By Mathew Dunckley
Biotech company Sirtex Medical is facing shareholder class actions over the events surrounding the controversial departure of its chief executive.
Law firms William Roberts Lawyers and Maurice Blackburn Lawyers and litigation funder IMF Bentham are each inviting Sirtex shareholders to join separate class actions.
Former Sirtex Medical CEO Gilman Wong.Credit: Michael Amendolia
The class actions allege the company engaged in misleading and deceptive conduct in relation to missed sales forecasts for 2016-17 that sparked a share price plunge.
Following the 37 per cent one-day plunge in Sirtex's share price on December 9, the shares fell another 9 per cent a week later when Sirtex announced it was investigating trades earlier in the year by chief executive Gilman Wong. Mr Wong stood aside pending the outcome of the probe.
"Mr Wong sold 74,968 Sirtex shares in October 2016, and following the investigation, Sirtex terminated his employment," an IMF statement to the ASX said.
Maurice Blackburn's national head of class actions, Andrew Watson, said the events were "deeply troubling".
"We've investigated this potential matter for some time now, and it appears the company has serious questions to answer about its conduct and that of the then chief executive," Mr Watson said.
"When a chief executive dumps more than $2 million worth of stock shortly before the company releases a surprise announcement of a severe decline in earnings and sales growth, and investors then suffer a 37 per cent share price dive off the back of that, it immediately rings alarm bells about compliance with continuous disclosure laws."
Shareholders who purchased Sirtex shares between August 24 and December 19, 2016, may be eligible to participate in the actions. The announcement of Monday's class actions follows another action that was announced in January.
Wayne Attrill, senior investment manager at litigation funder IMF Bentham, said the case warranted "serious scrutiny".
William Roberts Lawyers alleges that Sirtex had no reasonable basis for a statement in August 2016 that it expected double-digit sales growth for its SIR-Spheres Y-90 radiation therapy for 2016-17.
SIR-Spheres Y-90, a targeted radiation therapy, is Sirtex's lead product and is approved for supply in Australia, the European Union and the US, and accounts for almost all of Sirtex's revenues.
William Roberts Lawyers principal Bill Petrovski said Sirtex's own communications to the market after December 9, 2016, confirmed that the company had a very short window of visibility over sales.
"How could it then reasonably predict double-digit sales growth over a six-month or 12-month period?" Mr Petrovski said.
"It is our view that Sirtex's share price was artificially inflated based on misleading disclosures to the market."
Sirtex was contacted for comment. The company's share price closed 1¢ higher at $16.09.
with AAP