iBio (NYSEAMERICAN:IBIO) stock is up 12% in the past year and up 74% in the year-to-date period. However, since I last wrote about IBIO stock on Nov. 20, the stock is mostly flat, including two big drops,lending credence to my concerns.

My worry at the time was that the company would continue to issue shares and end up diluting shareholders in the long run. I suspected that in the end, they would have nothing to show for the additional shares.

Nothing But Red Ink

As expected the company has produced nothing but losses. On Feb. 16, it released its most recent earnings (actually losses) statement. It showed just $700,000 in revenue for the quarter ending Dec. 31. After R&D expenses, the company lost $8.2 billion.

The only really good news is that iBio  reported $91 million in cash. Therefore, given that it is burning $33 million per year, it might be able to self-fund its losses for another two and a half years or so, before they would need to raise more capital.

The stock is likely to fall again if red ink continues. After all, the company has not made much progress with its attempts to get a Covid-19 vaccine.

For example, here is what the company said about its vaccine progress, buried within its press release:

“The ‘end-of-life phase’ of IND-enabling toxicology studies with IBIO-201, the Company’s leading candidate for the prevention of SARS-CoV-2 infection, has been completed. Data analysis is being expedited by iBio’s Contract Research Organization, and the Company currently expects to receive a report on the pathology results in early Q4 FY2021.“

The company expects to receive a report. Wow! That’s great news. Maybe the report will push the stock up when it comes out. Or maybe it will be meaningless. Maybe nothing stellar is really expected.

That is the takeaway that I get from these two sentences.

Burning Through Cash

Another problem is that iBio has burnt through a large amount of cash. Based on its latest 10-Q, as well as quarterly financial cash flow information compiled by Seeking Alpha, iBio burnt through $15.489 million in the last six months. In addition, $8.4 million of that was in the quarter ending Dec.

Therefore at this rate of cash burn, the company will use up $33.6 million in the next 12 months, and $67.2 million in the next 24 months. In addition, it will run out of cash before the end of the third year.

As a result, I expect to see the company do another capital raise well before then, possibly even before the end of this year. That will likely put additional pressure on IBIO stock.

What To Do With IBIO Stock

I suspect that the IBIO stock will start to fall closer to its cash per share. For example, at the end of its fiscal Q2 ending Dec. 33, there were 216.009 million shares outstanding. Therefore, dividing the $92.252 million by 216.009 yields net cash per share of 42.7 cents per share.

Therefore, given that its operations might deserve a slight premium over that amount, say 10%, IBIO stock is really not worth much more than 47 to 48 cents per share. That implies a potential drop in the stock price of 94 cents or 66% from $1.42 on Mar. 5 to 48 cents per share.

That is not saying much for the company. Let’s say by some miracle the company could miraculously project $20 million in sales over the next year or two. Let’s also assume the market was to give the business a 5 times sales multiple, or $100 million. Therefore, combined with the $92 million in cash, the most IBIO stock could be worth is $192 million. That works out to 89 cents per share.

In other words, its present $306 million market value (i.e., 216.009 shares times $1.42 per share) is still at least $114 million overvalued using miraculous assumptions.

In other words, stay away from IBIO stock. You are not likely to make much money if at all.

On the date of publication, Mark R. Hake did not hold a long or short position in any of the securities in this article.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.