just 57 cents a share. That's the life of a penny stock. And that's the simply story you lot need to know most Ocugen.

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The reason the stock is rising is genuinely good news. The company'southward pb factor therapy drug, OCU400, received a U.Southward. Orphan Drug tag. OCU400 is designed to treat PDE6B gene mutation-associated retinal diseases such as Retinitis Pigmentosa (RP).

This news couldn't come at a better time for Ocugen. I wrote about the company's fortunes in June. At the time, they had just discontinued a Stage 3 clinical trial for OCU300. That was, at the time, the company's lead drug candidate.

OCGN stock fell approximately 30% on that news before starting its contempo climb. Simply before speculators decide to jump on the Ocugen train, it's important that they have a articulate view of what'southward ahead for the company.

Now the Bad News

This isn't the first U.S. Orphan Drug tag Ocugen has received. But the company still does non have a product on the market. And OCU400 will not exist on the market until 2025. Certainly, there are opportunities for OCGN stock to pop as the drug moves through clinical trials.

Simply, equally was evident with OCU300, there'southward also a proficient adventure that the drug will fail to make it through clinical trials. The visitor touts that their "breakthrough modifier gene therapy platform has the potential to care for multiple retinal diseases with one drug." The company calls the arroyo 1 to many.

Even so, it's worth noting that the company is operating in a very narrow niche. Even if the company is successful at bringing a drug to market place, investors have to consider what the addressable market for that drug will exist.

OCGN Stock Could Still Be Delisted

One of the more obvious and immediate issues facing Ocugen is the very real take chances that its stock may exist delisted. The company received a delisting detect from the Securities & Commutation Committee (SEC) on Dec 27, 2019.

The 180-twenty-four hour period borderline has come up and gone. Ocugen did non execute a reverse stock separate. The state of affairs doesn't look great considering OCGN fell badly following its second-quarter earnings study.

Ocugen Will Not Be an Overnight Success

I understand that you lot may be reading this and thinking "So what?" And if you're just looking at getting in and out of trades quickly, and then my mode is probably not for you. The Covid-19 pandemic has brought out speculative investors, and there is absolutely cypher wrong with that. Investing isn't limited to only one manner.

However, if you're considering buying thousands of shares on a stock that looks like it's ready to explode, I'd urge you to await once more. OCU400 is not scheduled to received FDA approval until 2025. And that's if everything goes well, which is often not the instance as it relates to biotech companies.

The attraction of a penny stock is easy to understand. But delight remember that Ocugen is operating with no revenue. And the earliest prospects for it to start generating revenue are 5 years away.

In January, Vince Martin illustrated the risk better than I can:

Ocugen stock is a play with enormous risk. As with many biotech stocks, the virtually likely outcome is for the company to fail, and for shareholders to wind up with nil.

Martin did proceed to say that investors that choose correctly can be looking at blockbuster returns. But with a drug that'southward already fallen short in clinical trials, I need to see more than before jumping in on OCGN stock.

Chris Markoch is a freelance fiscal copywriter who has been covering the market for over five years. He has been writing for Investor Place since 2019. As of this writing, Chris Markoch did not hold a position in whatever of the same securities.