Ocugen (OCGN 10.00%) is the biotech stock everyone's been talking about these past few months. The company made a splash when it said it was partnering with India's Bharat Biotech to bring an almost-ready coronavirus vaccine candidate to the U.S. market. As a result, Ocugen's shares have soared more than 400% so far this year.

The potential vaccine -- Covaxin -- is in phase 3 development in India. The country granted it emergency authorization earlier in the year. As part of the deal with Bharat, Ocugen stands to benefit from 45% of U.S. vaccine profits -- if the U.S. Food and Drug Administration (FDA) offers Covaxin authorization. But even if the FDA gives the product a nod, Ocugen still faces a major hurdle.

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U.S. sales only

Ocugen's agreement with Bharat covers sales of Covaxin in the U.S. only. So, U.S. authorization represents Ocugen's only opportunity to generate revenue from Covaxin. Authorization isn't my biggest concern. Of course, the FDA may not be in a hurry to authorize newcomers since it already has authorized three coronavirus vaccines (those of Moderna, Pfizer and partner BioNTech, and Johnson & Johnson).

But eventually, it's in everyone's best interest to have a variety of products available. Each product has a characteristic that may make it the best choice for certain individuals. For instance, the J&J vaccine drew interest because it's the only vaccine administered in one dose. And considering the depth of the pandemic, it's preferable to have access to a broad range of vaccines.

So, if Covaxin's safety and efficacy meet the FDA's standards, we can imagine the agency offering the product authorization. This may take some time. It's not yet clear if the FDA will require Ocugen to conduct U.S.-based trials of Covaxin -- or if it will base a decision on data from the trials in India. In Ocugen's earnings report last week, the company said it has submitted data to the FDA and will add more as it comes in from Bharat. But a longer time to market isn't my concern.

The major hurdle facing Ocugen is demand. Or lack of it. President Joe Biden earlier this year bought enough vaccine doses from Pfizer and Moderna to cover most of the U.S. population. Now, Pfizer is about to roll out its vaccine to a new population: teens. The FDA authorized that earlier this week. Moderna is close behind. And both companies are testing their vaccines in children. We might even expect a vaccine rollout to that very youngest group later this year or in early 2022.

Donating extra vaccines

Biden recently spoke of donating extra vaccine supply to other countries that are struggling to obtain enough doses. So, it would be surprising if the U.S. actually ordered new vaccine doses in the near term.

Let's look further into the future. Once the U.S. has completed this first rollout and used up most doses, there will be a need for a whole new round of doses. Companies haven't confirmed the frequency of vaccination. But many experts say we should expect annual vaccines -- much like the flu.

That means Ocugen could vie for a share of the U.S. market farther down the road. But if the market leaders are able to bring the pandemic under control, it's likely these leaders will attract most of the future orders. This means there may not be much room left for Covaxin.

Of course, Ocugen doesn't have to be a market leader to benefit from Covaxin sales. Still, the Covaxin partnership represents an investment. Sales of the vaccine must cover the investment -- and generate enough to help Ocugen advance its main business. That main business is gene therapy for eye diseases.

A long way to go

And here, Ocugen has a long way to go. The company said in its earnings report that it is on target to begin four phase 1/2 trials by the end of next year. These represent the company's most advanced programs.

At this point, it's unclear whether a potential U.S. supply deal will compensate for Ocugen's investment in Covaxin. And considering the strength of today's market leaders, I'm not optimistic about Covaxin's potential to truly take off in the U.S.

So, in my view, Ocugen will struggle to overcome the hurdle of low demand in the U.S. All of that means a limited revenue opportunity. And if that indeed happens, it could be devastating for this high-flying stock in the long term.