In the last year, Ocugen (NASDAQ:OCGN) stock is still among the top performers. During this period, the stock has surged by over 500%. The stock’s ascent began after Dec. 21, 2020 — starting from there, the stock is up over 1,600%.

However, it’s worth noting that OCGN stock was trading well below one dollar before it stitched a partnership with Bharat Biotech. The companies announced plans to begin manufacturing Covid-19 vaccines in the U.S. on Dec. 22 last year.

Beyond the news of this partnership, there has been little to cheer for investors. OCGN stock traded at all-time highs of $18.77 in February and reached slightly lower peaks in May and November. The stock traded at $5.12 at the start of Dec. 23.

Ocugen will continue to underperform going forward. Even after the downtrend in the last few months, OCGN stock should be avoided.

Let’s talk about the reasons to be bearish.

FDA Approval Remains Elusive

Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) have been leaders in the vaccine race in the U.S. In a country where more than 70% of the population has already been vaccinated, Ocugen has yet to secure an approval from the U.S. Food and Drug Administration.

Back in June, the biotech company’s application for emergency use authorization was rejected by the FDA. The recommendation by the FDA was to file for a biologics license application, which implies full approval.

In November, Ocugen announced that the FDA has “issued a clinical hold on the Company’s Investigational New Drug application (IND) to evaluate the COVID-19 vaccine candidate.” The FDA will be identifying the specific deficiencies that form a basis for the clinical hold. Once Ocugen addresses these deficiencies, there will be some progress.

The key point is that it’s been over a year since Ocugen announced the partnership with Bharat Biotech. The company has still been unsuccessful from an approval perspective.

In July, Ocugen had also initiated a rolling submission to Health Canada for the vaccine. There is no positive news on that front either.

Let’s imagine a scenario where Ocugen receives an approval for vaccine use in Q1 2022. This is very unlikely. However, even in an optimistic case scenario, Ocugen needs to compete in a market where vaccination percentage is high. There is unlikely to be a case for strong revenue and cash flow growth.

Can Omicron Provide a Lifeline for OCGN Stock?

The omicron variant has been a cause of concern for governments globally. Ocugen and partner Bharat Biotech are currently studying the effectiveness of the vaccine against the variant.

If the vaccine proves to be effective, can it be a game-changer for Ocugen? Most likely, no.

First and foremost, Moderna has announced that its Covid-19 booster increases neutralizing antibodies 37-fold against Omicron variant.

Furthermore, Pfizer has announced that a third dose increases the “neutralizing antibody by 25-fold compared to two doses against the Omicron variant.”

Clearly, the leading vaccine makers have an edge. Even if Ocugen announces that its vaccine is effective against the omicron variant, the stock is unlikely to trend higher.

People who have already taken two shots of Moderna or Pfizer are unlikely to pursue a booster shot with Ocugen. Additionally, Ocugen is still struggling for approval.

It’s also worth noting that Ocugen needs to share revenue with Bharat Biotech. The visibility for healthy cash flows is therefore very unlikely.

OCGN Stock Will Trend Lower

OCGN stock is likely to continue trending lower in the coming months. Without an approval, the company is rapidly losing out on any revenue and cash flow potential.

The company is building a pipeline of drugs for various indications. However, the pipeline for various indications is still at a pre-clinical stage.

The stock trend will therefore be dictated by the outcome of Covid-19 vaccine approval and revenue potential. Things seem bleak on that front.

It also seems unlikely that Ocugen has a capability to expand the vaccine partnership with Bharat Biotech to other countries.

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

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.