Ocugen (OCGN 3.00%) became a surprise entrant in the coronavirus vaccine race last year. I say "surprise" because the biotech's specialty isn't vaccines or infectious diseases. Its focus is on gene therapy for eye diseases.
But Ocugen signed a deal with India's Bharat Biotech for the U.S. co-commercialization rights of the company's close-to-market vaccine candidate Covaxin -- and investors cheered. In fact, all this interest propelled the stock to a 149% gain last year. And at its highest point, it rose more than 750%.
Eye-popping share gains and a potential coronavirus vaccine may make us think of another biotech company. I'm talking about vaccine-leader Moderna (MRNA -0.18%). The company's shares soared 434% in 2020 as it developed and then commercialized a vaccine. The shares extended gains last year, and Moderna generated billions of dollars in vaccine revenue. Today, it's reasonable to ask: Could Ocugen follow in Moderna's footsteps?
Where Ocugen stands now
Let's take a look at some background information on Ocugen -- and where the company stands now. Bharat Biotech has commercialized Covaxin in India and about a dozen other countries. But that doesn't add money to Ocugen's coffers. Ocugen holds co-commercialization rights in the U.S. and Canada only. The company would keep 45% of profits in those countries.
Ocugen's shares have climbed from time to time on positive Covaxin trial data. The World Health Organization's addition of Covaxin to its emergency-use list also triggered optimism. These elements are positive because they support the idea that Covaxin is a safe and efficacious product. But they don't bring Covaxin any closer to commercialization in the U.S. or Canada, and what's most important for Ocugen is to bring Covaxin to market -- and generate revenue.
So far, Ocugen faces some significant hurdles. First, the U.S. and Canada already have vaccinated large percentages of their populations with Pfizer and Moderna vaccines. That means it will be difficult to carve out market share. Still, there's a bit of good news: The U.S. Food and Drug Administration (FDA) has authorized the "mixing and matching" of boosters, so if you got the Pfizer primary series, for instance, you could get a Covaxin booster (if it's eventually approved).
I used the word "approved" above because Ocugen is aiming for full approval -- not Emergency Use Authorization (EUA). And this represents another one of the hurdles. The FDA advised Ocugen last spring to opt for the traditional approval path rather than the EUA one. This means a review time of six to 10 months, versus a few weeks for an EUA.
Trial on hold
But the bad news doesn't stop there. Ocugen planned on launching a new clinical trial for Covaxin to support its regulatory request. In November, however, the FDA issued a clinical hold on the request. That means the trial can't start until Ocugen resolves questions or concerns the FDA has about the trial.
Ocugen submitted Covaxin to Canadian regulators in the second quarter of last year. They haven't yet issued a decision.
The problem with Ocugen isn't the quality of the vaccine. Data from trials in India have been positive. The real uncertainty is if and when Covaxin will reach the U.S. and Canadian markets. And if it's extremely late to market, it may be difficult to generate significant revenue.
The new Moderna?
Let's get back to our Ocugen/Moderna comparison. They both have vaccine products backed by strong data. But Moderna quickly brought its vaccine from development to commercialization. And Moderna benefits from sales of its vaccine worldwide -- not just in two countries.
These are two key reasons for Moderna's success today, and they're the two key elements missing from the Ocugen story. Moderna also has a pipeline with many late-stage programs, but Ocugen hasn't yet brought a candidate into clinical trials.
Ocugen shares may gain on any positive Covaxin news in the coming weeks or months. But as mentioned above, it's unclear when Covaxin will make it to market and how it can carve out much market share.
Ocugen's other programs are too early stage to bring in revenue any time soon. That's why I expect more volatility from the company. And it's unlikely it will follow in the footsteps of bigger biotech rival Moderna.