iBio (NYSEAMERICAN:IBIO) was once a novel coronavirus vaccine contender. Now it’s a disappointment and IBIO stock reflects that dejection. It would need to more than triple to return to its July highs, which is to say investors shouldn’t be seduced by a more than eight-fold gain this year.
When the race to develop a Covid-19 vaccine commenced in earnest months ago, many participants were viewed as longshots, which suited iBio because the scenario gave off the aura of equal footing. Thing is, vaccine development is more marathon than sprint and the longer the race goes on, the easier it is separate the contenders from the pretenders.
Investors pondering how a company with a history of moving back-and-forth between micro- and small-cap territory could adequately compete against more well-heeled rivals were right to express those concerns and IBIO stock validated those worries. Put simply, drug and vaccine development is expensive while a company like Pfizer (NYSE:PFE) can afford a misstep every now and then, iBio cannot, particularly when time is off the essence as it is with Covid-19 vaccines.
IBIO Stock Will Survive Coronavirus Disappointment
Two things that are often overlooked regarding iBio are that the company actually has a pipeline (success is a different story) and it was around long before the coronavirus, so it’s not some fly-by-night operation that popped up in the wake of the pandemic.
However, those aren’t reasons to by the stock. Prior to the emergence of the coronavirus, iBio was laboring around 30 cents in January and it has a history of rallying amid pandemics only to leave investors disappointed. Looked at another way, iBio became a “Covid-19 stock” and that was great for a few months, but it’s unlikely to make good on previous enthusiasm.
Part of the problem here is the company is evaluating two vaccine candidates – IBIO-200 and IBIO-201. A dual evaluation for one purpose isn’t the typical biotech/pharmaceuticals strategy and it’s one often reserved for companies with deeper pockets than iBio. Interestingly, the company even acknowledges one tests better than the other.
“While IBIO-201 produced significantly higher anti-spike neutralizing antibody titers than IBIO-200, we are still encouraged by the potential of IBIO-200,” said Chairman and CEO Tom Isett.
Where Is IBIO With Testing?
Speaking of testing, iBio is notably behind several of its competitors. The companies Covid-19 vaccines are in pre-clinical trials. That’s not even Phase I. As just one example, Moderna (NASDAQ:MRNA) is significantly more advanced with its vaccine than iBio, but that company said on Sept. 30 it probably won’t seek Food & Drug Administration (FDA) approval for the product until late in the first quarter of 2021 at the earliest.
That means the vaccine won’t be ready for distribution until spring of next year. Using that timeline as a comparison, iBio probably can’t get one its vaccines into late stage trials until late next year. That’s too much time for both the investment and healthcare communities.
Downside Looms
With IBIO stock down almost 73% from its peak pandemic high, downside from here may appear to be limited. It’s not.
Remembering that this was once a 30-cent a stock and its 52-week low is five cents, potential downside from here is considerable. Moreover, there are reasons why the stock can pinch long investors.
There is the specter of a Moderna or a Pfizer beating iBio to market with a Covid-19 vaccine and there’s the real possibility that iBio completely fails in its efforts. One of these scenarios will almost certainly come to pass and both could happen. Neither are ingredients for success with iBio, meaning investors should take a pass.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
