Ocugen (OCGN -4.68%) wowed investors when its stock soared as much as 763% from the start of the year to its peak in February. It's given up some gains, but the stock has still posted a healthy 300% increase year to date. Why all the excitement? The biotech company partnered with India's Bharat Biotech to co-market Bharat's close-to-market COVID-19 vaccine in the U.S.

Now, Ocugen is moving a step closer to bringing that potential product -- Covaxin -- to people's arms. The company plans to submit its request for emergency use authorization (EUA) to the U.S. Food and Drug Administration (FDA) in June. Knowing this, we may ask ourselves: How risky is this high-flying stock right now? Let's find out.

A person in a suit and tie points at the word "risk."

Image source: Getty Images.

45% of vaccine profits

First, a little background. Ocugen may have surprised some when it entered the vaccine race. That's because the company specializes in gene therapy for eye diseases. Ocugen plans on beginning its first clinical trials in that area this year. Meanwhile, the company's collaboration with Bharat could represent an early revenue source -- if the FDA authorizes Covaxin and if the U.S. orders doses. As part of the deal with Bharat, Ocugen keeps 45% of the profits.

Bharat is conducting a phase 3 trial in India, and so far, the data show Covaxin is 78% effective in the prevention of COVID-19. It's 100% effective against severe disease.

News this past week may have worried some investors. The FDA updated its industry guidance for the issuance of EUAs. During the rest of the pandemic, the FDA "may decline to review and process further EUA requests other than those for vaccines whose developers have engaged in an ongoing manner with the agency."

I don't expect this to impact Ocugen. The company has been in contact with the FDA for months. And it even submitted a master file regarding Covaxin in late March.

So far, all sounds positive. But here's my concern. And it's a big one. It's unclear exactly how Ocugen may carve out market share in the U.S. This is the only market where Ocugen can benefit from Covaxin sales. That means success here is crucial.

First of all, the U.S. has already purchased enough vaccine doses from earlier-to-market rivals Pfizer and Moderna to cover nearly the entire population. In fact, the government has already started donating extra doses to other countries. In this context, it seems unlikely the U.S. will order more vaccine doses for this year.

What about next year?

Of course, there's always next year. Could Ocugen take market share at that point? Even then, it may be difficult. The Pfizer and Moderna vaccines both have shown strong efficacy. The U.S. may choose to continue ordering primarily from these leaders. For Ocugen to succeed, Covaxin probably will have to stand out in some way. Ocugen has mentioned Covaxin's performance against variants. And Bharat plans to soon begin Covaxin trials in kids.

But here, too, Pfizer and Moderna are a step ahead. They're working on booster candidates to address new variants. Pfizer expects to report booster data in July. And Moderna says its booster may be available by fall. Both companies also are testing their vaccines on kids and teens. The FDA recently granted Pfizer authorization for use of its vaccine in those ages 12 through 15.

So, for Covaxin to stand out against variants or as a vaccine for kids it will have to significantly beat the performance of Pfizer and Moderna vaccines. And betting on that right now is risky.

Speaking of risk, let's get back to our original question: How risky is Ocugen? It's possible the FDA will authorize Covaxin. And if that happens, Ocugen shares could head higher. But, as mentioned above, I'm concerned about what happens next. For Ocugen shares to maintain gains and move higher over the long term, the company must find its place in the U.S. market. That may be difficult. And that's why I consider shares of this biotech player a very risky bet right now.