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Legal Issues Behind It, IBIO Stock May Be a Long Play For Risk-Tolerant Investors

iBio remains a dark horse in the ongoing development of Covid-19 vaccines. But an intriguing new candidate and a resolution of intellectual property issues makes a long, albeit small position in IBIO stock justified for risk-tolerant investors.

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This story originally appeared on MarketBeat

iBio (NYSEAMERICAN:IBIOwas one of the more fascinating stocks at the onset of the Covid-19 pandemic. The company already possessed a proprietary system for producing proteins from plants. And in the early days of the pandemic, iBio introduced a vaccine candidate, IBIO-201, with hopes that it could receive funding from Operation Warp Speed (OWS) 

That news pushed IBIO stock from about 30 cents a share to over $6 a share. However the company wasn’t selected for OWS. And it found itself engaged in a lawsuit with Fraunhofer USA which threatened the intellectual property surrounding its proprietary FastPharming technology.  

The stock dropped sharply but has found support that’s keeping it above the psychologically important $1 threshold. One reason for that is that the company is taking another whack at a next-generation Covid-19 vaccine. And, in the last month, the company has managed to put is 

I don’t often find myself pondering taking a position in a penny stock. Most penny stocks are inexpensive for a reason. Nevertheless, I find myself intrigued by iBio now that the company has put its legal troubles behind it.  

An Innovative Approach to Vaccine Development 

For investors unfamiliar with iBio, I threw a lot at you in that introduction. So let me quickly take a step back. IBio uses plant-based technology to enable next-gen biologics. The company’s proprietary FastPharming system produces proteins from plants. Because they’re plant-based, these proteins can be rapidly developed in the production of vaccines and antibody treatments.  

In addition to the speed, the premise behind the FastPharming technology is that plants are a more sustainable source for producing biologics.  

Vaccine 2.0 

IBio’s initial vaccine candidate, IBIO-201, combined antigens from the novel coronavirus spike protein and fused the with the company’s patented LicKM booster molecule in an effort to boost immune response. Using the LicKM molecule was an attempt to achieve single-dose immunity.  

Although the United States is amply supplied with vaccines, iBio continues to move IBIO-201 through the clinical trial phase. Early in May 2021, the company reported successful toxicology study results for IBIO-201.  

However, anticipating the potential of variants that may lessen or negate entirely the effect of the existing Covid-19 vaccines, iBio set out to design a second Covid-19 vaccine. This one, IBIO-202 focuses on the nucleocapsid (N protein).  

But to get this vaccine to market will take time and funding. The company may be eligible for funding from the Coalition for Epidemic Preparedness Innovations (CEPI). If it could get funding, that would be a significant catalyst for the stock.  

A Risk of Further Share Dilution 

For a biotech, the process of bringing a drug to market takes a long time and a lot of money. On the company’s earnings call, management reported $103.9 million in cash, cash equivalents and debt instruments as of the end of March 2021.  

However, even with the nearly $12 million in aggregate cash recovery the company will receive as part of the resolution of its lawsuit with Fraunhofer USA, iBio is only funded until the end of March 2023. This prompted a question from an analyst about whether the company would have to issue another share offering to raise money.  

As you would expect, the company was non-committal and expressed hope that it would be able to generate non-dilutive revenue from its FastPharming system or through funding it will receive to proceed with its Covid-19 vaccine candidate.  

What to Do With IBIO Stock? 

Although inexpensive stocks typically attract trading activity, I don’t see a good setup for IBIO stock right now. However, as a component of the speculative part of your portfolio, a long, albeit small position in iBio is worthy of consideration. It’s certainly more compelling with the stock trading near $1.50 than almost $6 as it was last summer.  

Of the two revenue opportunities in front of iBio, I see the potential for government funding to be more likely than that it finds a substantive partnership for its FastPharming technology. But clearly getting funding through either outlet would be a huge catalyst for IBIO stock.  

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