Year to date iBio Pharma (NYSEAMERICAN:IBIO) stock is up over 500%. In early February, the company announced a partnership with China-based CC-Pharming to develop a vaccine for the coronavirus from China. As a result, the rise in IBIO stock has recently appeared unstoppable.
Hope springs eternal, especially when the issue is the immediate health of millions of people worldwide. Biotech stocks are in general among the most volatile group of equities. In the past, many early shareholders in small to mid-sized biotechs have become wealthy as those companies have managed to capitalize on their specialties and commercialize new treatments for the masses.
Therefore, today, I’d like to discuss the prospects for IBIO stock so that our readers may form a better opinion before they may invest for the long-term.
According to iBio Pharma management, if its recently announced research collaboration with CC-Pharming is successful, it “will deliver product candidates which can then be quickly produced at iBio’s FastPharming Manufacturing Facility.” CC-Pharming also regards it as “an important collaboration to develop plant-derived vaccine strategies for the emerging coronavirus outbreak … in China, and around the world.”
IBio provides product development and contract manufacturing services to clients. And it is especially known for its plant-based pharmaceutical platforms and work on plant-based vaccines.
Therefore, if a plant-based vaccine were to be developed in the coming months, iBio would be likely at the center of its research, development and manufacturing.
Potential Vaccine Could Push IBIO Stock Higher
As of March 12, the number of globally reported COVID-19 infections is fast approaching 130,000. And the outbreak has already killed over 4,500 people. In addition to the human cost of the illness, many analysts are discussing the potential adverse economic effects of the spread of the virus. And I do not need to remind you what a roller coaster week it has already been in broader equity markets.
As we get more coronavirus infection numbers globally, the hype surrounding iBio Pharma’s coronavirus vaccine collaboration could propel IBIO stock much higher.
Any biopharma company that plays a substantial role in finding a cure, such as a vaccine, for the novel virus, will be a winner on many fronts. Our regular readers will know that in addition to iBio Pharma and CC-Pharming, there are other companies that are currently working on vaccine development.
But many experts warn that a full vaccine may take well over a year to be ready and deployable. Even if a biotech company were successful in developing the vaccine that got the approval of various authorities globally, their management would still need to commercialize it successfully.
Thus, it is hard to analyze the the potential impact of such a vaccine on IBIO stock. This is especially true since it is not clear how the collaboration with CC-Pharming would develop, how much sales there would be and how the sales would translate in profits.
The group may also face competition from other drug companies that may be ready to launch their own drugs against the coronavirus. At this point, no investor can fully tell how any of these vaccines or drugs may perform commercially.
Many investors are well aware how biotech stocks can indeed create sizable wealth for investors. But they can also be highly speculative investments. Therefore, depending on your own risk/return profile, you may want to study IBIO stock further to see if you should buy into the shares.
The company currently has a market cap around $110 million. And it could easily increase in valuation if its collaboration with CC-Pharming were to lead to a substantial development.
Meanwhile, it could also find itself as a takeover candidate.
The stock price of Ibio has skyrocketed in a matter of weeks. In early January, it was around 30 cents. Currently, it is hovering around $1.50.
Thus there is likely to be some profit-taking around the corner. If you believe in the prospects of the company, you may regard any potential dip in price as an opportunity to go long the company.
If you are interested in other biotech stocks in addition to iBio Pharma, you may consider buying an exchange-traded fund (ETF). Examples would include the ARK Genomic Revolution ETF (BATS:ARKG), Invesco Dynamic Biotechnology & Genome ETF (NYSEARCA:PBE), iShares NASDAQ Biotechnology ETF (NASDAQ:IBB) or SPDR S&P Biotech ETF (NYSEARCA:XBI).
Ultimately, it’s up to the investor’s discretion here. Given the volatility and hype surrounding the stock, it’s not for the faint-hearted.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, she did not hold a position in any of the aforementioned securities.