US hedge fund Pentwater Capital has emerged as the buyer of the 23 per cent stake in Irish life science investment company Malin Corp that was sold in recent weeks by troubled UK asset manager Woodford Investment Management.
The move increases Pentwater’s stake to 26 per cent, Malin said on Tuesday, making it the company’s largest investor after taking advantage of the stock’s depressed value.
Pentwater is already a co-investor along with Malin in a firm called Poseida Therapeutics, which is developing a treatment for bone marrow cancer. Malin's UK corporate broker Liberum estimates that Poseida, in which Malin has a 25 per cent stake, may be worth between $450 million (€409 million) and $850 million.
On that basis, Malin’s market value, which has jumped by more than a third to about €192 million since Woodford offloaded most of its interest on September 24th, would be mainly justifiable on the Poseida investment alone.
However, Poseida’s ultimately worth will ultimately come down to crucial clinical trial data on its pipeline therapy in the middle of next year.
Shares in Malin slumped in June when Woodford blocked investors taking money out of its main fund as it struggled to cope with client withdrawals. The firm, led by once-revered stock picker Neil Woodford, pledged at the time to sell shares in companies that aren’t frequently traded as well as unquoted firms.
Shares in Malin are currently trading at about €4.20, having fallen to as low as €2 in August amid heightened uncertainty over the Woodford holding.
Woodford also holds interests the three other key priority companies in Malin’s investment portfolio: Immunocore, whose key pipeline product is an eye cancer treatment; Kymab, which is working on a treatment of eczema; and Viamet, which focuses on antifungal products.
“We have acquired a significant interest in Malin at a deep discount to its intrinsic value of €7.90 per share,” said Pentwater management in a statement. “We are supportive of the current business strategy and of the Malin management team and are very excited about the potential of Malin’s assets to create significant additional value for shareholders.”
Pentwater, which has interests in a number of healthcare companies, bought most of its Malin shares at €3.10, which is 60 per cent below what the firm estimates the stock's real value to be. The shares appear to have been held in parts of investment banks Credit Suisse, Citigroup and UBS on Pentwater's behalf before Tuesday's announcement.
Malin’s chief executive, Darragh Lyons, told The Irish Times early last month that the company had been working hard to line up investors as it was looking increasingly likely that Woodford would end up selling out.
Welcoming Pentwater's investment, Malin chairman Liam Daniel said: "Our assets are progressing, with several near-term milestone which I believe can be catalysts to significant value creation for all our shareholders."