Sirtex Medical CEO Gilman Wong … UBS says the company could aspire to a market four times larger. Photo: Brianne Makin
Unusually strong comments from researchers about Sirtex Medical’s liver cancer therapy helped boost the company’s share price by 14 per cent on Monday.
The stock has whipsawed in the past few months as the company has drip-fed results from a large clinical trial, in line with strict rules governing research presented at the American Society of Clinical Oncology’s annual meeting.
When the preliminary results were released in March, and showed the primary end point was not met, the stock plunged from as high as $39.13 to a 12-month low of $16.14.
A fortnight ago the release of Sirtex’s conference abstract, showing slightly more detail, pushed the stock up 35 per cent to $27.00. After the full data was released at the conference on the weekend, Sirtex shares rose as high as $34.00 after coming out of a trading halt on Monday, before closing 14 per cent higher to $30.52.
“Early feedback from key opinion leaders in the peer review process is promising for Sirtex’s commercial prospects in liver-only disease,” Morningstar’s Chris Kallos said following an investor conference call on Monday.
Mr Kallos said the feedback was that there could be a role for Sirtex’s novel targeted radiation therapy as a first-choice treatment for some patient sub-groups, “namely, younger patients with liver-only cancer [who are] otherwise in relatively good health”.
“The up-tick in sales data for March and April, cited by management, supports the positive impact of the recent findings despite primary end point not showing statistical significance,” he said.
“Overall survival data is still the key measure, with findings not expected until 2017.”
UBS upgraded its price target for Sirtex to $38.45 from $35, arguing the research results released at the weekend will open the door to a four-fold boost to the potential market for its treatment.
“We believe Sirtex has inspired early adopters to treat a significant subgroup of liver cancer as first-line, with others clearly encouraged to look at second-third-line treatment,” it told clients.
The data will enable Sirtex to modernise its label to include its treatment as a combination therapy for inoperable metastatic colorectal cancer (mCRC) liver only, according to UBS.
“This allows Sirtex to target up to 40 per cent of patients where the colorectal cancer has been resected but the disease remains in liver only,” the broker said. “It is likely that this category would be narrowed again to those who are fit and healthy and where there is an adverse molecular signature.
“Though narrowed, this represents a [fourfold] expansion of the market” for the Sirtex treatment.
UBS reckons Sirtex has penetrated only around 7 to 8 per cent of the salvage market.
“We now consider a ‘roadmap’ whereby Sirtex can aspire to a market four to 16 times larger for mCRC,” it told clients.