Neutral Study Limits Sirtex Medical Outlook

This story features SIERRA RUTILE HOLDINGS LIMITED. For more info SHARE ANALYSIS: SRX

The Sirtex Medical SARAH study has not met its primary end-point and disappointment is reflected in some brokers re-evaluating the stock.

-27% of patients assigned the therapy in the study did not receive it
-Diverse views on the implications for subsequent trials/studies
-Key issue of what patient population finds SIR-Spheres most useful
 

By Eva Brocklehurst

Sirtex Medical ((SRX)) has not delivered on the primary end point in its SARAH study, as overall survival was not superior to competing product Sorafenib. The company's SIR-Spheres product resulted in an overall median survival rate of 8.0 months versus the 9.9 months for Sorafenib in patients with advanced and inoperable hepatocellular carcinoma (HCC).

The company has pointed to, with the benefit a sub-group analysis, the 27% of the patients assigned to receive the company's therapy that did not receive it, despite an intention-to-treat. Referencing preceding trials, where per-protocol population (PP) is the accepted data set, has convinced the company that it can begin marketing and gain label guidance using that data set.

The population that did get the company's treatment showed equivalent overall survival in primary liver cancer to Sorafenib and Sirtex Medical believes using the PP data is made more compelling by the better quality-of-life data for SIR-Spheres versus the significant adverse effects with Sorafenib.

Either way, UBS has not taken a view on the outcome of the study and maintains a Buy rating on the stock. Secondary end-points and sub-segment data may indeed be favourable and the broker expects the company will be required to explain the SARAH PP data. UBS also finds no logical implications for subsequent studies such as FOXFIRE, which is embargoed until June 5-17.

CLSA, not one of the eight stockbrokers monitored daily on the FNArena database, downgrades the stock to Sell and has removed the upside from the SARAH clinical studies from its target price, reducing that to $16.00 from $25.10. The broker believes there are an increasing number of reasons to be negative about the upcoming FOXFIRE global combined study, given previously announced results were not significant, and these outweigh the reasons to be positive.

Morgans was not surprised by the failure of the SARAH study to show a survival advantage in advanced primary liver cancer. While the broker believes SIR-Spheres is a viable option in those patients that are intolerant of Sorafenib, and the base business is unlikely to be affected by the result, the means to drive strong uptake ahead of Sorafenib is challenged without knowing which patients are most amenable.

The reliance on PP analysis may better reflect the effects of treatment but also provides a lower level of evidence as it reflects optimal treatment and, coupled with a wide variation in treatment characteristics, fails to address the factors which will drive significant uptake, the broker adds. Morgans incorporates a negligible impact from SARAH in estimates and makes no changes to forecasts.

There are three Buy ratings (Morgan Stanley and Macquarie yet to update on the latest information) and one Hold (Morgans) on FNArena's database. The consensus target is $25.65, suggesting 71.0% upside to the last share price. Targets range from $15.60 (Morgans) to $30.30 (UBS).
 

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