On Monday, Sirtex Medical Limited (ASX: SRX) shares went into a trading halt at the request of the company pending a company announcement. The announcement is related to the company's SIRFLOX study. The clinical trial results of this study are highly anticipated and have been a catalyst for the stock rising 147% over the past 12 months.
Sirtex Medical previously announced in its 18 Feb half-year investor presentation the preliminary data release would occur in March 2015. The final results and detailed analysis of the study will be presented at a US medical conference at the end of May / beginning of June.
Successful trial results to lead to production expansion
What investors are hoping to hear is the study results indicate its specialised liver cancer treatment using SIR-spheres shows a statistically significant result in aiding patients' progression free survival time. If that and other factors determining a clinically significant outcome occur, the company has projected its production levels could potentially triple.
Initially, this major step would be in the US, the world's largest healthcare market, but other world regions could open with further regulatory approvals. Sirtex Medical could have a long growth story ahead of it.
The trading halt is in effect until the earlier of the commencement of normal trading on Wednesday, 18 March 2015, or when the announcement is released to the market.
Australian healthcare company success story
Sirtex Medical is one of the success stories among Australian companies that have expanded overseas. Even before the current clinical study results come out, the company has raised revenue over six times since 2005. In the past five years, the stock has risen a whopping 529%.
CSL Limited (ASX: CSL), the $43.4 billion pharmaceutical, Cochlear Limited (ASX: COH), the hearing aid device producer and ResMed Inc (CHESS) (ASX: RMD), which specialises in breathing aids and respiratory equipment, are all examples of Aussie healthcare stocks that have made it big internationally. Sirtex may be the next to rise to their ranks.
Unfortunately, the stock is trading at a 67 price/earnings ratio due to investor anticipation of the clinical trial results. For value investors, it's hard to buy at those levels because there isn't much margin of safety in the share price. Still, I will be watching the company very closely because the long-term growth story is attractive.
