Ocugen (OCGN -5.60%) jumped into the coronavirus vaccine race late -- as rivals Pfizer and Moderna brought their vaccines to market. The biotech company signed a co-commercialization agreement with vaccine developer Bharat Biotech of India for that company's candidate, Covaxin. Ocugen's partnership with Bharat includes commercialization in the U.S. and Canada only.
At first, investors cheered the move. The stock soared more than 700% in only a few weeks early last year. Since, however, Ocugen has faced various roadblocks. And it hasn't yet brought Covaxin to market in the U.S. or Canada. So where does Ocugen stand right now? There is one green flag for the company this year and one red flag. Let's take a look at both.
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Green flag: A clinical trial may begin
Originally, Ocugen aimed to win Emergency Use Authorization (EUA) in the U.S., based on Bharat's clinical trial results. Bharat completed a phase 3 trial in India. But the U.S. Food and Drug Administration (FDA) requested additional data, so Ocugen planned a phase 3 trial in the U.S. and submitted a request to begin the trial back in October. The FDA placed the trial on a clinical hold before it could begin -- this happens when the FDA has questions about a trial or wants to suggest changes.
The good news is that the FDA lifted this hold last month, and Ocugen plans to begin the study as soon as possible. This is an immunobridging trial, meaning that Ocugen will vaccinate trial participants and later compare their blood samples with those of trial participants in India. The idea is to show the results of that original trial apply to this new trial.
Covaxin's results in India have been strong. The vaccine showed more than 93% efficacy against severe COVID-19, nearly 78% efficacy against symptomatic illness, and more than 63% efficacy against asymptomatic disease. If Ocugen can show that this performance applies to its trial population too, the company may have a good chance of finally bringing Covaxin to the U.S. market.
Red flag: Ocugen got a very late start
Last spring, the FDA suggested that Ocugen take the traditional regulatory route: applying for approval instead of an EUA. Once Ocugen submits trial data to the FDA, the review could take six to 10 months. Review time for an EUA might only take a few weeks.
Let's consider the best possible scenario. In this case, Ocugen will generate trial data in the second half of this year and submit files to the FDA. (Prior to the clinical hold, Ocugen planned on completing the study in the first half of 2022.) If all goes smoothly, the FDA could make a decision in the first half of next year. (Of course, any setback could extend that timeline.)
But even in this best-case scenario, Ocugen would join the market extremely late. Why does this matter? Leaders Pfizer and Moderna already are working on updated vaccines or boosters to more specifically target the coronavirus of tomorrow. Even latecomer Novavax has started a phase 1/2 trial for a combined influenza-coronavirus candidate. It will be difficult for Ocugen to compete against companies that already have significant market share. But it will be even worse for Ocugen if these companies also start commercializing newer and better vaccine products.
What does this mean for investors?
Ocugen shares have fallen about 80% from their peak last year. Any good news could offer them a boost, giving investors potential for a short-term gain. But I'd rather not chase after short-term increases. Instead, I prefer to invest in companies that have clear potential to take a certain amount of market share. That means long-term revenue -- and eventually stock gains.
Ocugen's clinical trials may be successful. Covaxin's results might replicate those in India. But the problem is that there may not be much of a market left for this particular vaccine. As I mentioned above, current market leaders are already working on updated products. And they already have contracts with the U.S. government; Ocugen doesn't.
So I'm not convinced Ocugen will win much market share in the U.S. And that's why, right now, Ocugen remains an ultrarisky bet that I'd rather avoid.
