Is iBioPharma Inc. (NYSEAMERICAN:IBIO) the real deal? After the run IBIO stock has had, is it still a good gamble?.
That’s the question investors are trying to figure out as they assess the small biotherapeutics and contract manufacturing company and its claims to be able to mass-produce a vaccine against Covid-19.
Shares in the company have skyrocketed this year, jumping a staggering amount, from just 33 cents in February to more than $3 today.
IBIO stock got a big boost when it was added to the Russell 2000 and Russell 3000 indexes on June 29. And speculation is high that iBio will play some type of role in the mass vaccination campaign against Covid-19. But, at this point, is the speculation justified? Or will investors end up getting trampled in the stampede to bring a Covid-19 vaccine to market?
IBIO Stock: Risk vs. Reward
There’s a lot at stake in the hunt for a successful Covid-19 vaccine. Wall Street firms ranging from Morgan Stanley (NYSE:MS) to BMO Capital Markets (TSE:BMO) forecast that the market for a vaccine could be worth $10 billion to $30 billion in sales over the next decade depending on how much is charged per dose.
Estimates are that one-third of the global population will need to be inoculated against Covid-19 each year and the cost could be anywhere from $5 to $200 per dose.
Currently, there are more than 30 pharmaceutical and biotechnology companies racing to develop a vaccine. Companies in the hunt include global giants such as Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE) and Merck & Co. (NYSE:MRK), as well as upstarts such as Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX).
Amidst the worldwide race to a vaccine, which the U.S. government has dubbed “Operation Warp Speed,” iBio is considered both a smaller player and a long shot. However, the New York-based company has a few unique offerings that are helping to distinguish it and attract investor interest.
Two Paths to Success
iBio is working on two potential paths to success with a Covid-19 vaccine. The company is working around the clock to develop two potential vaccines to combat the respiratory disease that is formally known as SARS-CoV-2.
iBiois collaborating with a team of scientists at Texas A&M University on the vaccines. At the same time, iBio’s subsidiary called “iBio CDMO” has developed proprietary manufacturing platforms called FastPharming and FastGlycaneering that can provide contract manufacturing services at a 130,000 square foot facility located in Texas.
On its website, iBio says that the “speed and scalability of FastPharming make it an ideal choice for other innovator companies who want to rapidly-produce COVID-19 biologics.”
This means that iBio could play a major role in helping to manufacture a vaccine against Covid-19 that is developed by another biopharmaceutical company, which is the more likely scenario that investors are betting on.
While iBio is not a front runner in the development of a Covid-19 vaccine, the company could still reap benefits from helping to mass-produce a vaccine against the disease.
iBio has a lot going for it right now. The company recently announced that its potential Covid-19 vaccines got a boost from IBM (NYSE:IBM), which has provided the company with 18 months of use of the IBM Clinical Development (ICD) solution, free-of-charge. Utilizing the ICD could help iBio get its vaccine to the clinical trial stage faster, according to the company.
Yet, despite all the recent success and attention, it is important for investors to maintain some perspective regarding IBIO stock. While the run-up in price this year has been impressive and potentially lucrative, this is still a penny stock that trades under $5 per share.
iBio remains a small company whose odds of bringing a Covid-19 vaccine to market are extremely slim. At this point, the best that iBio can likely hope for is that it will be contracted to help mass-produce a vaccine developed by a much larger pharmaceutical company.
The Bottom Line on IBIO Stock
Given its small size, iBio currently has no real analyst coverage. There is currently only one analyst rating on the company, and it is a “buy” recommendation with a price target of $2.55 per share. The bottom line for investors is that iBio remains a highly speculative stock. People who choose to buy shares should do so knowing that they are taking a calculated risk.
If investors do have some appetite for risk and want to speculate on companies that have the potential to benefit from a Covid-19 vaccine, then buying IBIO stock could make sense.
The cheap price means that investors can purchase a lot of shares for not a lot of money, which could help offset some of the risk. Just don’t bet the farm on IBIO stock while the company’s future direction remains uncertain.
As of this writing, Joel Baglole held shares of IBIO and MRNA.