Tuesday 4 May 2021

After a Major Run on OCGN, GOVX is Next

Ocugen, Inc. (OCGN)
Beginning Price: $0.81
Current Price: $12.51
Gain Since Inception: 1,444%
Upside Potential: 60%
Market Cap: $2,477 million
Target Price: $20.00
Shares outstanding: 198 million

GeoVax Labs, Inc. (GOVX)
Beginning Price: $5.53
Current Price: $6.17
Gain Since Inception: 12%
Target Price: $15.00
Upside Potential: 143%
Market Cap: $39 million
Shares outstanding: 6.3 million

Two weeks ago we reiterated our bullish calls on Ocugen, Inc. (OCGN) and GeoVax Labs, Inc. (GOVX) in OCGN And GOVX Are Two Cheap COVID Vaccine Plays. OCGN doubled from $6.50 in the two days since that piece and has gone up 15x from our bullish call at $0.81 in December. While the stock has been very successful, we think the focus and money should switch to GOVX. OCGN was down today after insider selling and has temporarily lost its momentum as people try to figure out what this insider selling means. Conversely, GOVX rose in the last few minutes today with more buying up to $6.40 after hours. GOVX is reporting Q1 results and providing a corporate update on May 6th, so we think it should continue to rise leading into this date in anticipation. In addition to this, GOVX offers a 143% upside to our target price while OCGN's is "down" to just 60% upside to our target thanks to its recent move from $6.50. 

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Cocrystal Pharma, Inc. (COCP) was up more than double during the middle of the day and ended up 73% on updates on its early stage COVID-19 vaccine program. It ended up adding $50 million in market cap and closed at a $153 million valuation. GOVX has a $39 million market cap with $20 million in cash. If GOVX was to add $50 million market cap in a day on its vaccine program update, it would more than double in price.

GOVX is in pre-trial for its COVID vaccine, but animal test results are expected in Q2. GOVX has several other vaccine data updates due in Q2 including Malaria and Lassa Fever. It also has early stage clinical development for Zika and Ebola and is in Phase 2 for HIV, demonstrating the broad utility of its MVA-VLP technology platform. An analyst report said the following about GOVX's COVID vaccine candidate:

GeoVax’s SARS‐CoV‐2 (COVID‐19) vaccine is based on its GV‐MVA‐VLP™ technology, enabling insertion of multiple antigen fragments, potentially allowing for broad‐spectrum virus prevention. In contrast to certain competitor vaccines that only target the COVID‐19 spike protein, GeoVax’s vaccines are designed to provoke a response to multiple COVID‐19 antigens—potentially translating into these vaccines being less susceptible to viral mutations. GeoVax’s vaccines are intended to be used as either a primary vaccine or to boost other COVID‐19 vaccines as part of vaccination strategies to provide immunity to a range of SARS‐CoV‐2 variants. 

On January 11, 2021, GeoVax Labs, Inc. announced that the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), had awarded the Company a Small Business Innovative Research (SBIR) grant in support of its development of a vaccine against SARS‐CoV‐2. The Phase 1 grant, titled, “Preclinical Development of GV‐MVA‐VLP Vaccines Against COVID‐19,” will support the ongoing design, construction, and preclinical testing of GeoVax’s vaccine candidates in preparation for human clinical trials. The efficacy testing will be performed in collaboration with the University of Texas Medical Branch (UTMB).   

Additionally, October 26, 2020, the Company announced the signing of a Patent and Biological Materials License Agreement with the NIAID in support of GeoVax’s development of a vaccine against SARS‐CoV‐2. The Patent License Agreement to GeoVax includes access to NIAID’s patent rights in the stabilized SPIKE protein, which is the protein that SARS‐CoV‐2 uses to enter human tissue. 

GeoVax has designed and constructed four COVID‐19 vaccine candidates to date, with the goal that one will provide a single‐dose, universal vaccine effective against multiple coronavirus strains. Preclinical small animal studies for the first candidate are currently being conducted in collaboration with researchers at the University of Texas Medical Branch at Galveston (UTMB), with GeoVax anticipating to accelerate small animal testing (with initial results expected near term). Furthermore, GeoVax continues active discussions and negotiations related to additional funding support, as well as securing the necessary manufacturing resources to proceed into clinical development as soon as possible. 

Despite their being vaccines that have entered various stages of clinical testing (using different approaches and vector platforms than GeoVax), there is increasing evidence that alternative vaccine approaches, including those from various cohort populations will be necessary to successfully address COVID‐19 and various coronaviruses. GeoVax expects to be ready to move into the clinic with its candidate during 2022. This timing, however, will depend on what the Company reports with its animal results, which could come in the latter part of first quarter or into early part of second quarter.

This is important because GOVX's vaccine technology is far different than existing vaccines out there. The GeoVax vaccine intends to be a one-shot vaccine effective against mutations by provoking a response to multiple COVID‐19 antigens. As we have already seen a rise in the double mutant Indian variant, it's only a matter of time before similar time of mutations appear as well, with the effectiveness of current vaccines being unknown. 

GOVX is at the very early stages of COVID vaccine, but considering that it is more than just a COVID vaccine player, we think that it being valued at 15% of the market cap of Vaxart, Inc. (VXRT) is fair. That would lead to a $98 million market cap, or $15 target price.  

GOVX also has warrants under the symbol GOVXW. These warrants have a strike price of $5.00 and expire in September 2025, so there is plenty of time. They offer leveraged upside because they trade at $1.25. If the stock price triples to $18, the warrants will be worth $13, more than 10x their current price. 

Disclosure: We are long GOVX, GOVXW

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