Where Will Ocugen Stock Be In 5 Years?

Apr. 27, 2022 12:33 PM ETOcugen, Inc. (OCGN)BNTX, JNJ, MRNA, PFE, NVAX5 Comments2 Likes
Keith Williams profile picture
Keith Williams


  • Ocugen’s licence to sell Indian COVAXIN vaccine in the US, Canada and Mexico hits stumbling block with phase 2/3 trials in the US on hold by FDA.
  • World Health Organisation suspends export of COVAXIN from India pending resolution of deficiencies in GMP.
  • US marketing plan for COVAXIN involving pediatric, booster and US Government purchase is challenging.
  • Gene therapy and fusion protein approach to eye disease is early stage and challenging.
  • Ocugen has interesting programs, but it isn't clear it is resourced to adequately address them.

India"s Covaxin Vaccine Administered In Harare

Tafadzwa Ufumeli/Getty Images News

We are all tired of COVID, but the SARS-CoV-2 virus isn't necessarily tired of us, especially because a very large part of the human family is not vaccinated. Combine this with an interconnected world through international travel and you have a recipe for more surprises about COVID.

The point is that the developed world has a powerful new generation of vaccines through mRNA technology (Comirnaty:BioNTech (BNTX)/Pfizer (PFE) and Spikevax:Moderna (MRNA)), which is quick to implement if needed for new variants that might make existing vaccines less effective. Is there a place in the US and Canada for an old-style traditional inactivated viral vaccine? This is the big question that investors in Ocugen (NASDAQ:OCGN) need to address. My take is that the answer is "no" and this colours my view of investment in Ocugen.

Ocugen's business

This month Ocugen released an Investor Slideshow, which covers the company's three business areas. These are:

i) plans to market Indian COVID vaccine COVAXIN (BBV152) which is manufactured in India by Bharat Biotech International;

ii) A modifier gene therapy platform which addresses eye disease;

iii) A novel protein treatment for macular degeneration

Each of these three business areas is ambitious and requires substantial cash backing to succeed. The investor presentation was noteworthy in lacking any financial details.

The COVID vaccine

Ocugen is interesting because it is a COVID vaccine play that involves introducing a traditional inactivated viral vaccine from India to US, Canadian and, very recently, Mexican markets. It is a brave plan to enter the US, a market that is dominated by two revolutionary vaccines based on mRNA technology. Manufacturer Bharat Biotech is an established Indian vaccine manufacturer, having delivered more than five billion doses of a variety of vaccines including against flu, rabies and rotavirus.

The traditional approach to vaccine production involves culturing a virus, in this case SARS-CoV-2 (which is the virus that causes COVID-19) in vero cells, purifying the virus, inactivating it and then formulating it with an adjuvant. This forms the basis of the COVAXIN vaccine.

A large Phase 3 trial (25,800 subjects) in India showed that two doses of COVAXIN produced 77.8% vaccine efficacy against symptomatic COVID-19 disease, with 93.4% efficacy against severe symptomatic COVID-19 disease and 63.6% protection against asymptomatic COVID-19 disease.

Unlike the three COVID vaccines with EUA (Emergency Use Authorization) from the FDA, which all address the spike protein of SARS-CoV-2, COVAXIN elicits immune responses to the spike and other proteins in the virus.

Delay with FDA approval for COVAXIN

In early April the World Health Organisation (WHO) confirmed suspension of supply through UN procurement agencies, of COVAXIN from Bharat Biotech. This resulted from a WHO inspection of Bharat Biotech's facilities which revealed deficiencies in Good Manufacturing Processes. The company is developing a plan to correct the WHO findings through submission to the Drugs Controller of India. In the meantime export of COVAXIN has been suspended pending resolution of the problems, notwithstanding that the WHO risk assessment did not indicate safety issues nor that the virus was ineffective.

COVAXIN is one of 10 COVID vaccines granted Emergency Use Listing (EUL) by WHO. In addition to India, WHO granted COVAXIN EUL for 13 additional countries, mostly in Africa and Asia, but also including Mexico. It is claimed that COVAXIN is approved for emergency use in more than 25 countries, with applications for emergency use pending in a further 60 countries.

10 trials have been/are being conducted, with eight of these trials in India and two in the US. As a result of the WHO suspension, the FDA has put on hold the Phase 2/3 trials involving COVAXIN in the US. Ocugen's clinical strategy is largely around a Phase 2/3 immunobridging and broadening study involving 400 participants. I'm not convinced that this going to be enough to get EUA approval from the FDA for COVAXIN for adults.

In a sign of the FDA paying closer attention to Ocugen, this week it was reported that the FDA has threatened a fine concerning late submission of data for a 2019 trial on dry eye disease.

Issues concerning Ocugen's COVAXIN marketing plans in the US

The Q4 2021 earnings call had several red flags about the Ocugen COVAXIN strategy. Three markets for COVAXIN were highlighted by senior management in the Q&A session. While this wasn't explicitly stated, it seemed that there is an assumption that EUA will be achieved for adults quickly from the FDA. I don't think that it is clear that this is how it will play out with the FDA.

The priorities discussed on the Q4 2021 transcript are:

i) Children: Two markets are indicated here, pediatric (under 5) and 5-18. There is no under 5 COVID vaccine available in the US currently, although both Pfizer/BioNTech and Moderna seem close to having their respective market leading mRNA vaccines available within a few months. For the 5-18 age group the Pfizer/BioNTech vaccine Comirnaty is recommended by the CDC.

It is a brave call to suggest that COVAXIN will be at an advantage compared with the market-leading Pfizer/BioNtech and Moderna mRNA vaccines, notwithstanding that there is some Indian data for COVAXIN in children, and approval in India has been gained recently for children aged 6-18 although further data is required. Given that COVAXIN approval for adults in the US is in question at the moment, expecting quick approval for children seems optimistic.

ii) Boosters: There is a need for boosters, notwithstanding some controversy about timing of boosters and where a fourth vaccination fits. CEO Shankar Musunuri places a lot of emphasis on the need for choice, especially among the unvaccinated. It isn't clear to me that vaccine-hesitant people will be easy to convince even with a traditional vaccine like COVAXIN. I'm not sure what the path for getting COVAXIN approved as a booster in the US will involve.

iii) US Government purchase for overseas: In the Q4 2021 transcript CEO Shankar Musunuri raises the possibility of the US Government purchasing its COVAXIN vaccine for global distribution as part of a "vaccine diplomacy" push. He makes the point that the vaccine has a shelf life of two years at refrigeration temperature (six months at room temperature), but the obvious question is as to why a vaccine made in India, with ingredients exported to the US would be competitive with the same vaccine sourced from India. Indeed I wonder how Bharat Biotech (the Indian manufacturer) might view Ocugen seeking to enter the global market in this US government sponsored way. This seems like a long bow. Perhaps I am missing something here?

Why wouldn't the Indian Government do this? The cost structure for COVAXIN in India looks very competitive having been cut recently from ~$15.60 to ~$3. It isn't clear what price Ocugen would expect to achieve from putative sales to the US Government.

Ocugen has a major gene therapy interest too

Unlike Ocugen's COVID vaccine strategy, which involves introducing COVAXIN, the traditional Indian COVID vaccine to the US, Canada and Mexico, Ocugen's gene therapy strategy is "out there" with a risky complex approach, potentially addressing multiple gene defects in a single product. There seems to be a lot of optimism for an emerging technology area, but a Phase 1/2 trial is recruiting for treating Retinitis Pigmentosa. This is likely to be a long road.

A third major area involves a protein-based treatment for three eye diseases

The program involves a fusion protein (transferrin-tumstatin) and it is at a very early stage involving animal toxicology studies.

Each of the above programs involves different technologies and skills, with little overlap between a traditional killed vaccine, a complex gene therapy and a fusion-protein treatment.

Where is the money?

Ocugen's R&D spend of $35.1 million in 2021 was modest for such an ambitious series of programs, but it was still up more than five fold compared with 2020 R&D spend. It did include an upfront payment of $15 million to Bharat Biotech for additional rights to licence COVAXIN in Canada.

Overall Ocugen's net loss in 2021 was $58.4 million, up substantially from $34.3 million in 2020. Its cash position at the end of 2021 was $95.1 million which was improved by the raising of a further $50 million (before expenses) in February 2022. Given the costs of seeking to secure FDA approvals for COVAXIN, a significant gene therapy program and a protein fusion treatment, this doesn't seem like the end of need for substantial further cash, and the Q4 2021 reporting indicated the need for more cash by Q1 2023. A lot seems to be hinging on revenue from COVAXIN sales before then. Given the current situation there seems no guarantee that COVAXIN will deliver and indeed FDA approval seems in question at this stage. Perhaps Mexico might deliver although I suspect that COVAXIN supply to Mexico is suspended currently.


The contrast between Ocugen and other US COVID vaccine providers is stark. Out of hundreds of candidate vaccine projects, to date just three have been given FDA EUA (Emergency Use Authorization): BioNTech/Pfizer's Comirnaty, Moderna's Spikevax and J&J's (JNJ) Janssen COVID vaccine. This provides a context regarding Ocugen's approach to get COVAXIN approved by the FDA for EUA. It certainly doesn't help for there to be a question mark by the World Health Organisation over Bharat Biotech International GMP manufacturing plant deficiencies. The FDA is no easy barrier as Novavax (NVAX) investors are well aware as they wait for FDA EUA for their COVID vaccine.

I think Ocugen has a huge challenge to execute on their business plans, even though their strategy isn't silly. I doubt that there is enough money or skills to make it work in a timely fashion. While the share price fall is less relentless than the 80% fall year on year it has produced, in the past month the share price has fallen 35%. There seems no immediate reason for this relentless grind to stop any time soon.

I am not a financial advisor but I've been in the trenches in biotech and know how hard it is. I hope my insight helps you and your financial advisor when thinking about investment in Ocugen.

This article was written by

Keith Williams profile picture
Keith began his career as a research scientist (developmental biology, biochemistry, molecular biology) at the Australian National University, University of Oxford (UK), the Max Planck Institute for Biochemistry (Munich, Germany) and finally Macquarie University (Sydney) where he held a Chair in Biology and established the Centre for Analytical Biotechnology. Pioneering the area of proteomics (with Marc Wilkins in his group coining the term), Keith established the world’s first government-funded Major National Proteomics Facility (Australian Proteome Analysis Facility) which was involved with industrialising protein science. Keith left academe with his team to found Proteome Systems Ltd in 1999 to commercialise proteomics. The company had a strong focus on intellectual property, engineering/technology and bioinformatics. As CEO he led the company to ASX listing in 2004. Since 2005 Keith has been involved in new business development in biotech, e-health and other emerging technologies. Keith sees climate change and sustainable development as a major issue for humankind and also a major business disruptor/risk and opportunity. Keith holds a Bachelor Agr Science from the University of Melbourne and a PhD from the Australian National University. He is a Fellow of the Australian Academy of Technological Sciences & Engineering and received an AM (Member of the Order of Australia) for services to the Biotechnology Industry. He has received various industry awards including an Innovation Hero Medal from the Warren Centre for Advanced Engineering. With 300 scientific papers and many patents written, Keith has a clear view of innovation in the Biotechnology and Climate/Renewable Energy space. He is not a financial advisor but his perspective adds relevance to decision-making concerning feasibility and investment in technology innovation.

Disclosure: I/we have a beneficial long position in the shares of PFE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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