25 August 2011 -- Sirtex Medical Limited (ASX: SRX) today announced revenue from the sales of goods increased 9 per cent to $70.3 million for the period ended 30 June 2011 and the company will pay a fully franked dividend of 7 cents per share. As previously reported dose sales increased 19 per cent from 4,171 doses to 4,977 doses worldwide. Sirtex Chief Executive Officer, Mr. Gilman Wong, said, “These good results reflect a growing awareness and acceptance of SIR-Spheres microspheres as a treatment for inoperable liver cancer. This is supported by the publication of the results of a number of recent independent clinical studies showing the benefits of SIR-Spheres microspheres adding to the already significant body of evidence”.
“It is worth reflecting that the dose sales still represent less than 1 per cent of the addressable global market of people diagnosed worldwide with liver cancer each year. We are very confident this growth will continue as our business is now based on very solid foundations and we continue to invest in building the infrastructure to enable more significant growth in the future”.
Geographic growth
During FY2011, an additional 100 new hospitals worldwide commenced using SIR-Spheres microspheres to treat liver cancer patients.
Sales in Europe grew 25 per cent with 1,603 doses sold, while sales in the US grew 19 per cent with 2,969 doses sold and Asia Pacific sales rose 3 per cent to 405. This resulted in $22.2 million in European revenue, US revenue of $45.1 million and $3.0 million in the Asia Pacific region.
In the US, Sirtex’s investment in sales and marketing support staff combined with a renewed and refocused program to address the referral community began to show very promising results.
In Europe, efforts to improve customer service, referrals and the promotion of highly positive clinical data from several small European studies helped drive increased awareness and sales. The UK’s National Institute for Health and Clinical Excellence (NICE) recently issued guidance to recommend the wider use of targeted radioactive treatments like its SIR-spheres microspheres for patients with liver cancer tumors, resulting from colorectal cancer. More liver cancer patients across the UK will now potentially benefit from treatment and Sirtex expects sales in the UK to grow following the decision. During financial year 2011, Dr. Burwood Chew was appointed to head the Asia Pacific region. Dr. Chew is a very experienced senior executive previously with Bayer Schering. This region has significant potential for growth and Dr. Chew is developing appropriate strategies to take advantage of this potential. This will include expanding sales, marketing and clinical support teams, investigating and entering new markets. Whilst we expect to see acceleration in growth in the coming years, due to the various regulatory, cultural and licensing requirements unique to this region, it will take at least two years before more significant growth can be realised.
Investment for the Future
Sirtex continues to make the necessary and significant investments in clinical studies, sales and marketing, manufacturing, and research and development to build the structure necessary to ensure the business is in a sound position to be able to take advantage of significant longer term growth and expansion.
Key investments undertaken over the last 12 months include: -
- A significant increase in investment into four large international randomised controlled studies of SIR-Spheres microspheres in the therapy’s two main indications, metastatic colorectal cancer (mCRC) and primary hepatocellular carcinoma (HCC). Patient recruitment into these studies has increased 142 per cent year on year. The most advanced of these studies are the SIRFLOX study in mCRC and the SIRveNIB study in HCC. Both are achieving their recruitment milestones and are expected to complete recruitment in approximately 15 months and 20 months, respectively.
- A significant increase of 29 per cent in the number of people employed globally. Sirtex has set about identifying and securing the best people possible to continue to build the business’s capability and develop the necessary infrastructure to ensure continued growth and success.
- The company’s new Singapore facility including a regional head office and new manufacturing plant that came online in July 2011. The plant will have regulatory approval to supply customers all over the world. This adds to Sirtex’s existing global manufacturing capability in the US. Sirtex has also recently reached agreement with ARI (ANSTO) at Lucas Heights, Sydney to continue contract manufacture of our product. These three plants will provide adequate capacity to enable Sirtex to meet demand from its growing customer base for the immediate future.
- The business has considerably ramped up its development programs aimed at improving aspects of our SIR-Spheres microspheres treatment, the so called SIR-Spheres Evolution Program. A major focus for the company at this time is to significantly revamp our current Delivery Apparatus, which was developed some 14 years ago. The development of an improved Delivery Apparatus is to provide a more reliable and simplified administration system for SIR-Spheres microspheres. Recent testing has demonstrated that our first prototype device has met key performance criteria. Sirtex is confident that the new Delivery Apparatus will be ready for market approval within the next 18 months. A second major focus for the company is the development of a Treatment Planning System to enable more tailored, patient specific therapy planning prior to the administration of SIR-Spheres microspheres. This system combines several technologies developed via our collaborations with highly regarded research universities. Clinical testing to validate the underlying principles is expected to commence later this year, but it will likely be some time before the final system is ready for market release.
- In addition to the SIR-Spheres Evolution program, Sirtex also continues to invest in its R&D program to develop new technologies to feed into a pipeline of new products. The programs can be broadly categorised into the following three technology areas; Radioprotector, Nanoparticle Developments and Microsphere Technologies. The business extracts maximum leverage from its investment in these programs via extremely beneficial collaborations with high profile research institutions throughout the country. In each case we have increased the level of support as we get closer to first clinical testing of some of the developments.
Performance and Capital management
Cash on hand increased to $42.9 million compared with $41.4 million last year. Cash from operating activities was $15.3 million. Sirtex returned $3.9 million of this to investors with a fully franked dividend for the second consecutive year. A further $10.0 million was invested back into the business during the year in the new Singapore facility, the 4 major clinical studies and the development of the new delivery technology for SIR-Spheres microspheres, as described above.
Profit before tax, excluding foreign exchange and the settlement of the legal proceedings determined last financial year, was up 13 per cent to $17.0 million compared to $15.0 million the previous year. Profit before tax, including foreign exchange and UWA proceedings, was down 25 per cent to $14.4 million. Net profit after tax was $11.5 million. This year’s results were positively impacted by $6.6 million (before tax) as a result of the company capitalising a portion of the SIR-Spheres Evolution program and Clinical trial costs associated with the four major trials mentioned above. In past years these cost have been expensed through the P&L, as the successful completion of these activities was uncertain.
With over 95 per cent of Sirtex’s revenue being generated offshore and mainly denominated in US dollars and Euro, movements in foreign exchange have a significant impact on the year on year reported numbers. The following unaudited table provides guidance for the FY2011 results having been normalised to FY2010 average exchange rates.
Outlook
Sirtex Chief Executive Officer, Mr. Gilman Wong, said, “We expect continued good growth over the coming years, further building on the solid results we have achieved in the past. We are confident that the prudent investments that we have made and business plans we have implemented over the past few years are succeeding. Looking ahead we expect that sometime in the next 3 to 4 years the results of some of our major clinical studies will be published. In anticipation of this we are currently developing further business plans and strategies and making the necessary investments to ensure the business is in a sound position to cater for a step change in our growth.”
For further information please contact:
Gilman E. Wong
CEO Sirtex Medical Limited
(02) 9936 1400
Tim Allerton or Andrew Geddes
City PR
(02) 8916 4848
