Over the past week, we’ve seen a dramatic turn in market sentiment. The novel coronavirus is surging in many states, leading local and state governments to reinstate lockdowns. As travel stocks plunge, traders are rotating back into the Covid-19 names. That has given iBio (NYSEMKT:IBIO) stock new life.
IBIO stock originally rocketed up from 35 cents to as much as $3 as the pandemic surged in February. However, iBio soon fell back to around $1 per share as the initial excitement wore off. Now, however, shares are on the move, jumping to near the $2 mark again.
We Still Need A Vaccine
Until recently, it may have seemed like the economic reopening was going all right. Businesses resumed activities and we saw hopeful signs including rising retail sales, restaurant activity, increased car traffic and more. While the virus was still out there, most people stopped worrying about it nearly so much.
That’s all changed, however. Pro athletes are turning up sick. Cruise lines are canceling voyages again. Apple (NASDAQ:AAPL) stores that had reopened are having to shut back down. And overall numbers are trending rapidly in the wrong direction; Texas just hit new case highs and Houston’s hospitals are reaching capacity.
With all that in mind, it’s clear that the hunt for a vaccine is still of crucial importance. Additionally, given the urgency, there will be a lot of funding available to help along promising vaccine candidates. iBio, as a player in the search for a Covid-19 vaccine, will continue to garner investor interest.
IBM Recognizes iBio’s Efforts
Adding to the recent trading excitement, iBio recently announced a partnership with IBM (NYSE:IBM). IBM offered to give out 18 months of free access to its Watson Health technology, in particular the IBM Clinical Development platform. Hundreds of companies applied for this technological grant, and iBio was among those selected which will receive access to this platform. This serves as validation for iBio’s efforts. iBio’s CEO Tom Isett said:
“This technology helps to support the rapid and efficient undertaking of clinical trials of iBio’s COVID-19 vaccine candidates. It also complements our FastPharming System’s core speed, quality and scale-up advantages in the development of vaccines and therapeutics. Through strategic collaborations like this one, we believe iBio is now poised with the tools, technology and capital necessary to compete in the fight against COVID-19.”
This is a solid achievement for iBio, no doubt. And IBM’s Watson machine-learning capabilities appear to be quite robust; this could help iBio with a key scientific discovery. That said, it’s important to note that there’s nothing here that would immediately lead to revenues or profits for the company.
IBIO Stock Verdict
Last month, I warned readers about iBio’s spotty long-term track record. The company’s shares have suffered as the company has struggled to reach profitability or generate meaningful recurring revenues over the past decade. And that’s all still true – so investors should be careful.
In fact, I agree with our Chris Tyler, who recently wrote that: “iBio continues to sound great on paper, but nowhere else.” The IBM partnership is the sort of thing that seems compelling but doesn’t necessarily amount to much in the long run, as far as financials go.
iBio’s financial situation remains worrisome. Even after raising some money, iBio had just $10 million of cash on hand as of last quarter. That’s not a lot given that the company tends to lose $4 million or so per quarter. Furthermore, it may have to ramp up research and development if it wants to deliver on the promise of a virus vaccine.
All that said, IBIO stock is back on traders’ radars. And rightfully so – the company is putting out the right sort of news releases to stir up interest. And the IBM partnership in particular could potentially lead to something. With a second wave of the coronavirus seemingly upon us, the Covid-19 stocks are having another moment in the sun.
Just don’t overstay your welcome; iBio and other Covid-19 stocks sold off sharply once the first virus wave passed in March.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. At the time of this writing, he owned IBM stock.
