Maurice Blackburn, in partnership with litigation funder IMF Bentham and Australian Funding Partners Limited, 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.
Settlement Distribution Scheme approved by the Court
On 23 August 2019, the Federal Court of Australia made orders approving the $40 million settlement of the Sirtex class action, appointing Maurice Blackburn as the administrator of the Settlement Distribution Scheme (SDS) and approving the terms of the SDS.
View the Court's orders made on 23 August 2019
View the Approved Settlement Distribution Scheme
Anticipated time frame to distribution
After the confirmation of all group members' trade data, the Administrator will make an assessment of each group member's claim in accordance with the SDS.
The Administrator anticipates that an Assessment Notice will be sent to each group member in late 2019. The Assessment Notice will include the estimate of expected distribution and information about group member's right to seek a review of the assessment.
We anticipate making payment to group members in the first half of 2020.
In-principle settlement reached
On Friday, 7 June 2019 the parties reached an in-principle agreement to settle the proceeding for $40m, inclusive of GST and costs. The Deed of Settlement was executed on or about 25 June 2019. The agreement is subject to several conditions, including Court approval.
On 26 June 2019, the Court made orders scheduling a settlement approval hearing for 23 August 2019 and approving a notice to class members regarding the proposed settlement.
View the Notice of Proposed Settlement
View the Court's Orders made on 26 June 2019
The deadline for class members to register to participate in any pre-trial settlement of the Sirtex class action passed at 4pm AEDT on 7 August 2019. If you did not register before the deadline you will not, in the absence of further order of the Court, be entitled to participate in the settlement.
Common fund orders
On 30 April 2018, the Federal Court made "common fund" orders in the proceeding.
Pursuant to the common fund orders, the Joint Applicants and group members shall pay from any settlement or judgment amount, the costs and expenses of the proceeding as approved by the Court and a percentage proportion of the settlement or judgment amount not exceeding 28% to IMF and AFPL as consideration for funding the Sirtex Class Action.
A copy of the Full Court's reasons for judgment and orders are available at the following links:
What was the Sirtex class action about?
SRX is a life-sciences company which, during the relevant period, was listed on the ASX100. Sirtex has regulatory approval for the sale of 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 in the proceeding related to Sirtex's continuing "double digit" dose sales growth guidance given on 24 August 2016. In late 2016, following queries by the ASX as to the accuracy of its guidance, Sirtex announced on 9 December 2016 that the dose sales growth rate would be 4% to 6% rather than the 15.7% previously forecast. Following that announcement, the Sirtex share price fell by 37%.
Also at issue in the proceeding was 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." On 16 December 2016, Sirtex announced that it had formally engaged its legal advisors, Watson Mangioni, to investigate Mr Wong's trading activities. Following this announcement, 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.