SRX - Sirtex Medical

craft · 16 December 2014

coolcup said:
Does anyone know why this stock tanked so much today? Down 8% but can't find any reason why. Volume seems modest too!

Tank or Blip? Depends on your time frame really.

Large Sirflox trial primary end point result should be known by March. Full data (assuming it’s met its primary end point) should be released July.

Volume was second highest for the year. Not ‘public’ news driven type volume but good technical move volume. Closed reasonably strongly off the lows.

A negative trial outcome and you could expect the price to half, Positive and it could double. I expect a lot more volatility running into the results – This stock has been far too easy a hold recently with low volatility, one way traffic. The tree needs to be shaken to flush out non-conviction volume before trial results are out.

Perhaps it was driven by some inside information – every blip is going to carry the fear that somebody knows something early regarding the trial, which will exaggerate the moves regardless of the actual move trigger.

So my conclusion as to the reason: No idea.

coolcup · 17 December 2014

craft said:
Tank or Blip? Depends on your time frame really.

The tree needs to be shaken to flush out non-conviction volume before trial results are out.

Very insightful post craft, many thanks.

I think you are right, we have seen strong volatility even since then with intraday lows of 5% down on the prior day followed by strong recoveries. And yet no announcement. It would be great if the ASX gave them a speeding ticket and that way they could provide a market update!

craft · 18 December 2014

coolcup said:
Very insightful post craft, many thanks.

I think you are right, we have seen strong volatility even since then with intraday lows of 5% down on the prior day followed by strong recoveries. And yet no announcement. It would be great if the ASX gave them a speeding ticket and that way they could provide a market update!

2nd day action and then to recover from that does start to seem a bit unusual.

Wonder if Peter Halls new high conviction fund has anything to do with it? I'm not sure if they can be on both sides with different funds and I'm not implying anything but the volatility 'may' have been strategically beneficial.(reduced tax in funds with stock exposure limits that are constantly being triggered by the rising price - lower cost base in another where a good start will help attract funds???)

Maybe it was just the market doing what the market does.

skc · 18 December 2014

craft said:
2nd day action and then to recover from that does start to seem a bit unusual.

Wonder if Peter Halls new high conviction fund has anything to do with it? I'm not sure if they can be on both sides with different funds and I'm not implying anything but the volatility 'may' have been strategically beneficial.(reduced tax in funds with stock exposure limits that are constantly being triggered by the rising price - lower cost base in another where a good start will help attract funds???)

Maybe it was just the market doing what the market does.

Found something here... again not sure if it's relevant (feels like a long bow to draw).

http://www.sharecafe.com.au/roger_m.asp?a=AV&ai=33065

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.

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.

robusta · 10 February 2015

Interesting to see what the brokers targets are for this business, between $14.03 and $36.70!!!!

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=35673E6D-DF5C-CA3C-6866B3980BB7BBB2

craft · 11 February 2015

robusta said:
Interesting to see what the brokers targets are for this business, between $14.03 and $36.70!!!!

A few weeks ago it was volatility to the down side - now the upside. Trial data release closing in.

10+ Bagger now for me on a full clip at purchase price and facing a fairly binary outcome at these levels from trial results is starting to do my head in - As per normal mental comfort zone seems a few steps behind what the market dishes up.

I suspect the upgrades will keep escalating with successful trial data, bad results and we will take the lift straight down to a lower level.

VSntchr · 11 February 2015

craft said:
A few weeks ago it was volatility to the down side - now the upside. Trial data release closing in.

10+ Bagger now for me on a full clip at purchase price and facing a fairly binary outcome at these levels from trial results is starting to do my head in - As per normal mental comfort zone seems a few steps behind what the market dishes up.

I suspect the upgrades will keep escalating with successful trial data, bad results and we will take the lift straight down to a lower level.

View attachment 61513

Good stuff Craft.
Balls of steel for sure. Are you planning to hold the entire position through the clinical results? I can imagine that CGT for a 10x investment on a full size position is a factor to consider
Joe Hockey may have the 15/16 budget deficit call pending on your answer

craft · 11 February 2015

VSntchr said:
Are you planning to hold the entire position through the clinical results?

A question I keep asking myself and one I'm having trouble answering.

The original investment thesis and buy price allows for a decent return on only the salvage end of treatment. Moving up the treatment scale was then basically free upside. This upside is very hard for me to value, so my determination was to stay firm until we have the results - one way or another. A stunning return or an adequate return was the expectation and that outcome is still valid.

On the other hand, A fair bit of the upside is now priced in on expectation - and pre trial data upside valuation is not much more then a guess - so the risk probabilities of the hold in progress have changed and the portfolio weighting is causing some pressure.

My latest thinking is - the original thesis is in tact and despite the psychological pressure to remove some risk - my risk control parameters are not breached by the holding - so GULP, I will wait for the information I need to make decisions on business developments.

skc · 12 February 2015

craft said:
My latest thinking is - the original thesis is in tact and despite the psychological pressure to remove some risk - my risk control parameters are not breached by the holding - so GULP, I will wait for the information I need to make decisions on business developments.

Is there an options market to hedge a bit?

*Thinking like a pu$$y.

skyQuake · 12 February 2015

skc said:
Is there an options market to hedge a bit?

*Thinking like a pu$$y.

No options, IG not accepting GSLs on the stock.

However there are some warrants - SRXKOC $22.63 calls
They're citi minis which are essentially barrier options with 1:1 delta

I guess if the news is REALLY bad those calls can save you some money...

craft · 18 February 2015

Dose sales are the key indicator for me on SRX and they are up 26.3% for the Half (PCP)
Applying that sort of growth to a gross margin of 84% is rocket fuel. (even if you are wearing expenses to the P&L to grow)

In the US they put the price up US$1,000 to $16K per dose and still achieved a 28% dose volume increase – their biggest and most established market.

All this growth is pre the clinical studies outcome.

Perhaps there is some oncologists pre-empting the data – perhaps the salvage end of the business is performing well. Either way the results are strong and telling.

Next important dates will be whether the SIRFLOX trial has made its primary endpoint (March) and then data released at the American Society of Clinical Oncology meeting 29thMay.

The unquantifiable potential of SRX is that it is not only developing a liver cancer treatment it is building a (self funding) efficient sales and distribution network into Oncologist clinics all over the world that could be leveraged through getting some of Australia's excellent medical research and innovation to market.

Aussies own BIG pharma? One day maybe - We have got to aim for something more then just mining.

Huskar · 5 March 2015

craft said:
A question I keep asking myself and one I'm having trouble answering.

The original investment thesis and buy price allows for a decent return on only the salvage end of treatment. Moving up the treatment scale was then basically free upside. This upside is very hard for me to value, so my determination was to stay firm until we have the results - one way or another. A stunning return or an adequate return was the expectation and that outcome is still valid.

On the other hand, A fair bit of the upside is now priced in on expectation - and pre trial data upside valuation is not much more then a guess - so the risk probabilities of the hold in progress have changed and the portfolio weighting is causing some pressure.

My latest thinking is - the original thesis is in tact and despite the psychological pressure to remove some risk - my risk control parameters are not breached by the holding - so GULP, I will wait for the information I need to make decisions on business developments.

Awesome craft - pretty sure some wag says the punters go broke by holding too long and the experienced go broke by selling too soon. Now I am not experienced but I still have found it very hard to hold on for the ride. For example VTG I bought at 35c then sold at 65c feeling pretty pleased with myself. Now it is at $1.70

craft · 12 March 2015

craft said:
Some people will probably think they have missed SRX already because it is priced in dollars rather than cents. – but IF (don’t miss the big if) the trials move SIR-Spheres up the treatment chain, we have only had entree so far. SRX is still capitalised under 1 Billion. Being self funded has kept the number of shares on issue stable.

Mains are nearly ready - will it be delicious or will it be burnt?

craft · 12 March 2015

UBS probability matrix for SRX.

Basically they are saying 90% probability of a positive announcement regarding primary end point which should be announced very soon and 80% chance then of positive data when full results are announced in late May.

So they come up with pre announcement value of $50.40 – you can then take from the table a value of $54.20 if the endpoint is positive and you still hold an 80% expectation that full results will be positive or $15.95 if endpoint is negative.

Post full results the price valuation goes to $63.80 if the full results are good or $15.95 if bad – although bad full results following a positive end point is very low probability so the $15.95 valuation becomes a very unlikely possibility if Primary end point announcement is positive.

Personally and based on latest current dosage sales I have a higher valuation than $15.95 if the trial is a failure based on the continuation of the salvage level treatment. I can’t assign accurate probabilities to the trial outcomes other than being confident based on past evidence. I am unable to do much more than guess at the upside valuation at the moment – So I can’t produce a precise table like UBS has – but a continuing hold is still my judgement.

I’m thinking that this sort of report by UBS if people act on it might push the price higher in the next few days prior to the end point announcement then I would otherwise expect. They have finally stopped chasing the price higher with their price targets and declared high probabilities of success to get a target price ahead of the pack.

craft · 12 March 2015

This is how the Average analysts target prices have been chasing the SRX price. As typical - a very accurate lagging indicator.

SuperGlue · 12 March 2015

craft said:
Mains are nearly ready - will it be delicious or will it be burnt?

Or will it be buy the rumor sell the fact.

Positive results, then SP goes down.
Some analyst will say SP has been factored in for the positive result.

Hate it when it happens.

coolcup · 12 March 2015

I'm not super informed on Sirtex but if the SIR Spheres become an approved front line treatment, will this cannibalise their existing revenues, because they won't be used for second line treatment or is it simply additive? I think the latter but wanted to check.

craft · 12 March 2015

coolcup said:
I'm not super informed on Sirtex but if the SIR Spheres become an approved front line treatment, will this cannibalise their existing revenues, because they won't be used for second line treatment or is it simply additive? I think the latter but wanted to check.

In addition and many multiples of where they are today.

If you have an hour+ this will help your understanding.
http://www.sirtex.com/au/investors/investor-videos/investor-clinical-lunch-learn/

SuperGlue said:
Or will it be buy the rumor sell the fact.

If the price keeps anticipating the results as it has over the last few weeks - that's entirely possibility.

craft · 16 March 2015

SRX has gone into a trading halt pending an announcement on the SIRFLOX study.

Probably not good that I experienced an adrenalin rush when the announcement notification first popped up - Try as I may to keep investing, analytical and unemotional – my natural responses sometimes just won’t stay at bay.

For better or worse we are locked and loaded and now we wait.

galumay · 16 March 2015

craft said:
Probably not good that I experienced an adrenalin rush when the announcement notification first popped up - Try as I may to keep investing, analytical and unemotional – my natural responses sometimes just won’t stay at bay.

craft, there is no problem with getting an adrenalin rush, natural responses are just that - natural, what matters is how we respond to them! Isolating the response and recognising it as an emotional one is the important thing, then you can isolate it from the decision making process.

SRX - Sirtex Medical

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