The Robinhood website lists iBio (NYSEMKTS:IBIO) among the 100 most popular stocks traded on the commission-free trading platform. Looking at IBIO stock price action, it’s not difficult to guess why millennials like the stock.
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Prior to the novel coronavirus pandemic, the stock was trading at 33 cents. With the company joining the list of potential vaccine developers, the stock surged to a high of $7.45 by July 2020. Amid volatility, the stock has trended lower and currently trades around $2.
I believe that is plenty of action left in the stock and a strong bounce-back is likely after the deep correction. This column will discuss the factors that can trigger upside for IBIO stock.
As I write, its being reported that AstraZeneca (NYSE:AZN) has put its Covid-19 trial on hold over safety concerns. Reports suggest that the potential vaccine had a “suspected serious adverse reaction in a study participant.”
The bad news is that the world needs to keep waiting for a vaccine. For other vaccine candidates, the good news is that they can race a-step-ahead if trials run smoothly. Not surprising that AZN stock is sharply lower in post-market trade.
Vaccine Development Is Encouraging
Before discussing the company’s vaccine development progress, its worth noting that iBio recently inked an agreement with Planet Biotech. The agreement involves global rights to the latter’s COVID-19 therapeutic candidate, ACE2-Fc. On announcement of this partnership in late August, IBIO stock traded higher by 24%. This is just an example of how a few positive catalysts can send the stock soaring.
In August 2020, the company also provided an update on the vaccine program. The initial results from the pre-clinical trials have been encouraging. Further positive developments for IBIO-200 and IBIO-201 will serve as a strong catalyst for the stock.
The obvious investment risk is that iBio still does not have any vaccine or drug in the market. That makes the stock speculative. A counter view is that the company has partnered with the likes of Infectious Disease Research Institute and Texas A&M University for vaccine program development. This lends more credibility to the company’s efforts toward developing a vaccine.
Of course, there are other relatively smaller players in the fray. According to McKinsey & Company, “More than 50 candidates are expected to enter human trials in 2020, and 250 total vaccine candidates are being pursued.”
The report further states that “historical attrition rates would suggest that such a pipeline could yield more than seven approved products over the next few years.”
For now, the stocks will react to news related to different phases of the clinical trial. From that perspective, there is a flurry of news that’s due from iBio in the next few quarters.
Last month, the U.S. government signed a $1.5 billion deal with Moderna (NASDAQ:MRNA) to supply of 100 million doses of the COVID-19 vaccine. Any such deal for iBio can send the stock soaring.
Concluding Views on IBIO Stock
Besides the race for the Covid-19 vaccine, iBio has a strong pipeline of vaccines and drugs in an early development stage. Some of the financing sponsors for the development program include National Institute of Mental Health, GE Healthcare and the Bill & Melinda Gates Foundation.
Backing of credible sponsors underscores the point that the company’s pipeline has potential. Any conversion to approved vaccine can take the stock higher.
In addition, the demonstration of scalability to produce 500 million doses of vaccine on an annual basis should help iBio secure a government contract if the vaccine development progresses well.
For now, positive news on further phases of clinical trials for Covid-19 vaccine can help the stock double from current levels. However, I still believe that the stock is a purely speculative bet and a big exposure should be avoided.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities.
