IBio (NYSEAMERICAN:IBIO) shares have continued their pattern of volatility with recent news. The pandemic grinds on, and the world’s economies continue to look for positive signs. Thus, news regarding vaccine laggards — including iBio — becomes a renewed source of investor hope. Trading spikes. Prices rise. This is great for traders. That’s where this stock has merit.
Yet, for investors, iBio looks much the same as it has for a long time: below investment grade.
Investors are unsure of how to approach vaccine stocks to a large degree. Yet investors are also afraid to lose out on the next big thing. But neither a lack of certainty nor fear should dictate investing strategy.
Investing Strategy and IBIO
Rather than chasing price spikes, investors would be better served to simply consider all of the potential candidate vaccines first. Second, they should look at the time required for vaccine development from a regulatory perspective. Vaccine commercialization is a drawn out process. This remains true even though this pandemic which has seen expedited timelines for vaccines. Regardless, regulators aren’t going to push a vaccine from the pre-clinical phase to FDA approval overnight. The risks are simply too high.
The point is to not get caught up when iBio or any other low-priced vaccine stocks spike. Investors should do their homework regarding how far along a given vaccine is in reality when news pops. Ask yourself what a 5% or a 10% price spike means for shares that trade around $2. To me, not much.
Most Recent Spike
IBio’s most recent price spike came on the heels of news that it had prioritized one of its candidate vaccines for primary development over another. Read carefully because this isn’t much news at all.
Investors who read this press release critically will note a few things. The company simply found that one of its vaccine candidates (IBIO-201) produced more beneficial effects than the other (IBIO-200). The release is very scant regarding any quantifiable data thereto. Perhaps the difference therebetween is significant in terms of efficacy, perhaps not. But this is still pre-clinical, animal testing. This candidate is not in clinical testing which takes place with human subjects.
Human testing is what will ultimately matter. After all, that’s who the vaccine is meant for.
Secondly, the company is still going to develop the other candidate, IBIO-200. IBIO-201 will be tested for toxicology. To my knowledge, this is also done in animal models. This means the company remains in pre-clinical stages, and has a long road ahead before any commercial vaccine. So investors should not chase this stock on this very minor development.
Kitchen Sink Approach
IBIO’s approach is multifaceted, like that of many vaccine candidate manufacturers.
Yes, the company has therapeutics IBIO-200 and IBIO-201. But its strategy also includes manufacturing capability. The company relies on something it calls FastPharming and also has a 130,000 square foot manufacturing facility in Texas. This allows the company the capacity to undertake contract manufacturing. Thus, it could rise in a manufacturing and production capacity, rather than in a vaccine development capacity.
Back in April the company stated that it could produce 500 million doses of vaccine at its Texas facility. However, that was predicated upon its IBIO-200 candidate. The company has not released any data or statements indicating that it can manufacture doses produced by other companies.
It did state “we are ready to make the FastPharming System available to other COVID-19 vaccine and therapeutic developers on a contract manufacturing basis to help speed their products to market as well.” So, iBio’s contract manufacturing capability is somewhat amorphous.
In any case, investors likely want to know about its progress toward a vaccine, and not much else.
Where to Look
News regarding manufacturing is what investors should really be on the lookout for when it comes to iBio. There seems to be a feeling that one of the leading vaccine candidate manufacturers will prevail. This includes those candidates in stage 3 of clinical trials and those approved for limited use, of which there are 14. Investors should understand that IBIO’s chances of producing a vaccine are seriously slim at this point. But the company does have another chance.
Perhaps iBio can salvage a win in a manufacturing capacity. However, the company hasn’t been aggressive in playing up its manufacturing capabilities either. This leads me to believe that it may not be a great candidate from that perspective either.
Of course, it could have a contract manufacturing deal in the works it just hasn’t announced. I am not privy to such information.
Verdict on IBIO Stock
IBio really looks like an also ran in the Covid-19 vaccine story. I’m still struggling to see why investors, and not traders, are interested in this stock.
In previous articles I’ve talked at length about its financial situation and history of losing money. I still primarily look at stocks from the perspective of their underlying sales, revenue, and other fundamental factors. Personally, I also love growth companies in emerging sectors with the right catalysts. I don’t see that IBIO is any of these things. Thus, I wouldn’t recommend buying it at all.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
