Stuck in a “soft” quarantine, I turned to what most people did during the hard quarantine – watch the film Contagion. It’s been quite a while since I last saw the terrifying depiction of a devastating pandemic. After giving it another run through, I’m struck at how ominously accurate the movie is regarding the novel coronavirus. And this brings me to iBio (NYSEAMERICAN:IBIO) and specifically, IBIO stock.
Over the last few months that I covered this biotechnology firm, I described its equity as a speculative opportunity to advantage with “dumb” money. In other words, as a pure gamble, you could do a lot worse. Should the organization live up to its claim of mass-production of a coronavirus vaccine, IBIO stock could veritably skyrocket.
But as shares have steadily ticked higher since early April and as demand for a vaccine consistently rises, I’m willing to sharpen my prognostication for iBio. Rather than it being a dumb money move, it’s a rational one.
Don’t get me wrong – IBIO stock is still ultra-risky. However, what has given me more confidence in the underlying company is that a return to normalcy may be impossible without a biological solution to this crisis.
In carefully watching Contagion, I realized what made this narrative so compelling from a filmmaking perspective is plot organization. Starting with the initial strike, the protagonists work through the fictional MEV-1 virus’ second wave, which then culminates in a vaccine and its unwieldy distribution.
Each segment in the film features its own conflict. What intrigued me about Contagion’s final act was that the mere production of a vaccine wasn’t enough. This brings me to my first of three bullish factors for iBio.
Scale Is the Distinguisher for IBIO Stock
As the New York Times spelled out a few months ago, several entities are developing a novel coronavirus vaccine. Contrary to some people’s opinions, this development process is long, arduous and expensive. It’s not as easy as injecting disinfectants.
Therefore, you’re looking at a two-front battle. First, a pharmaceutical company must forward a truly viable and effective vaccine. Second, it’s got to bring that vaccine to scale so that the entire nation can benefit. Both challenges will be difficult to overcome.
But as I pointed out in early June, scale is what distinguishes IBIO stock from the competition. I wrote:
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.”
Granted, the company must live up to its claims. Otherwise, it can go downhill quickly for IBIO stock. Nevertheless, if it can achieve this scale, the U.S. government’s ambitious target to get a vaccine within a 12- to 18-month window is much more credible.
Multiple Paths to Success
Another previously not well known pharmaceutical company in the coronavirus vaccine race is Inovio Pharmaceuticals (NASDAQ:INO). Despite question marks over its candidate’s viability, INO shares are still performing outstandingly. In part, this may be because there are multiple paths to success.
According to Dr. James Samuel, a regents’ professor and the head of the Department of Microbial Pathogenesis and Immunology at the Texas A&M University College of Medicine, initial coronavirus vaccines may be helpful for healthy individuals. However, Dr. Samuel cautioned that other vaccines may need to be developed for medically vulnerable individuals.
As Dr. Samuel put it, “The challenge is a lot more complicated than a single vaccine… The scale of the problem alone is unprecedented. This will not be a horse race with a single winner.”
Therefore, just because a company beats everyone else to an effective vaccine doesn’t spell disaster for others. First, scaling up that vaccine is a challenge, but one that would better suit iBio. Second, multiple vaccines may be necessary to fully address the Covid-19 pandemic.
So, IBIO stock may have a safety margin that some investors may not be aware of.
Economic Demand Is Surging
Whoever forwards genuine solutions, investors of that organization will find themselves loving life (assuming they don’t get Covid-19 and die). But the financial implications of a vaccine don’t just end on Wall Street. Indeed, the domestic and perhaps the international economy is dependent on it.
For the most part, Americans have graciously adopted previously foreign practices, such as wearing masks and practicing social distancing. But skyrocketing new daily coronavirus cases, along with an uptick in Covid-19-related deaths have cast a shadow on these measures’ efficacy.
If only from the power of perception, the U.S. desperately needs a vaccine. It’s much easier to convince businesses to reopen and people to spend if we have a substantive, meaningful solution.
This also means that there’s extra leeway in terms of the vaccine development process. Stated differently, a less-than-desirable result may not spell immediate red ink for pharmaceutical players. And that adds another measure of confidence toward IBIO stock.
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.