Biotechnology firms have always held great importance in modern societies for their potentially groundbreaking innovations. Yet the novel coronavirus has added greater urgency to this sector as the pandemic shuttered global economies. As a result, even smaller, speculative outfits like iBio (NYSEAMERICAN:IBIO) have skyrocketed in prominence. Essentially, any one biotech firm may hold the key to a viable vaccine; hence, the dramatic rise in IBIO stock.
Indeed, very few publicly traded assets can come close to what this previously unknown entity has accomplished in the markets. After the close of the first session of 2020, IBIO stock was priced at 30 cents. On June 2, shares finished the day at $1.64, a whopping 447% increase. With U.S. coronavirus fatalities breaching the 100,000 level, it’s critical that we provide an effective solution.
Still, there is something to be said about the wildness of risky biotechs. Despite the massive swing up, iBio’s market capitalization is currently less than $200 million. Furthermore, shares were once trading hands above $3 on an intraday basis earlier this year. Not too many folks are willing to stomach such extreme swings in valuation.
Also consider that the rise of vaccine competitors is becoming a distraction for IBIO stock. A few weeks ago, Moderna (NASDAQ:MRNA) made waves when it announced encouraging results from its novel coroanvirus early stage clinical trial. Amplifying enthusiasm for MRNA was White House health advisor Dr. Anthony Fauci, who labeled the trial “quite promising.”
Later, Novavax (NASDAQ:NVAX) threw its hat in the ring, starting the first human studies for its experimental coronavirus vaccine. And let’s not forget another lesser-known competitor, Inovio Pharmaceuticals (NASDAQ:INO), which jumped early in the game with its gene-sequencing technology.
Scale Is Key for IBIO Stock
Although the vaccine space has become incredibly crowded, that alone should dissuade you from iBio stock. For one thing, no one has yet come up with a proven, effective solution. Until we get substantive results from a late-stage study, the game is still up for grabs.
For as much attention as Moderna has garnered, for example, many health experts criticized the company’s small sample size — data from only eight volunteers. As Dr. Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia put it: “You are about to give a vaccine to tens of millions of people. I really wouldn’t issue a press release about a number of people who you could invite to a small outdoor barbecue.”
Beyond that, nearly every biotech firm in this race would face a core dilemma even if they succeed in discovering the magic formula: scale. In order for a vaccine to be effective, you’ve got to provide it for the majority of Americans. Given the size of our nation, that’s a gargantuan undertaking. But this is exactly where iBio shines.
The driving force behind the company is a proprietary technology called the FastPharming Manufacturing System. Using a relative to the tobacco plant as a “bioreactor,” iBio can theoretically take a vaccine and scale it up to necessary commercial volume. According to iBio co-chairman and CEO Tom Isett, the firm can “make about 500 million doses of high-quality product annually.”
If that’s the case, the ambitious target of getting a coronavirus vaccine available to the public within 12 to 18 months seems more realistic. And that’s why IBIO stock has weathered the storm relatively well. Simply, the underlying company can potentially scale production in a way that’s impossible for the competition.
Supporting Factors for iBio
Ironically, a vaccine’s scaling requirements is what discouraged some investors from considering IBIO stock and similar investments at the onset of the Covid-19 outbreak. Even in the most optimistic timeframe, it would take a year before a vaccine was available.
By then, herd immunity could take effect, rendering such a solution meaningless.
However, that concern is fading. For one, we still have a worrying number of new daily infections. Should we suffer a second wave, that could cripple our economy if we’re not prepared.
More importantly, the outburst of anger over social inequities and injustices have brought much concern to health officials. Just turn on the news and you can immediately tell that social distancing doesn’t rank highly among the protesters’ concerns.
Don’t get me wrong — IBIO stock is still ridiculously speculative. As I mentioned near the top, shares were trading below a buck early this year. However, given the underlying company’s relevance in terms of scale, iBio certainly isn’t the dumbest of “dumb money” bets you can take.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.
