Sirtex Raises Hopes For Liver Cancer Therapy

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

-Potential market increases
-Dose sales still up strongly
-Outcome of further studies needed
-Queries still re overall benefit

By Eva Brocklehurst

Sirtex Medical ((SRX)) has delivered some positive news with further data from its SIRFLOX study into the survival rates for SIR-Spheres treatment of liver cancer. The company has confirmed that its secondary end point has been achieved in terms of progression-free survival for liver cancer.

The latest data revealed progression-free survival improved 62.7% while SIR-Spheres offered a 31% lower risk of liver tumours progressing. While the company had previously announced it had met its secondary end point the extent of the improvement and degree of statistical significance was not known until now. The company also reported that dose sales were up 22% in the first 10 months of FY15 and that the negative commentary on the study in March had not affected sales growth. March and April were record months.

The share price in the lead-up to the latest data reflected the disappointment with the failure in the primary end point, in Moelis' view. In March, the company announced a lack of statistical significance for metastatic colorectal cancer (mCRC) treatment. The broker now feels vindicated, having suspected that when the confusion around the wording of the initial announcement dissipated the market would respond positively. Given the positive statistical significance of the secondary end point has now been confirmed this should elevate the prospective use of SIR-Spheres as an early stage therapy, in the broker's view.

The use as an early stage therapy is critical to expanding the market opportunity. Extra studies were needed as, while the product is approved for use in both primary liver cancer and mCRC, there is not enough evidence of its effectiveness, which means it is not yet a standard therapy. Oncologists tend to prescribe it as a last option when other forms of therapy have been exhausted. Further studies are due in coming years.

From here, peer review is required to interpret the clinical implications and this will take place on May 30. Moelis expects a strong FY15 performance, with dose volume growth, increased US pricing and a depreciation of the Australian dollar providing the near-term catalysts and validating the strength of the business. The broker has a Buy rating and target of $35.57.

Morgans, yet to update on the latest information, had considered the lack of support for the primary end point a major setback. The broker expected that result would make physicians hesitant to use the product in a front line setting and insurers would be less likely to reimburse treatment in these patients. That said, Morgans did not expect disappointment with the primary end point would affect the use of the product in its current "salvage" setting. Despite the sell off at the time, the broker did not consider the stock a buying opportunity and retained a Reduce rating and $15.06 target.

Bell Potter also believes many will question the benefit of subjecting patients to this treatment in the absence of proven survival benefit while the lack of an overall benefit may be a significant issue for oncologists. Hence this broker believes there is no scope to expand the indication for Sir-Spheres based on this result. The broker does not expect the company will gain an extension of its label claim based on the liver survival measure alone, hence subsequent studies remain crucial for proving an overall survival benefit. Sub-group analysis will be of interest to the broker when the full results are released later this month. Bell Potter retains an unchanged Sell rating and $19.36 target.

UBS disagrees, suspecting that the regulators could allow a label for third or second-line treatment for liver cancer, and this could increase the potential market opportunity by as much as four to sixteen times. The latest result alone may not garner first-line status but the broker still believes there will be a positive impact on industry sentiment. This latest data is a positive precursor to the SARAH study, which is comparing Sir-Spheres with Nexavar, a standard treatment for primary liver cancer. The broker retains a Buy rating and raises the target to $35.00 from $30.35.

The statistical significance in the latest data impressed Macquarie, generating an upgrade to Outperform from Neutral. Target is increased to $30 from $26. Even if overall survival, the primary end point, cannot be demonstrated, the benefit in terms of liver metastases is critical, in the broker's opinion. The liver is generally the first and often only site where metastases – the spreading of cancer from the original site – occur in mCRC. Macquarie believes SIR-Spheres could play a large role in the earlier treatment of mCRC for those patients with cancer of the liver.

Goldman Sachs considers the result a meaningful outcome which should have positive implications for the therapy. The broker does not, however, include a contribution for first line treatment following he failure of the primary end point but notes the option clearly still exists. Goldman awaits the further details from the presentation to industry peers on May 30 to gain greater insight into the commercial significance. A Buy rating and $28.00 target are maintained.

FNArena's database has two Buy ratings (Macquarie, UBS) and one Sell (Morgans). The consensus target is $26.69, signalling 1.3% downside to the last share price, and compares with $23.80 ahead of the update.

See also All Is Not Lost For Sirtex on March 18 2015.
 

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