Appeals Court Upholds Ocugen Win in Covid Vaccine Investor Suit

A federal appeals court upheld a decision throwing out a shareholder lawsuit accusing Ocugen Inc. of misleading investors about the likelihood its Covid-19 vaccine would receive fast-track review from US regulators.

Investors allege Ocugen led them to believe Covaxin would be approved for emergency use, when in fact the biotech company failed to strictly follow Food and Drug Administration guidance, which extended the timeline for the vaccine’s approval.

The US Court of Appeals for the Third Circuit said Ocugen told investors plenty about its departures from FDA guidance and that information about the company’s approach to developing Covaxin was readily available.

Ocugen’s “disclosures provided information to render non-misleading Ocugen’s alleged omission of the ‘overarching’ fact that its efforts to date did not strictly adhere to FDA guidance,” the Third Circuit said Thursday, affirming a lower court’s decision to dismiss the suit.

Ocugen, which was created to develop blindness treatments, pivoted in December 2020 and partnered with India’s Bharat Biotech International Ltd. to sell Covaxin in the US. Ocugen’s share price, which was below $.30 in November 2020, topped $15 by February 2021, according to court filings.

The company’s share price slipped after the FDA recommended the company pursue a Biologics License Application, which takes longer than an authorization for emergency use.

The Third Circuit in its ruling also rejected investors’ argument that Ocugen, knowing it wasn’t strictly following FDA guidance, had no basis for its optimistic opinions about the likelihood of emergency use authorization.

“Ocugen’s awareness that rigorous scientific and ethical standards would apply does not lead to the conclusion that Ocugen should also have assumed every aspect of the FDA guidelines was mandatory, despite FDA’s express statements to the contrary,” the court said.

Johnson Fistel LLP and The Weiser Law Firm PC represent the investor. Troutman Pepper Hamilton Sanders LLP represents Ocugen.

The case is In re: Ocugen, Inc. Securities Litigation, 3d Cir., No. 23-01570, 3/21/24.