Does Ocugen Have a Real Shot at the U.S. COVID Vaccine Market?

Several COVID-19 vaccines are already available to Americans. Small biotech Ocugen (OCGN) hopes to join the group. In this Motley Fool Live video recorded on April 28, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss whether Ocugen has a real shot at becoming a winner in the U.S. COVID vaccine market.

Keith Speights: It looks like Pfizer and BioNTech are very close to finalizing a deal with the European Union to supply up to 1.8 billion doses of their COVID-19 vaccine through 2023, so it's a multiyear deal. You know the U.S. government is almost certainly thinking along similar lines, about lining up supplies of vaccines, at least for 2022 and perhaps beyond.

Brian Orelli: Just to interrupt you, I think that Moderna might have gotten a deal done today, this morning. I think I saw a headline on that.

Speights: Yeah, all right. Moderna is one of five vaccines that already have supply deals in place with the U.S. Of course, Pfizer and BioNTech are another. Johnson & Johnson, who's run into some problems. AstraZeneca has a deal, although their vaccine has not been authorized yet in the U.S. Novavax also has our supply deal with U.S.; Novavax's vaccine hasn't been authorized yet as well.

But there's another company, a small company, Ocugen, that I want us to talk about briefly. Ocugen, the ticker there is OCGN. Ocugen is also hoping to win emergency use authorization for its vaccine. Actually, it's not really the company's vaccine, but there's a vaccine called Covaxin that Ocugen is partnering with India-based company Bharat Biotech.

Brian, do you think that Ocugen has a real shot at becoming a winner in the U.S. COVID-19 vaccine market with so many established players already ahead of it?

Orelli: Obviously, the U.S. does not need any more vaccines this year. Whether it'll need vaccines in 2022, 2023, probably depends a lot on the variants and whether the current vaccines protect against the variants, whether Covaxin protects against the variants, which I don't think we know yet.

The data for Covaxin so far is pretty good at 78% efficacy and 100% protection against severe disease, so those are maybe a little bit lower than the mRNA ones, but in line with Johnson & Johnson. The clinical trials were run outside the U.S., so based on Novavax's history, which it doesn't seem like it's going to get authorization based on the UK data, it's going have to wait till its U.S. data comes out.

My guess is that Ocugen is probably not going to be able to get authorization based on the clinical trial that was run outside the U.S. I mean, I guess we'll have to just wait and see how the negotiations with regulators goes, but that's my best guess.

I also think that there's probably more opportunity for Covaxin outside the U.S. than inside the U.S. I think Ocugen might only have U.S. rights, so it's hard to tell.

But Novavax's market cap is 10 times higher than Ocugen. Some of that has to do with the pipeline that Novavax has more advanced pipeline than Ocugen, shows what investors are thinking about the prospects of Ocugen.

Speights: Yeah. I think Covaxin, the vaccine itself, does have a lot of potential. It's already authorized in India. You could see the prospects for Covaxin winning authorizations and ultimately approvals in other countries throughout the world. I think it could win authorization and approval in the U.S. as well.

You're right, Ocugen only has a licensing deal partnership with Bharat Biotech for the U.S. market. I think the challenge, and not just for Ocugen, I think for any late-stage or late comer to the U.S. vaccine market that doesn't already have a supply deal in place with the U.S. government, I just think it's going to be hard to elbow their way in, because countries including the U.S. are looking ahead already.

I did glance at the news about Moderna from this morning. But you got to figure the U.S. government is going to go ahead and start lining up supply deals for 2022, maybe go beyond like the European Union did, going into 2023. It seems to me that it's going to be really tough for a company like Ocugen to claw out a spot in the U.S. market, at least over the next year or two.

Orelli: Yeah. I mean, the other thing is that the government may start shifting more toward a flu-like system, where the insurance companies are on the hook for the vaccines instead of the government. If that becomes the case, now maybe if Ocugen can get authorized, which I seem to be a little more negative on that than you. But assuming they can get authorized or eventually approved, then maybe they have a shot at that point, because now they're competing with individual insurance companies. They can compete theoretically based on price.

Speights: Right. Yeah. I do think over the longer term, let's move past 2022. Over the longer term, I think you'll see more competition on price and on convenience.

Maybe companies that come out with combo flu-COVID vaccines could have an edge up. But yeah, I think for the near term, though, companies like Ocugen and others who are later to the party are going to have a difficult time in the U.S. market at least.