Varian Medical Systems has agreed to a $1.3 billion deal to acquire Sirtex Medical. The deal will give Varian control of radioembolization technology to complement its existing portfolio of cancer-care devices.
Sydney, Australia-based Sirtex has built its business around SIR-Spheres, devices that enable the delivery of radioactive isotope yttrium-90 to tumors. At Varian, the microspheres will slot into an internal radiation medicine franchise currently made up of devices and software that help doctors get radioactive payloads to tumors.
“This acquisition is the latest step in Varian's long-term strategy to become a global leader in multidisciplinary integrated cancer care solutions,” Varian CEO Dow Wilson said in a statement. “The combination of the two companies will expand the reach of the Sirtex platform by making it more broadly available to the clinical community.”
Sirtex received FDA premarket approval for its SIR-Spheres back in 2002—and has a CE mark—but that nod limited use of the medical device to a subset of patients and chemotherapeutic agents. The Australian company later embarked on a clinical trial program designed to expand the market for its products, only to suffer a series of setbacks. Sirtex subsequently wrote down the value of its R&D projects.
To further sour the situation, Sirtex became embroiled in an insider trading scandal 13 months ago. The furor led to an internal investigation that cost then-CEO Gilman Wong his job and sparked class action lawsuits that drag on to this day. The $1.3 billion buyout at a 49% premium is therefore seen as a lifeline to Sirtex and its investors.
“The bid price is definitely a good premium. I would struggle to see anyone else coming over the top,” Mathan Somasundaram, market portfolio strategist at stockbroker Blue Ocean Equities, told Reuters.