Malin’s equity value rises 9% in six months

Dublin-listed Malin’s estimated intrinsic equity value per share rose 9 per cent to €9.24 in the six months to June 30th, as the company said its investments saw significant progress.

The life sciences group has stakes in five companies – Kymab, Altan, Immunocore, Viamet and Poseida. In January it said it would sell its stake in Kymab to Sanofi, and announced in June it would sell Altan to Ethypharm, a deal that is expected to deliver net proceeds of of approximately €68 million to the company. Both deals were struck at significant premiums to the last disclosed fair value estimates for the companies.

The group’s intrinsic value has subsequently fallen – to €8.83 per share as of August 25th, a difference attributed to the decline in the share prices of Immunocore and Poseida.

In a note company broker Davy said the valuation was in line with its expectations and broadly similar to the €9.10 it estimated at the time of the Altan sale in mid-June.

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The company said its corporate cash balance at the end of the six-month period was €57.6 million. That included the proceeds of the Kymab sale, which yielded gross upfront proceeds to Malin of $113 million (€96m), after the repayment of the full outstanding debt balance with the European Investment Bank of €45 million.

Malin has also bought back more than 1.5 million shares at a weighted average price of €6.34 per share in recent months. As of August 25th, Malin’s corporate cash balance was €54.9 million.

Corporate cash operating expenses for the first half of 2021 were €1.4 million, in line with previous guidance.

Analysts at Davy said the sale of Altan will bolster this cash position to around €123 million on a pro-forma basis. It noted that this amounts to around 40 per cent of the group’s current market cap of €311 million.

“With annual operating cash spend of just €3 million, no contingent investment requirements and all debt repaid earlier this year, this positions Malin to return a significant amount of cash to shareholders in the coming months,” they said in a note to clients.

Business strategy

The company has already signalled such a move at the time of the Kymab sale.

“The first half of 2021 has been a period of strong achievement for Malin as we continued to see good execution of our business strategy, with the sale of Kymab and Altan at significant premiums to their last disclosed fair value estimates.

“As a result our estimated intrinsic equity value, which we believe is the most robust financial metric to assess the progress of Malin, increased 9 per cent to €9.24 per share as at June 30th, 2021,” said Darragh Lyons, Malin chief executive.

“The initial proceeds from the Kymab divestment of €88.2 million allowed us to fully repay all outstanding debt with the European Investment Bank and buy back over 1.5 million Malin shares.

“As we look ahead to the remainder of 2021, we will seek to demonstrate further execution of our business strategy with the close of the Altan company sale, an expected significant return of capital to shareholders and further value accretion from our remaining assets.”

Poseida is due to present data on its prostate cancer candidate in the coming days, while Immunocore recently had applications accepted for its lead cancer product by regulators in both the United States and Europe. That opens the the way for a potential commercial launch in the first quarter of next year, Davy said.