It continues to be all downhill for biotechnology company iBio (NYSEAMERICAN:IBIO). Since peaking at $7.45 per share in July, the New York-based company’s stock price has fallen further and further from its 52-week high as hopes fade for the company to make a meaningful contribution towards a cure for Covid-19.
Today, IBIO is trading at just over $2 a share, about the same level it was at in early March of this year. Investors who are holding onto the stock in hopes of a turnaround are likely to be disappointed. The biotech company’s two leading Covid-19 vaccine candidates had mixed results in early pre-clinical trials. And while iBio has selected one vaccine candidate to move forward with to the more advanced clinical trial stage, the company is far behind much larger and more established pharmaceutical companies such as Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE) and Johnson and Johnson (NYSE:JNJ) in the vaccine race.
Analysts and investors continue to hold out hope that iBio will play a role in a future Covid-19 vaccine through its manufacturing facility located in Bryan, Texas. But this is by no means guaranteed. And with a number of leading pharmaceutical players expected to bring a vaccine against Covid-19 to market within the next six months, hope is fading that iBio will play any kind of meaningful part in the global pandemic’s final act.
While IBIO enjoyed an impressive 3,100% gain this year — exploding from just $0.23 a share to $7.45, the stock has since fallen 72% from its highs. Rather than banking on a comeback, investors should likely get out of the stock now while the getting is still (somewhat) good.
A Lack of Products
iBio does not currently have any products on the market and its current pipeline is not nearly as strong as many of its peers. If the company has a distinguishing feature it is its unique bio-manufacturing system that uses genetically engineered plants to produce vaccine components.
According to the company, its plants are both faster and less expensive for vaccine prototyping than traditional manufacturing methods that employ bioreactors. Likewise, iBio claims that its plant-based manufacturing is easier to scale, less prone to contamination, and more environmentally friendly. This all sounds impressive and, if the stars align, could represent a potentially disruptive revolution in bio-pharmaceutical manufacturing.
However, like its vaccine candidates, iBio’s manufacturing process is largely speculative for investors at this point. Sure the company claims it can manufacture as many as 700 million doses of a Covid-19 vaccine in one year using its plants. But iBio’s vaccine isn’t even in clinical trials yet.
There has been speculation that iBio could be contracted to manufacture a Covid-19 vaccine for a larger pharmaceutical company, but that hasn’t happened yet. And there are no indications that a big manufacturing contract is coming to the company anytime soon. This leaves iBio basically at step one when it comes to the global race to end the pandemic.
The company currently has a few modest manufacturing collaborations and pre-clinical development deals at its Texas manufacturing plant, but nothing major.
The Robinhood Effect
While IBIO enjoyed a spectacular run this year before coming off its highs, the share price appreciation was driven almost entirely by speculation on the part of day traders, notably the ones who use the popular Robinhood trading app. These all-or-nothing traders seized on every stock related to a Covid-19 vaccine and ran the prices up during furious trading sessions over the spring and summer.
The more a stock like iBio rose, the more heavily it was traded until the high risk, high reward traders realized that iBio was being left behind in the vaccine race and moved onto other securities. Its stock has been slumping ever since.
Whether IBIO will rally again in the near-term remains to be seen. As the company’s shares trade among the penny stocks, analyst coverage of the company is almost non-existent. Currently there is only one analyst offering a 12-month price forecasts for iBio. That lone analyst has a median price target of $3.10. That would imply a 49% increase from the recent share price of $2.08. Having more analyst coverage on the stock would be beneficial. It’s difficult for investors to put their faith in a single analyst rating.
Sell IBIO Stock
At this point, IBIO feels like a “has been.” A once-great star that has faded and is dimming as the days and weeks go by. iBio seems to have been trampled and left in the dust during “Operation Warp Speed,” the U.S. government’s program to develop a vaccine against Covid-19 in record time.
With no other promising vaccines in its pipeline and an underused manufacturing center, there doesn’t seem to be much reason to hold onto iBio shares. Investors would be smart to sell this stock now before its price falls further.
On the date of publication, Joel Baglole held shares of MRNA.
