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What happened 

Shares of Ocugen (NASDAQ:OCGN) fell on Tuesday after an analyst sounded a note of caution to investors. As of 1:37 p.m. EST, the biopharmaceutical company’s stock price was down more than 15%.

So what 

Chardan analyst Keay Nakae lowered his rating on Ocugen from buy to neutral following the stock’s steep rise in recent months. The biotech’s share price skyrocketed from $0.29 on Dec. 21, 2020, to $15.81 on Feb. 8, 2021, after Ocugen disclosed its plans to potentially bring Bharat Biotech’s coronavirus vaccine candidate, Covaxin, to the U.S. 

Essentially, Nakae argued that Ocugen’s stock price had come too far, too fast. 

Ocugen’s shares gave back some of their recent gains on Tuesday. Image source: Getty Images.

Nakae noted that gaining Emergency Use Authorization from the U.S. Food and Drug Administration (FDA) is not a certainty, as clinical trials for the drug are still under way in India. Moreover, the analyst cautions that regulators may require a study to be completed in the U.S. before sales of Covaxin are authorized. 

Thus, Nakae argues that Ocugen’s shares are currently worth no more than $13. Some investors seemingly agreed, and its stock price declined to roughly $13.30 on Tuesday.

Now what

Ocugen certainly has upside potential, given that the deal it struck with Bharat Biotech gives it a 45% share of any profits that Covaxin generates in the U.S. market. However, until investors know for sure that Ocugen will be authorized to sell the drug, those profits remain uncertain. Ocugen’s now lower stock price, in turn, helps to account for this risk.