iBio (NYSEAMERICAN:IBIO) is expanding its horizons. In addition to being way behind in the race to develop a coronavirus vaccine, it’s now also way behind in the race to develop a coronavirus treatment. Despite the company’s decision to diversify its business, I remain bearish on IBIO stock at this point.
As many other pundits have pointed out, on Aug. 10 iBio announced that a test of its vaccine candidate showed that, in preclinical studies, its vaccine had sparked the production of anti-coronavirus antibodies.
Specifically, iBio noted that mice that had been injected with the vaccine candidate generated antibodies that prevented the coronavirus’ spike protein from binding to human ACE2 cells in a lab environment.
Likely Too Late
The company noted that “significant immune profiling studies are ongoing to evaluate safety and immune protection,” but it did not specifically say if or when the vaccine candidate would be tested in live human subjects.
Another InvestorPlace columnist, Patrick Sanders, pointed out in his Aug. 25 piece that, “currently there are eight vaccine candidates undergoing Phase 3 testing.” That means that each of these vaccine candidates are being tested on thousands of humans. In all likelihood, it will be at least six months before iBio’s vaccines reach that stage.
Meanwhile, the U.S. government remains committed to its goal of launching one or more vaccines by the end of the year, and there has been some talk of a vaccine reaching the market as soon as next month.
So iBio remains well behind the competition and, barring a very unlikely sequence of events, its vaccine will arrive too late to generate significant revenue iBio stock. In theory, the other vaccines could fail altogether, or they could all fail to protect certain large portions of the population, whereas iBio’s vaccine could succeed where its competitors all failed. The odds of such scenarios unfolding, however, are quite slim.
A Potential Treatment That’s Way Behind the Competition
On Aug. 28, iBio announced that it had bought a license for a Covid-19 therapy developed by Planet Biotechnology. Dubbed ACE2-Fc, the treatment is a protein that consists of an enzyme “fused to a human immunoglobulin G Fc fragment.” The enzyme attracts the spike protein of the coronavirus, preventing it from entering human cells.
The treatment sounds like it could be helpful, but it, like iBio’s vaccine, looks poised to likely come to market too late to generate a great deal of revenue. iBio stated that Planet’s studies in labs “demonstrated that its ACE2-Fc blocks SARS-CoV-2 virus from infecting Vero E6 cells.”
But Regeneron (NASDAQ:REGN) is looking to announce the results of tests of the Phase 2 data on its twin-antibody treatment later this month. In July, the FDA approved a Phase 2 study of Sorrento Therapeutics’ (NASDAQ:SRNE) abivertinib, which Sorrento acquired from China’s ACEA Therapeutics.
Last month, Sorrento also filed an application with the FDA to study its STI-1499 drug, which, according to the company, generated favorable results in lab tests and in tests involving animals. And Vir Biotechnology (NASDAQ:VIR) and GlaxoSmithKline (NYSE:GSK) have launched a Phase 2/3 trial of their own anti-coronavirus antibody.
So, by buying an early-stage coronavirus treatment, iBio has put itself in a similar situation as on the vaccine front. That is, because its treatment is so far behind the competition, it probably won’t wind up generating much revenue.
iBio’s Best Shot on Goal Is Looking Less Likely
As Sanders pointed out, iBio’s FastPharming technology could be used to quickly manufacture a vaccine for the coronavirus. However, he also correctly noted that “what {iBio} doesn’t have at this point is a partner with a viable vaccine. ”
Indeed, plans already seem to have been made for manufacturing the leading vaccines under development. If iBio was a part of those plans, it, in all likelihood, would have announced that momentous news. With each passing day that does not bring such an announcement, the chances of iBio’s technology being used to manufacture coronavirus vaccines gets lower.
The Bottom Line on IBIO Stock
iBio’s leading vaccine and its therapy appear to be too far behind the competition to generate much revenue for the company. As for its FastPharming technology, if it was going to be used to manufacture one or more coronavirus vaccines, that news probably would have been disclosed already.
Given these points, I continue to recommend that investors sell IBIO stock.
On the date of publication, Larry Ramer held a long position in Sorrento Therapeutics.
Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.
