The SRX Roller Coaster Continues…

What a remarkable day for Sirtex (ASX: SRX). On the back end of the release of the ASCO abstract for the SIRFLOX study the stock predictably rallied in a way that most $Bn market cap biopharma companies can only dream of. While I think the release is very positive and has some good information, there are a few things to remember:

1) The stock got hammered based on essentially the same news information. What we are seeing here is a slightly more polished management of the communication process, including some crucial details that were not, as far as I am aware, previously released. I largely consider this adjustment to be recalibration of the stock price after a completely ridiculous retail market reaction to the initial SIRFLOX news (news that I believe the vast majority of punters didn’t even understand in terms of clinical or commercial significance).

2) It needs to be remembered that SIFLOX still failed its primary end-point. While several key drugs in oncology have been approved on the basis of clinical end-points like progression-free survival (PFS) the commercial impact of SIRFLOX’s secondary outcomes, in this case, is probably negligible at this time. SIR-Spheres are already FDA approved so the stock price jump isn’t warranted on the basis of this information. In fact, not to put too fine a point on it, ultimately the lack of overall survival (OS) benefit is going to hamper reimbursement for indication expansion of SIR-Spheres in many countries because the pharmacoeconomics are simply not compelling for mCRC based on the current information.

3) Based on what I have read on the trading platforms, the vast majority of retail shareholders don’t understand that the data released in the ASCO abstract means that people did not live longer with SIR-Spheres in the SIRFLOX study. Patients on SIR-Spheres did not “get more months”. It’s critical to understand this.

4) I am reserving judgement on the ASCO outcome until I hear how the panel discussion goes and I think the stock jump on the basis of the abstract release, without a bit more colour around it, is a little premature. Although I think the clinical execution was likely solid for SIRFLOX (this should not be the issue in terms of peer-review), I have a fear that the response is going to be somewhat lukewarm about whether SIR-Spheres really have a role to play in this patient setting.

Given that SRX is not trading all that high above it’s historic P/E mean at the moment – and the growth in the business has been solid – I think there are a few bucks of headroom left in the stock even after this bump, purely on the basis of the existing commercial proposition. A business proposition that, incidentally, seems to have been essentially forgotten about by the punters out there (though not Montgomery who is obviously grinning from ear-to-ear today based on the usual crapola follow-on announcement). Of course, the irrationality of the ownership behavior in this stock will prevail and I am sure there will still be plenty of interesting stock movement to come.

By the way, for those of you who have been sucked into believing that Oncosil (ASX:OSL) will be the next Sirtex, it’s worth noting that in order to prove utility in a first-line metastatic indication, SRX will have dosed over a thousand patients between SIRFLOX and FOXFIRE. Only with 500 patients was SRX able to evaluate PFS with statistical certainty (not 17 patients). My back of the envelope calculation is that SIRFLOX and FOXFIRE will have cost somewhere between USD $50m and $80m by the time we get the data out in 2017, factoring clinical costs, regulatory and development runway required to achieve that data point. Perhaps more. With current cash on hand somewhere between $5m and $7m (based on Dec ’14 financials and rough burn rates) it helps you to realise just how far away OSL is from prime time and how tough this space is to make inroads.

Regarding FOXFIRE, I am going to make the prediction now that it will have no impact on OS either. Very few drugs have beaten end of life chemo in the advanced metastatic setting.

But let’s wait and see…

14 thoughts on “The SRX Roller Coaster Continues…

  1. Pingback: SIRFLOX : OS v PFS | The Long Tail

  2. Hi Chris,

    Please excuse my layman’s ignorance, but why do you say that:

    “the data released in the ASCO abstract means that people did not live longer with SIR-Spheres in the SIRFLOX study” in this article, but that:

    “PFS does not predict OS. PFS does not “hint” at OS. OS can only be measured when a trial, statistically powered to measure OS, is complete” in your OS v PFS article?

    Doesn’t the ASCO abstract give no indication one way or the other regarding OS? Have I misinterpreted your comment?

    Thank you,

    JD.

    Like

    • Hi James,

      Thanks for your note. Yes, you have misinterpreted my comments – but I can see that it would be easy to do so. My piece where I state that “PFS does not predict OS. PFS does not “hint” at OS. OS can only be measured when a trial, statistically powered to measure OS, is complete” is a really a general discussion about PFS vs OS, because there was evidently a lot of confusion about it. I had a number of people tell me that an improvement in PFS can “hint” and OS improvement, and this is simply not the case.

      You are correct that the ASCO abstract does not indicate anything about OS – it only states that overall PFS did not improve. To date, the only improvement that has been able to be demonstrated is a improvement in the progression of the disease in the liver (understandable, since it is a localised treatment).

      My understanding of all the communication to date, is that the company is deferring its OS position until the FOXFIRE study is complete. I’m not entirely sure whether there is a statistical basis for this or not – it seems a little odd. But at least they are consistent in their messaging.

      Thanks for reading.

      Like

      • Thanks very much for clarifying that Chris. I too am a bit confused as to why the OS position needs to be deferred – OS is listed as a secondary endpoint of the SIRFLOX study, so I thought there would be sufficient data in the study for it to be determined.

        PS: It think your site and commentary is first class.

        Liked by 1 person

      • You’re very kind, thanks for reading.

        I really like Sirtex and I see the value in the technology but I fear that if the company can’t get its act together in communication that it will not reach its full potential.

        Like

  3. Pingback: Novogen : Unacceptable Behaviour (Part II) | The Long Tail

  4. Hi Chris,

    I thought I might revisit this post in light of the recent rebound in the share price. I’ve read comments about the future potential of SRX spheres in other cancers but am a little skeptical as my understanding is that the spheres are optimised for the liver in particular and use the specialised blood flow into and out of the liver to aggregate the spheres around the cancer. My understanding is quite basic but I don’t see how SRX could get its spheres to collect in one spot in other organs but figure if anyone know it would be you….any thoughts??

    Cheers,
    Roman Lohyn

    Like

    • It’s a good question and if there are any nuclear medicine docs, interventionalists or pharmacologists reading this post, I will welcome a chime-in. But I can certainly do my best to try and give you a simple answer.

      At 30-35 microns in diameter, SIR-Spheres are likely to be above the threshold of first-pass renal clearance. I say likely, because the behaviour of particles can be really tough to predict (glomerular filtration, etc.). I tried going back to ancient publications to dig out systemic animal dosimetry but didn’t look long/hard enough to find a citation for that. What this practically means is that if you were to simply inject SIR-Spheres into your arm, they would probably have a reasonable circulation time, would pretty much irradiate most things in your body (maybe get trapped in anything with small capillaries) and any excess radiation would get parked in your liver. That’s reason why we don’t just stick this stuff in your arm – the whole body radiation dosimetry that one would have to endure in order to get enough radioactivity into a tumour would basically turn a cancer patient into a human barbeque.

      In fact, to illustrate how important it is to “dump” all of the radioactivity into the place where it needs to get to, I do recall that if there is any liver-to-lung shunting during SIR-Sphere administration, the lungs can get quite a decent dose of radioactivity (lungs are one of the most-radiation sensitive organs, so not good). Because of the way that SIR-spheres are hepatically administered, there is very little kidney toxicity in normal use.

      Why do I mention this? Well, it means that for the vast majority of cancers, if you want to treat metastatic disease outside of an organ – preferably a clearance organ – that has a clearly defined vascular anatomy “feeding” the tumour, you basically can’t do it. Sirtex does have a clinical trial for renal cancer and I think the gist of the (very poorly written) ANZCTR description (ACTRN12610000690055) is that it’s the same sort of approach as for the liver, you use an interventional approach to position the spheres into the vascularity surrounding the tumour directly in the kidney. The kidneys are a lot more sensitive to radiation than the liver (although there are also strategies for mitigating that too) and so this is a comparatively tough thing to get right especially since a lot of cancer patients have poor kidney function already. It’s probably the reason why Sirtex isn’t expending a whole lot of dollars/energy on this application beyond a pilot study. I don’t even know if that study is finished yet – if someone knows, let me know.

      The third sort of possibility is that you might inject SIR-Spheres directly into a tumour site. It’s certainly theoretically possible, the problem is that it’s probably not a competitive strategy to other approaches like using imaging-directed external beam radiation. It’s funny how people believe that a doctor can stick a needle into exactly the right place, but in fact it’s really hard to position a needle correctly (either to deliver a drug, or to sample a tissue to understand its pathology). We do use radiopharmaceutical ablation techniques for certain cancers (like, for example, thyroid cancer) but SIR-Spheres wouldn’t have a clinical edge in those sorts of applications.

      So – to summarise. It’s never going to be possible just inject SIR-Spheres into a metastatic cancer patient and hope that that killing radiation ends up in the right place. It wont. It will probably just nuke everything and not actually deliver enough radiation into a tumour. It’s also not really practical or differentiated to inject directly into a tumour because it is a bit hit-and-miss, and there are probably better ways of accomplishing that particular clinical goal. Really, to give SIR-Spheres, you need to be able to work with a clearance organ where there is clear vascular anatomy feeding the tumour. However this is much more difficult to accomplish in the kidney because it is more radiation sensitive (at least compared with the liver) and so – really – SIRSpheres are only ever going to have applicability in treating liver primary/mets.

      Does that help? Again – anyone reading this that has technical corrections to make, please supply them.

      This does, of course, lead to a more interesting strategic question about how Sirtex might further grow its business. I think the SIR-Sphere product is very good and the company deserves its success. But if it wants to grow further as a radiopharmaceutical company, it is going to have to expand its product pipeline. Given the shocking lack of leadership and vision in the radiopharmaceutical industry, a company like Sirtex could clean up a lot of very good assets at low cost.

      Let’s see if the management has the vision and drive to make it happen.

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      • Thanks for the answer Chris…very illuminating as usual. It does seem that they are not going full bore on the Renal cancer study..12 patients in 5 years doesn’t really sound like its a high priority project.
        Following on from that, a couple of questions….
        1. can you think of what other cancers would suit the SRX model ?
        2. it seems that the core competency is quite specific so how would SRX expand its product pipeline without incurring a high risk of screwing up something with which they are unfamiliar?
        Cheers,
        Roman Lohyn

        Liked by 1 person

      • Simply:

        1) no, it’s basically tumours of the liver, and then not all tumours. That’s pretty clear in the literature.

        2) they would need to acquire other radiopharmaceuticals or interventional products (if they want to go down that pathway). Sirtex is a reasonably sophisticated company, they are surely capable of expanding their pipeline in a reasonable way. There are plenty of obvious commercial targets.

        Like

    • No comment. I didn’t spend 15 years working extensively in radiopharmaceuticals to post an M&A list on a public forum. You must be belabouring under the misconception that I am some kind of blogger.

      But for the avoidance of doubt there is not a single radiopharmaceutical asset in Australia worthy of acquisition by Sirtex. That includes Oncosil (for example).

      Like

  5. Pingback: Oncosil Apology | The Long Tail

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