Personally, the case for iBio (NYSEAMERICAN:IBIO) stock always looked like a longshot. As time has gone on, that sense only has grown.
After all, IBIO stock has soared on hopes that the company can contribute to the fight against the novel coronavirus pandemic. Even with a sharp pullback from recent highs, IBIO still has rallied 657% so far this year.
But those hopes looked questionable from the jump. The company never has developed an approved product. IBIO stock saw a similarly steep rally back in 2014 amid hopes that iBio could come up with a vaccine for the Ebola virus. Those efforts appear pretty much dormant at this point.
Investors were, and are, betting that this time is different. And to be fair, there are at least some reasons for hope.
The rally off February lows allowed iBio to improve its balance sheet and precluded a potentially painful reverse split. Its “FastPharming” technology potentially can help scale production of a vaccine or treatment developed by another company. And bulls have pointed to the company’s association with Texas A&M University, which has been heavily involved in the federal government’s efforts against the coronavirus.
None of that seems like enough, however. And the problem for iBio now is that the bull case is much the same as it was a few months ago. The company simply hasn’t made enough progress. Given how many rivals have, it’s hard to be optimistic toward IBIO stock — even at a lower price.
One of the core problems for iBio is that it’s not working toward a vaccine, or a treatment, alone. Dozens of companies, including some of the world’s largest drug makers, are involved in the fight against the virus.
And those companies are making progress. The likes of AstraZeneca (NYSE:AZN) and Moderna (NASDAQ:MRNA), to name just a few, have moved vaccine candidates forward. Novavax (NASDAQ:NVAX) is heading into Phase 2 trials.
The work of all these companies puts iBio on the clock. Getting a vaccine approved in a couple of years isn’t going to do much if there are multiple candidates on the market already. The same is true on the treatment front.
Yet we haven’t really received much, if anything, in the way of good news from iBio.
Not Enough Progress
The company did announce this month that it was focusing on IBIO-201 as its primary vaccine candidate. Even that isn’t necessarily good news, however.
IBIO-201 was the second of the company’s candidates, not announced until June 4. It was IBIO-200 that originally drove optimism toward the stock back in March. IBIO retains hope for that program, but early returns at the least weren’t overwhelming.
The company does have a partnership with China’s CC-Pharming to develop another candidate. But it’s hard to see how iBio can get much, if any, support from a federal government that has shown increasing hostility to Chinese companies.
On the treatment front, iBio is working with partnership as well, with privately held Planet Biotechnology. But Planet doesn’t appear to have much, if any success, in its history, either. The combination of two unproven firms hardly creates much optimism.
So what, really, does iBio have at the moment? It has two partnerships which have shown little and which on their face have serious question marks. IBIO-201 remains in the lab. Yet for IBIO stock to rally from here, the company has to catch up with better-funded, more successful rivals who already are out in front.
The Core Problem with IBIO Stock
It’s simply difficult to see how that is going to happen. One big problem is that iBio simply isn’t going to spend as much as those rivals, because it can’t. As I’ve noted before, iBio spent $1 million on research and development in the calendar first quarter of this year. Moderna spent $152 million.
IBIO’s spending will rise, as the company has raised cash through equity sales. According to a recent prospectus, the company brought in $71 million just between June 11 and July 23. Against AstraZeneca, Moderna, Johnson & Johnson (NYSE:JNJ) and so many others, however, that’s just a drop in the bucket.
It certainly doesn’t seem like enough. It wouldn’t seem like enough if iBio was starting even with those larger rivals. But it’s already behind. It’s awfully difficult to see how iBio can catch up — yet it needs to for IBIO stock to rally from here.
On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.