Focus on iBio’s Tech, Not Its Coronavirus Story

At a time of pandemic speculators will grab for any hope.

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Companies like Moderna (NASDAQ:MRNA) and Regeneron Pharmaceuticals (NASDAQ:REGN), which are working on vaccines for the coronavirus from China, have skyrocketed well beyond their fair value.

Then there’s the case of iBio (NYSEMKT:IBIO).

Shares in iBio have rocketed in March. They were selling at 30 cents as recently as Feb. 26. Even with substantial selling on March 13 they opened March 16 at $1.40.

The reason? Supposedly it is working with a Chinese company on a plant-based vaccine. The stock, which has been trading below $1 for months, has withdrawn its application for a reverse stock split.

But is there any hope here?

iBio Is Not Pharma

As the filing that withdrew the reverse split makes clear, iBio is not a pharmaceutical company. It’s a production company. Its manufacturing system, called FastPharming, uses vertical farming and hydroponics to quickly produce proteins. These can include vaccines.

A company called Beijing CC-Pharming, which has done work on Middle East Respiratory Syndrome (MERS), a disease also caused by a coronavirus, signed a deal whereby iBio might make something if Beijing CC-Pharming can deliver it. This came with a $100 million registration statement on new iBio shares.

If this Chinese company had a vaccine, in other words, iBio could get it into production within weeks. But there’s no indication that Beijing CC-Pharming has a working vaccine, or that iBio would be anything more than a manufacturer.

I doubt you’ll see Warren Buffett buying iBio stock, suggests InvestorPlace’s Will Ashworth. Obviously. Even with its recent run-up the company has a market capitalization of just $120 million. If it had real potential and needed cash to fulfill it, I’m sure someone like Buffett might be happy to offer a loan, maybe even convertible into stock. But that’s not happening.

Taking Advantage

iBio has also been taking full advantage of its maybes.

The board has turned out founder Robert Kay as CEO in favor of Thomas Isett. It calls him “an accomplished executive with decades of successful management and corporate development experience in the life sciences.”

Isett can do the corporate name-drop with the best of them. He has worked at various times for General Electric (NYSE:GE), Danaher (NYSE:DHR) and a company that was sold to Thermo-Fisher Scientific (NYSE:TMO). But he has mainly been a consultant since the start of 2015.

The company’s headquarters are listed as New York but Isett’s LinkedIn profile shows him to be in Sparks Glencoe, Maryland, north of Baltimore.

So, if Beijing CC-Pharming can produce a vaccine, Isett has the experience and technology to get it into production quickly. That’s it, that’s the company. Small wonder InvestorPlace’s Tezcan Gecgil writes this is “not for timid investors.” Luke Lango agrees, calling it “unlikely” that iBio will be a coronavirus winner.

The Bottom Line on IBIO Stock

Rather than bet that iBio is going to end the coronavirus plague, I can see speculating on it based on the idea that it can deliver at-scale production of specific proteins.

Trouble is, I don’t know what that’s worth, and chances are neither do you. If producing proteins were a problem, I would think a large pharmacy company would have snapped iBio up by now. Isett may have been hired to shop iBio’s FastPharming system, in the form of intellectual property, to drug makers, or manufacturers of reagents.

Buying IBIO stock today is betting that Isett has some names in his Rolodex that might be interested in what the company is selling. That’s a bet you can make, but it’s a blind bet and a long shot.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story. 

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