Sirtex shares dumped on poor research outcome

Shares in chemical treatment outfit Sirtex Medical slumped on Thursday following the release of poor research results that may limit the chances of its key product moving beyond a last-line, or salvage, treatment for liver and colorectal cancers.


The company has now signalled it will review its existing business and operations, especially following continued sluggish sales abroad even as a key competitor has just disclosed continued robust sales of a similar cancer treatment.

“Sirtex intends to examine all aspects of our business following the data,” interim chief executive, Nigel Lane, said on Thursday.

The poor results from the global clinical studies of its SIR-Spheres cancer therapy follow a disastrous period for the company during which it lost longstanding chief executive Gilman Wong after an investigation into his share trading, and was hit by a class action lawsuit.

Sirtex sought to put a brave face on the research results, with Mr Lane arguing they would have “minimal impact on our current business”. This is because the patients his company currently targeted had already failed all standard chemotherapy treatments.

“In our existing market of salvage … [treatment] there is a market opportunity of 42,000 [colorectal cancer] patients,” he said.

Earlier on Thursday, Sirtex released the results of the clinical studies, which it had hoped would open the door for its SIR-Spheres treatment to potentially replace chemotherapy as the primary treatment for colorectal cancer and also for liver cancer. But with the metatastic colorectal cancer cases, its radiospheres failed to achieve a survival benefit over the existing standard of care.

As a result, investors dumped their holdings, driving the company’s shares down 28.5 per cent to $10.72. Trading had been suspended until earlier in the afternoon, as the company prepared its response to the results. This leaves the company valued at only around $610 million – barely 2.5 times annual revenue. iFrameResize({enablePublicMethods : true, heightCalculationMethod : “lowestElement”,resizedCallback : function(messageData){}, checkOrigin: false},”#pez_iframeA”);

Over the past 12 months, the shares have declined by more than three quarters, after trading above $41 a year ago amid investor optimism that results from earlier research could see its cancer treatment used more widely.

“Our initial conclusion is that this represents a poor outcome for the company,” Bell Potter analyst John Hester said.

“In our view SIR-Spheres are likely to continue to be used in the salvage therapy setting only.”

For its part, Sirtex said the research results would not affect existing regulatory approvals, stating it intends to proceed with an application to the US Food and Drug Administration to broaden the indications its treatment could be used for, although any response would be very late this year, or more likely sometime in 2018.

The company also said the head of its American operations, Kevin Richardson, “has ceased employment with the company, effective immediately”.

“We are conducting a very extensive review of our entire business,” Mr Lane said, “and felt a change was needed in the US.”

Weak sales, particularly in the US, have caused significant unease among investors, particularly since UK drugs group BTG, which has a rival product to the Sirtex treatment, earlier this week disclosed 16 per cent sales growth for its product.

“This is obviously a concern,” Mr Lane said when asked about the success of BTG in boosting sales.

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