One of investors’ misconceptions of the novel coronavirus pandemic is that iBio (NYSEAmerican:IBIO) is in the “race” to create a COVID-19 vaccine. It’s not. It’s racing to perfect a technique it claims can manufacture vaccine quickly.
This means that even if it is right about what it calls FastPharming, IBIO requires a another firm with a vaccine to contract with it for manufacturing.
Back in March, when the ballyhoo over a vaccine started, this meant a Chinese company called Beijing CC-Pharming, which had done work on Middle East Respiratory Syndrome (MERS), an earlier coronavirus. Since then, IBIO has been working with Texas A&M, very near its Bryan offices, on two of its own vaccine candidates.
The A&M-IBIO Stock Connection
It’s important that investors understand the A&M connection.
IBIO had been a technology licensing company until 2016, when it took over a 130,000 square foot facility near the A&M campus in College Station. That facility was originally built in 2010 with G-Con Manufacturing, which develops cleanroom facilities, as an IBIO licensee. It’s now operating under a master joint development agreement IBIO signed with the university in 2016.
In March, IBIO replaced founder Robert Kay with Thomas Isett, a consultant and former pharma executive. Within days of my first story on it, IBIO claimed to have two vaccine candidates, both developed at A&M. A few weeks later it signed agreements with the Infectious Disease Research Institute (IDRI) at the University of Washington, based on its efforts and IDRI adjuvants, which would be used in one of the candidates.
Do They Have It?
Since April, IBIO has been touting its vaccine candidates. While companies like Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) are doing Phase 3 studies on their vaccines, with human subjects, IBIO’s candidates are still in the pre-clinical stage.
IBIO’s most recent earnings statement, covering the March quarter, showed it with about $1 million in research expenses and $2.6 million in “other selling, general and administrative expenses.”
It had received a potential $50 million lifeline from Lincoln Park Capital, shares Lincoln Park could buy over 36 months. That shored up the balance sheet. Analysts like our Louis Navillier began pounding the table for IBIO, writing that “big catalysts” were just around the corner.
The value of shares peaked at over $6 on July 20, based on speculation around the improved balance sheet and IBIO’s continued production of press releases. The shares have since fallen back sharply. They open for trade Aug. 18 at $2.64, still a market capitalization of $460.5 million for a company that has yet to produce a product.
A week after the peak in the shares, InvestorPlace contributor Bret Kenwell noted that IBIO stock lacked fundamentals, but still had technical factors on its side. In other words, the stock was running like a thoroughbred vaccine candidate, when it was well back in the pack. Pre-clinical data in mice isn’t expected until October.
The Bottom Line on iBio
If the company had a contract with one of the leading vaccine candidates to use FastPharming in vaccine production, I would be bullish on iBio stock.
It doesn’t. Big contracts for delivery of vaccine have been let in both the U.S. and Europe; iBio’s name isn’t on them. It’s still possible that one of these companies could contract with the firm, based on FastPharming, but that’s pure speculation. So is the idea that iBio’s candidates will succeed in human trials.
The fact is that the whole company is pure speculation. Texas A&M has ambitions to become a center for biotechnology. IBIO is part of its play in that area. But until it contracts to make something, or has something to make, it’s just a research center.
You don’t buy something as a player if it’s barely in the game.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.
