The warning signs were there for all to see ahead of a trading update last week that slashed hundreds of millions of dollars off the market worth of biotech outfit Sirtex Medical.
And even its 37 per cent share price fall on Friday hasn't encouraged Marc Sinatra, analyst at Lodge Partners, to shift from his long-standing "sell" recommendation on the company's shares.
![Departed Sirtex Medical chief executive Gilman Wong sold more than a quarter of his holding in October 2016.](http://web.archive.org./web/20171213010801im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/0/u/g/u/image.related.articleLeadwide.620x349.gt91sv.png/1484290271226.jpg)
"I've been bearish on the stock for a long, long time," said Mr Sinatra, who argued the primary market that Sirtex serves - cancer that has spread to the liver from the colon - was a small one.
"The failure of the SIRFLOX study last year is starting to bite," he said, referring to a disappointing research study that resulted in the halving of the Sirtex share price from more than $40 to below $20 for a time. That study showed no overall improvement in the survival rate for cancer patients from the company's cancer treatment.
Sirtex has three additional research studies, with the results due for release early next year.
"I don't think we have another Acrux," Mr Sinatra said, referring to the loss by another one-time popular biotech company of much of its business, "but it really needs most things to go in its favour to regain its former glory."
Acrux, which makes a testosterone treatment, has a sharemarket worth of just $50 million, down from more than $750 million a few years back due to regulatory changes in the US, its key market.
On Friday, Sirtex warned of weak sales, reversing investor expectations of continued double-digit growth.
One investor not spooked by Friday's warning was Peter Hall, the founder of Hunter Hall Investments, who has made tens of millions of dollars from Sirtex shares over the years. He stepped into the sharemarket on Friday to top up his holding of Sirtex shares for his investment funds.
"We bought at $15.57 on Friday. At that price, it is not a value stock, but it is quite cheap," Mr Hall told BusinessDay.
Sirtex shares bounced on Monday and closed 3.75 per cent higher at $16.60, well clear of the day's high of $17.33.
Sirtex has developed radioactive spheres to treat cancer and has built up a sizeable business as a so-called salvage or last-line treatment for patients who have few treatment alternatives. However, rival products are cutting into its market, primarily Lonsurf, which is a pill from Japanese drug maker Taiho Pharmaceutical.
"There are plausible reasons for the [sales] slowdown," Mr Hall said. "Medical oncologists prefer to give pills rather than radioactive therapy."
Like other investors, he is looking to the outcome of further research results that are due in the next few months to help strengthen the position of Sirtex's treatment in the cancer treatment market.
Analysts were wary that the company's decision to hold a briefing late last month on other research initiatives after it had earlier indicated slowing sales was a possible sign that all wasn't well at the company.
"It is a fairly common 'pea and thimble' trick," another analyst said, who did not wish to be named. "Holding a R&D; day for the first time ever, helps to shift the focus away from the basic business as sales slow.
"That may have been a trigger for Goldman Sachs to sell down its substantial shareholding in the company."
Goldman Sachs announced last Thursday that it had sold down its stake in Sirtex to below 5 per cent.
Sirtex chief executive Gilman Wong sold more than $2 million of Sirtex shares a month ago, reducing his stake in the company by 27 per cent.