Sirtex to ‘vigorously defend’ possible legal action

The biotech has pledged to “vigorously defend” possible legal action as it released a draft statement of claim against it.

The December downgrade shocked investors as the company gave them no hint of the pain ahead at its October AGM.

Biotech Sirtex has said it will “vigorously defend” possible legal action against the company for sales growth forecasts that missed the mark.

The Australian-listed company today released a draft statement of claim it received that foreshadows the commencement of a representative proceeding against the company in the Federal Court of Australia.

Shares in Sirtex were down almost 3 per cent at $14 following release of the statement.

The statement of claim alleges breaches by the company of its continuous obligations and alleged misleading and deceptive conduct that arose out of a statement made by the company on August 24, 2016 that it would achieve “double digit dose sales growth” in 2017.

Sirtex said today that the class of members identified in the statement of claim is all persons who acquired ordinary share in the company on, or after, August 24 and who were at the start of trading on December 9 holders of any of those shares.

“If the foreshadowed proceeding is commenced, Sirtex will vigorously defend the proceeding,” the company said.

“In the meantime, Sirtex is considering the foreshadowed proceeding and is obtaining legal advice about it.”

The legal move comes weeks after the board of the biotech sacked chief executive Gilman Wong following a probe into his sale of millions of dollars’ worth of stock ahead of a plunge in the group’s share price.

Questions about Mr Wong were first raised after he sold $2.1 million worth of shares on October 26 at an average price of $28.48, the day after the Sirtex sales update was questioned by the ASX for using “imprecise terms”.

The ASX came back to Sirtex on December 2 and was told guidance for “double-digit growth guidance for dose sales” was still current. A week later, on December 9, Sirtex shares plunged ­following a downgrade of dose sales growth guidance to between 5 per cent and 11 per cent.

The December downgrade shocked investors as the company gave them no hint of the pain ahead at its annual general meeting in October and failed to update the market on its sales concerns at its R&D investor day, which was held only a week ­before the December 9 announcement.

Analysts said at the time that shareholders should be disappointed in how management had chosen to disclose information to the market. The Sirtex board ­engaged its legal advisers, Watson Mangioni, after the sales downgrade to analyse the actions of its chief executive.

The company reported to the market on January 13 that while the findings were “privileged and confidential” they had led to the departure of the company’s leader. Chief operating officer Nigel Lange is acting CEO while an executive search takes place.