Does iBio (NYSEAMERICAN:IBIO) stock have any shot of a comeback? It doesn’t look too promising. During the summer, speculation in novel coronavirus vaccine plays sent the stock to prices as high as $7.45 per share. But, as leading contenders pulled away from the pack, “also rans” like this company began to fall fast behind.
And, even with the stock finding support around $2 per share, forget about a bounce back. It’s questionable whether iBio can hold to what’s left of its year-to-date gains. As its pandemic vaccine prospects continue to fizzle out, it’s easy to see shares falling back to their pre-outbreak prices (well below $1 per share).
That’s not to say the company is worse off now than it was before the pandemic. There are some factors at play that could help support today’s valuation. But, those reasons alone hardly make a bull case.
So, what’s the play here? Offering little for investors looking to bet on vaccine success, it’s best to avoid this flailing contender.
IBIO Stock and Current Vaccine Prospects
As InvestorPlace’s Vince Martin put it Sep 23, iBio always looked like a longshot. And, over the past six months, this perception has changed very little. Candidates from rivals like Moderna (NASDAQ:MRNA), and Pfizer (NYSE:PFE), have made substantial progress towards bringing a vaccine to market.
iBio? It’s only now moving its leading candidate, IBIO-201, to clinical trials. So far behind, it hard to see this company capture even a sliver of the potential market. Sure, like with Novavax (NASDAQ:NVAX), some trailing candidates may have a “last-mover’s advantage.”
But, Novavax’s candidate my be the exception that proves the rule. Similar to the situation with Inovio (NASDAQ:INO), it’s doubtful there’s a “last mover’s advantage” situation here with iBio’s candidate.
With this in mind, it’s no surprise IBIO stock has cratered nearly 73% off its highs set during the summer. But, despite this massive drop, shares could have further room to fall. How so? As the company’s coronavirus catalyst goes from longshot to “no shot,” expect more speculators to head for the exits.
It’s important to remember that, despite the massive sell-off starting in August, the biotech company’s stock is up substantially from its pre-outbreak price levels. Before the virus first made headlines, iBio was firmly in penny stock territory, trading for less than 30 cents per share in January.
In short, shares have material downside if and when the coronavirus catalysts are no longer on the table. Coupled with low chances of a bounce back, the risk/return is far from being in your favor.
Can Other Factors Help Shares Retain Value?
With its prospects flailing, it seems inevitable iBio will be back to square one in due time. Yet, aren’t there other factors that can help shore up the stock?
Yes and no. On one hand, the company’s FastPharming contract manufacturing business may offer potential. Perhaps very soon, considering the recent partnership with Planet Biotechnology our own Larry Sullivan discussed in his Sep 21 article.
In other words, iBio could realize tangible results from the pandemic. Not from its own success bringing treatments/vaccines to market. But, via third-party biotech firms farming out production to the company.
On the other hand, like its Covid-19 prospects, monetization of FastPharming remains a long shot as well. Until this unit starts to deliver, it’s doubtful investors will assign today’s valuation to this unit alone.
In short, with FastPharming, at least iBio at something on the back burner. The issue? It’s likely not enough to prevent shares from heading lower. Perhaps not back to prior lows (under 30 cents per share). Yet, without Covid-19 catalysts, falling back below $1 per share seems highly likely.
Avoid This Longshot, There Are Better Vaccine Plays Out There
So, with these negative factors in mind, what’s the call on iBio? Going long seems out of the question. Does this make the stock a compelling short? Not so fast!
Why? Granted, the odds of shares retaining their value, much less heading higher, look slim. But, given you can’t “predict the unpredictable,” an unforeseen positive development could send shares skyrocketing once again.
That being said, don’t jump into this name on the hopes of some sort of “deus ex machina” plot twist saves the day for this story stock.
As I detailed earlier this month, there are many pandemic vaccine plays out there with greater chances of success. That’s not to say these rival candidates will find success. But, compared to IBIO stock, they look like worthwhile wagers.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Thomas Niel, contributor to InvestorPlace, has written single stock analysis since 2016.