iBio

Kurta Law is investigating recommendations of iBio (IBIO). The company’s prospectus clearly disclosed the risks involved in this stock. Recommendations of high-risk investments violate FINRA Rule 2111 and Regulation Best Interest, which require brokers to tailor their investment recommendations to investors’ profiles. 

If you lost money on your investment in iBio, consider reaching out to a securities attorney. Investors can find a quicker and cheaper remedy than a civil suit by pursuing FINRA arbitration instead. Contact us at (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney for free today.

What is iBio?

According to the prospectus, IBio, Inc. (IBIO) is a biotechnology company that develops its own technology and product candidates and also provides product development and manufacturing services to other companies.

The prospectus states that one notable product involves redirecting the protein-producing ability that plants use to grow into producing desired proteins for use in biopharmaceuticals and vaccines, as well as for improving existing products.

In its prospectus, iBio states that it intends to focus on proprietary product candidates for the treatment of fibrotic diseases, naming idiopathic pulmonary fibrosis and systemic scleroderma as examples.

What are the Risks Associated with iBio?

Biotechnology and pharmaceutical companies take years to develop and release FDA-approved products in a market with steep competition.

According to the prospectus, iBio is an early clinical-stage company with only two product candidates undergoing clinical trials. The company states: “Our ability to generate product sales revenues, which we do not expect will occur for many years, will depend heavily on the successful development and eventual commercialization of our product candidates.”

Investing in iBio also comes with other risks associated with its financial condition.

Immediate and Future Dilution of Ownership

The company states that investors will experience immediate dilution of $0.12 per share following the consummation of the offering.

Further, iBio states it will need “substantial additional funding to execute [its] business plan,” and that the company has “limited financial resources.” Investors should be aware that future stock offerings may dilute current stockholders’ ownership.

iBio notes two stock-purchasing deals that may also dilute investors’ ownership and potentially cause the stock price to decline: a 2014 deal with Aspire Capital Fund to purchase more than 23 million shares, and a 2017 deal with Lincoln Park Capital Fund to purchase $16 million of stock. Lincoln Park Capital was also issued 1.2 million shares under its agreement with iBio.

Reliance on Third Parties

Ibio depends on relationships with third parties for its business plan, depending on partners in research and development and on licensees of products for “significant revenues” in the future. However, business partners may breach their contracts or choose to terminate them, cause delays in clinical trials, or take advantage of access to iBio’s proprietary or intellectual property.

Previous and Potential Litigation

At the time of the prospectus, iBio was involved in litigation with a research and development partner, Fraunhofer USA, Inc., alleging breach of contract. In a settlement reached in 2021, iBio provided Fraunhofer USA with a license to use the technologies relevant to the lawsuit.

However, iBio could be involved in other litigation in the future, including other intellectual property disputes which could become expensive for the company.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

What Can I Do If I Suffered Losses?

If you have concerns about your investment in iBio, our experienced securities attorneys may be able to help. Kurta Law attorneys have experience taking on cases of unsuitable investment recommendations and securing fair settlements for our clients. Call (877) 600-0098 or email info@kurtalawfirm.com.