After a terrible year of falling share prices, the Sirtex Medical Limited (ASX: SRX) share price has bounced almost 40% in recent days as investors responded to yesterday's announcement.
Incoming CEO Andrew MacLean has announced big cuts to staff numbers and R&D expenditure to focus on the core business – selling SIR-Spheres treatments.
The company also elected to write-off of previous R&D expenditure, which is expected to produce a big hit to statutory profits in the coming year. However, dose sales continue to grow and the company is expected to provide an update on its strategy at the annual report in August.
One wag on social media joked yesterday that 'all the company needs to do is forecast double digit growth sales in August again and it's going straight back to $30', a reference on last year's optimistic and ill-fated forecast that ultimately ended with a class action against the company and the sacking of then-CEO Gilman Wong.
My view is that Sirtex faces an uphill struggle to regain lost territory, especially now that the likelihood of seeing SIR-Spheres expanded to a wider range of uses has been greatly reduced. However, the company does have a compelling product and room to grow via entering new markets and achieving reimbursement for its use. Fortunately, Sirtex also has a clean balance sheet which has improved its ability to invest where necessary and weather financial shocks. I continue to hold my shares while I evaluate these changes to the company's strategy.
