Varian to Acquire Embattled Sirtex for $1.3B
Varian Medical Systems has revealed plans to acquire interventional oncology specialist Sirtex Medical for $1.3 billion. The proposed acquisition comes about a year after the New South Wales, Australia-based company fired CEO Gilman Wong, following an investigation into his share trading.
In January 2017, the Sydney Morning Herald reported Wong was terminated after an investigation revealed he received $2.1 million from the sale of shares in Sirtex about one day after he told investors at the company’s annual general meeting that the company expected “double-digit” dose sales in 2017.
Wong was replaced in June 2017 by 20-year industry veteran Andrew McLean.
Sirtex is still facing two class action lawsuits stemming from improper trading.
In addition to its woes with its former CEO, Sirtex also failed to meet endpoints for several of its clinical trials in 2017, costing the company millions in R&D. As a result, Sirtex cut 15% of its workforce.
“Clearly the company has had a lot of distractions over the last year and half,” Varian CEO Dow Wilson said during a conference call Tuesday. “I think the [new] CEO and commercial team are very focused right now. It has been a large period of turmoil for them. The company has a very good plan…”
Sirtex’s lead product is the SIR-Spheres, a targeted internal radiation therapy for certain liver cancers. The microspheres have PMA approval, CE mark, and a nod from the Australia Therapeutic Goods Administration, but the approvals limit the use of the technology to a subset of patients and chemotherapeutic agents.
Varian specializes in cancer treatment devices, such as linear accelerators, simulators, and afterloaders, so the acquisition would be perfect fit, Wilson said.
“This acquisition is the latest step in Varian’s long-term strategy to become a global leader in multi-disciplinary integrated cancer care solutions,” Wilson said. “The combination of the two companies will expand the reach of the Sirtex platform by making it more broadly available to the clinical community.”
Sirtex brought in about $234 million in sales and has about 300 employees worldwide.
“Our view is this interventional oncology market is a new and emerging pillar in cancer therapy and is going to be an important one in all of its flavors,” Wilson said. “This gives us a very good platform position to be entering into our market that’s very closely related to our radiation strategy.”
The acquisition has been unanimously approved by the boards of each company. Sirtex said it would appoint an independent expert to determine if the transaction is in the best interests of shareholders.
Varian’s price of $22.5 for each Sirtex share represents a 49% mark-up on the January 29 closing price of $15.51 and a 60% premium to the average price over January.
Sirtex said that although its board had not put the company up for sale, it had received a number of unsolicited takeover proposals from credible parties late in 2017.
The deal is set to close in May.