Malin Corp looks to benefit from Covid and promises returns

Life sciences investment firm Malin Corporation has pledged to return capital to shareholders as it seeks to benefit from opportunities created by the Covid-19 pandemic.

In a letter to shareholders, published on Monday, Malin chief executive Darragh Lyons said the company's revenue-generating assets, Altan and Xenex, both performed well in 2020.

“Altan’s full-year 2020 revenues are expected to be over 25 per cent higher than 2019 while the demand for Xenex’s UV-light disinfection technology is expected to result in its 2020 revenue trebling compared to 2019,” he said.

“Our revenue generating assets will look to build on their 2020 progress next year. Altan will target further top-line growth as it continues to launch new products and expand its presence across Europe.

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“A major focus of management has also been on improving margins and we expect to see EBITDA margin improvement in 2021 and beyond.”

Mr Lyons said Xenex will “seek to solidify” the 2020 demand levels for its UV light disinfection technology.

“The pandemic created unprecedented demand for Xenex’s product during the spring of 2020 but I also believe that there has been a lasting effect on society’s focus on disinfection and intolerance of disease-causing pathogens in any setting,” he said.

“Several new business opportunities have been created by Xenex following the pandemic, both within and outside of the acute hospital care setting (which has been and will continue to be Xenex’s primary market focus).”

Mr Lyons continued that Malin’s investee companies made “good progress” during 2020 with “strong potential” to trigger transactional and business development activity in these companies during 2021.

“Where we determine that our investee companies have reached optimal value inflection points, we will seek to monetise our positions, and we expect to generate cash returns from our investee companies during 2021,” he said.

“Executing significant cash realisations from our assets during 2021, would allow us to consider capital returns to shareholders once we have repaid our remaining outstanding debt to the European Investment Bank, which now stands at €45 million.

“We commit to exploring all available avenues open to us in delivering these shareholder returns.

“Despite the strong progress of our investee companies during 2020, our market value remains at a very significant discount to what we estimate as our intrinsic value.

“Though frustrating in the short term, I am confident that shareholder returns will ultimately be underpinned by the return of capital to shareholders.”

On the pandemic, Mr Lyons said Malin’s investee companies “continue to work diligently” to minimise the effects of the pandemic on their operations, but admitted there have been “some negative impacts”.

“Several of our investee companies have experienced delays in the progression of some clinical trials,” he said. “Fortunately, the most advanced trials across our investee company group have been able to progress with minimal disruption.

“Altan’s strong revenue growth in 2020 shows the resilience of this hospital-focused business even though sales have been negatively impacted by the significant reduction in the performance of elective procedures in hospitals across Europe.”