Some investors have been betting on Ocugen (OCGN 2.35%) as one of the next companies to enter the coronavirus vaccine market. Last year, the biotech gained rights to co-commercialize Bharat Biotech's Covaxin in the U.S. The shares soared more than 700% in only a few weeks on the news. Ocugen later added rights in Canada to the agreement. Since, the company has been trying to gain authorization of Covaxin in these markets.
The path hasn't been easy. The U.S. Food and Drug Administration (FDA) wouldn't base a regulatory decision uniquely on Bharat's pivotal trial in India. That means Ocugen must conduct a new phase 3 trial in the U.S. But the FDA placed that new trial on clinical hold before it even started. And Canadian regulators in December requested more information from Ocugen before continuing their review. The latest blow: The FDA rejected Ocugen's authorization request for pediatric use of the vaccine. Now, investors are surely wondering: Is there any hope for Ocugen? Let's find out.
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The U.S. and Canada
First, a bit more detail on the company's coronavirus vaccine program. Ocugen aims to secure the regulatory nod in both the U.S. and Canada. If it succeeds, it keeps 45% of potential vaccine profits. Bharat gains the rest. Ocugen only has rights to Covaxin in these territories. So Covaxin successes in other parts of the word don't put money in Ocugen's coffers.
The challenges in the U.S. are many. A big one is timing. The FDA recommended Ocugen go for traditional approval rather than Emergency Use Authorization (EUA). This is a review timeframe of six to 10 months (when all goes well) compared to just a few weeks for an EUA.
One bit of positive news: The FDA lifted its clinical hold on Ocugen's trial. And Ocugen says it will start the study as soon as possible.
Still, Ocugen remains a definite laggard in this race. Pfizer and Moderna already dominate the U.S. market. Johnson & Johnson holds a small share. And Novavax may enter the market in the coming weeks. The FDA now is considering Novavax's EUA request. Novavax already has a supply deal with the U.S. And right now, 65% of the U.S. population is fully vaccinated. So, it's hard to imagine Ocugen gaining orders and market share in the U.S.
The situation in Canada is similar. The country has purchased doses from about eight different vaccine makers. This doesn't leave much room for a newcomer.
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A possibility for market share
Is there any way Ocugen can carve out share in either country over the long term? There is one possibility. And that has to do with efficacy. If Ocugen can show Covaxin is more efficacious, particularly against new variants, it may eventually gain some traction.
Today's vaccines have demonstrated efficacy against variants. But these vaccines target the spike protein -- and if that protein mutates extensively, efficacy may decline. In a study, Covaxin showed it produced T cells against the spike protein and nucleocapsid proteins. This, in 85% of subjects after a period of six months. Targeting nucleocapsid proteins could help it beat the virus even if the spike mutates significantly.
So, is Covaxin likely to surpass today's leaders in efficacy? It's possible Covaxin will show strong efficacy against variants. But here's why I think it's unlikely Covaxin actually will beat more advanced rivals. These rivals already are working on vaccine or booster candidates to handle variants of the future. For example, Moderna has five candidates in clinical trials to target specific variants. By the time Covaxin is ready to complete its regulatory request, today's leaders also may be submitting requests for their latest candidates.
Is there any hope?
Now let's get back to our question: Is there any hope for Ocugen? Over the long-term, maybe. It's important to remember that Ocugen specializes in developing gene therapy candidates for eye diseases. The company recently launched its first phase 1/2 trial for one of these candidates. If this candidate or others are successful, Ocugen may have a bright future ahead.
But today, Ocugen shares are highly dependent on Covaxin news. And that makes them risky. It's unclear if and when Covaxin will launch in the U.S. and Canada. And if it does, carving out market share will be difficult. Any of these problems could crush the shares. That's why it's best to watch Ocugen from afar for now -- and maybe in the future revisit the biotech company for its work in eye diseases.
