The shares of biotechnology company iBio, Inc.(IBIO) soared to hit their $7.45, 52-week high on July 21, 2020 on the back of investors’ optimism surrounding its COVID-19 vaccine candidate. However, the shares have been on a downtrend since then because the company’s vaccine candidates are still in their developmental stage, while many other companies have already developed their vaccines and are now distributing them.

IBIO stock has lost 20.5% over the past six months to close yesterday’s trading session at $1.36.

IBIO is in a transitional phase, increasing its focus on its FastPharming System, but it’s still uncertain if it will be able to generate significant growth as a result. Furthermore, the stock was down 2.9% in after-hours trading on May 17 following its disappointing financial results for the last-reported quarter, ended March 31. In December, the company closed a public stock offering that generated roughly $35 million in gross proceeds. IBIO is expected to use the proceeds to fund the development of its biotherapeutic and vaccine candidates, in-licensing of biopharmaceutical assets, and for other general corporate purposes.

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So, here’s what we think could shape IBIO’s performance in the near term:

Lagging in COVID-19 Vaccine Race

On May 6, IBIO announced that its vaccine candidate—IBIO-201—which is fused with its LicKM booster molecule, recently completed IND-enabling toxicology studies. Its subunit vaccine candidate—IBIO-202—which targets the nucleocapsid protein (N protein) of SARS-CoV-2, is currently being tested in preclinical studies and results are expected in the first quarter of its fiscal year 2022.

Meanwhile,  the Centers for Disease Control and Prevention this month recommended the use of Pfizer, Inc.’s (PFE) COVID-19 vaccine  for adolescents in the 12 -15 age group.. A recommended pause on Johnson & Johnson’s (JNJ) vaccine was lifted on April 23, following a thorough safety review. Furthermore, several people have now been vaccinated with Moderna, Inc.’s (MRNA) COVID-19 vaccine,mRNA-1273.

Ongoing Transformation

IBIO provides contract development and manufacturing services to collaborators and third-party customers primarily, but it is increasing its focus on plant-based biologics with the help of its FastPharming System that  combines automated hydroponics, vertical farming, and glycan engineering technologies to increase speed-to-clinic of scalable, consistently high-quality monoclonal antibodies, antigens, bioinks and other recombinant proteins.

Most of IBIO’s  products have yet to reach  Phase I development. Its systemic scleroderma product candidate IBIO-100 is in its preclinical stage, while its IBIO-400, for the treatment of  swine fever, is in its clinical development stage. The has had to deal with several controversies in the past. In fact, it paid nearly $1.9 million in 2015 to settle a federal class-action lawsuit brought by stockholders who alleged  that the company  repeatedly lied about the role it played in producing an experimental Ebola drug.

Weak Financials

For its  fiscal third quarter, ended March 31, IBIO’s revenue came in at $765,000 compared to $96,000 in the prior-year period. However, its operating loss for the quarter increased 77.2% year-over-year to $7.20 million. Its net loss also increased 62.9% from the same period last year to $7.73 million. The company’s loss per share came in at $0.04 compared to $0.06 in the year-ago period.

POWR Ratings Reflect Bleak Prospects

IBIO has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. IBIO has an F grade for Quality, which is in sync with its negative ROE and ROA. It has a F grade for Stability as well.

The stock has an F grade for Value. This is justified given that its 93.32x forward EV/Sales  is significantly higher than the 6.24x industry average. Also, its 122.13x forward P/S is 1,561.6% higher than the 7.35x industry average.

IBIO is ranked #490 of 496 stocks in the F-rated Biotech industry. Click here to see the additional POWR Ratings for IBIO (Growth, Sentiment and Momentum).

Better than IBIO: Click here to see 25 top-rated stocks in the same industry.

Bottom Line

IBIO is not only lagging  many companies in terms of developing its COVID-19 vaccine, but most of its other products are also in their preclinical stages. Moreover, its lofty valuation is not in sync with its near-term prospects. Analysts expect its revenue to decrease 19.6% year-over-year to $900,000 for the current quarter, ending June 30, 2021. So, we think it’s wise to avoid this penny stock now. 

Click here to checkout our Healthcare Sector Report for 2021

IBIO shares were trading at $1.36 per share on Tuesday morning, down $0.00 (+0.10%). Year-to-date, IBIO has gained 29.52%, versus a 11.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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