iBio (NYSEMKT:IBIO) stock spent much of the last year trading as a penny stock. That changed at the end of February 2020 when IBIO stock surged to as high as $3.40.
Though the stock lasted only briefly there, investors rushed into the stock for one reason. iBio partnered with Beijing CC-Pharming to develop a plant-based vaccine. As simple as the news sounds, the partnership still allowed the company to file a $100 million shelf registration.
When other big firms like AbbVie (NYSE:ABBV), Regeneron (NASDAQ:REGN) and Gilead Sciences (NASDAQ:GILD) are developing therapies for the coronavirus from China, IBIO stock looks more like a gamble.
After IBIO stock surged, the company announced that it will not seek to reverse split its shares. This is good news for investors. Instead of holding fewer shares at a higher price, the outstanding share count will stay the same. The stock still trades at a decent stock price and has a healthy level of liquidity.
On March 12, 2020, iBio announced a new CEO. Thomas Isett has a strong knowledge of proprietary product development. He has experience working in firms dedicated to biologics contract development and manufacturing organizations.
Covid-19 Vaccine
On Feb. 3, 2020, iBio announced a collaboration with Beijing CC-Pharming to initiate the joint development of a coronavirus vaccine. Beijing CC-Pharming’s chief scientific officer has 25 years of vaccine research and development experience. iBio’s Sylvain Marcel has experience in the rapid design of manufacturing processes.
iBio and Beijing CC-Pharming are in the early innings of bringing a vaccine to market. Yet investors that bought IBIO stock in the $3 range are betting otherwise. Its plant-based expression systems power iBio’s FastPharming manufacturing facility.
The technology previously produced antibody candidates for Dengue fever and the Ebola virus. The firm has also completed studies for a few vaccine candidates. These include the avian influenza, seasonal influenza and human papillomavirus.
iBio uses modified “relatives of the tobacco plant to grow viral proteins for vaccines.” Beijing CC-Pharming will then work on developing the vaccine.
Balance Sheet
iBio ended 2019 with $3.6 million in cash. It generated $314,000 in revenue while operating expenses totaled $3.2 million. The net loss for the three-month period was $25.4 million.
The regular stock issuance gives the company the cash it needs to continue with its research and development activities. With the market keenly interested in a coronavirus vaccine and antiviral suppliers, IBIO may sell the stock when it needs to.
Speculators are not concerned about the losses. So if it gets closer to developing a successful vaccine, the stock will reward shareholders.
Risks With IBIO Stock
Stock Rover lists many warnings on iBio stock. The company reported negative cash flow for much of the last decade. Bearish bets against the company suggest more downside ahead. Over 16% of the float is being sold short.
On the charts, the moving average convergence/divergence turned negative. What does that mean? The bearish signal implies the stock will fall after sharp selling in the last week.
iBio is a risky investment and is, in effect, only a good trade for speculators. If the stock shoots higher again, consider locking in your profits.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns. As of this writing, Chris did not hold a position in any of the aforementioned securities.
