Irish life sciences investment company Malin Corp, whose shares have plunged in recent months amid fears over the future of embattled Woodford Investment Management's 23 per cent stake, will have enough investor demand to absorb the holding if it is sold, according to its new chief executive.
Speaking to The Irish Times after Malin reported first-half results, Darragh Lyons, previously the company's chief business and financial officer, said he expects a "resolution to the Woodford situation in the short term" in the investment fund either committing to retaining its stake or opting to sell.
“It’s key that the uncertainty is resolved,” Mr Lyons said, adding that Malin has been working on building up investor demand for the stock, which is trading at a “huge discount”.
UK-based Woodford blocked investors taking money out of its main fund in June as it struggled to cope with client withdrawals. It has pledged to sell off shares in companies that aren’t frequently traded as well as unquoted firms, which has driven a more than 50 per cent slump in Malin’s share price in the past three months to €2.42.
Davy analyst Andrew Young said Malin's stock is trading at a 70 per cent discount to its €7.90 fair value per share, and that there is a "compelling opportunity for investors to generate outsized returns over the next 18 months".
The Dublin-based company reported on Tuesday that the value of its portfolio of investments had dropped by 5 per cent in the first half of the year to €385 million. That is due to a decrease in value of its 9 per cent interest in biotech company Immunocore, which is currently raising equity in a funding round and whose key pipeline product is an eye cancer treatment.
“The Immunicore valuation in this financing round is pretty disappointing,” said Mr Lyons, adding, however, that he sees a number of potential catalysts for a recovery as its main product continues through clinical trials.
Malin, which raised €330 million selling shares at €10 each in its initial public offering (IPO) in March 2015, was the subject of a board and management overhaul in the middle of last year that led to a refocusing of its disparate portfolio of investments around four priority assets.
These included stakes in: Poseida Therapeutics, which is developing a treatment for bone marrow cancer; Immunocore; Kymab, which is working on a treatment of eczema; and Viamet, which focuses on antifungal products.
The company's annual operating expenses have been cut from €16 million to between €5 million and €6 million. The company's last CEO, Adrian Howd, quit last October.
Poseida, in which Malin has a 25 per cent interest, shelved an IPO plan in April and opted to raise $142 million (€129.5 million) in a funding round backed by pharma giant Novartis. It may be worth between $450 million and $850 million, according to London-based securities firm Liberum.
Liberum analysts said in a bullish report last month that Malin’s Poseida stake currently justifies its entire market value. They said the holding could be worth up to three times as much as clinical trial data on its key pipeline therapy is released in the middle of next year.
Mr Lyons said he expects “good clarity” on Poseida over the next six months, with options including a takeover or IPO.