What's more exciting than a stock with a penchant for skyrocketing? Probably a stock that skyrockets without immediately falling right back down to earth -- but that's not at all what I'll be discussing today. 

Despite several face-melting crashes, Ocugen's (OCGN -1.21%) stock rose more than 666% this year so far, and it might have further to go, provided that its flagship coronavirus vaccine gets cleared for sales in North America. But is the investing thesis for Ocugen stock sound, or is the market getting this one wrong?

A doctor administers a vaccination to a child.

Image source: Getty Images.

What will regulators do?

The biggest questions facing Ocugen at the moment are which regulators will greenlight its vaccine, and whether any of those potential green lights might actually translate into significant revenue. 

The company's two-dose vaccine is licensed from Bharat Biotech, a private manufacturer based in India. Per the terms of the license, Ocugen is allowed to sell the jab in the U.S. and Canada, provided that regulators assent. 

On Oct. 27, the company petitioned the U.S. Food and Drug Administration (FDA) for permission to start its phase 3 clinical trials, which it expects would conclude in the first half of next year. In mid-July, it initiated a rolling review process with regulators in Canada. 

Though both countries already have several other approved vaccines made by companies like Pfizer and Moderna, it's possible that Ocugen could still have a shot at grabbing some of the market. Its jab is made using inactivated viral particles rather than the mRNA used in Pfizer's and Moderna's entries.

That doesn't make it any more effective, but it does offer an alternative that may be appealing to some vaccine-hesitant people. Plus, regulators are unlikely to find fault with its 93.4% efficacy against severe disease or its stellar side effect profile, which shows the jab's effect as indistinguishable from a placebo.

Still, investors need to recognize that not all of the potential regulatory approvals matter. The stock traded fiercely in the lead-up to the World Health Organization's (WHO) decision to grant an Emergency Use Listing (EUL) on Nov. 3. But Ocugen doesn't have a license to sell its product worldwide, meaning that the WHO's stamp of approval doesn't really open the door to any opportunities for new revenue. 

In other words, in the U.S., it's the FDA that has the final say, and in Canada, it's the Ministry of Health. If other regulatory authorities say that Bharat Biotech's vaccine is good to go, that won't be worth a penny for Ocugen. 

It's probably better to invest in something else

There's not much reason to invest in Ocugen on the basis of its non-coronavirus vaccine projects. Aside from the jab, all of its other pipeline projects are so early stage that they aren't even in clinical trials yet. In my view, that means the future payoff of those programs is so uncertain that they shouldn't be considered as heavily weighted arguments in favor of buying the stock. 

In sum, the investing thesis for Ocugen stock requires the company to first get its vaccine approved in the U.S. or Canada, and then successfully steal some market share from powerful competitors in markets where majorities of the population are already fully vaccinated. Under normal conditions, that scenario doesn't seem very favorable.

There is a mitigating factor that might make the stock worth a purchase, however. Because Ocugen has never made any revenue or gotten any of its medicines approved for sale, making inroads to holding even a small slice of the market will produce awesome year-over-year revenue growth. The catch is that it's hard to tell whether the market is accurately pricing in the value of the small slice that it can grab, so big swings in either direction are possible. 

I wouldn't buy shares of this stock, as I don't think that the company has any competitive advantages that will allow it to succeed in the long run, and I don't find the prospect of a small biotech competing against established and powerful companies to be very appealing. But, if you're looking for a speculative investment, it could work. Each new approval from regulators will likely send the stock's price spiraling upward, even if the financial merits for that are illogical. Likewise, if it ends up capturing more of the coronavirus vaccination market than expected, it'll be quite favorable for investors.