It’s Time for iBio Speculators to Consider Something Else

With the latest news that AstraZeneca (NASDAQ:AZN) has a potentially effective novel coronavirus vaccine, the temptation exists to call the race for a solution done and over. After all, Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) shocked the world with their vaccines, which reported at least a 90% effectiveness rate. Due to viable vaccine candidates pushed by major pharmaceutical firms, this leaves iBio (NYSEAMERICAN:IBIO) and its speculative IBIO stock in the dust.

A scientist in medical gear peers through a microscope.
Source: Shutterstock

Of course, with the crazy year that we’ve had, you don’t want to say anything is quite yet over. There is a remote chance that none of the above candidates get approved, pushing the race back to square one. However, this scenario is extremely unlikely for myriad reasons. On a broad level, it would be a political catastrophe to not have at least one solution ready to go.

Also, the American people potentially have a wealth of choices. Both Pfizer and Moderna utilize messenger-RNA-based vaccines, which have the advantage of relatively quick manufacturing. This is an obvious high-demand attribute. However, despite some question marks about AstraZeneca’s vaccine, the underlying viral-vector approach has the advantage of “high efficiency gene transduction,” which could facilitate one-dose regimens.

In contrast, the mRNA vaccines from Pfizer and Moderna incorporate two-dose regimens. That’s going to put pressure on the logistics element of the Covid-19 battle. Still, these are the companies clearly in the lead, which puts IBIO stock in a bind.

Nevertheless, those holding onto hope may have an outside lifeline with the company’s therapeutic solution.

Can the Covid-19 Treatment Path Save IBIO Stock?

Over the weekend before Thanksgiving, government officials were nervously eyeballing the latest stats for new daily coronavirus infections. Unfortunately, the data was awful. As of Nov. 22, the seven-day moving average of cases breached the 170,000 mark. This implies that if we do see a slowdown in cases, the intermediate-term threshold may be in six-digit territory.

For the nation, that has terrible implications. But if you were cynical, it may be a risky opportunity for IBIO stock. While the coronavirus vaccine race is no longer worth pursuing, iBio still offers a potential treatment pathway. Simply, if cases surge like this, the immediate narrative is on medical tactics, not far-looking strategies.

If you want a brief summary of how the company can utilize its ACE2-Fc in the war against Covid-19, you can read my September article about iBio. The main takeaway is that ACE2-Fc, a recombinant protein, “acts as a decoy, binding to the novel coronavirus and blocking infection of healthy cells.” Further, other attributes promote the life and therefore effectiveness of this protein.

Theoretically, this innovation could be a surprising win for IBIO stock, particularly when you consider the political framework. As you know, President Donald Trump and key members of the White House got sick with the coronavirus. Recently, Trump’s son, Donald Trump Jr., came down with “rona,” to use his words.

But if you’re thinking about pulling the trigger on IBIO stock, you may just want to sit this one out.

Public Opinion Is Turning Unfavorably Against iBio

In October, I mentioned that one of the bullish arguments for iBio was that shares generally had a strong correlation with new Covid-19 infections: as cases increased, so too did IBIO stock. However, I warned that the apparent loss of this correlation between beginning of September to mid-October made “the bullish argument incredibly risky.”

Nevertheless, I suggested that if the “situation worsens into a second wave at home, the race for therapeutics will be back on. And that could drive up IBIO stock.” Unfortunately, that’s not happening. Despite coronavirus cases skyrocketing, IBIO is plummeting. Fundamentally, this doesn’t make much sense unless you consider that opinions about coronavirus vaccines are shifting.

According to a recent Gallup poll, roughly six in 10 Americans would agree to be vaccinated against Covid-19. This represents a significant uptick in vaccine favorability from September. Though I’m speculating here, that’s probably because Americans were lulled into a sense of complacency in that month. However, we all see how a little laxness can materialize into a national crisis.

Further, I believe there’s a growing recognition that without a long-term solution, our society and economy risk permanent fracture. It’s conceivable then that everyone will take social distancing and mitigation protocols seriously while waiting for a tangible, long-term solution. Thus, all eyes are on the vaccine race, which again leaves out IBIO stock.

A Risky Trade That’s Just Not Working Out

Over recent months, I’ve labeled iBio as a “dumb money” bet. It had potential – and still does to an extent – but it was also highly risky. However, the bottom line is that Wall Street doesn’t see the likelihood that this trade will work out.

You can focus on the science as much as you want. Unfortunately, someone’s got to cut the checks. And at this juncture, that’s more related to sentiment than science.

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.

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