The market has appeared to internalize the idea that a vaccine for the novel coronavirus is probably going to be ready within a few months. Not coincidentally, the shares of many speculative “coronavirus stocks” tumbled. In the latter group was vaccine maker iBio (NYSE:IBIO), as IBIO stock fell 34% in the last week.
The catalyst for the downturn in speculative stocks related to the coronavirus appeared to be a statement by Russian President Vladimir Putin. Specifically, Putin said that his government had approved a vaccine for the coronavirus and noted that his daughter had received the vaccine.
Although the shot has not undergone thorough trials, Putin’s announcement appeared to get large investors to finally accept the idea that viable vaccines will be here sooner rather than later.
The vaccine candidate for iBio is well behind those of Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and AstraZeneca (NYSE:AZN) chronologically.
Other companies in the same category as iBio include Inovio (NASDAQ:INO), whose stock sank 21% on the day of Putin’s announcement, and Novavax (NASDAQ:NVAX), whose shares fell 9%.
Unlike the larger companies, iBio, Inovio and Novavax have not announced the initiation of Phase 3 trials of their coronavirus vaccines.
As the market accepts the idea that a vaccine is likely to be introduced more quickly than many anticipated, it’s logical for the highly inflated shares of the lagging vaccine makers to tumble. If a viable vaccine can’t be introduced for another year, the laggers could conceivably catch up to the leaders by, for example, conducting Phase 3 trials relatively quickly.
But if a vaccine is just a few months away, it’s very difficult to see how iBio and their fellow laggers could conceivably move quickly enough to level the playing field. It’s unrealistic to believe that a Phase 3 trial could be carried out and a vaccine approved within a month or six weeks.
iBio Looks Like a Laggard Among Laggards
Inovio and Novavax have both announced the results of Phase I trials of their vaccines in humans, while iBio has not done so. In fact, it just disclosed the results of a test of its vaccine candidate on mice on Aug. 10.
Although the results were favorable, it’s obvious that iBio’s vaccine is running well behind those of the other companies. Further, unlike those other companies, iBio has not announced that it has received meaningful funding from the U.S. government for its vaccine.
iBio Has a Different Shot on Goal
iBio has established a partnership with China’s Beijing CC-Pharming. Conceivably, CC Pharming could develop a vaccine and use iBio’s FastPharming System to manufacture it. That could generate a significant amount of revenue for iBio, greatly boosting IBIO stock.
But since I was unable to locate any information about the viability or development of CC Pharming’s vaccine, I think it would be unwise to bet on that scenario, especially because iBio’s market capitalization still stands at more than $400 million.
A Better Bet
On July 2, Investor’s Business Daily reported that the products of West Pharmaceutical Services (NYSE:WST) are expected to play a role in providing vessels for Covid-19 vaccines. The U.S.-based company “makes the components necessary to inject medicine,” the website noted.
And interestingly, on Aug. 10 the website reported that 29 top-performing funds had bought the company’s stock recently. That sounds like a high number, and indeed it was one of the highest on the list which included well over 50 companies.
For comparison, 30 funds bought Netflix (NASDAQ:NFLX) stock recently, while Nvidia’s (NASDAQ:NVDA) comparable number came in at 37. West’s shares are up 76% in 2020, and its forward price-earnings ratio is 72, which isn’t cheap. Still, the company seems well-positioned to make a great deal of money from a vaccine for the coronavirus and doesn’t seem to have been discovered by many retail investors yet.
The Bottom Line on IBIO Stock
iBio seems to be well behind several of its peers in the effort to develop a vaccine for the coronavirus, and the market seems to have lost its appetite for speculative coronavirus stocks in the wake of Russia’s announcement.
Given these points, I recommend selling the shares at this point. West Pharmaceuticals looks like a much better alternative going forward.
As of this writing, the author did not own shares of any of the aforementioned stocks. However, he may buy shares of West Pharmaceuticals within the next 48 hours.