The Sirtex Medical Limited (ASX: SRX) share price could come under pressure when it returns to the ASX boards after the results of some of its flagship clinical trials were released by the American Society of Clinical Oncology (ASCO) this morning.
The latest results to come out involve the company's FOXFIRE trial that was designed as a study as to the effectiveness of the company's selective internal radiation therapy (SIRT) as a first-line treatment for patients with liver metastases from colorectal cancer.
My understanding is that the primary endpoint of the study was to improve overall survival (os) times in patients, with the length of the disease's progression free survival (pfs) another important endpoint for the oncology community.
Unfortunately, it seems the primary endpoint of the study was not met with the available ASCO abstract concluding: "Despite higher response rates and improved liver-specific PFS, the addition of SIRT to first-line oxaliplatin-fluorouracil chemotherapy for patients with liver-only and liver-dominant mCRC did not improve OS or PFS."
The ASCO conference abstracts also contains a report due for discussion June 4 2017 on the SARAH or SIR v NIB trials that pitted SIR-Spheres against a rival product named Sorafenib that is currently in wide use by oncology professionals. Again the ASCO abstract seemed to reaffirm the original conclusion that: "There were no statistically significant differences in OS between Y90 and sorafenib."
As with other recently released trial results including SIRFLOX and SARAH it seems there were positive aspects to the trial results, but whether the clinical evidence is sufficient to persuade oncologists to use the SIR-Spheres higher up the treatment scale is hard to know.
Outlook
The Sirtex share price has swung wildly over the last few years on the back of the release of trial results, hype (in particular fed to the media by institutional share owners) and downgrades to previous sales forecasts.
Many of Australia's biggest research houses including UBS also arrived late to the Sirtex party in 2015 only to leave those following their bullish advice feeling mightily hungover. UBS for example put a bullish 12-month price target of $50 on the shares in 2015, with Goldman Sachs declaring a $40 price target, and another famous investment bank putting a $42 price target on shares.
Since then the shares have slumped to $15 and the CEO has been sacked after selling nearly $2 million worth of shares just over a month before downgrading his own sales guidance for the company. The previous CEO's last December 2016 trading update I described as just about the worst I had ever seen (from a previously investment grade company) in more than 10 years covering financial markets.
It remains my opinion that Sirtex's best days are almost certainly behind it as growth slows, competition rises, and the stink from the CEO's share selling engulfs the credibility of the company's past and future.
I might be wrong, but I'm definitely not a buyer of its shares, especially when the ASX is blessed with several high-quality healthcare alternatives that continue to enjoy dominant competitive positions and rock solid double-digit profit growth. Hearing aid maker Cochlear Ltd (ASX: COH) and blood plasma business CSL Limited (ASX: CSL) are on my watch list to buy once their share prices come back to more attractive valuations.
