Buying iBio As a Vaccine Winner Is a Waste of Money

I have been consistently negative on iBio (NASDAQ:IBIO) as a potential vaccine play for most investors. You might be better off avoiding IBIO stock to find a successful novel coronavirus vaccine play. One of the reasons is that the company is far behind its competitors in their vaccine trials.

A scientist in medical gear peers through a microscope.
Source: Shutterstock

Despite the progress report that the company provided on Aug. 10, iBio has not advanced to either Phase 2 or 3 trials with its Covid-19 vaccines.

Interestingly the company did not actually update investors on any advancement of their ongoing trials. Rather, it concentrated on some pre-clinical studies underway to produce a new type of vaccine adjuvants.

What Analysts Say About iBio

My fellow Investorplace writer, Larry Ramer, provided a good in-depth analysis of  its clinical trial progress, in his article, “Why Investors Shouldn’t Bet on IBIO Stock Now.” I have written in the past that this stock is at best a speculative play.

The recently compared IBIO stock to Vaxart (NASDAQ:VXRT), a similar small-cap biotech stock. Vaxart also has its own Covid-19 vaccine candidate.

Vaxart originally had five candidates but narrowed this down to several that have generated immune responses in animals after one dose. The key difference is that Vaxart’s vaccine is taken orally. As a result, it was selected by the U.S. government’s Warp Speed program in a non-human primate challenge study.

Moreover, Johnson & Johnson (NYSE:JNJ) has collaborated with the company on its oral vaccine for the flu. As a result of these factors, The decided to pick Vaxart over Ibio as a promising small-cap biotech play.

Analysts polled by Seeking Alpha see iBio making just $600,000 for its year ending June 30. For next year they don’t see a much better result, with just $800,000 in sales. The company will likely report its earnings on Aug. 26 based on previous announcements.

More of a Contract Manufacturer

iBio claims it can produce 500 million doses of its vaccine using its FastPharming system. The Wall Street Journal discussed this new area of biotech manufacturing called “pharming.”

The system uses plants to grow protein particles from viruses. This type of vaccine production can be quickly expanded by simply growing more plants.

The U.S. Defense Advanced Research Agency put funds into iBio’s original technology program. Its 130,000-square-foot plant is in Bryan, Texas, on land owned by Texas A&M.

Some analysts, such as Owl Talon Trading on Youtube, believe that iBio is more of a contract manufacturer for pharmaceutical firms. This is its real strength rather than a major player in the race for a Covid-19 vaccine.

What to Do With IBIO Stock

In my last article on iBio, I implied that iBio could theoretically be worth $200 million. But there would have to be a greater than 40% probability of this happening.

I now don’t think even this is going to happen. Given that the market cap is now $453 million at $2.60, there is nothing left in the stock price.

If I owned IBIO stock I would be selling it now. There is no rational reason, from a probability standpoint, of buying this stock. The odds of making money in it seem terribly low.

Moreover, there are no major sell-side companies that cover iBio. That is a sign that the stock is probably highly speculative in nature. In other words, if you like to gamble, this might be the only reason to take a position.

For example, let’s say you pick a number of vaccine story stocks, including Vaxart, as I mentioned above. This might make some small sense. The idea here would be to diversify your positions across a number of vaccine plays. Other than that, don’t put any money in this speculative stock, especially now that it has risen so much.

As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide, which you can review here.

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