The chase continues for the two important contingents propping up Ocugen (NASDAQ:OCGN) stock at present.

On the one hand, there’s those who hope Ocugen can finally break through and receive approval to market its Covaxin vaccine. But that hope has followed the company for a long time and provided plenty of disappointment. Nevertheless, if that contingent is ultimately correct, OCGN stock will provide handsome returns. 

On the other hand, there’s a chance to see returns for traders hoping to capitalize on a short squeeze. With short interest remaining at a very high 28.16%, the possibility continues to exist. 

Anything Could Happen

A short squeeze could materialize. I generally suggest investors don’t chase that possibility because the risk is high. Too often we read only about the retail investor who buys options that benefit from a short squeeze. Though they often produce headline worthy returns, they remain the minority. 

Much more often what happens is that retail investors lose money on expensive options which expire. In the worst case the downside losses are extreme. 

That is a simple warning worth repeating in the case of Ocugen. But even while I wouldn’t play that game I realize that the possibility remains that a short squeeze does materialize. That’s one outcome if OCGN prices suffer a quick dive. 

Likewise, prices could appreciate on positive news regarding Covaxin authorization. In fact both a short squeeze and authorization could happen. Or neither might occur. Or one or the other could occur. But my point is that it’s basically a guessing game at this point. 

What investors should know, though, is that Ocugen is unattractive fundamentally. 

Fundamentals Aren’t Inviting for OCGN Stock

Remember, Ocugen’s attractiveness as a stock derives from its ability to market Bharat Biotech’s Covaxin vaccine. Until it receives the authority to sell Covaxin it won’t record any revenues worth noting. Ocugen recorded no revenue in Q3, nor did it record any revenue in 2021. 

So, fundamental investors are watching a sinking ship. The only way to patch that ship and bail out all the water is Covaxin authorization. 

Ocugen is undertaking a balancing act between burning cash and seeking approval for Covaxin. Per its most recent earnings report it has roughly $107 million of cash and cash equivalents. That’s enough liquidity to keep the ship above water for several quarters, but it might not matter. 

Let’s do some quick math here in order to estimate where the company is headed. Ocugen recorded a net loss of $43.784 million through the first three quarters of 2021. If we prorate that out to encompass the remainder of 2021, then the company should lose approximately $58.4 million this year. 

That suggests that the $107 million in liquidity would keep it in business for nearly two more years. 

But I don’t think that matters. 

Slow Death for OCGN Stock

If Ocugen simply continues to unsuccessfully spend money in an attempt to get Covaxin authorized it ultimately dies. That’s entirely obvious. But that’s what we should expect if past is prologue. 

That’s where I think Ocugen is headed at this point. It’ll continue to burn through its cash reserves and pump out press releases about new applications or other hope. 

I don’t think investors are going to hang around to see if the firm ultimately burns through that $107 million of liquidity. Rather, it’s going to be much more gradual. But slowly investors will pull their capital out of Ocugen on a gradual basis. That will serve to pull prices down in that slow kind of death as hope runs out. 

Maybe I’ll be proven wrong and Covaxin will be approved for FDA EUA as a vaccine for children aged 2-18. But its tough to imagine that there won’t be a lot of skepticism around its use even if it is approved. Covaxin isn’t approved for adults. If there’s skepticism in the American public for using already approved vaccines in children, it should be doubly true for Covaxin.

On the date of publication, Alex Sirois 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.