The surge in the share price of liver cancer treatment developer Sirtex Medical Limited (ASX: SRX) is a little perplexing as it seems to be based on news that doesn't quite tell us anything we didn't already know.
If anything, the latest result from the study confirms that Sirtex's microspheres did not meet the primary endpoint of the SIRFLOX trial. The primary endpoint for the SIRFLOX trial was to show an overall statistically significant improvement in progression free survival survival for patients recruited to the trial.
What the study did show was that Sirtex's microspheres keep cancer in the liver at bay for a longer period than otherwise. In fact, the median time period when patients are free from liver cancer increased by 7.9 months to 20.5 months.
The stock jumped by a third in value to $26.59 on the news – its highest since Sirtex reported the initial SIRFLOX study results. The trial aimed to justify using the company's microspheres as a first-line treatment for liver cancer.
The microspheres are currently used only supposed to be used as a treatment of last resort and liver cancer is typically a secondary cancer – meaning the cancer has spread from somewhere else.
In that sense, perhaps it is not surprising that patients do not live longer as the original cancer infection kills them.
On the initial SIRFLOX trial result in March the stock plunged from $39 to $17.53.
The plunge back then looked like an overreaction and today's jump may just reflect investors' view that Sirtex had been punished too harshly.
Short-covering also cannot be ruled out as traders targeted the stock by borrowing stock to sell in the hope of buying it back at a lower price later to profit from the difference.
Regardless, don't hold your breath for the stock to bounce back to its March high – not unless the justification for using Sirtex's microspheres as a first-line treatment is changed to treating liver cancer and not extending patient life.
Perhaps the lastest results will spark this debate, but until there are clearer signs of this, I don't see much more significant upside for the stock.
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