In the coronavirus vaccine market, several players -- including Moderna and Pfizer -- are currently benefiting from a first-mover advantage. But other companies are still looking to break into this space. One of them is Ocugen (OCGN 2.98%), a company that partnered with India-based Bharat Biotech to develop and market a COVID-19 vaccine called Covaxin. 

Like many other meme stocks, shares of Ocugen have been highly volatile since the beginning of the year -- and a recent regulatory breakthrough in India sent the company's stock soaring through the roof. Let's review what's going on with the vaccine maker and decide whether it is worth initiating a position in its stock today. 

Chart showing rise in Ocugen's price compared to the S&P 500.

OCGN data by YCharts

Good news from India

On Oct. 12, shares of Ocugen ended the day up by nearly 20% after India's Subject Expert Committee granted vaccine emergency use approval to Covaxin for children aged two to 18. Note that Covaxin has been approved on an emergency-use basis for adults in India since January. No other vaccine has yet to be cleared for kids as young as two anywhere else in the world, so this is a breakthrough for Ocugen and its partner. But that's not all.

Now, Ocugen and Bharat Biotech are awaiting emergency use listing for their candidate from the World Health Organization (WHO). This vote of confidence from the WHO wouldn't make the vaccine marketable everywhere, but those inoculated with products listed by the organization are generally able to travel internationally without needing to quarantine or face other restrictions. U.S. authorities recently said they would lift travel restrictions for people inoculated with a WHO-approved vaccine.

This all sounds great, but what does it mean for Ocugen?

Doctor vaccinating patient.

Image source: Getty Images.

Worth buying?

Despite the progress Covaxin is making in India and the approval it could soon receive from the WHO, it is difficult to make a strong case for Ocugen. Here's why.

First, the biotech will only record any revenue from Covaxin if it is approved and marketed in North America. And even then, it will only keep 45% of the profits. That's part of the agreement it signed with Bharat Biotech. Plus, whatever health agencies in India or elsewhere think of Covaxin isn't likely to affect what regulators in the United States and Canada do.

In fact, Ocugen is now unlikely to obtain emergency use authorization (EUA) in the U.S. Per the recommendation of the U.S. Food and Drug Administration, it will instead pursue full approval for its drug candidate. An EUA takes several weeks at most while full approval can take up to 10 months from the moment an application is submitted. In other words, we are unlikely to see Covaxin offered in U.S. pharmacies anytime soon.

Perhaps this wouldn't matter too much if this vaccine were vastly superior to its peers. But that doesn't seem to be the case. In a phase 3 clinical trial, Covaxin proved 77.8% effective against symptomatic COVID-19 and 93.4% effective against severe cases of the illness. That's not bad at all, but the two leading vaccines on the market -- from Pfizer and Moderna -- proved even more effective than Covaxin in clinical trials.

To be fair, Covaxin's pivotal study was conducted in India, where the more virulent delta variant of the virus originated. This may help explain why Covaxin's efficacy compared unfavorably to that of its competitors. Still, there is little evidence that patients would be better off if they had chosen Covaxin over other vaccines. Plus, other companies are working on improving the efficacy of their respective products. 

Even if the pandemic continues for a year or two, other vaccines will likely continue to dominate the market in developed countries while Covaxin could, at best, carve out a very tiny share of this space. And whatever sales it generates will have to be shared with Bharat Biotech. Covaxin's best shot, in my view, is to make waves in countries where vaccines aren't as readily available.

But that wouldn't help Ocugen. And to make matters worse, none of the company's other pipeline programs have even made it to a phase 2 study yet. Any regulatory setback related to Covaxin could send Ocugen's stock spiraling down. Putting all this together, this biotech stock does not look like a particularly attractive investment at the moment. Investors would do better to look elsewhere.