Outlier Covid-19 vaccine play Ocugen (NASDAQ:OCGN) stock has been on a negative run in the past three months, losing about 17% of its value.

The company failed to gain an emergency use authorization (EUA) from the FDA for Covaxin, the Indian variant of the coronavirus vaccine. Moreover, its partner firm Bharat Biotech is in the midst of an international bribery scandal. Therefore, with limited upside, OCGN stock is an incredibly risky Covid-19 vaccine play.

Ocugen was a struggling biotech before it struck a deal with India’s Bharat Biotech to commercialize Covaxin in the United States. However, after the FDA rejection and recent controversies with its partner firm, the outlook is remarkably bleak for OCGN stock.

Despite its troubling situation, it still boasts a respectable market capitalization of over $1.3 billion.

CovaxinGate

Bharat Biotech has been in a myriad of controversies since it began work on its Covid-19 vaccine. Covaxin was green-lit for use in India when Phase 3 trials were still ongoing. However, a more shocking scandal has emerged recently, which is now being dubbed as CovaxinGate.

Brazil had rejected the importation of Covaxin over concerns related to manufacturing, documentation and integrity. However recently, the country’s government abruptly changed its mind and signed a massive contract with Bharat Biotech. Health officials panned the move as the vaccine hadn’t been approved by the World Health Organization and was more expensive than its counterparts.

Moreover, the payment for the contract was being routed to a Singapore-based firm called Madison Biotech. One of the directors of the firm is Bharat Biotech’s president and founder, Dr. Krishna Ella.

These developments raise serious questions about bribery and foul play in the contract. An investigation has begun, led by some leading Brazilian senators, who feel that tax evasion, money laundering and bribery are in the deal.

Furthermore, Anvisa, Brazil’s healthcare regulator, sought a complete analysis of Phase 3 trials in Brazil before Covaxin could be approved. Bharat Biotech had claimed previously that it had received a EUA from the Brazilian authorities. According to the Anvisa, “mandatory and essential documents for the evaluation of the efficacy and safety” of the vaccine were missing.

Outlook

As it stands, Ocugen will have a difficult time convincing its investors of a possible comeback.

On June 10, the FDA told the company to abandon its EUA efforts and pursue a biologics license application (BLA). The BLA will require a new clinical trial in the U.S., and the approval process is more rigorous than a EUA. The process entails an array of inspections and manufacturing runs which could take more than 10 to 12 months to review. However, at this stage, the FDA’s response makes sense.

Investors who feel that Covaxin could launch in the U.S. are sadly mistaken in the next couple of years. The BLA requirements are likely to extend the prospective timeline for the company to at least 2023. In the meantime, Ocugen is looking to its business in Canada and establish a presence there. However, with more than 65% of Canadians already vaccinated, it would be puzzling for the country to embrace such a controversial vaccine.

The Bottom Line on OCGN Stock

OCGN stock has been one of the more polarizing stocks of the year. However, after its EUA debacle, things became incredibly complicated. Moreover, the recent scandal with its partner firm is only going to exasperate its troubles.

Therefore, there seems to be no road back for OCGN stock at this stage.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.