iBio (NYSEMKT:IBIO) was up big on a massive 13.2M shares on Friday in response to speculation that it may be a manufacture partner in the government's efforts to ramp up production of Mapp Biopharmaceuticals' Ebola drug ZMapp. The stock price jumped another 70% in pre-market trading on Monday. However, a closer look at the news reveals that iBio cannot be the partner of ZMapp.
Based on UT San Diego news on Oct 9th, 2014, ZMapp's new partner will scale up a more traditional biotech process using genetically modified mammalian cells. That process uses "CHO" cells, derived from "Chinese hamster ovaries," grown in sterile tanks.
Bloomberg on 10/10/2014 also confirmed that the new partner will use Chinese hamster ovary cells for the new drug production.
However, IBIO's iBioLaunch is a plant-based platform. According to its website, The iBioLaunch platform is a proprietary, transformative technology for the production of biologics including monoclonal antibodies, other therapeutic proteins and vaccines. It uses proprietary, transient gene expression in unmodified green plants instead of materials such as chicken eggs, bacteria, mammalian and insect cells, transgenic plants, and human blood plasma required by other systems, to produce important biologic pharmaceuticals.
A simple and quick piece of investigative work can make investors/traders avoid traps caused by unfounded rumors or even profit from it. If the truth is revealed in the next few days, iBio will tank hard as investors/momentum traders find out that iBio is not the partner at all. To make the situation worse, iBio entered into a $10M common stock purchase agreement with Aspire Capital Fund LLC. After its initial purchase of 1,136,354 shares at $0.44 per share, Aspire has committed to buying up to $9.5M in additional shares of common stock over a 24-month period. You can expect that Aspire Capital will take advantage of this rumor and hype to sell their shares purchased under $1.
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