Companies touting successful treatment candidates to fight COVID-19 are in the healthcare spotlight, gaining the attention of investors. Experimental treatments are being developed at a rapid pace by many companies of all sizes. This includes biotechnology companies such as iBio (NYSEMKT: IBIO), an innovator specializing in the manufacture and production of antibodies and vaccines under development.
The iBio share price soared in July of last year after its inclusion in the Russell 2000 and Russell 3000 indices. But soon after, investor confidence weakened due to a lack of news from its investors. COVID vaccine candidates, resulting in a 75% drop in biotechnology stock.
Today, a brief resurgence of investor interest is the result of exclusive licensing deals and positive preclinical studies involving its most promising candidates. Could this be a sign of future growth?
Candidates who deserve to be supported to find an effective treatment
iBio has four candidates in its current pipeline, three of which focus on human diseases. He is also developing a vaccine to treat animals against swine fever.
All three candidates for human health have reached the preclinical phase of development, while the vaccine for the treatment of animals has progressed a little further in clinical development. Among the most promising candidates is what the company has labeled IBIO-202. It is intended to fight variant strains of the coronavirus by focusing on the neoclapsid (N) protein, which is known to produce a high rate of immune response.
In July, iBio released the results of preclinical studies involving IBIO-202, showing that the focus on the N protein can help produce T cells that help the body fight the virus. The study results support the idea that current vaccines focusing on the spike (S) protein may be effective but may wear off over time, requiring boosters. By focusing on the N protein in combination with the S protein, the vaccine could be more effective and longer lasting.
Cantor Fitzgerald’s Kristen Kluska said, “We believe the company’s approach is sound and could potentially support the ongoing global immunization effort. Cantor currently has a target price of $ 3 on the share, reflecting upside potential of over 170%.
A second candidate in the pipeline that the company is excited about is RTX-003 (renamed IBIO-101), an antibody developed by RubrYc Therapeutics that targets regulatory T cells (Treg) used for immunotherapeutic treatment of cancer. In preclinical studies, it has shown signs of generating strong anti-tumor responses both as monotherapy and in combination with checkpoint inhibitors.
iBio plans to launch an experimental study on a new drug within the next 10 months, with CEO Tom Isett saying the collaboration with RubrYc is a “crucial step for iBio that can create value in many ways.” The company intends to use its proprietary plant-based FastPharming protein expression system, combined with RubrYc’s artificial intelligence platform, to produce additional cancer therapeutic candidates that are safe and scalable. , and at top speeds.
Unique plant-based system leads to expanded capabilities
The FastPharming System is designed for rapid scale-up of vaccines and therapeutics and works by creating a targeted protein through the leaves of iBio’s proprietary plants. As the plants grow, so do the leaves, which are then harvested, and the proteins are separated, cleaned, and made into a final product. By using plants as bioreactors, instead of stainless steel or single-use bioreactors, the system is more in line with green initiatives, and the company maintains that the production method cuts standard processing times by months.
In addition to its pipeline of forward-looking candidates, the company has used the FastPharming system to successfully produce vaccines to fight two variants of influenza. The company has a 130,000 square foot facility with a two-story farm operation that now houses the FastPharming system.
Global exclusive licenses pave the way for a more robust pipeline
At the end of August, iBio disbursed $ 5 million to sign an exclusive worldwide license agreement with RubrYc, which will allow it to continue the development and commercialization of IBIO-101, as well as to have the option of four new molecules developed. with the artificial intelligence of RubrYc. Platform. An additional $ 2.5 million will be paid to RubrYc in December. As part of the deal, iBio also took a stake in the private company.
This agreement follows an exclusive licensing agreement signed with Planet Biotechnology last year, giving iBio the rights to Planet ACE2-Fc’s therapeutic candidate. It is the foundational candidate that iBio is using as part of its current pipeline to develop treatments for the SARS-CoV-2 virus in its efforts to combat COVID variants.
New hype does not justify an investment
The intrigue of investing early in a biopharmaceutical company under the radar is alluring. But with the early stages of a therapeutic pipeline, there is the risk of lower income, higher expenses, and reliance on non-financial news to generate interest.
During the quarter ended June 30, all of these characteristics were visible. Revenue for the quarter was down more than 50% from the same period last year, and it was also down 37% from the previous quarter.
Spending has also increased. Research and development expenses climbed 177% to $ 10 million for the full year, due to higher spending to support its pipeline and platform technology. Selling, general and administrative expenses also jumped in the quarter, doubling from the same period a year ago.
The company expects these expenses to continue to grow through 2022, but more slowly than in 2021. Meanwhile, losses continue to add to more than $ 23 million for the year, or a 41% increase from 2020. The company has $ 97 million in cash and cash equivalents, but noted that the current cash position will run out in the first calendar quarter of 2023.
For the bargain-hunting investor who doesn’t hesitate to take risks, a $ 1 stock in a company that builds a pipeline to treat infectious and fatal diseases could be a big winner in five to 10 years. It could also be nonexistent if the money runs out. For those looking for more solid ground, there are probably better options.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.