Investors looking for exposure to the COVID-19 vaccine market may naturally lean toward Moderna (MRNA -0.81%), which developed mRNA-1273, and Pfizer (PFE -0.56%), which developed BNT162b2 in collaboration with BioNTech. These companies were the first to earn Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration for their respective products.
And while millions of people continue to receive doses of mRNA-1273 and BNT162b2, Novavax has yet to earn an EUA for its candidate, while Johnson & Johnson's vaccination efforts were paused in the U.S. because six patients experienced blood clots after receiving the pharma giant's vaccine. These factors arguably make Moderna and Pfizer the leaders in the coronavirus vaccine market, at least in the U.S.
But there is a small-cap company looking to make waves in this space: Ocugen (OCGN -2.11%), a biotech headquartered in Pennsylvania. Ocugen's stock has soared by 208.7% year to date as investors cheered its potential entry into the COVID-19 vaccine market. But is this biotech a better bet than Moderna and Pfizer?
Ocugen's COVID-19 efforts
Ocugen is developing Covaxin -- an experimental coronavirus vaccine -- in collaboration with India-based Bharat Biotech. The two entities penned an agreement earlier this year that stipulated that Ocugen would be responsible for the clinical development and commercialization of the candidate in the U.S. Consequently, Ocugen is set to keep 45% of the profits Covaxin will make in the country. Of course, all of this is contingent on the vaccine earning emergency authorization.
In early March, Ocugen reported interim results from a phase 3 clinical trial for Covaxin that Bharat Biotech is running in India. The study involved 25,800 patients between the ages of 18 and 91 and tested the vaccine's efficacy in preventing COVID-19. According to Ocugen, Covaxin demonstrated 81% efficacy in those without prior infection after the second dose. Covaxin's safety profile also seemed encouraging, as the vaccine was well tolerated by patients during the trial. These results could support an application for an EUA in the U.S.
Better than Moderna and Pfizer?
That said, Covaxin is unlikely to rack up sales greater than those of Pfizer or Moderna. For one, Pfizer and Moderna have been distributing their vaccines for months, and both have scored several supply agreements worth tens of millions of dollars with various governments worldwide. What's more, BNT162b2 and mRNA-1273 were initially shown to be even more effective than Covaxin.
While the emergence of new variants of the virus could affect the efficacy of these vaccines, both Pfizer and Moderna are currently testing whether booster shots will be successful in preventing infection with these variants. Further, there is evidence that BNT162b2 is already effective against the variant that emerged in South Africa.
Covaxin would have to be clearly superior to both BNT162b2 and mRNA-1273 to catch up in terms of overall sales, but the evidence hardly supports that view. And that's not considering the fact that Ocugen will keep less than half the profits from sales of Covaxin in the U.S.
Still, Ocugen does not need to record tens of billions in revenue from its vaccine candidate for the company's stock to outperform that of its two rivals. After all, the biotech has a market cap of only $1.1 billion, which is peanuts compared with Moderna's $65 billion and Pfizer's $216.4 billion.
As the much smaller company, Ocugen could have a long runway for growth ahead -- growth that could outpace that of its much larger peers -- even with comparatively modest vaccine sales. Nonetheless, Moderna and Pfizer look like the better bet for long-term investors. Moderna's pipeline features several products (other than mRNA-1273) that are already being tested in phase 1 or phase 2 human clinical trials.
And thanks to the revenue it will generate from mRNA-1273, the company will be better equipped to fund these programs. Meanwhile, Pfizer is a well-established pharma giant with a rich pipeline and a solid lineup that generates billions in revenue every year. Ocugen has yet to even start human clinical trials for any of its candidates other than Covaxin.
This factor makes the prospects of this biotech stock especially hard to gauge at this point, and therefore very uncertain. With that in mind, long-term investors looking for exposure to the coronavirus vaccine market would be better served purchasing shares of Moderna or Pfizer than those of Ocugen.