Sirtex Medical Limited (ASX: SRX) sells tiny biocompatible radioactive microbeads, called SIR-spheres, that allow radiologists to deliver radiation directly to liver tumours. This is a new treatment for liver cancer and, quite literally, can save lives. Sirtex shares are up over 63% in the last year alone, as the market wakes up to the company's potential.
Here's why Sirtex is exciting investors.
1) Many oncologists (cancer doctors) consider Selective Internal Radiation (SIR) therapy to be a 3rd line treatment. One risk of SIR therapy is that the radioactive spheres end up somewhere other than the target. As a result, SIR therapy requires that radiologists place tiny coils through a catheter to block certain arteries. A couple of weeks later, after taking certain preparatory medications, the patient receives the radioactive spheres through the artery. This is quite a process, and it naturally takes time for health professionals to learn it, but once they do, they see results. Furthermore, it makes little sense to reserve such a treatment for after the patient is already badly weakened. Anecdotally, patients' families want doctors to prescribe the treatment before it's too late. It doesn't seem right for SIR therapy to remain a 3rd line treatment for those it could help earlier.
2) The company is currently funding the SIRFLOX study, testing whether SIR therapy is a good companion treatment for chemotherapy. If the study shows that it is, you can be sure that SIR-spheres will be more widely used.
3) SIR-spheres dominate the main competition, TheraSpheres. I'm not a medical expert, so I couldn't explain why exactly, but it does seem to me that the biocompatible resin spheres would be preferable to the TheraSpheres, which are made of glass (although they are smaller).
As long term shareholders of superstar stock CSL Limited (ASX: CSL) know well, one of Australia's strengths is medical research. Perhaps that is why Tony Abbott has created a $20 billion medical research future fund, to be paid for by a Medicare co-payment. CSL has grown profits over 2600% in 15 years. If Sirtex performs even half as well, shareholders will be happy, despite the fact there is already a lot of optimism priced in.
