iBio (IBIO) Stock: The Case for Big Gains Is a Clear One

iBio IBIO Stock News

iBio Inc (NYSEAMERICAN: IBIO) has been a huge topic of conversation as of late, and for good reason. The company is currently working on the development of two vaccines for the coronavirus, but there are strong arguments on both sides of the coin. Today, we’ll talk about the bearish opinion, the bullish opinion, and why I believe that the path to gains is a clear one:

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The Bearish Case on IBIO

The bears have been all over iBio as of late, and while I believe that they’ve got it wrong (we’ll get into that in a minute), I also believe that it’s important that investors see both sides of this coin.

With that said, the bearish case on IBIO is a very simple one. The idea is that the company is lagging behind the pack of larger companies that are working to develop a vaccine for COVID-19.

The argument makes sense, Moderna (MRNA) and Inovio Pharmaceuticals (INO) already have vaccines in late-stage clinical trials. With IBIO not in the clinic yet, the argument is that by the time the company brings a COVID-19 vaccine to market, if it happens, it will be too late to make any substantial revenue from the move.

Again, my view is that the bears are wrong, I’m just outlining the argument here.

Bulls See Opportunity

While the bears are working to push iBio down on the very simple argumnt that they simply won’t be first to market, the bulls see a different story, one that outlines a strong opportunity ahead.

No one is arguing that IBIO will somehow go through all phases of clinical trials before Moderna and Inovio complete their Phase 3 trials. So, should these trials result in positive data, they will likely be first to market, but that doesn’t mean as much as the bears would like you to believe for a few reasons:

  • Availability. Every human being on the globe needs a COVID-19 vaccine. We’ve seen big stories about the United States buying millions of doses of the vaccines in advance, but the United States is only one geographical region. There’s no way that Inovio, Moderna, or both, will be able to meet global demand any time soon. This lengthens the amount of time that IBIO has to bring one of their vaccines to market to make a meaningful global impact.
  • Coronavirus Immunity. There are several strains of the coronavirus out there. In fact, it’s the family of viruses that causes the common cold. Immunity against these types of viruses can be extremely difficult. Moreover, immunity in the common cold only lasts for a couple of years, maybe three if you’re lucky. That’s why we get sick every few years. Developing a vaccine that works against these viruses for the long term is not likely. If it was, a common cold vaccine would already be out there. In my view, when vaccines are developed and commercialized, we’re likely to learn that they only last a couple of years. As such, annual vaccines, like what we see with the Flu, are likely necessary. As such, global demand isn’t going to disappear. In fact, there’s a strong indication that there will be long-lasting demand for a COVID-19 vaccine, further opening the door to opportunity for IBIO.
  • IBIO Work. If MRNA or INO wet the bed on their late stage studies, they’re back to the drawing board. However, IBIO is currently working on multiple COVID-19 candidates. At the end of the day, if you throw two darts, you have a much better chance of hitting the bullseye than you do throwing just one dart.
  • Takeover Appeal. Finally, IBIO may be a perfect takeover target. Not only does the company have two COVID-19 vaccines, it is the owner of the FastPharming Facility, a facility that offers a major competitive advantage when it comes to speed of manufacturing. At the same time, the company’s market cap is relatively slim, making it an easy pill to swollow for big pharma. So, the argument that a potential takeover is coming is building.

The Bottom Line

The bottom line here is simple. IBIO has been taking a bit of heat because many don’t believe that it will be first to market. However, I don’t think first to market matters as much in this case as it would in other areas of medicine. The widespread coronavirus warrants work on a vaccine from several companies. Moreover, the long-term demand for a vaccine that’s likely ahead, combined with the potential for a takeover make for a strong bull argument on IBIO.

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