The coronavirus vaccine market is only a few months old, but it is already worth well over $1 billion. And while companies such as Moderna and Pfizer are currently leaders in this space, others are working to throw their hats into the ring. Two of them are Vaxart (VXRT -1.78%) and Ocugen (OCGN 3.50%)

Both companies have recently grabbed quite a few headlines, but Ocugen has been the clear winner in terms of stock market performance since the beginning of the year, or for that matter, over the past 12 months. Past performance aside, which of these two biotechs is more likely to outpace the other from here on out? 

Person in mask, white coat, and goggles holds up a plastic container with blue dots in lab setting.

Image source: Getty Images

Could Vaxart's secret weapon be a game changer?

Vaxart's coronavirus vaccine candidate, VXA-CoV2-1, is still in its early stages of development. The company recently reported results from a phase 1 clinical trial for VXA-CoV2-1. The study tested the safety and immunogenicity (the ability to trigger an immune response) of VXA-CoV2-1. During the trial, the experimental vaccine was well tolerated and generated higher T-cell responses than those marketed by Moderna and Pfizer. T-cells are white blood cells that bind to and kill virus-infected cells. 

Of course, there is still a long road ahead for VXA-CoV2-1, and Vaxart will have to confirm these results in late-stage studies. But VXA-CoV2-1 has another potential advantage over its competitors: It is an oral vaccine, i.e., a pill. According to a poll the company commissioned, as many as 19 million Americans who choose not to receive a vaccine would change their minds if they could, instead, get their hands on an oral vaccine.

Even if that's true, as of May 13, just over 154 million Americans have already received at least one dose of a vaccine. By the time Vaxart receives approval for its candidate, if it goes that far at all, the initial market will have gotten considerably smaller. 

With that said, Vaxart believes its experimental vaccine could be a "promising solution to variants" since it targets two of the structural proteins of the SARS-CoV-2 virus that causes COVID-19. By contrast, the currently avaible messenger RNA (mRNA) vaccines instruct our bodies to create antibodies against only the virus' spike proteins, which allow the virus to infect host cells.

Future mutations of the spike proteins could render some vaccines significantly less effective, a problem Vaxart hopes to avoid with its approach. Under this scenario, VXA-CoV2-1 could still go on to rack up decent revenue for Vaxart in the future, if it makes it through the later stages of clinical trials. The remainder of Vaxart's pipeline is pretty thin, and all of the company's candidates are in their early stages. 

Moving forward, the company's stock performance will largely depend on the progress of its coronavirus program. 

Is Ocugen's recent performance sustainable?

Ocugen is developing its candidate, Covaxin, in collaboration with India-based Bharat Biotech. According to a deal the two entities finalized in February, Ocugen will be responsible for Covaxin's clinical development, regulatory approval, and commercialization in the U.S., and the company will keep 45% of the profits the vaccine will make in the country. Bharat Biotech will take the remainder of the profits.

In March, Ocugen reported results from a phase 3 clinical study for Covaxin that Bharat Biotech ran in India. Covaxin demonstrated 81% efficacy in patients without prior infection after the second dose during the study. The company also said that Covaxin seems to be able to handle the variant of the SARS-CoV-2 virus that emerged in the U.K.

The next step for Ocugen would be to seek Emergency Use Authorization (EUA) in the U.S., and to that end, the company claims to be in talks with regulatory authorities. It isn't clear when Ocugen will move forward with EUA, but the next few weeks will be volatile for Ocugen and its shareholders, especially since none of its other candidates have even started phase 1 studies.

A word on financials

Vaxart doesn't have any products on the market and does not generate much by way of revenue. And neither does Ocugen. But for what it's worth, Vaxart seems to be in a slightly better financial position at the moment. As of the first quarter ended March 31, Vaxart had a cash and cash equivalent balance of $177.3 million compared to Ocugen's $44.8 million. It's also worth noting that Ocugen has a market cap of $1.7 billion, compared to $813 million for Vaxart. Both of these stocks are still in the small-cap category, and both could skyrocket if their COVID-19 programs pan out. 

The verdict

At the moment, Ocugen looks like the better buy for one major reason: The company is much closer to launching its coronavirus vaccine candidate, Covaxin, on the market. An oral vaccine might be very promising, but it could take well over a year for Vaxart to advance VXA-CoV2-1 through late-stage clinical studies. And by then, the market could be even more saturated than it already is.

While Ocugen seems to be dragging its feet, investors can expect the company to announce some progress in its regulatory efforts within the next few weeks. Once it does, the company's shares might just soar. With that said, both of these biotech companies seem very risky for the average investor at the moment, so some may be more comfortable adding them to a watch list for now.