Even with three COVID-19 vaccines already on the market in the U.S., the scramble to develop better vaccines is far from over. Ocugen (NASDAQ:OCGN) and Vaxart (NASDAQ:VXRT) stand out as two small companies hoping to achieve success.

Vaxart's shares skyrocketed more than 1,500% in 2020, but Ocugen has been the bigger winner so far this year. Which of these vaccine stocks is the better bet going forward? Here's how Ocugen and Vaxart stack up against each other.

A coronavirus structure with $100 bills in the background.

Image source: Getty Images.

Vaccine vs. vaccine

Ocugen actually hasn't developed a COVID-19 vaccine candidate. However, in December 2020 the company announced that it was partnering with Bharat Biotech to potentially commercialize COVID-19 vaccine Covaxin in the U.S. Covaxin already received authorization in India.

The vaccine demonstrated 78% efficacy in a late-stage study with 100% efficacy against severe cases of COVID-19. Ocugen announced results earlier this week from a lab analysis that suggest Covaxin could also be effective at neutralizing emerging coronavirus variants.

There's still no update yet as to whether or not the U.S. Food and Drug Administration (FDA) will allow Ocugen to submit for Emergency Use Authorization (EUA) for Covaxin based on Bharat's previous clinical studies. If the vaccine ultimately wins EUA or full FDA approval, Ocugen stands to receive 45% of the profits from all U.S. sales.

Meanwhile, Vaxart hopes to advance its COVID-19 vaccine candidate VXA-CoV2-1 into phase 2 testing by mid-2021. The vaccine is a tablet instead of an injection, making it more convenient to administer, ship, and store. Vaxart believes that VXA-CoV2-1 could be as effective as leading COVID-19 vaccines already available but with a different immunological profile. 

The company also plans to kick off phase 1/2 studies evaluating variant-specific vaccine candidates in the third quarter of this year. It intends to initiate studies evaluating booster doses with previously vaccinated or infected individuals in the second half of 2021 as well.

Other pipeline candidates

Neither Ocugen nor Vaxart focuses solely on COVID-19 vaccines. Both biotechs have other pipeline candidates.

Ocugen's lead candidate is gene therapy OCU400. The company hopes to advance the experimental therapy into phase 1/2 clinical testing in the second half of this year, targeting two genetic eye diseases. Ocugen's pipeline also includes two other preclinical programs focused on the treatment of eye diseases. 

Vaxart has four clinical studies of its oral norovirus vaccine candidate planned for this year, including a phase 2 challenge study. The biotech has another clinical-stage candidate, a tablet flu vaccine, that it would like to either out-license or partner with another drugmaker on development. In addition, Vaxart has two oral vaccine candidates targeting respiratory syncytial virus and human papillomavirus in preclinical testing.  

Financial positions

Ocugen's cash, cash equivalents, and restricted cash totaled around $46.6 million as of Feb. 28, 2021. Since then, the company has raised another $100 million in gross proceeds through a public stock offering. Based on Ocugen's current rate of cash burn, it can probably fund operations into 2022 before more cash will be needed.

Vaxart reported cash, cash equivalents, and marketable securities of $177.3 million as of March 31, 2021. This cash position should enable the company to fund operations beyond 2022 based on its current cash burn. 

It should be noted, though, that both Ocugen and Vaxart will likely spend more heavily as they advance their pipeline candidates into larger clinical studies. This could mean that both companies will have to conduct stock offerings to raise cash sooner than their current cash burn rates would indicate.

Better vaccine stock?

Both of these biotech stocks sport valuations that assume significant growth. Ocugen's market cap currently stands above $2.2 billion, while Vaxart's market cap is around $870 million.

My view is that Ocugen probably deserves the nod as the better pick at this point. Covaxin is more of a known quantity than VXA-CoV2-1 since it's already being used in India and has demonstrated solid efficacy in late-stage testing.

However, I wouldn't go so far as to recommend Ocugen right now. The company could face an uphill battle in the U.S. It's quite possible that the FDA will require an additional clinical study before granting EUA to Covaxin. Even if the vaccine wins EUA, Ocugen might not be able to carve out significant market share because of the more well-established players securing big supply deals.

Ocugen seems to be less risky than Vaxart. But I think that it's still too risky for most investors to buy.

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.