Stocks of coronavirus vaccine developers garnered investors' attention due to their potential to decisively end the COVID-19 pandemic and allow economies to return to normal via mass immunization. Right now, there are nearly 50 experimental SARS-CoV-2 vaccines in clinical trials and 89 vaccine candidates still in preclinical studies.
The COVID-19 vaccine race is coming to an end, as the U.S. Food and Drug Administration (FDA) may issue emergency use authorization to one or more promising late-stage candidates as early as November. Stemming from a lack of progress, investors began to ditch coronavirus vaccine developer iBio (NYSEMKT:IBIO) stock en masse. Since reaching a 52-week high in August, iBio stock is now down over 60%, wiping off nearly $700 million in market cap. Today, let's take a look at why the opportunity to make money on iBio is over and why investors should avoid this stock.
An uphill battle
Right now, iBio's coronavirus vaccine candidates are only in the preclinical stages. Unlike its competitors, iBio has the double burden of developing a coronavirus vaccine and the expression system behind that vaccine. An expression system is a construct that contains genetic data extracted from a virus. Vaccine manufacturers using this method typically utilize bacteria, yeast, insect cells, and mammalian cells for their expression systems.
iBio, on the other hand, is using a plant-based expression system for its experimental coronavirus vaccine. Unfortunately, plant-based expression systems do not have a track record of success for pharmaceutical use. In fact, there are currently no plant-based vaccines approved by the FDA on the market.
To make matters worse, the FDA would not even review plant-based vaccines because they are classified as genetically modified organisms (GMO) and thus are under the jurisdiction of the U.S. Department of Agriculture (USDA), which in fact approved a plant-derived vaccine for use in chickens in 2006. Even if the company's experimental vaccine somehow goes into clinical trials and ends up successful, it would arguably need to invest capital in lobbying to change the current laws (a potentially very lengthy process) since it is the FDA that is reviewing all of the coronavirus vaccine candidates.
Right now, iBio has two other candidates outside of its coronavirus pipeline, both of which have not made it into phase 1 clinical trials. In addition, one such candidate, IBIO-400, for potential immunization against classic swine fever, suffers the same scientific and regulatory uncertainty issues as its COVID-19 plant-based vaccines.
Since iBio's inception in 2008, the company has lost a cumulative sum of $150.4 million. In the past year, iBio generated just $1.6 million in revenue compared to a $38.3 million net loss. What's more interesting, however, is that the company's share outstanding stood at 50 million at the beginning of the year. As of Oct. 24, that number has ballooned to 180.29 million via multiple rounds of stock dilutions.
There is no doubt that investors get excited about companies with potential scientific advancements, but that means nothing without accounting for the probability of attaining that success. There are simply much better buys in the biotech sector for those who are interested in coronavirus stocks. At the moment, investing in iBio stock is about as risky as it gets.