If you want to find stocks that can produce huge gains in short time spans, the biopharmaceutical space has lots of what you're looking for. Shares of drugmaker called Ocugen (NASDAQ:OCGN) more than tripled last Monday, and investors want to know if it's too late to buy some for their own portfolios. 

Shares of this biotech stock had been flying way under the radar before the company and its international collaboration partner began making progress with a potential new coronavirus vaccine. Now that it's one of the most popular stocks in the biopharma space, can it keep producing big gains?

Scientist examining a bottle.

Image source: Getty Images.

Why Ocugen stock could soar a lot further

Ocugen stock could skyrocket again in response to more good news for COVAXIN, a coronavirus vaccine candidate in late-stage development from Bharat Biotech. On Feb. 2, this large vaccine manufacturer from India signed a definitive agreement with Ocugen to co-develop, supply, and commercialize COVAXIN for the U.S. market.

If granted emergency use authorization (EUA) by the FDA, Ocugen will retain 45% of any profits generated by selling COVAXIN in the U.S. market. Authorization seems likely because regulators in India have already begun administering COVAXIN under emergency authorization with a batch of 30 million doses to be administered to healthcare professionals and frontline workers.

Unlike currently authorized vaccines from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) that require extra refrigeration equipment, COVAXIN can easily be stored at regular refrigerator temperatures. Bringing COVAXIN into the U.S. market could lead to huge sales for this relatively small company and drive its stock price much higher in the process.

This year, Pfizer expects to report around $15 billion in topline revenue from the COVID-19 vaccine developed in partnership with BioNTech. Pfizer expects around $4 billion to reach its bottom line, after adjusting for the 50% gross margin split in the partners' collaboration agreement.

Despite a big 3,430% run-up over the past few months, Ocugen's market cap is still worth a little less than $2 billion at the moment. Biotech stocks with profits generally trade at double-digit multiples of net income, so there's a lot of room for Ocugen stock to climb if it can successfully launch COVAXIN in the United States.

OCGN Chart

Data source: YCharts.

A rags-to-riches story

It's been a little over a month since Ocugen regained compliance with the Nasdaq exchange. The company had been in danger of losing its major stock exchange listing because its stock price had languished below the price of $1.00 for months on end. Thanks to interest in COVAXIN, though, the company's worth nearly $2 billion at recent prices.

A whopping 68 new biotech stocks began trading on a major U.S. exchange in 2019, but Ocugen wasn't one of them. Instead, Ocugen gained its Nasdaq listing through a reverse merger with Histogenics, whose shareholders retained 10% of the new company despite bringing nothing to the deal table other than a stock market listing.

It doesn't look good

Ocugen's reverse merger with Histogenics isn't a decision you'd expect from a company confident about the value of its assets. Giving up a large chunk of the company for a public stock market listing at a time when institutional investors were plowing money into promising biotech start-ups strongly suggests Ocugen's pre-coronavirus pipeline isn't worth much.

Without anything to fall back on, Oncogen's future depends on potential sales of COVAXIN in the U.S. market. That's a big problem because the company hasn't even begun a U.S. trial yet.

The FDA doesn't want to review EUA applications for COVID-19 vaccine candidates before they have phase 3 data from U.S. participants. If this were an option, AstraZeneca (NASDAQ:AZN) would have submitted the results that led to its recent emergency authorization in the U.K. to the FDA without waiting for an ongoing U.S. phase 3 trial to wrap up. 

Successful phase 3 data from U.S. trials run by Novavax (NASDAQ:NVAX) and Johnson & Johnson (NYSE:JNJ) will most likely convince the FDA to authorize two more COVID-19 vaccine candidates for emergency use before spring rolls around. With at least two, and perhaps four available options ready by the time Ocugen has phase 3 data from a study under way in India, there's zero chance the agency's going to consider granting EUA to COVAXIN on the timeline the company has suggested. 

Irrational exuberance could drive Ocugen stock a lot higher in the near term, but there's very little chance this stock will provide anything but losses over the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.