The vaccine-makers fighting COVID-19 garnered significant popularity and profits over the past two years. However, with the global pandemic receding, the industry is facing headwinds from recession risks. Access to capital has also become seemingly more difficult than in 2021.
On top of it, research and development, which is vital for the biotech industry, is an expensive and lengthy process. Also, the firms face litigation risks.
Penny stocks are usually small companies with limited cash and resources. Moreover, the stocks are associated with heightened volatility and hence, a higher level of risk.
Given the turbulent broader market backdrop, we think it might be best to avoid biotech penny stocks, iBio, Inc. (IBIO), VistaGen Therapeutics, Inc. (VTGN), and Timber Pharmaceuticals, Inc. (TMBR) now.
iBio, Inc. (IBIO)
IBIO is a biotechnology company that provides contract development and manufacturing services to collaborators and third-party customers. The company operates in two broad segments: Biopharmaceuticals and Bioprocessing.
In August, IBIO provided an update on its next-generation vaccine candidate, IBIO-202, for multivariate COVID-19 disease. IBIO-202 uses a portion of the nucleocapsid (N) protein. The recently produced N antigen is undergoing release testing. However, this vaccine might take a long time to be ready.
IBIO’s total operating expenses increased 88.3% year-over-year to $14.08 million in the fiscal third quarter ended March 31. Its loss from operations grew 69.1% from its prior-year quarter to $12.18 million. The company’s comprehensive loss increased 62.7% from its year-ago value to $12.49 million, and its loss per share was $0.06.
Street expects IBIO’s EPS to amount to a negative $0.23 for the fiscal year ending June 2023, indicating a decrease of 4.6% from the prior-year period. Its consensus revenue is expected to decline 5.9% year-over-year to $2.40 million for the same period.
IBIO’s shares have declined 77.2% over the past year to close its last trading session at $0.26. It has declined 52.7% year-to-date.
This bleak outlook is reflected in IBIO’s POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
IBIO has an F grade for Quality and a D for Growth, Value, and Stability. It is ranked #419 out of 622 stocks in the F–rated Biotech industry. To see additional POWR Ratings for Momentum and Sentiment for IBIO, click here.
VistaGen Therapeutics, Inc. (VTGN)
VTGN is a clinical-stage biopharmaceutical company that engages in developing and commercializing various medicines with the potential to care for anxiety, depression, and other disorders of the central nervous system (CNS).
On July 22, VTGN announced topline results from its PALISADE-1 Phase 3 clinical trial of PH94B for the acute treatment of anxiety in adults with social anxiety disorder. The company reported that PH94B did not achieve its primary endpoint, as measured by change from baseline using the Subjective Units of Distress Scale (SUDS) compared to placebo.
In the first fiscal quarter ended June 30, VTGN’s total operating expenses increased 147.9% from its prior-year quarter to $20.08 million. Total revenue declined 12.4% from the prior-year quarter to $310 thousand. The net loss attributable to common stockholders came in at $19.78 million, indicating an increase of 144% from its year-ago value. The company’s net loss per share per stockholder increased 150% year-over-year to $0.10.
Analysts expect VTGN’s EPS estimate to be a negative $0.07 for the second fiscal quarter ending September. Its consensus revenue estimate is expected to be $206.70 thousand, indicating a decline of 42.3% year-over-year.
The stock has declined 92.9% over the past year and 90.3% year-to-date to close its last trading session at $0.19.
VTGN has an overall D rating, equating to Sell in our proprietary rating system. The stock is graded an F in Growth and D in Momentum, Stability, and Sentiment. It is ranked #309 in the Biotech industry.
In addition to the POWR Rating grades we’ve stated above, one can see VTGN’s ratings for Growth and Quality here.
Timber Pharmaceuticals, Inc. (TMBR)
TMBR operates as a clinical-stage biopharmaceutical company that develops and commercializes treatments for orphan dermatologic diseases. The company’s lead product candidates include TMB-001 and TMB-002.
On August 8, TMBR announced closing its public offering of 66,666,667 shares of its common stock and warrants to purchase up to 66,666,667 shares of its common stock at $0.12 per share and associated warrant. The company intends to use the net proceeds from this offering for research and development, working capital, and general corporate purposes.
For the second fiscal quarter ended June 30, TMBR’s total operating expenses increased 180.2% year-over-year to $9.40 million. Its loss from operations increased 216.9% from the prior-year quarter to $9.40 million. The company’s net loss increased 220.1% from the prior-year quarter to $9.50 million. Net loss per share grew 87.5% year-over-year to $0.15.
Analysts expect EPS to decrease 20% from the prior-year period to a negative $0.06 for the fourth quarter (ending December 2022). The consensus revenue is expected to decline 21.1% year-over-year to $150 thousand.
The stock has declined 87.6% over the past year and 70.5% year-to-date to close its last trading session at $0.11.
The POWR Ratings reflect TMBR’s bleak prospects. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
TMBR has a Quality grade of F and a Momentum, Stability, and Sentiment of D. It is ranked #480 in the same industry. Click here to see additional POWR Ratings for TMBR (Growth and Momentum).
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IBIO shares were trading at $0.27 per share on Tuesday afternoon, up $0.01 (+3.80%). Year-to-date, IBIO has declined -50.82%, versus a -12.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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