For those readers that followed my advice and bought Sirtex Medical Limited (ASX: SRX) shares mid-last year, I'm sorry. As you'd no doubt be aware, Sirtex has continued to disappoint with its share price slumping last Thursday following another disappointing round of trial results.
Whilst I'd ordinarily brush this off if the underlying operations of the company were growing, the latest round of trial results suggest this company is going nowhere anytime soon.
Accordingly, I think it's time to sell.
Sirtex's shareholders arguably have a love-hate relationship with the company.
Back when I first recommended buying the stock in June last year, Sirtex was trading at then 52-week lows of $26.73, as investors feared a slowdown in dose sales growth would hamper profitability at the biotechnology company.
Nevertheless, shortly after my initial recommendation, the stock surged to $34.80 – a gain of 30% – as the company surprised investors after reporting higher-than-expected dose sales growth.
At the time, Sirtex's shares were flying and on track to join the ranks of CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) as another one of Australia's biotechnology success stories. However, in late December last year, the company shocked the market with an unexpected trading update which sent Sirtex's share price tumbling.
Back then, many like myself, believed the company's downside was limited given its highly-anticipated trial results due for release this year. However, enough is enough.
Sirtex's share price has continued to languish with the latest FOXFIRE and SARAH trial results demonstrating there's little hope for the company to grow dose sales growth rapidly.
To date, management has been resting its laurels (and Sirtex's success) on the long-term study results of its SIRFLOX, SARAH and FOXFIRE clinical trials. The aim of all three trials was to show that Sirtex's (one and only) treatment – the SIR-spheres – increased the overall survival rate, or progression free survival rate, of various types of cancers, when compared to the current treatment of choice.
Invariably, the aim of these three studies was to convince the oncology community that SIR-spheres should be used as a treatment of choice, rather than its current "last-resort" treatment status.
Disappointingly for investors, all three clinical studies failed to support the company's thesis that the SIR-spheres were superior to the leading treatment in effectively treating metastatic colorectal cancer.
Although each clinical study showed reduced patient side-effects when using the SIR-spheres (as against the leading alternative treatment), these positive aspects are unlikely to be enough to convince the oncology community to prescribe SIR-spheres as a first line of defence. Accordingly, I don't think investors should stick around much longer to see if the company can revive sales growth.
Foolish takeaway
Indeed, Sirtex may surprise and continue to grow dose sales given its low market penetration in the area.
However, as Acrux Limited (ASX: ACR) has previously shown, the biotechnology sector can be a fickle space with any negative publicity affecting the company's long-term prospects.
Although the recent results aren't company ending for Sirtex, I do believe the company's lack of alternative products and disappointing trials means investors should cut their losses and sell the stock at current prices.
