What happened

Shares of Ocugen (OCGN 1.53%) were falling 5.1% as of 12:03 p.m. ET on Wednesday. The company hasn't made any announcements this week. Its stock appears to simply be continuing a slide that began in early November.

There are two primary underlying reasons behind Ocugen's steep sell-off over the last two months, with shares plunging more than 70%. Most importantly, the company still hasn't secured an authorization or approval in the U.S. or Canada for COVID-19 vaccine Covaxin. In addition, concerns about the omicron coronavirus variant are lower. That could hurt the commercial prospects for Covaxin if it does secure authorization or approval.

COVID-19 vaccine vial and syringe on top of a calendar.

Image source: Getty Images.

So what

On July 15, 2021, Ocugen announced that it had initiated a rolling submission for the authorization of Covaxin in Canada. The company submitted an Investigational New Drug (IND) application on Oct. 27, 2021, to begin a phase 3 study of the vaccine in the U.S. It filed for U.S. Emergency Use Authorization (EUA) in children ages 2 to 18 on Nov. 5, 2021. 

So far, however, the only result of these efforts has been bad news. In November, the U.S. Food and Drug Administration (FDA) placed the planned phase 3 study of Covaxin on clinical hold.

The problem is that Ocugen's valuation depends largely on the likelihood that it can win EUA or approval for Covaxin. As time goes by with no positive movement on the regulatory fronts, investors' hopes diminish -- and so does the price of the biotech stock

Now what

Probably the best chances for Ocugen's shares to rebound are for the FDA's clinical hold to be lifted so that the phase 3 study of Covaxin can proceed. However, it's uncertain how long it will be before the agency's issues with Ocugen's IND application will be resolved.