Biotech Ocugen to spin off regenerative medicine division; Noble confirms 670% upside

Gene and cell therapy biotech Ocugen has agreed to a merger with Carisma Therapeutics, a tiny developer of novel therapies for fibrosis and cancer. Ocugen will transfer its regenerative medicine division and in return will get 90% of the new company. Noble Capital Markets sees more than 670% upside for Ocugen. 

Ocugen, which has a Nasdaq capitalization of $302 million, has entered into a merger agreement with Carisma Therapeutics to form a new company. Ocugen will transfer its regenerative medicine division, OrthoCellix, including NeoCart, an autologous cartilage implant technology that uses a patient’s cells to repair articular cartilage defects in the knee. 

Carisma, whose market capitalization is $17.9 million, will contribute its entire business. At the same time, it expects to raise about $25 million from Ocugen and other private investors. This will allow it to complete clinical trials of NeoCart, the press release stated.

With the merger, which is expected to be completed by the end of 2025, Ocugen shareholders and other participating private equity investors will own about 90% of the combined company, while Carisma investors will get about a 10% stake.

Following the merger, Carisma will be renamed OrthoCellix and will get a new Nasdaq ticker symbol, OCLX. The boards of both companies have already approved the merger, according to the press release.

Ocugen stock jumped 5.5% to $1.03 per share after the deal was announced yesterday, June 24, but Carisma fell nearly 5.2% to $0.43 per share. 

In premarket trading today, Carisma continued to slide, down more than 2% as of this writing, while Ocugen extended its gains, adding another 2%. 

In a report published yesterday, Noble Capital Markets says the deal will benefit Ocugen. Regenerative medicine is not Ocugen's core business: It focuses on gene therapies and vaccines, so NeoCart will be developed more quickly by a company specializing in that area, Noble argues. It reiterated its «outperform» rating on Ocugen at an $8 per share target price, for upside of more than 670%. 

Yesterday, two other analysts, from HC Wainwright  and Chardan, reiterated their «buy» calls and target prices of $7 per share, according to data on Yahoo Finance.

In total, Ocugen is covered by four Wall Street analysts, and all have a «buy» recommendation, according to data from MarketWatch. The average target price of $6.50 per share offers upside of 531% versus yesterday's close.

The AI translation of this story was reviewed by a human editor.