Covaxin stares at an uncertain US launch

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 February 2 and June 10.

“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 February 2, February 5 and March 19. 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”.

“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.” Inchausti said.