Two months before Ocugen, the US partner of Bharat Biotech International Ltd, announced its partnership with the company for bringing the covid-19 vaccine to the US, it was facing the threat of its shares being delisted from Nasdaq.
Ocugen failed to maintain a minimum bid price of $1 per share as required by the rules of the trading platform. In February, the company announced that it was tying up with Bharat Biotech to seek emergency use authorization (EUA) for Covaxin from the US Food and Drug Administration (FDA). Within a month of this announcement, shares of Ocugen, which were barely meeting the minimum trading listing price of $1 apiece, shot up to $18 on the news that it was on track to seek an emergency approval for Covaxin in the US.
This guidance came, although Bharat Biotech hadn’t submitted its phase 3 data to Indian regulators. However, the euphoria over the meteoric rise in Ocugen’s stock price ended in early June when the FDA rejected the company’s emergency use application.
Now, Ocugen and its promoters face allegations of fraud by its investors. In a class-action lawsuit filed in the district of Pennsylvania this month, shareholders of Ocugen alleged that the company’s promoters Shankar Musnuri and Sanjay Subramaniam committed fraud by deliberately sharing materially false and misleading statements over the progress of Covaxin vaccine between 2 February and 10 June.
“Each of the individual defendants is liable as a participant in a fraudulent scheme…that deceived the investing public regarding Ocugen’s business, operations, management, and the intrinsic value of its securities,” according to a lawsuit filed by Roberto Nicaro, one of the shareholders.
The lawsuit pertains to three public statements made by Ocugen on 2 February, 5 February and 19 March. All these three statements claimed that the company would seek an EUA for Covaxin with the US FDA. The class-action suit states that these statements were false and/or misleading as the company failed to disclose that “the information submitted to the FDA was insufficient to support an EUA, (ii) Ocugen would not file an emergency use authorization with the FDA, (iii) as a result of the foregoing, the company’s financial statements, as well as defendants’ statements about Ocugen’s business, operations and prospects, were false and misleading and/or lacked a reasonable basis”.
Ocugen said such lawsuits against public companies, when their stock drops in the course of business, are common in the US.
“We believe the current class-action lawsuit is without merit, and we will vigorously defend ourselves in court. As this is a matter involving litigation, we can’t provide further details to the matters related to the case,” Ken Inchausti, head of investor relations at Ocugen, said in an email response to a query.
“We’re currently evaluating the clinical and regulatory path for Covaxin in the US, which is already being used in 16 countries under emergency use authorizations. We’re also reviewing the guidance from the US Food and Drug Administration, as well as our own independent experts, regarding a Biologics License Application submission and the data needed to support such a submission. We also believe that we’ve been timely and accurate when disclosing our communications with the FDA and the path for pursuing commercial development of Covaxin.” Inchausti said.
Some parts of the statement contradict publicly available information. For example, contrary to the claims by Ocugen that Covaxin is in use in 16 countries, only nine have so far have approved the vaccine.
History of Ocugen
Ocugen was founded by Shankar Musnuri, a pharma executive whose past experiences included stints with companies such as Pfizer. After his exit from Pfizer, Musnuri floated companies such as Histogenics, which was involved in developing a therapy for knee cartilage. However, Histogenics was subsumed into Ocugen in 2019 after the FDA rejected a biologics approval due to lack of data. The company does not have any approved drugs in the US. In December 2019, the company was put on notice by Nasdaq “for failure to satisfy a continued listing rule or standard; transfer of listing”.
Ocugen’s claims of seeking an EUA in February seemed ill-planned, if not daring, said an official from a leading vaccine company. The person did not want to be named. The company was seeking approval for an old vaccine platform in the US at a time it was becoming clear that the mRNA vaccine platforms of Pfizer and Moderna had better trial data. Ocugen’s India partner, Bharat Biotech, did not have the required data to seek approval from the FDA. For example, Bharat Biotech did not have peer-reviewed data of its phase 3 trials, one of the requirements by the USFDA for a “master file” submission for approval for a EUA. It is still in the process of getting its phase 3 studies published in a peer-reviewed journal. All the three companies that received an EUA from the FDA to date (Pfizer, Moderna and J&J) had trials conducted in the US, a default requirement by the US regulator. Bharat Biotech had no such trials registered in the US.
Trouble began for Ocugen when in May this year the FDA announced that it might not accept any new EUA applications for covid-19 vaccines other than those who were already engaged with the regulator. With a supply glut fuelled by Pfizer and Moderna and their vaccines’ over 90% effectiveness data, the market and requirement for a new vaccine in the US did not seem substantial. But even after the FDA announcement, Ocugen told investors that this condition does not impact the company. “Since we have been in discussions with the FDA since late last year, we do not believe that the FDA’s recently revised guidance regarding EUAs raises any concerns about our ability to submit the EUA for Covaxin as planned,” CEO Musnuri said in a statement to investors in May.
In two weeks, the company released another statement to investors stating that it will now seek full approval of Covaxin instead of a EUA. The FDA rejected the EUA of the company because of the incomplete trial data.
“The FDA provided feedback to Ocugen regarding the master file the company had previously submitted, and recommended that Ocugen pursue a biologic licence application (BLA) submission instead of an EUA application for its vaccine candidate and requested additional information and data”, the company said in May. While these discussions were ongoing with the regulators, promoters Musnuri, Uday Kompella and Sanjay Subramanyam between March and April 2021 sold their shares worth $10 million. Several other promoters of vaccine companies (such as Moderna) have made similar gains in the past year by selling equity; but in case of those companies, their vaccine candidate was launched in the immunization drive.
Future in the US
If the EUA seems like a tall climb, a BLA is like climbing Mount Everest. The FDA expects rigorous population-level data for approval of a drug/vaccine application under BLA.
“FDA hasn’t given BLA to any of the covid-19 vaccines yet. Not even to Pfizer and Moderna, with their hundreds of millions of doses administered. So for any company wanting to get full approval, the standards are going to be high. It won’t be a walk in the park,” said Davinder Gill, a former CEO of Hillman Labs that works on vaccine research for neglected diseases.
For the Indian government-backed Covaxin, a stamp of approval from regulators such as the FDA, EU and WHO is essential as the reality of vaccine passport becomes a norm for travel. As things stand, Covaxin is not recognized by the US and EU in their vaccine passports. Besides the class-action suit, the flip flops by Ocugen in its filings also threaten the Indian pharma industry’s ability to launch a vaccine in a regulated market. No Indian company has managed to get approval for their vaccines in the US yet. This is despite India being one of the largest manufacturers of vaccines in the world.
A senior executive of an Indian company developing a covid-19 vaccine in India said poor regulatory filings by companies complicate the journey of Indian vaccine makers in these markets. “We have to play by their rules if we wish to step into their markets, and there can be no short-cuts in that journey,” said the executive, requesting anonymity.
Bharat Biotech did not respond to a query on whether the company will continue its association with Ocugen after this class-action suit.
After a failed attempt to seek an EUA in the US, Ocugen has announced that it will now seek approval from Health Canada under its accelerated approval system. This announcement has yet again fired up the Reddit threads of Ocugen stock punters who have started speculating about an imminent approval from Health Canada sometime in August.
In an emailed response to a query, a spokesperson for Health Canada said the department is currently reviewing the submission and will only decide after a thorough scientific review of the vaccine’s safety, efficacy and quality. “At this time, we cannot provide specific timelines for completion,” the spokesperson said. Live Mint