BioWorld International Correspondent
SYDNEY, Australia - Directors of Sydney-based SIRTeX Medical Ltd. welcomed the A$271 million (US$161 million) bid by Cephalon Inc., saying that Cephalon has the distribution muscle to get its liver cancer treatment to market.
Executive chairman and founder of SIRTeX, Bruce Gray, said that the offer of A$4.85 a share for the Australian company represented a nearly fivefold increase to the company's IPO price of $1 a share in August 2000. The bid also represents a premium of 13.5 percent to the average trading price for SIRTeX (weighted for volume) in the 90 days before the bid, and a 2.1 percent premium to the share price before trading was halted to announce the bid.
Gray said that the company can develop markets for its liver cancer treatments itself and is already making sales in the U.S. market. But Cephalon, of West Chester, Pa., already has a well-developed distribution network in the U.S. and Europe, with about 1,000 people in the U.S. and 700 in Europe.
"The company has distribution muscle," Gray said.
He said that the offer, in effect, represented a way for shareholders to realize profits from the cancer treatment without SIRTeX taking the risk and trouble of building up the market itself.
The company has devised a treatment using very large biospheres, called microspheres, which contain radioactive particles. These spheres are delivered directly, through a catheter, to the hepatic artery feeding the liver and are trapped in the small blood vessels of the tumors, delivering their radiation dose directly to tumors.
Clinical trials have shown side effects, including fever, abdominal pain and nausea, but also have show greater survival times for patients treated using the spheres.
Gray said that SIRTeX approached several companies about distribution deals, including Cephalon, but Cephalon's response had been that instead of distributing the spheres it wanted to own the company.
SIRTeX directors have formally recommended the bid to shareholders, "in the absence of a higher offer," but it still will be required to jump through several hoops under Australian law, with the first step being for both bidder and target to produce statements for shareholders.