Delaware-based iBio (NYSEAMERICAN:IBIO) celebrates its 12th anniversary this month. And where IBIO stock is concerned, you can guess what’s on the birthday wish list: the magnificent gift of a vaccine to arrest the novel coronavirus.
Yes, Ibio remains in the running to produce what will be universally regarded as one of the most important vaccines in history. But this is not a race that small companies of its type are poised to win. In fact, the Covid-19 Sweepstakes, if you will, is an Olympian sprint with a crowded field. At least 15 companies are vying to cross the finish line first, and the whole contest could easily turn into an endurance race — or a marathon. “Rarely,” the New York Times reports, “has a vaccine been developed in less than five years.”
And while it’s not a household name compared to fellow entrants Johnson & Johnson (NYSE:JNJ) or Pfizer (NYSE:PFE), iBio can at least look across the state line for a comforting precedent. Over in New Jersey, Eagle Pharmaceuticals (NASDAQ:EGRX) saw its share price skyrocket by more than 500% in 2015 thanks to a blockbuster licensing deal with Teva Pharmaceuticals (NYSE:TEVA).
Trying to Transcend Penny Stock Status
In penny stock territory from November to February, iBio exploded like fireworks in the last week of February with a markup of more than 700%. Then it shed half its value, only to post its highest closing price in more than three years on July 20 — $6.41 per share. But it tumbled once again and now trades at $2.11. Dizzy yet?
This can’t be reassuring to investors, especially those who have waited out the stock for more than nine years in hopes of a comeback. OK, so the heady peak of $55 per share in 2011 is no longer a realistic target. But even a little shot of investment adrenaline would be nice. IBIO stock is still down 70% from the modest price of $7.10 per share it hit at this time five years ago.
If all this gyration sounds confusing, remember that pharma companies in general can be a ponderous lot, especially the smaller ones. They live and die by the licensing deals and new drugs in the pipeline, and since it can take years for these things to materialize, prospects can look miserable until that breakthrough is unveiled and — voila! — suddenly shares rebound and astound.
That of course gives rise to the question of whether it’s wise to “buy the dip,” considering that IBIO stock could spring up at the slightest whisper of Covid-19 vaccine momentum. Trouble is, that has nothing to do with the value fundamentals that investors need to apply wherever and whenever they hit the “buy” button.
You’d Better Not Bet
To act otherwise means you’ve indulged at least one of three cardinal sins: a) you’re betting merely on speculators driving up the price, b) you’re trying to time the market for the next bounce, or/or c) you’ve surrendered to the investment pandemic known as FOMO. But what is it you fear missing out on, anyway?
News on the Covid-19 vaccine front surely hasn’t given investors much clarity, especially since some companies seem intent on playing it. One transparent example involves AstraZenica (NYSE:AZN), which was only to eager too eager to trumpet its “landmark agreement” on April 30 with Oxford University to produce a Covid-19 vaccine. But investment mavens didn’t bite for the “landmark” bit: AstraZenica stock actually went down the next day by just under 1%. Since then? Up 7%. Quick, Dr. Fauci, stop the presses!
Listening to a more level-head investment crew — Wall Street analysts — we hear … well, not even crickets. Checking the Nasdaq and Wall Street Journal analyst reports, only one firm has bothered to weigh in on IBIO stock over the last three months, and while they call it a buy with a median target of $3.10 per share, that’s hardly a ringing endorsement.
IBIO stock looks stuck for now
Yes, the race and chase for a Covid-19 vaccine is fascinating to watch. But in most if not all cases with the companies involved, trying to predict the winner amounts to gambling, especially if you fail to follow the financials on record. In the case of iBio, we can’t report a price-to-earnings ratio because the company isn’t profitable. And while it sounds boneheaded to say, buying a share of stock amounts to ownership in a company, and when that company doesn’t make bupkis, it stands to reason that you’re throwing good money after bad.
My negative take on IBIO’s stock isn’t meant to spoil the fun of rooting for an underdog. Nor does it seem to be the same case as with another vaccine entrant, Inovio (NASDAQ:INO), which short sellers warn may be using its place in the Covid-19 field to prop up its stock. (The company hasn’t brought a product to market in its 40 years of existence.)
We all know it: There’s no such thing as portfolio immunity, even if you buy shares in the company that eventually cracks the Covid-19 code. Just as it’s too soon to know which concern will prevail, it’s likewise imprudent to invest your hopes along with your dollars where iBio is concerned.
As of this writing, Lou Carlozo did not hold a position in any of the aforementioned securities.