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Thursday, February 9, 2023

There’s a Reason Why Ocugen Is a Last Resort in Eye Care

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The last time I wrote about Ocugen (NASDAQ:OCGN), OCGN stock was up 34% only halfway through the month of January. Since then, a whole bunch of stuff happened, some of it good, some of it bad, none of it worthy of you betting the farm on the clinical-stage biopharma company.

Source: luchschenF / Shutterstock.com

Here’s why.

There Are Better Eye Care Options Than OCGN Stock

I’m big on reminding investors that they’ve always got options. More so today, with fractional share investing putting your spare change to work.

Ten years ago, Ocugen stock would have been a compelling penny stock investment merely because it was trading under a buck. That’s no longer important. In 2020, if I want to buy $100 of Amazon (NASDAQ:AMZN), fractional investing allows me to do so. No questions asked.

Howard Lindzon, the founder of StockTwits, stated in 2016 that fractional share investing was something long overdue.

“My daughter is in college and last year she started buying individual stocks on Robinhood. One of her first buys was Amazon. She bought 1 share of stock for $547 and today it is $837.

She can only sell the 1 share or buy more full shares,” a quote Lindzon recently revisited.

“She would love to be able to sell $300 worth of Amazon and diversify into $100 of 3 more stocks so she can start building her own portfolio. It’s not rocket science to build or teach portfolio construction and risk management with the tools we have today.”

Well, today she can. And that makes the purchase of OCGN stock unnecessary except for the most speculative investors or those very familiar with ophthalmology treatments.

I’m neither and so is 99% of the population.

How Have Eye Care Stocks Performed in 2020?

In my January article, in addition to Ocugen, I mentioned two other eye care companies: Alcon (NYSE:ALC), and National Vision Holdings (NASDAQ:EYE). Year-to-date through Aug. 17, OCGN stock is down -4.4%, ALC is up 9%, and EYE’s also gained 9%. That compares to 6.2% for the U.S. markets as a whole.

At the time, I argued that Alcon’s multi-year transformation should push its stock higher than $61. While it’s still trading around $61, if you’d bought below $40 in the March correction, you would be sitting on paper gains of more than 50%. Not too shabby.

On July 14, Alcon announced the Food and Drug Administration’s approval of its Pataday Once Daily Relief Extra Strength, the first over-the-counter eye allergy drop offering 24-hour relief without a prescription.

As an allergy sufferer, anything that’s easy to buy and helps keep things under control is a welcome addition.

Six months later, I still believe that ALC and EYE make better eye care investments than Ocugen.

The Bottom Line

InvestorPlace’s Chris Markoch recently stated that Ocugen would be a penny stock for years.

“[I]f you’re considering buying thousands of shares on a stock that looks like it’s ready to explode, I’d urge you to look again. OCU400 is not scheduled to receive FDA approval until 2025. And that’s if everything goes well, which is frequently not the case as it relates to biotech companies,” Markoch wrote Aug. 17.

“The allure of a penny stock is easy to understand. But please remember that Ocugen is operating with no revenue. And the earliest prospects for it to start generating revenue are five years away.”

When I wrote about Ocugen in January, OCU300 was still very much in the conversation. On June 1, the company discontinued its Phase 3 clinical trial on the drug. Now that it appears to be making headway on OCU400, the speculators are back in the game.

For me, when it comes to eye care, Ocugen is the stock of last resort.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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