Before the novel coronavirus pandemic, iBio (NYSEAMERICAN:IBIO) was a promising though lesser-known biotechnology firm. But when the outbreak exploded into a worldwide catastrophe – especially one that would devastate the U.S. – the narrative for IBIO stock likewise soared.
Indeed, the sentiment continued to take shares into uncharted territory before plummeting as the harsh realities of vaccine development and distribution came into focus.
Nevertheless, with IBIO stock now trading around $2, speculators have undoubtedly reconsidered the bullish case. Frankly, I don’t think it’s a bad idea to gamble with “dumb” money in your pocket, so to speak. Yes, the broader coronavirus solution narrative has taken a beating. But iBio benefits from two critical angles: what it did do and just as importantly, what it didn’t do.
Let’s tackle the latter first. One of the reasons why IBIO stock appeals today is because AstraZeneca (NYSE:AZN) dropped a bombshell disclosure. Its vector-viral vaccine candidate that AZN has been developing with the University of Oxford produced an “unexplained illness” in a human-trial participant.
According to The New York Times, the illness could be transverse myelitis, which is an inflammatory syndrome that affects the spinal cord. However, it’s not yet clear whether this is linked to AstraZeneca’s coronavirus candidate.
Nevertheless, this is a devastating blow to the vaccine race. Based on a report by medical researchers Takehiro Ura, Kenji Okuda, and Masaru Shimada, viral vectors offer the advantage of efficacy, specific delivery of genes to target cells, induction of robust immune response and most importantly in this case, the enabling of large-scale manufacturing.
Of course, we’re now seeing the darker side of viral vectors.
IBIO Stock to Rise on the Therapy Boost
Because of viral vectors’ strong implication for gene therapy and vaccine production for other viruses beyond coronaviruses, the AstraZeneca setback may have a ripple effect. For instance, I’ve discussed other vaccine plays like Inovio Pharmaceuticals (NASDAQ:INO) and most recently, CureVac (NASDAQ:CVAC). I’m not suggesting that you should now short these stocks but unfortunately, the AstraZeneca news came out after I had inked my CVAC article.
As such, you may want to take extra precautions regarding companies levered heavily toward a coronavirus vaccine. Therefore, IBIO stock also has some risks to consider. After all, the underlying company is competing in this very crowded arena.
But here’s where it gets interesting for iBio – shares can possibly move higher on what it is doing. Specifically, I’m referring to its partnership with Planet Biotechnology to develop Planet’s therapeutic candidate, ACE2-Fc.
To provide a very brief background, ACE2 refers to a protein called angiotensin-converting enzyme 2, which is found on the surface of many cell types. Regarding the pandemic, the novel coronavirus’ signature “spike-like” proteins – hence the name “corona” or crown – latches onto ACE2, infecting the underlying cell.
What’s compelling about ACE2-Fc is that this recombinant protein acts as a decoy, binding to the novel coronavirus and blocking infection of healthy cells. Additionally, the fused human immunoglobulin G Fc fragment (Fc) “domain prolongs the life of the protein in circulation.”
Potentially, we have an effective therapy or treatment for Covid-19 which might also provide lasting efficacy. Fundamentally, this is crucial because most Americans will not take a coronavirus vaccine when it first becomes available. Perhaps more eye-opening, one in four don’t want to take a vaccine at all.
When certain coronavirus vaccines may cause adverse effects, this apprehension will only increase.
Scale Is Another Catalyst
To emphasize the point, ACE2-Fc is a treatment, not a vaccine. Therefore, patients will only take it if they get infected. Otherwise, they can go on their merry way without having to worry about a vaccine’s possibly serious side effects. That’s a distinction that could help lift IBIO stock.
However, I should point out that iBio isn’t alone in the therapy race. For example, Sorrento Therapeutics (NASDAQ:SRNE) has a similar antibody called STI-1499 that exploits the coronavirus’ interaction with ACE.
But in this specific context, I’d give the edge to IBIO stock. That’s because the underlying company can potentially leverage its FastPharming innovation to rapidly produce biologics. Don’t get me wrong – I’m not suggesting that Sorrento can’t scale up their solutions. But from what I understand, iBio was already heavily involved in the manufacturing game. Therefore, Sorrento may need to contract out their production, perhaps leading to higher costs.
Nevertheless, none of the Covid solutions has been confidence-inspiring this year due to the volatility. I’m not just talking about the smaller players but also big names like Gilead Sciences (NASDAQ:GILD).
Therefore, you don’t want to buy IBIO stock thinking it’s a high-confidence play. It’s not. But in the context of a dumb money gamble, I believe it has potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.