Sirtex class action
Maurice Blackburn, in partnership with litigation funder IMF Bentham, has filed a class action against Sirtex Medical Limited (ASX:SRX) on behalf of shareholders following an announcement of deteriorating earnings and sales growth, followed by a further announcement confirming an external investigation into the share trading activities of then-CEO Gilman Wong.
The class action alleges contraventions of the ASIC Act, Corporations Act and the Australian Consumer Law in seeking to establish that Sirtex engaged in misleading or deceptive conduct and/or breached its continuous disclosure obligations.
SRX is a life-sciences company listed on the ASX100, which has regulatory approval for a product called SIR-Spheres Y-90 resin microspheres which provides targeted radiation treatment for liver tumours. The SIR Spheres are priced at around USD$16,000 per dose.
The primary disclosure issue relates to Sirtex’s dose sales growth guidance for the SIR Spheres and it’s disclosure to the market that the 1H17 dose sales were substantially less than previously forecast. After Sirtex was prompted by the ASX, it made an announcement on 9 December 2016 that the dose sales growth rate would be 4% to 6% rather than the 15.7% previously forecast. Upon the announcement, the Sirtex share price fell by 37%.
A further disclosure issue is the nature of share trades undertaken by then-CEO, Gilman Wong. Mr Wong sold 74,968 Sirtex shares on 26 October 2016 in order to, in the company’s words, ‘cover the tax incurred in relation to the recently vested tranche of rights.’ When Sirtex subsequently announced on 16 December 2016 that they had formally engaged its legal advisors, Watson Mangioni, to investigate Mr Wong’s trading activities, the Sirtex share price suffered a two day price drop of 9%. Mr Wong’s employment with Sirtex was subsequently terminated on 13 January 2017.
On Friday, 7 June 2019 the parties reached an in-principle agreement to settle the proceeding for $40m, inclusive of GST and costs.
The parties' legal representatives have signed a confidential Heads of Agreement which is a guiding document for a binding deed of settlement.
The proceeding has been adjourned to 24 June 2019 at which time the parties will provide timetabling orders for the Court to determine whether to approve the settlement pursuant to s33V of the Federal Court of Australia Act 1976 (Cth).
Court Orders require Sirtex to retain sufficient assets to cover the settlement, until the settlement amount is paid.
There are a number of steps that must be taken before the settlement monies can be distributed including:
- the Court will need to approve the form and content of notices to all Group Members of the class informing them of the settlement and their right to object to it;
- after the notices have been sent, the Court will be asked to approve the settlement; and
- 43 days after Court approval, the process of distributing funds may commence if no class member appeals.
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