Ibio Inc

IBio Inc (AMEX: IBIO) is a Pharmaceuticals & Biotechnology Company. The Company is engaged in the business of developing vaccines and therapeutics for the betterment of the health of human and animal.

Investment Highlights – Avoid at USD 1.38

• Despite the higher revenue in H1 FY2021, the profitability margins remained impacted by higher expenses.
• In the last six months, the Company delivered a negative return of ~66% and delivered lower returns compared to the benchmark Index.
• In Q2 FY21, the profitability margins and ROE were in the negative zone.
• In Q2 FY21, the Company had a Debt/Equity ratio of 0.31x, which was higher than the industry median.
• On a trailing 12 months, EV/EBITDA, Price/Earnings, and Price/Cash Flow are in the negative domain. Moreover, EV/Sales multiple is overvalued as compared to the industry median.
• From the technical standpoint, shares were trading below the short-term support level of 200-day (USD 1.94) simple moving average price, which reflects a downtrend in the stock and can decline further.

Key Risks

• The growth trajectory of the business could be impacted due to existing as well as emerging risks and uncertainties.
• Also, the increased competition can lead to the market share decline and income shortfall.
• Adjacently, there are some operational risks arising from changing regulatory policies, loss of sensitive data through cyberattacks, and increased supply cost due to the Covid-19 outbreak.

Recent News

On 6 May 2021, the Company provided an update on its IBIO-201 program and announced the progress in developing a second-generation subunit vaccine candidate, IBIO-202.

On 4 May 2021, the Company had resolved its lawsuit with Fraunhofer USA, Inc.

Q2 FY21 Trading Update (for the period ended 31 December 2020, as on 16 February 2021)

• iBio’s revenues increased by around $0.4 million as compared with the corresponding period of the last year.
• Due to higher operating expenses for the period, the profitability margins remained in the negative zone.
• R&D expenses were increased, driven by an increase in laboratory consumables, supplies and other costs, and an increase in R&D personnel costs.
• The cash improved to $91,252 thousand as on 31 December 2020 (30 June 2020: $55,112 thousand).

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

Despite the higher top-line performance, the bottom-line performance remained in the negative zone. The Company needs to manage its operating expenses effectively unless it results in further deterioration in financial performance in the coming years. IBIO is focused on advancing its pipeline, growing revenue and diversifying its customer base. Despite the impact of covid-19 on the world economy, the Company is focused on driving growth across the platform. The Company is in the development stage, and it relied on the cash balances and fundraised from the stock market for all the operational activities. Overall, it remains difficult to provide forward-looking guidance due to the ongoing uncertainty. The stock made a 52-week low and high of USD 0.96 and USD 7.45, respectively.

Considering the current market dynamics and various risk factors as discussed above, we have given an "Avoid" stance on Ibio Inc at the closing market price of USD 1.38 (as on 6 May 2021).

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