The coronavirus from China has caused wild swings in some biotechnology stocks. This is definitely true for Ibio (NYSEAMERICAN:IBIO) stock. This company is among those seeking to develop a coronavirus vaccine, and the share price has been volatile. Ibio also has a candidate vaccine for an agricultural disease known as classical swine fever (my favorite livestock-pathogen name since mad cow disease).
Investors aren’t focusing much on pig diseases nowadays, so the focus is on whether Ibio can be first to market with a coronavirus vaccine. They have an unique approach to developing a vaccine. However, this by itself probably isn’t enough to warrant owning shares of Ibio stock if you’re a cautious investor.
Misplaced Hope
Some speculative investors have used so-called “coronavirus stocks” as a lottery ticket. They’re hoping to pick the one that gets a vaccine to the market first. Because the speculators all jumped into these types of companies at around the same time, some biotech stocks soared in February but then plummeted in March.
Ibio stock certainly fits this description. As the hype built around coronavirus stocks, gamblers placed their financial hopes and dreams into this company. The share price leaped from 33 cents to $2.45 within a few days.
Can you guess what happened next? If you guessed that the hype wore off and Ibio stock came crashing back down, you’re 100% correct. By late March, the Ibio share price tumbled to $1.15, less than half of its not-too-distant peak.
Sadly, we’ve seen this type of thing happen before with Ibio. InvestorPlace contributor Vince Martin did an excellent job of summarizing iBio’s pop and drop during another pandemic scare:
“Back in 2014, iBio rose over 600% in two months. The catalyst then was similar to the current one. At that time, it was the Ebola virus that was causing fear among consumers and greed among speculators. iBio offered to help the federal government develop a vaccine, causing its stock to soar. The end of the rally came quickly, however. By January, the gains were pretty much gone, and IBIO stock was trading below 50 cents.”
Is It Different This Time?
Mr. Martin also observes that Ibio hasn’t been the most cash-flow-positive biotech company. In fiscal-year 2019, Ibio took in slightly more than $2 million in revenues while reporting a $17.8 million net loss. Moreover, the company managed to burn through $14 million in cash during that time.
Still, Ibio does seem to have a unique approach to therapy and vaccine development. The company explains it thus:
“iBio uses the FastPharming System to quickly produce biotherapeutic and vaccine candidates for unmet medical needs. In the area of human disease, IBIO-100 targets fibrosis, a leading world-wide cause of organ failure. IBIO-200 is a virus-like particle (VLP) vaccine designed as a rapid medical countermeasure solution to the COVID-19 outbreak.”
Tom Isett, co-chairman and chief executive officer at iBio, is eager to point out that the company is advancing its coronavirus-vaccine program as expeditiously as possible. Citing a recently commenced collaborative venture with the Texas A&M University System, Isett asserted, “This next stage of work on IBIO-200 is critically important as we seek to quickly enter the clinic with one of our VLP candidates.”
With “FastPharming,” Ibio does have an interesting approach to developing vaccines and therapies. It’s also encouraging that Ibio is collaborating with a highly respected university. Still, none of this guarantees that Ibio will be successful in developing an effective vaccine for the coronavirus.
The Takeaway on IBIO Stock
The fact that IBIO stock once gained 600% in a couple of months makes it a prime target for speculators. If you’re willing to risk losing most or all of your investment, this one might be right up your alley. For cautious investors, though, this one’s too risky to consider until proven otherwise.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, he did not hold a position in any of the aforementioned securities.
