KUALA LUMPUR (Oct 12): Genting Bhd may get to raise its shareholding in its 20.33%-owned UK-based TauRx Pharmaceuticals Ltd for cheap, according to Maybank Investment Bank Research (Maybank IB Research).
"We understand that in the last round of TauRx's rights issue in November 2021, Genting was awarded warrants with an exercise price of US$45 (RM211) each. From other channel checks, we understand that TauRx shares are now transacting at a much higher [price of between US$200 and US$300] each.
"We are told that since not all shareholders participated in the aforementioned rights issue and thus, did not receive the warrants, Genting may effectively get to raise its shareholding in TauRx from 20% for cheap," said the research house in a note dated Oct 10.
Maybank IB Research said it attended a briefing held by TauRx after it announced results for its Phase 3 Alzheimer's disease study, Lucidity (TRx-237-09).
TauRx will submit its hydromethylthionine mesylate (HMTM) oral drug for people with Alzheimer's disease to be approved by the US Food & Drug Administration in the first quarter next year and maintains that it will be worth about US$15 billion should HMTM be approved.
Interestingly, the result of the study found that the placebo used as control, being Methylthioninium Chloride (MTC), also has benefits. In theory, this would invalidate TRx-237-09 as one could not gauge the difference in benefits between HMTM and MTC.
Despite that, TauRx was still able to prove HMTM's efficacy, said the research house. Maybank IB Research highlighted that TauRx emphasised that HMTM is effective, safe and cheaper than its competitors.
"We ascribe US$1 billion valuation to TauRx and raise our Genting SOP-based TP (target price) to RM5.35 from RM5.25. If TauRx is worth US$15 billion, Genting will be worth a much higher RM8.57 per share," the research house noted.
Genting narrowed its net loss for the first half of financial year 2022 to RM259.2 million from RM895.3 million a year earlier, as revenue jumped to RM9.9 billion from RM5.2 billion.
Shares of Genting traded down six sen or 1.36% to RM4.36 at the time of writing on Wednesday (Oct 12), valuing the group at RM16.86 billion.