Malin Corp, the Dublin-listed life sciences investment firm, is on track to return about €250 million of cash to shareholders from assets sales in the next 12-18 months, including its key holding in a company developing cancer treatments that has slumped since floating on the Nasdaq in July, according to analysts at Davy.
The scale of such a cash return – which would also result from stake sales in Irish injectable drugs company Altan and Texas-based disinfection services business Xenex – would eclipse Malin’s current €180 million market value. It would also equate to more than 60 per cent of the €400 million raised by Malin through its 2015 initial price offering (IPO) and two follow-up share sales.
Davy analyst Andrew Young estimated in a report on Tuesday that Malin can increase the fair value of its portfolio of investments by 50 per cent from current levels to €510 million. This is based on the prospects of positive clinical trials data coming from companies in which it is invested, asset sales and the setting of new valuation benchmarks through IPOs of investee firms.
Still, risks to the portfolio of investments were underscored when Poseida, in which Malin holds a 15 per cent stake, plunged in August after it announced that a safety trial for one of its early-stage pipeline products, a prostate cancer drug, had been halted following a patient death.
“Although disappointing, it is too early to make a judgement call on a pessimistic outcome,” Mr Young said.
‘“The halting of the clinical trial does not mean it is finished.
“The [/US Food and Drug Administration]/ investigation is an ongoing process, for which we expect a resolution before year-end.”
Mr Young expects Poseida to reach important clinical milestones for other drug prospects within the next year, potentially paving the way for a sale of Malin’s stake.
The Davy analyst also flags the possible trade sales or IPOs of Kymab, which is working on an eczema treatment, and Immunocore, whose key pipeline product is an eye cancer drug, next year. Malin owns 10 per cent of Kymab and 7 per cent of Immunocore.
“In order to reach a stage where Malin can exit its investments, and exit with attractive terms, there are several important upcoming milestones that need to be successfully navigated first,” said Mr Young.
“The first set of newsflow is expected over the coming months, relating to all priority assets, and will provide a good gauge of asset progression and clarity on next steps.”