Some badly-needed good news for Sirtex Medical Limited shareholders

After a raft of bad news in recent times that has knocked the share price down 38% in a year, Sirtex Medical Limited (ASX: SRX) shareholders may have cause for some optimism today.

After a follow-up analysis, the company found that its SIR-Spheres treatment combined with chemotherapy was significantly better than chemotherapy alone in a certain group of metastatic colorectal cancer (mCRC) patients.

Specifically, right-sided tumour sufferers (see image below) experienced a significant improvement in their outcomes when SIR-Spheres were added to their treatment regimen. It is hypothesised that SIR-Spheres are more effective because these patients traditionally have a poorer prognosis and inferior responses to treatment.

source: Company presentation

Unfortunately the SIR-Spheres were pretty much useless in left-sided tumour sufferers, but a future case might be made for including SIR-Spheres as standard treatment regime for right-sided tumours (which, ultimately, could result in a larger target market). From lemons, a few drops of lemonade:

Treatment with… chemotherapy plus SIRT… in mCRC patients with primary tumours originating in the right colon results in a statistically significant and clinically meaningful improvement in overall survival compared with chemotherapy alone.

Unfortunately, and this is one of the most frustrating parts of scientific research:

“The drivers of the observed side-based differences in treatment impact remain to be elucidated.

Which is scientist-speak for ‘we’re not really sure why we got this result.’ In my view the results are a positive but unlikely to be important to the company’s sales and prospects in the near term. Rather, they suggest that Sirtex can potentially still expand into other treatment opportunities over the medium term.

In the near term, the new CEO’s strategies to cut costs and focus on growing sales will be far more important. While I’m optimistic about the new strategy, I’ll be waiting for evidence before making an investment decision either way on Sirtex.

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Motley Fool contributor Sean O'Neill owns shares of Sirtex Medical Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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