When it comes to biotechnology firm iBio (NYSEAMERICAN:IBIO), a high-profile penny stock, the dilemma is whether buying IBIO stock is investing or just gambling. Sitting here in mid-September, the answer isn’t promising.
Granted, iBio is more interesting than many penny-stock companies. The attention it enjoys results from wider interest in biotechnology amid the novel coronavirus and hopes for therapies and a vaccine.
iBio is one of several companies working on treatments and vaccines to combat Covid-19, the deadly disease caused by the coronavirus.
IBIO stock, therefore, is eyed by many investors for a couple of reasons. One is the stock’s low price — trading around $2.50 per share – puts it within reach of many more potential suitors. Also, investors trust they stand to profit from owning shares of a company that finishes the Covid-19 race in the money.
‘FastPharming’ is Unique
iBio operates a large development facility in south Texas, near the home of Texas A&M University. The historic school is regarded for its work in engineering and science. That location is not coincidence as the company has a relationship with the school.
One thing that makes iBio unique among its competitors is its use of FastPharming. It is technique that uses plants to reproduce biologic compounds.
The company has a pair of vaccine candidates in trials and has partnered with Planet Biotechnology to develop a therapeutic candidate to treat Covid-19. The agreement between the two companies was announced on Aug. 28.
The agreement was described as “ideal” by Elliott Fineman, president and CEO of Planet Biotechnology.
“iBio is an ideal partner for Planet, offering experience in manufacturing plant-based biopharmaceuticals and rapid scale-up capabilities,” Fineman said.
A Look at IBIO Stock
IBIO stock has been on a roller coaster ride. During the last year, the share price has ranged from a low of 50 cents to a high of $7.45.
Some observers, who had been saying iBio needed to forge strategic partnerships, believe the agreement with Planet Biotechnology could give the stock fuel to approach those 52-week highs. Indeed, that kind of movement for a penny stock could be impressive and profitable.
However, when I last wrote about iBio in InvestorPlace, IBIO stock was trading around $3. That was on Aug. 17, before the partnership was announced. Since then, the shares are up 12.3%, compared to a less-than-1% gain in the ETFMG Treatments, Testing and Advancements ETF (NYSEArca:GERM).
My verdict at that time: “Aside from day trading, though, it is premature to fully embrace IBIO stock.”
Moreover, Josh Enomoto, my colleague at InvestorPlace, recently wrote “you don’t want to buy IBIO stock thinking it’s a high-confidence play. It’s not.” He asserts the company is “a dumb money gamble.”
The Bottom Line
Biotech company iBio offers a different sort of play on pharma stocks. It’s Fast Pharming system to use plants as bioreactors is touted now as a potential contributor in the quest to combat the Covid-19 pandemic.
The company also formed a partnership with another biopharma company, Planet Biotechnology, to work on a Covid-19 therapy candidate. Although this partnership appears to hold promise if the work is successful, the market has not been overly impressed. IBIO shares are trading for less at this writing than they were before the partnership was announced.
This illustrates a key fact about IBIO stock. It has a history of serious volatility and should be approached with caution.
I continue to believe that buying IBIO stock is more speculation than investing, and best remains in the realm of day traders.
Non-day traders who feel IBIO shares may be worth a try should take a hard look at their tolerance for risk before pressing the buy button. And, as with any penny stock, don’t take short cuts with your due diligence.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.
