Sirtex confirms guidance but announces restructure

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Investors have responded positively to Sirtex Medical (ASX:SRX) announcing a restructure and confirming its full-year guidance.

The company recently announced disappointing results from the 459-patient SARAH study that confirmed no survival benefit from use of its SIR-Spheres Y-90 resin microspheres over Bayer's PBS-listed NEXAVAR (sorafenib).

In an announcement yesterday, the company said it would focus on the core business by "eliminating resource inefficiencies". This will result in a headcount reduction of approximately 15 per cent and a pre-tax restructuring charge of approximately $5.3 million. The changes, which follow the clincial trial results and a business review, follow a $7 million reduction in R&D costs identified in February.

The company announced the departure of chief medical officer Dr David Cade.  

"Sirtex thanks him for 14 years of service, and wishes him well. Dr Cade will transition out of the business over the next three months and a search for a replacement will commence immediately," said the company.

On its financial performance, Sirtex said global dose sales of approximately 12,590 are 5.5 per cent higher compared with last year. Underlying earnings, at constant currency, are anticipated to be in line with previosu guidance at approximately $72 million.

The company also announced a one-off non-cash impairment charge of around $90 million in relation to the carrying value of SIRFLOX/FOXFIRE/FOXFIRE studies in metastatic colorectal cancer and the SARAH/SIRveNIB studies in hepatocellular carcinoma (HCC). The impairment follows the release of data showing the studies did not meet the primary endpoint.

CEO Andrew McLean said financial results supported the long-term growth potential of core operations, while at the same time it was important to take additional steps to improve the underlying profitability of the business.

“Sirtex’s core business, based on selective internal radiation therapy (SIRT) with targeted doses of SIRSpheres Y-90 resin microspheres into the liver is clinically proven technology with regulatory approvals across key global markets, which produces positive outcomes for patients with liver cancer. Our goal is to achieve expanded use within our existing markets which covers over 40 countries globally and gaining utilisation in new geographies,” said Mr McLean.

“While the reduction in headcount across a number of business functions is regrettable, it must be noted that these structural changes in the business are designed to optimise the way we engage with our key clinician stakeholders and more effectively target new users, while ensuring as many patients receive our innovative therapy through new or expanded reimbursement,” he added. 

The company's share price closed up over 15 per cent on Wednesday and rose another 4 per cent early Thursday.