Ibio Inc (NYSEAMERICAN: IBIO) is running for the top in the market this morning, trading on gains of more than 40% premarket. A search through Yahoo! Finance and the SEC will show that the company hasn’t issued any news today. Nonetheless, there’s a good reason for the gains. Here’s what’s going on:
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Here’s Why IBIO Is Up Over 40%
As mentioned above, iBio is having a great start to the trading session this morning. But with no news, many are scratching their heads wondering the reason for the run. In my view, the reason is simple.
IBIO stock is a pretty heavily shorted one. Any time that short sellers think that the stock may see gains, they quickly race to cover their positions, leading to a short squeeze. I believe that this is exactly what we’re seeing today. So, what’s the catalyst for the squeeze?
The truth is that iBio postponed its Annual Meeting of Investors, which is now scheduled to take place next week. Many are expecting for this to be a strong catalyst given recent news from the company and others about the Wuhan Coronavirus or COVID-19.
The idea here is that the company will provide an update with regard to its work with CC Pharming to develop a vaccine. Considering the current climate in the market, this could send the stock soaring. So, short sellers are racing to cover ahead of the news.
Nonetheless, regardless of the company’s work with CC Pharming, it is likely to become a big winner in the coronavirus vaccine space.
That’s because the company owns the FastPharming Facility. Originally part of a government funded program, the FastPharming Facility was created to produce vaccines and biologic agents against pandemic illnesses like COVID-19. In fact, it is the only facility in the United States that has the ability to produce vaccines at the rate at which it can produce them.
As such, no matter who creates the first COVID-19 vaccine, IBIO stands to benefit greatly. First and foremost, the little guys in the race simply don’t have the production capabilities that are required to produce this vaccine. Moreover, the big guys in the race don’t want to give up their valuable production lines to combat the pandemic, losing money via opportunity cost in the process. So, it doesn’t matter which one of them creates the vaccine first, they are going to be looking for manufacturing facilities that can meet demand quickly and keep up thereafter, the FastPharming Facility is one of very few that can do this.
What To Watch For Ahead
First and foremost, pay close attention to the company’s coming annual meeting. Recently, the market has been red due to coronavirus fears. In fact, the only stocks that seem to have consistently been green are those that are actively announcing work with regad to the coronavirus.
Considering this, I’m expecting that we’ll receive an update with regard to iBio’s work with the coronavirus vaccine and potentially work to mint manufacturing parterships. Whatever the news is, if it’s about the coronavirus, it’s likely that we’re going to watch IBIO scream for the top. So, keep your eyes peeled.
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