SRX vs BTG

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SRX - Sirtex Medical vs BTG

We have watched the share price fall in Sirtex Medical over the past week with some interest, and whilst we don’t take our cues from price action alone, we did a fair amount on enquiry as to what had spooked investors over such a short space of time.
In the end, we uncovered what we believe is a rather benign event – a major broking house (whom we currently do not use) – hosted a lunch earlier this week with BTG International, a global specialist healthcare company. BTG own the look-a like product to Sirtex’s SIR-Spheres known as Theraspheres and if you are interested in this, here is a link to the website.
In previous research at Montgomery, we investigated – among other possible liver cancer therapies – Theraspheres. This was prior to it being bought by BTG.
We discovered that whilst it was a direct competing product to SIR-Spheres, with a large database of 26 supporting publications, at the time, it only had (and still only does) a device exemption with the FDA for humanitarian clinical use.
Sirtex’s SIR-Spheres on the other hand have TGA, FDA and CE Mark approval as well as inclusion in best practice guidelines for clinical use.
BTG have been making some noise about Sirtex’s pivotal SIRFLOX trial which is currently underway. Given they have a competing product, this is understandable, but at this stage we consider what we have learnt as just that, noise.
Theraspheres have never run a trial (small or large scale) whilst SIR-Spheres have already six previously completed, albeit smaller clinical studies and the results of two large scale retrospective analyses, which were all positive in salvage. There has not been a failed study of SIR-Spheres to date.
And whilst of course competing products such as Theraspheres and their progress (albeit slow) is a development to watch for risk of substitution later on, we believe that Sirtex have a material head-start (5 to 7+ years) on Thereaspheres.
Once the trial results are delivered for SIRFLOX in 2015, if this is positive – as we presently think it will be – then elevation to the first-line will make it almost impossible for a similar medical device to knock them off.
SIRFLOX is a Progression Free Survival study and they need to show a benefit of 3 months, which given previous positive results in salvage (5+ months), has clearly be designed to be a success and thus given their lead over their closet competitor, we remain long-term holders.
The funds at Montgomery own shares in Sirtex Medical Limited (ASX: SRX).