Shares of Ocugen (OCGN 0.52%) have been losing steam of late. The once-popular meme stock has been falling in recent weeks, and its current level of just over $8 a share has it down more than 55% from the 52-week high of $18.77 it hit earlier in the year. Hype around its COVID-19 vaccine, Covaxin, is what initially got investors excited about the stock toward the end of last year.

But now, the company has confirmed it won't seek an emergency use authorization (EUA) for the vaccine candidate. Does that mean it's too late to invest in Ocugen? Or could this be the ultimate contrarian buy?

Person receiving a vaccine.

Image source: Getty Images.

Ocugen isn't giving up on its vaccine

Ocugen told investors this month that the U.S. Food and Drug Administration (FDA) suggested it not pursue an EUA for Covaxin, suggesting instead that it go the route of a biologics license application (BLA). And that's what Ocugen is going to do. The big drawback for investors here is that a BLA could take up to 10 months to obtain. By then, it's anyone's guess how strong the demand for the vaccine may be. It was already questionable how much of a market there could be for Ocugen's vaccine, given that the FDA has already approved vaccines from Johnson & Johnson, Moderna, and Pfizer. There may even be a fourth available soon if a vaccine from Novavax gets the go-ahead.

However, Ocugen isn't letting that derail its plans to get the drug, which it's co-developing with India-based Bharat Biotech, to market. On June 15, it announced that it has found a manufacturing partner in Jubilant HollisterStier, which will help it produce the vaccine for the Canadian and U.S. markets -- should it obtain the necessary approvals. Under its current agreement with Bharat Biotech, Ocugen will share in 45% of the profits earned from Covaxin sales in Canada and the U.S.

Although vaccination rates continue climbing, there are challenges ahead in the battle to stop COVID-19. Many people don't want to be vaccinated for a variety of reasons, with possible side effects and a lack of trust cited as a few of the concerns. But if some of those people change their minds, Ocugen could potentially secure some vaccine-related revenue. And there will be opportunities down the road to administer booster shots. Pfizer CEO Albert Bourla believes that vaccinated people will still need an additional dose within 12 months. While in the short term Ocugen looks to be in trouble, there is the possibility for the company to generate sales from its vaccine down the road.

Plenty of risks for investors to consider

There's potential for Ocugen to grab market share and get investors excited about the stock again, but there's also risk -- lots of it. Ocugen generated no revenue in its most recent quarter, for the period ending March 31. And there's nothing on the horizon that's going to lead to an influx of cash. The company's pipeline is relatively bare, with nothing in late-stage trials for investors to count on in the near term. That means the threat of dilution could be significant, leading to a further decline in the share price.

And analysts are already bracing for some headwinds -- there have been multiple downgrades of Ocugen's stock within the past month. The most bullish forecast still suggests that Ocugen can rise to $10, while the most bearish sees the stock falling to $4.50.

Can you still earn a good return with Ocugen?

The one thing that the markets have taught investors this year is not to count out the impact retail investors can have on any given stock. Under normal circumstances, I would say there's no hope for Ocugen to get back to the levels it reached earlier this year. But given the volatility in the markets -- especially among meme stocks like Ocugen that can generate lots of excitement without results to back up the bullishness -- I wouldn't rule out a possibility that it could get back to over $10. However, I wouldn't count on it.

Given the challenges that Ocugen faces right now and the difficulty its vaccine may face in securing any meaningful market share in North America, the risks outweigh the rewards for this healthcare stock. And there's a strong possibility that the ship has sailed on Ocugen -- data from Google Trends shows that investor interest in the stock is fading. If you are looking for a safer, more likely return on your investment, you should consider buying other stocks instead.