Ocugen's (NASDAQ:OCGN) shares surged as much as 700% from the start of the year to a peak in February. The reason for the enthusiasm? The company signed a deal to co-commercialize Bharat Biotech's near-to-market coronavirus vaccine in the United States. Currently, Bharat's Covaxin is involved in phase 3 trials in India.

But Ocugen has given up some gains. In fact, its shares are down more than 40% from that February high point. Investors are concerned about how much vaccine Ocugen and Bharat actually may sell in the U.S., which has so many doses it's actually started giving them away.

This past week, though, Ocugen announced an extension of its deal with Bharat. It now may co-commercialize Covaxin in Canada as well. Could this additional market equal a win for Ocugen? Let's find out.

A healthcare worker vaccinates a patient.

Image source: Getty Images.

The regulatory picture

First, let's keep in mind one crucial point. U.S. and Canadian regulators haven't yet authorized Covaxin, so any potential success will depend on positive regulatory rulings. Ocugen has submitted a master file to the U.S. Food and Drug Administration and will request Emergency Use Authorization this month. The company said it will "simultaneously" request emergency authorization in Canada.

Canada's vaccination rollout hasn't been particularly smooth. The country doesn't produce its own vaccines, so has relied on importing doses. And there it's faced a lack of supply.

All of this seems to leave room for a latecomer. Or does it? Canada's problem isn't due to a lack of vaccines ordered; the country's contracts with providers include options for as many as 400 million doses. The problem has been the shipping and delivery of doses. Right now, about 50% of the Canadian population has received at least one dose of vaccine -- but only 4.6% of the population is fully vaccinated.

Ocugen could gain market share here if it's able to make Canada a priority and deliver doses more quickly than its rivals. That could happen if Covaxin were available right away. If regulators wait to offer Covaxin authorization for a couple of months, though, Canada might no longer need extra doses. Vaccine delivery to the country has improved in recent weeks. Right now, more than 27 million doses of vaccine have been distributed in Canada (a number that reflects only two-dose vaccines). The country's population is about 38 million.

That said, Canada has shown it is open to ordering from many suppliers, rather than sticking to only the top few. The country has ordered doses from seven companies so far. If Canadian regulators OK Covaxin, it's possible the country would place an order for doses of it. Even if that order was for next year, it would be great news for Ocugen.

What does this mean for investors?

Canada isn't a bigger market in terms of population -- after all, the U.S. has more than 330 million residents. But Canada could represent more opportunity for Ocugen; it may be easier for the latecomer to carve out share here than in the U.S. The U.S. vaccine rollout has been rather smooth, and the country has plenty of vaccine doses. It's easy to imagine the U.S. reordering from current suppliers Pfizer, Moderna, and Johnson & Johnson next year.

Ocugen's decision to expand its collaboration agreement with Bharat into Canada is a smart one. Relying on only one market -- the U.S. -- for revenue was highly risky. Still, I'm not convinced that even both markets together are enough to make Ocugen's move into the vaccine space highly profitable. Today's dominant players are already bringing their vaccines to younger age groups, and say that boosters to handle variants are almost ready. To gain significant market share -- in Canada or the U.S. -- Ocugen will have to stand out in some way. And right now, it's not clear how Covaxin may stand out from rival vaccines.

Ocugen shares are a favorite among high-risk, short-term investors at the moment, and with any positive news, we may see more gains. But considering the points above, and Ocugen's 380% share-price gain since the start of the year, it's not the best choice for a long-term portfolio right now. I prefer watching this coronavirus vaccine player from the sidelines.

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.