The pandemic is dragging on. With the newer and more contagious omicron variant of the virus that causes COVID-19 now spreading quickly, we aren't out of the woods just yet. These latest developments again highlight the importance of potent vaccines as a tool to fight the outbreak.
And while there are plenty of companies already offering vaccines, two biotechs that still plan to make some noise in this market are Ocugen (OCGN -1.28%) and Inovio Pharmaceuticals (INO 3.05%). These vaccine makers are underdogs, but which one is more likely to perform well in 2022 and beyond? Let's look closer into both companies' businesses and pick a likely winner.
The case for Ocugen
Ocugen jumped into the race to develop a vaccine for COVID-19 by partnering up with Bharat Biotech, an India-based biotech company. Bharat Biotech ran a late-stage clinical trial for the vaccine in question, Covaxin, in India, and earned emergency use authorization (EUA) for it there.
In the study, Covaxin proved 77.8% effective overall and 93.4% effective against severe cases of COVID-19. The agreement between Ocugen and Bharat Biotech stipulates that the former holds the right to market Covaxin in North America, and Ocugen is entitled to keep 45% of the profit the vaccine generates in this region.
Unfortunately, Ocugen ran into regulatory headwinds. Following the advice of the U.S. Food and Drug Administration (FDA), the biotech decided to pursue full approval for Covaxin instead of applying for an EUA. The process to acquire full approval is significantly longer -- it takes up to 10 months. An EUA can take as little as a few weeks.
Furthermore, Ocugen needs to run a late-stage clinical trial for Covaxin in the country before it can hope to receive approval for it. However, the FDA recently placed a clinical hold on Ocugen's phase 3 clinical trial for Covaxin after identifying unnamed deficiencies in the company's application to conduct this study.
Ocugen's hope to earn authorization for Covaxin for children aged 2 to 18 also seems like a long shot, to say the least. Is there any hope for Covaxin in North America? Ocugen's best bet seems to be north of the U.S. border. It completed a submission for EUA to health authorities in Canada in August, and it is awaiting an answer from regulators in the country.
Given that cases of COVID-19 continue to climb, if Covaxin earns the green light from Canadian authorities soon enough, Ocugen could generate some decent sales from this vaccine in Canada. That might work wonders for a company that currently has no products on the market.
The case for Inovio Pharmaceuticals
Inovio Pharmaceuticals has also had its share of regulatory headwinds. The company's phase 3 portion of a phase 2/3 clinical study for its investigational COVID-19 vaccine, INO-4800, was placed on clinical hold by the FDA for a little more than a year. Regulators had concerns regarding Inovio Pharmaceuticals' Cellectra 2000 device. The company uses this gadget that resembles an electric toothbrush to administer INO-4800. The device uses electrical pulses to temporarily open small pores into a patient's cell to allow the vaccine to enter.
Fortunately, the FDA recently removed this clinical hold, which will allow the biotech to go ahead and conduct a phase 3 study for its vaccine.
The company has also received the regulatory nod to conduct its late-stage study in other countries, including Brazil, Mexico, the Philippines, and Colombia. Inovio Pharmaceuticals' strategy is to target underserved countries with its vaccine, once it proves safe and effective and earns approval. The company has also announced its intention to develop an omicron-specific COVID-19 vaccine, and other candidates that could address future variants of the coronavirus.
Beyond COVID-19, Inovio Pharmaceuticals' most advanced candidate is VGX-3100. It's a potential DNA vaccine aimed at treating a precancerous condition called cervical dysplasia, associated with the human papillomavirus (HPV). VGX-3100 is undergoing a pair of late-stage clinical trials. It has already delivered promising data in one of these trials, and Inovio Pharmaceuticals expects results from the other in the second half of the year.
The annual incidence of cervical dysplasia stands at 233,000 people in Europe and 195,000 people in the U.S. -- and there are currently no treatment options for the condition. VGX-3100 could be very successful if it makes it to the market.
With the pending EUA in Canada, Ocugen looks closer to launching its vaccine on the market. However, the company will keep slightly less than half of the profits Covaxin will make in Canada. Meanwhile, Ocugen's chances to market Covaxin in the U.S. within the next year are bleak.
Inovio Pharmaceuticals isn't close to launching its candidate either, but it will at least have a much broader market to work with if INO-4800 is approved. Moreover, while all of Ocugen's other candidates are far too early in their developmental stages to be meaningfully considered here, Inovio Pharmaceuticals has a promising late-stage program in VGX-3100.
Neither company generates any profit, but Inovio Pharmaceuticals ended the third quarter with $394.9 million in cash and cash equivalents compared to Ocugen's $107.5 million. Keep in mind that clinical-stage biotechs often resort to secondary offerings to raise additional capital, a dilutive method of financing that almost always results in a sell-off. But as the company with less cash on hand, perhaps Ocugen is a higher risk here.
Inovio Pharmaceuticals' cash cushion, combined with its more attractive overall late-stage pipeline, justifies the company's market cap of $984.6 million -- slightly higher than Ocugen's $834.6 million.
For investors focused on the long game, Inovio Pharmaceuticals looks like the better option right now, but only barely. Both of these companies look very risky, though, and there are much better options to consider for biotech investors.