Up 600% Year-to-Date, Sell iBio Stock While Its Still Flying High
It’s been an incredible comeback year for iBio (NYSEAMERICAN:IBIO). Up until 2020, IBIO stock had a long and unfortunate run as a publicly traded investment. Shares dropped from a peak of $55 each in 2011 to as low as 5 cents last year. However, for the fledgling biotech and vaccine company, the novel coronavirus gave it a new lease on life. Here’s the latest in iBio news.
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Shares roared from that 5-cent low to as high as $7 this year. That came as iBio reported that it had two pre-clinical candidates for a potential Covid-19 vaccine. Like many of the coronavirus vaccine competitors, however, iBio never managed to transform that clinical promise into much in the way of tangible results.
As a result, IBIO stock has slid from that $7 peak back to $2. And shares are set to head much lower going forward now that Pfizer (NYSE:PFE) has a working vaccine and Moderna (NASDAQ:MRNA) is also waiting in the wings in case anything goes wrong with the Pfizer one.InvestorPlace - Stock Market News, Stock Advice & Trading Tips
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The search for a successful coronavirus vaccine has now just about concluded, and that leaves very little left in the tank for iBio as far as future prospects go.
Lots Of Developments, But Minimal Revenues
For iBio’s most recent quarterly results, in the press release, the company started off by discussing the 16 different new business initiatives iBio has launched over the past year. This includes a full spectrum of things ranging from bioink for 3D-printing organs to something about deploying blockchain to track pharmaceutical manufacturing. There’s a bunch of stuff that sounds futuristic and exciting.
However, as is almost always the case with iBio, there’s little evidence of any of this turning into a commercial business in the foreseeable future. For the fiscal year that ended June 30, iBio produced just $1.6 million in revenues. That’s not a lot. In fact, it’s actually a decline from the previous year, when iBio generated $2 million in revenues. Despite all the furor over the potential coronavirus vaccine, iBio’s business outright shrunk.
IBIO News: Is This Really Worth $315 Million?
As of this writing, iBio has a market capitalization of $315 million. That’s the price traders are willing to pay for this company that has less than $2 million per year in revenues and loses large sums of money. Looking back, over the past year, iBio lost $16 million while producing just $1.6 million in revenue. That’s not a good ratio.
The one place you can give iBio credit is its balance sheet. Management took advantage of the spike in IBIO’s stock price and issued shares. In fact, the firm did so repeatedly, first selling stock to institutional investors. Then, iBio launched an at-the-money (ATM) offering to issue stock to the general public as well.
In doing all this fundraising, iBio has lifted its cash position to $83 million, which is way up from the $4 million that it had in 2019. However, of course, that money didn’t come without strings. In fact, incredibly enough, iBio’s share count has gone up seven-fold — from 20 million to 140 million — over the past year. Thus, even in the event that iBio manages to start generating meaningful revenues, the stock price still might not do much given just how much dilution has already occurred.
In any case, the cash holding will give IBIO stock a floor. But that’s at a much lower level than the current share price. $83 million of cash does not come close to backing up a $315 million market cap on a firm that historically loses tons of money and has never generated significant amounts of revenue.
IBIO Stock Verdict
The fact of the matter is that the Pfizer vaccine now appears set to start generating commercial revenues. And even if something unexpected happens to the Pfizer vaccine, Moderna is on deck with another strong candidate of its own. Neither of those rely on plant-based technologies to work. In fact, there’s scant historical examples of successful revenue-generating vaccines based on the sort of technology iBio is using.
That’s not to say iBio’s product won’t necessarily work. But the time for such an effort has come and gone. A vaccine in early clinical stages of trials based on an unproven platform simply doesn’t have much value in a world where Pfizer is already launching its effective vaccine momentarily.
Recall that iBio had projects related to Ebola, another catastrophic infectious disease. But iBio was unable to convert that effort into meaningful profits either. In fact, iBio paid damages in a lawsuit relating to allegedly false and misleading claims it made about an experimental Ebola drug.
In any case, iBio has not had a reputation for speedy product development in its decade as a public company, which in large part helps explain why the company has struggled. Whether or not iBio’s Covid-19 vaccine ultimately is effective, it will be too little too late. IBIO stock traded for 5 cents per share within the past year. Now that its Covid-19 ambitions are fading, what’s the reason to keep holding the stock way up at $2 per share?
Bottom line: the iBio news is not promising.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.
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InvestorPlace · 11/13 15:48