SurModics Inc (SRDX) オプション

SRDX new 52 week high

SRDX new 52 week high

Corrected FY2Q18 PR to fix typo:

https://www.businesswire.com/news/home/20180502005423/en

SRDX FY2Q18 results:

https://www.businesswire.com/news/home/20180502005423/en

SRDX +17% on ABT collaboration for drug-coated balloon: #msg-138870555.

SRDX showing up on my 'short' radar. Yearend 2017 numbers are "$73M REVENUE / .29 EPS" which puts this one at a current 100+ P/E followed by a future weak guidance of:

Fiscal 2018 Outlook
Surmodics expects fiscal year 2018 revenue to range from $72.0 million to $75.0 million. The Company expects diluted loss in the range of $0.50 to $0.75 per share, which reflects the Company’s commitment to accelerate execution of its whole-product solutions strategy with increased research and development investments. Non-GAAP diluted loss is expected to be in the range of $0.16 to $0.41 per share.

With tangible BV of only around $5 per share, is there something spectacular in their bio-research & development I am missing here or are the ETF-stampeders getting waaaaayyyyyyyyyy ahead of themselves here - as with so many others?

...for the general focus management seems to be showing.Can you elaborate? Thanks.

I bought back in in later april, mostly for technical reasons, but also because I felt management for getting a handle on focus for the company. It has been a nice winner so far and I plan on staying in at least through earnings but again for the general focus management seems to be showing.

OCUL is creating long-acting formulations for back-of-the-eye diseases:

#msg-125825487

Is anyone still reading this board?

I'm surprised that this companies stock continued upward on a overall down day after this was contained in a business wire announcement from March 6th. Two board members resigning (including the chair) is no minor matter. Anybody have any clarity on this matter? I'm pleased the stock has continued up but at a loss for why.


"Ward and Nelson resigned over a disagreement regarding how to optimize the working relationship between the Board and the Company’s Chief Executive Officer. “We appreciate the service of Scott and Tim and wish them well,” Knight continued."

Two directors in, one director out:

http://finance.yahoo.com/news/surmodics-announces-changes-board-directors-000000502.html

Long term folks who follow this company will be interested in this

http://www.startribune.com/obituaries/detail/14013419/?fullname=dale-r-olseth

Olseth, Dale Roger age 83, of Hopkins, passed away Feb. 11, 2014. Preceded in death by his beloved wife, Nancy; son, David; and brother, Neal. Survived by children, Cheryl Olseth (James Empson) of Mpls., Karen (Jeremy) Solomon of Portland, OR, Jon Olseth (Marypat Anderson) of Mankato; grandchildren, Ingmar, Gunnar, Beatrice, Finn, Eleanor, Ian, Gus, Abraham, Caspar; brother, Bruce (Jan) Olseth of Bloomington. Dale graduated from the University of Minnesota in 1952 with a BA in Business Administration, MBA degree from Dartmouth College in 1956, Honorary Doctor of Law from the U of M in 2004. He served as President and CEO of Tonka Corporation 1971-1976, Medtronic Inc 1976-1985 and Surmodics 1986-2005. Dale was a SAE Gentleman, 100% Gopher fan and 100% Norwegian. He was a true believer in family, education and community. Dale served on the board of numerous local businesses and non-profits, including the University Foundation, St. Olaf College, Sister Kenney and the Minnesota Orchestra. He was the recipient of numerous honors and awards including the U of M Outstanding Achievement Award, Outstanding Philanthropist of the Year, MN Chapter of National Society of Fund-Raising Executives and the United Way Distinguished Service Award. In lieu of flowers, memorials preferred to Gianna Homes, 4605 Fairhills Road East, Minnetonka 55345 or Shepherd of the Hills Lutheran Church, Hopkins. Funeral service 11:00 AM Wednesday, Feb. 19 with visitation starting 9:30 AM at Shepherd of the Hills Lutheran Church, 500 Blake Road South, Hopkins 55343. Private interment Lakewood Cemetery. www.Washburn-McReavy.com Edina Chapel 952-920-3996

The share price has had a nice bump from the low, so many other investors agree, evidently.

I continue to be impressed with Gary M. and the changes he has put in place. The numbers are clear and clean. The strategy is comprehensible to me. Just like a breath of fresh air, finally. I always trusted Dale, but something went out of whack after he stepped down.

~ $SRDX ~ Earnings posted, pending or coming soon! In Charts and Links Below!

~ $SRDX ~ Earnings expected on Thursday *
This Week In Earnings: Earnings are coming or are already posted! This is what the charts look like! If you play the earnings these posts can be very helpful to you!
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*If the earnings date is in error please ignore error. I do my best.

Bizarre: #msg-71663295

Phil Ankeny is NO LOSS. Like so many, you were fooled.

Re: Ankeny loss...

I, for one, am very disappointed to see Phil Ankeny leave... I had grown to trust him and I liked his frank commentary in the CC's.

Ankeny was the last holdover from the old SRDX. I wonder why they are letting him go.

4:54PM SurModics announces strategic realignment of business; a result of these initiatives, co expects to take one-time charges of ~$1.1-1.4 mln in Q4 of FY11 (SRDX) 10.42 +0.40 : SRDX announced a realignment of its business to optimize co resources according to its strategic plan. As part of the strategic realignment, the co announced a reduction of ~9% of its total workforce. Co also announced the consolidation of its BioFX product manufacturing operations from Owings Mills, Maryland into its corporate headquarters located in Eden Prairie, Minnesota. The Minnesota facility is fully qualified and operational, and is now producing and shipping BioFX branded products. The Co does not expect the transition of responsibilities announced today to affect its day-to-day operations, nor is it expected to impact the co's ongoing efforts to explore potential strategic alternatives for its SurModics Pharmaceuticals business. As a result of these initiatives, the co expects to take one-time charges of ~$1.1-1.4 mln in Q4 of FY11. Also, in connection with these initiatives, co expects to save ~$1.7-2.0 mln on an annualized basis.

Re Q3 Earnings Report...

I agree, the earnings report was good... and given the positive market response on a very bad day, it is clear that many others also agree...

The upward guidance adjustment for the Non-GAAP per share earnings seems to be the strongest positive. This quarter it was raised from $0.13-$0.26/share to $0.28-$0.38/share. Last quarter it was raised from ($0.15)-$0.05/share.

The balance sheet remains strong with no significant debt and about $60M in cash (i.e. slightly more than $3/share).

Anticipated adverse events:
1) J&J will give up its exclusivity provision for the Cypher Sirolimus coating which will abrogate the minimum royalty provision. Thus, the current $1M royalty payment will end at the end of Fiscal Quarter 4 (i.e. in October 2011). This will result in about a 10% drop in overall royalty income and about a 25% drop in operating income, everything else being equal.

Things to look forward to are:
1) Reinvigoration of the photolink franchise due to a new formulation/product
2) Continued development of a coated balloon device
3) Disposition of the Pharma Unit ...Gary Maharaj expects to conclude the Pharmaceutical strategic alternative process by the end of calendar year 2011.

Good earnings report but the main thing I hear is the crisp and clear change to Gary Maharaj. I used to dread their fuzzy complex conference calls but look forward to this one. Even the press release is clear and crisp.

"...Having defined our core business in a crisp and clear manner, we are now actively implementing our strategic plan and are confident in our ability to reach our revised financial targets for the fiscal year. In addition, we are pleased with the progress we are making in our review of strategic alternatives for the Pharmaceuticals business.”

Best, L.

JNJ drops Cypher and Nevo: #msg-64256077.

PFE restricts PSDV collaboration to a Xalatan implant: #msg-64247589.

Thanks, Aslan. I posted the full text of that article with some annotations in #msg-63615434. Regards, Dew

Re: FWIW (ART bioresorbable DES)

ABT's ABSORB BVS has anecdotal reports of cracking. Perhaps there is a demand for ART's technology if indeed this is a problem and they have solved it. Fully absorbable stents are likely less deliverable due to necessarily thicker struts, however. Probably best suited for disease that is not complex.

Micell's MiStent DES (bioabsorbable polymer over Co/Cr platform) appears to have a high probablilty of clinical success and sizable market penetration, IMHO. It may have some important advantages over JNJ’s Nevo and BSX’s Synergy -such as more rapid biodegradation- decreasing the length of required DAPT.

In any event, the case for biodegradable polymer coatings is bearing out some truth:

http://www.medicalnewstoday.com/releases/226624.php

FWIW:

http://finance.yahoo.com/news/Arterial-Remodeling-bw-2700427027.html?x=0&.v=1

FP, thanks for your reply. The Johns Hopkins/Medicare study cited in #msg-61713973 has yet to have an impact on the commercial AMD market, according to Roche and NVS, but I think those data will make a difference when all is said and done. Regards, Dew

I don't follow Lucentis / Avastin so my comments may be off base....but I'm not so sure that evidence marginally favoring Lucentis would be good for it's marketing. For just about any other drug you could use this to gain market share. But if your competitor (Avastin) was held back by a lack of evidence and now that evidence exists...it might get the bigger boost as a result. Outside of the US there is perhaps more cost concern (at least from the point of view of the payer, if not so much from physicians). If you can treat 40 times as many people with Avastin for the same money, and if the choice to use Lucentis might mean introducing eligibility criteria which wouldn't see everyone treated...what would you, as the payer, do? These are not my decisions to make, though I do have some experience sitting on advisory groups providing medical opinion relevant to such decisions. I would personally rather treat a lot of people with a slightly inferior drug than to let a substantial number of people go untreated.

Roger that—I wasn't sure if there had been a formal update since the 10K filing.

Re: Long-acting Lucentis Formulation - probably not...

I am relatively certain that SRDX is no longer working on a long-acting formulation of Lucentis.... see #msg-57844827.

Is SRDX still working on a long-acting formulation of Lucentis? If so, readers may be interested in the results of the CATT study reported today:

#msg-62547005 Data
#msg-62550310 Musings on commercial significance for Roche/NVS
#msg-62552160 NEJM editorial
#msg-62552160 Musings on dosing frequency

Regards, Dew

Re: Surprising Response to Yesterday’s Q2 CC/Earnings...

Skip, I too was pleasantly surprised by the marked jump in share prices today...

I had believed that the reported earnings were mediocre, ... but at least not bad. I also had a neutral feeling about the tone of the CC .... although again, I didn’t think it was bad.

I was unenthused by the earnings report largely because:

1. The FY2011 Q2 revenue ($17.4M) is essentially the same as the quarterly average of FY2010 ($17.5M) when the economy was in worse shape than now. And it is substantially below the FY2009 quarterly average of about $20M (ignoring the $63M outlier in FY2009 Q1).

2. The Royalty and Licenses Income is essentially flat qtr-to-qtr and is at the lowest value since 2003.

3. The moving average of R&D income (over 4 qtrs) is flat rather than trending up.

4. And I felt, perhaps unfairly, that the reported earnings had an undeservably positive spin as a result of the following “determination” (as detailed in the 4/27/2011 8K describing the Q2 earnings):In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011, the Company determined that a $4.9 million milestone payment obligation related to its 2007 acquisition of SurModics Pharmaceuticals, Inc. (“ SurModics Pharmaceuticals ”), and an associated goodwill impairment charge, should have been recorded in the fiscal quarter ended December 31, 2010.... The restated financial results will include the following: operating loss of $5.6 million, compared with the previously reported operating loss of $0.7 million; net loss of $6.2 million, compared with the previously reported net loss of $0.4 million; diluted loss per share of ($0.36), compared with the previously reported diluted loss per share of ($0.02).Without this determination,

Operating income would have been a loss of $2.9M instead of the reported gain of $2.0M.

Net Income would have been a loss of $4.3M instead of the reported gain of $2.5M (calculated by subtracting the $5.8M differential in the restated Q1 earnings).

Diluted earnings per share would have been a loss of ($0.22) instead of the reported gain of $0.14.

Wow, I listened to the conference call and wrote that last post immediately after noticing SRDX price was up 10% this morning. Then I looked at my portfolio an hour or two later and was amazed to see the price up 22%. Is there other news or does everyone feel so much more confident about SRDX's future as the result of that one call? I had been almost embarrassed to tell you of my inability to understand Bruce and his strategy, but this is an incredible example of the importance of clear leadership in my opinion. Or maybe the importance of muddled leadership.

Or perhaps I've simply missed some news which accounts for the change. Again, there is a lot of work to be done before I am really sure Surmodics is a sustainable corporate entity, but I certainly like the beginning which has been made and a surprising number of others seem to agree.

Best, L.

Simply stated by Aslan, Gary was a breath of fresh air. I probably missed the January activities due to discouragement and expected lack of comprehension. When I last listened in to discussions by SRDX management, Ankeny was more comprehensible than the CEO. This time his presentation was a little clearer and Gary presented very carefully and clearly.

Gary sounds a bit like a Harvard B school graduate in his description of the analysis being performed. Nothing wrong with that in my opinion though one wishes to see the results as well as clear understanding of the situation. I took notes of the conference call and found myself carefully parsing every word he spoke. Didn't he say they all weighed a ton? Even mentioned the number of words in "hydrophyllic coatings of catheter based vascular delivery systems". I can understand that, Phil can understand that, even the analysts seemed to ask clearer questions and get more direct answers in this call.

I guess Pharma (Brookwood) was another mistake. I saw the announcement and am a little confused by the high congratulations given Brookwood management in signing new R&D programs. Filling up the capacity of that new building certainly has to be important to profitability and apparently Gary does not think SRDX is the optimum company to accomplish that goal. It almost feels to me like SRDX does not regard Birmingham as connected to them. A complex business like Chemistry does not need to add complications like far off people/plants. So I applaud Gary's emphasis on focus, derisking, and clarity of definitions (simplicity).

Oh, and thanks for breaking out operating margins. That makes a huge difference to me. I'm optimistic again.

Best, L.

Plavix PCI Study Shows 6-Months Non-Inferior to 12:

#msg-61798158

The duration of antiplatelet treatment for PCI patients has been discussed on this board from time to time.

SRDX’s Q1 2011 CC...

The CC’s main theme was the introduction of SRDX’s new CEO, Gary Maharaj.

My impression is that Gary will be a pragmatist rather than a visionary. I anticipate that his primary focus will be to increase the use of SRDX’s surface modification intellectual property in medical devices marketed by other companies. In this vein, he mentioned the value of SRDX’s intellectual property with regard to enhancing the minimally invasive qualities of medical devices and reducing infections resulting from medical device use. These are the strengths of the Medical Device Division which I expect to flourish under is his leadership.

I also came away with the impression that Gary will strengthen SRDX’s research and development enterprise and de-emphasize product sales per se. This expectation raises the question: what will happen to the In Vitro Diagnostics division? .... Dan Owczarski asked essentially the same question in the Q&A. Gary responded by stating that certain segments of In Vitro are connected to SRDX’s core competency via formulation and chemistry, and in any event, In Vitro is not hurting the company, but instead providing stability during this transitional period. I took this response to mean that there won’t be any dramatic changes in the In Vitro Diagnostics franchise in the near term... It is worth noting that the growth opportunities referenced in the CC were coming from the In Vitro Diagnostics Division.

====
Selected quotes:1. CC quotes relating to Gary Maharaj’s attitudes:

Gary Maharaj in his prepared remarks:

I believe that the ability to improve a medical device by surface modification is an important and ever growing need in healthcare...

SurModics is ultimately a technology company whose strength is providing easy-to-implement technology and product solutions for specific customer needs. R&D is the critical path of our growth engine and will be a key area of focus for me personally....

So minimally invasive, as we know, is a big trend, possible acquired infections are a big trend. So without limiting it, I think the trick will be to find easy uses for current core technologies that are able to generate medium term cash flows versus purely catheter type sleeves which are – which have a – many of them have a longer timeline because of the regulations involved...

From the Q&A:

<Q – Elizabeth Lilly>: I have several questions. Gary, can you – can we just step back a minute and you talked about tightly defining the core business is really critical in terms of defining the strategy. Let’s even taken a step back even before defining what it is, and can you, in a minute, define for us what the core business is?
<A – Gary Maharaj>: When you look at the markets and the segments SurModics as a company plays in, it’s easier said than done. You can define it perhaps on business-specific viewpoint. What I will say is that SurModics has some chemistry and formulation capabilities that have applicability in different markets. Beyond that in terms of the customers and the products, the baseline is really the technology. And so, if I were to really give my assessment of the core would be defining it more currently based on the technology. That’s not adequate to really build a business though because you’ve got to know what products, customers, market segments, and perhaps channels that you play in. But I’m zeroing in very early on as to what is the secret sauce at SurModics that we do that can impact our product lines from the chemistry and formulations that we have. And to be honest, I am still in discovery mode. I don’t want to overstate what I think until I kind of more deeply embed myself with some of the brilliant scientists and engineers that we have here. So I’ll have more to share about that in the next call, needless to say, I’ll start off defining it from a technology viewpoint.

<Q – Elizabeth Lilly>: Okay. So in essence you don’t really – I mean you maybe want to keep some of that cash on the balance sheet, but my sense is that you’ll – would you say that, Gary, one of your priorities is, in terms of all these other things that you talked about, the strategic priorities of the company, one of the priorities is to figure out the best way to redeploy that cash on the balance sheet?
<A – Gary Maharaj>: Yeah. The capital structure of the company is critical. I came from a private equity highly-leveraged world so I have a healthy respect for purity in the balance sheet, but the answer is absolutely.

<Q – Dan Owczarski>: Can you talk a little bit about the In Vitro Diagnostics business? Is that considered core right now or is that – could that be evaluated? And kind of what are the pros and cons of that business keeping that business as it is today?
<A – Gary Maharaj>: When I look at the IVD business, first of all, it is, the products we have there are marquee products, and they are very differentiated. As I looked at the connection, and this is a very early look again, the connection really is at a root technology level on formulation and chemistry such as our PhotoLink process and some of those products and which is applied also in medical device business. So, is there a connection via technology to the core? Yes. Are there connections via the market segments and customers, certainly they are different segments that we’re operating in there. The question is, does the strength of that connection of the core give us leverage or operating advantage in the business? The business is solid. It’s stable. It’s cash flowing. And one of the things we again have to address is, can we get this business to grow if the core – if it’s within the boundaries of the core? So, that business is not, certainly not hurting the company, but providing some stability as we go through the strategic planning process.

What I believe is when we get through the strategic planning process, we’re going to have to apply the test of strategic fit to what we’re doing in R&D because then we would have developed a strategic plan and deciding to not follow it. So I think that will come out of it later. That said, I haven’t seen anything in our R&D pipeline that is why we are off target in terms of what the company needs to be doing.

2. CC quotes relating to near-term profit drivers:

Phil Ankeny in prepared remarks:

We continue to generate broad-based customer demand for our component in vitro diagnostic products, as well as our polymers, and reagent, coating reagents.

From the Q&A:

<Q – Dan Owczarski>: That you can add as far as what you referred to new product introductions in In Vitro Diagnostics, any color you could add on to what that would be?
<A – Philip Ankeny>: There – we’re not prepared to give the details of the products yet other than to let you know that they’re in queue. And so, we’re making great progress on them and they’ll be coming out later in the year, probably second half of the fiscal year. And there are some products we’re really excited about. And absolutely, they help the growth profile of the business.
<Q – Dan Owczarski>: So we should be thinking that they’re more additives to the product line or enhancements to the product line?
<A – Philip Ankeny>: They’re not new categories. They’re within the product families that we have, but significant enhancements to capabilities our customers want to leverage.

re: accounting

True, the quarterly profits were meager to none and the business model is floundering.

The good news is they certainly seem to have become proactive in facing their troubles. Gary was a breath of fresh air.

SRDX is resorting to more and more non-GAAP accounting adjustments in order to report a meager quarterly profit, which is a sad state of affairs, IMO.

http://sec.gov/Archives/edgar/data/924717/000115752311000377/a6587152ex99_1.htm

First bioabsorbable stent approved in Europe
January 10, 2011 | Michael O'Riordan

Abbott Park, IL - The world's first market approved, bioabsorbable stent will soon be available in Europe, with Abbott announcing today that it has received CE Mark approval for the Absorb everolimus-eluting bioresorbable vascular scaffold (BVS) stent. The stent utilizes a poly-L-lactide polymer and is approved for the treatment of coronary artery disease.

Approval is based on the ABSORB clinical trials, previously reported by heartwire, showing the feasibility of the BVS device and the durability of its antirestenotic properties. Imaging studies published in 2009, also reported by heartwire, showed that at least one-third of the stent had been absorbed by the vessel wall by two years. Patients in the ABSORB trial have now been followed out to three years, according to the company.

Larger studies are still in the works, however, including a European trial that will enroll approximately 500 patients at 40 centers. In this study, patients will be randomized to the Absorb BVS stent and to Abbott's Xience PRIME stent, which has a permanent cobalt-chromium platform, while a global trial, which will include centers in the US, is planned for late 2011.

The Absorb stent will be available in a select number of sizes at various European centers in 2011, but a full commercial launch is expected in 2012, according to Abbott.

The potential for a stent that does its job and then disappears, with no long-term need for dual antiplatelet therapy, has been a holy grail in interventional cardiology. Even those excited about the technology, however, have worried about its deliverability and whether the stent can achieve the same low rates of restenosis seen with some of the newest permanent-scaffold drug-eluting stents.
« Previous heartwire article
Hysterectomy associated with raised CV risk in women under 50
Jan 10, 2011 09:45 EST

I had not planned on going this year, but the fact of your being there certainly makes it tempting. I am enroute Austin, TX tomorrow in an attempt to get warm on my bicycle. Feb 7 is a bit later than usual. Maybe Minnesota will be balmy by then.

I responded by private message and then looked in here to see your message was public. I share Foolish Premise' concerns and viewpoint.

On one point I'm relatively sanguine. Phil has been able to adapt in several of the situations which have come up at SRDX. I think he is a conservative and pretty straightforward kind of guy. So I actually kind of hoped he might be named permanent CEO. But I do wonder about his relationship to Brookwood. I think they were an artifact of Bruce's creativity.

Best, L.

Ouch...nice catch.

Re Annual Mtg on Feb 7...

I’m planning on going to the Annual Mtg this year... It will be the first time, as I have never been able to justify the expense of travel and lodging before (approx $500). Personal contact helps me get judge character (albeit sometimes limited contact in stereotyped situations are of limited value). The recent changes in leadership throughout the company and board will have a significant impact on the future of the company (in my opinion). My evaluation of the character and commitment of the various players will impact my investment decisions.

I doubt that I will be able to make any meaningful conclusions from the brief exsposue to personnel at an annual meeting, but who knows....

I’m particularly interested in estimating whether or not Phil Ankeny and Arthur Tipton are still energetically engaged with the company.... Often, interim leaders, such as Ankeny, become exhausted when assuming new responsibilities of leadership without relinquishing the full time responsibilities they already have... and leadership inevitably generates enemies (or resentments) which linger after the interim stint has ended and which diminish the satisfaction one gets from their job.... With respect to Tipton, I imagine that he might feel that the decision to seek strategic alternatives for the Company’s Pharmaceuticals business has left him high and dry...

I’m also interested in getting a sense of the character of the Ramius Directors and if they will be constructive or destructive in their interactions with the old guard.

Skip, you have attended these meetings over the years... Are you planning on going to this one?

Re: Sale of Pharmaceutical Division...

Foolish, I'm not troubled by the possible sale of the pharmaceutical business... Albeit, I don't relish the idea of selling it for a substantial loss.

I've been uneasy with the thought that SRDX might morph into a low-margin high-volume business model such as that characterizing a contract manufacturer. I had been comforted by the thought that the initial costs might be recouped fairly rapidly by manufacture of a Lucentis long acting release formulation. However, my reading of the recent 10K is that the Lucentis program is essentially dead. see pg 3 of: http://www.sec.gov/Archives/edgar/data/924717/000095012310113522/c61767e10vk.htm On October 5, 2009, we entered into a License and Development Agreement with F. Hoffmann-La Roche, Ltd. (“Roche”) and Genentech, Inc., a member of the Roche Group (“Genentech”). Under the terms of the License Agreement, Roche and Genentech have an exclusive license to develop and commercialize a sustained drug delivery formulation of Lucentis® (ranibizumab injection) utilizing SurModics’ proprietary biodegradable microparticle drug delivery system. Under the terms of the agreement, we received an upfront licensing fee of $3.5 million, are eligible to receive potential payments of up to approximately $200 million in fees and milestone payments in the event of the successful development and commercialization of multiple products, and will be paid for development work done on these products. Roche and Genentech will have the right to obtain manufacturing services from SurModics. In the event a commercial product is developed, we will also receive royalties on sales of such product. During fiscal 2010, the focus of our development activities have changed, primarily as a result of technical issues experienced in the Lucentis® microparticle product development program. Such technical issues reflect the inherent challenges often experienced in the development of new or reformulated pharmaceutical products. We are continuing to collaborate with Genentech under our agreement on sustained drug delivery products utilizing our proprietary biodegradable microparticle drug delivery system. However, the program remains subject to a number of risks and uncertainties, including those detailed under the heading “Risk Factors” in Item 1A of this Form 10-K.

The potential sale of the pharmaceutical business is troubling to me. I assume it is intended to pre-empt those that want to take over the company by lessening the value they would recieve from doing the same thing (breaking the company up and selling parts off). Perhaps it is a good move to thwart a takeover bid but I never expected short term gains from the pharmaceutical division and was quite content to wait out the time until they were profitable. While I don't want a takeover bid to succeed ... it is sad to think that we might be forced to sell something that we always knew was going to take a long time to generate revenue. An emphasis on short term profits is toxic - how can you build anything of real value looking through that kind of lens?

Possible sale of pharmaceutical business...

In the “Subsequent Events” section of the 10K (pg 4-5) filed today one finds the following quote: In addition, in December 2010, we announced that the Board of Directors of the Company had authorized the Company to explore strategic alternatives for the Company’s Pharmaceuticals business, including a potential sale of that business. This decision by the Board reflects our focus on returning the Company to profitable growth, and our renewed commitment to pursuing growth opportunities and investments in our Medical Device and In Vitro Diagnostics businesses. We have retained Piper Jaffray & Co. as our financial advisor in connection with this process. The Company has made no decision to enter into any transaction regarding the Pharmaceuticals business, and there can be no assurance that we will enter into such a transaction in the future. Additional details concerning this announcement can be found in the Company’s Current Report on Form 8-K expected to be filed with the Securities and Exchange Commission on or before December 20, 2010.see: http://www.sec.gov/Archives/edgar/data/924717/000095012310113522/c61767e10vk.htm

Gary Maharaj...

SRDX announced today at 4:35 pm that it had named Gary Maharaj President and Chief Executive Officer.

The biographical data in the announcement was: Mr. Maharaj, 47, most recently served as President and Chief Executive Officer of Arizant Inc., a world leader in patient temperature management in hospital operating rooms. Under Mr. Maharaj’s leadership, Arizant nearly doubled revenues in less than five years by expanding its market penetration, geographical diversification and product portfolio. Arizant was sold to the 3M Company for $810 million in October 2010. During his 23 years in the medical device industry, Mr. Maharaj has also served as vice president of Philip Adam and Associates, a product development management consulting firm, and in various management and research positions for the orthopedic implant and rehabilitation divisions of Smith & Nephew, PLC. Mr. Maharaj holds an MBA from the University of Minnesota's Carlson School of Management, an M.S. in biomedical engineering from the University of Texas at Arlington and the University of Texas Southwestern Medical Center at Dallas, and a B.Sc. in Physics from the University of the West Indies. Mr. Maharaj holds over 20 patents, all in the medical device field.A similar biographical sketch can be found on the Arizant webpage (i.e. http://www.arizant.com/arizant/media_kit.shtml ). This sketch was apparently written in July 2007. It includes a picture for those interested in seeing what he looks like. Gary Maharaj was appointed president and chief executive officer of Arizant Inc. on May 1, 2006. He joined the company in April 1996 as the Manger of Research and Development. In November 1996 he was appointed Vice President of Research & Development, and then added the responsibilities of Vice President of Marketing in October 2001.

As the Vice President of Research & Development and Marketing, Mahraj had ultimate responsibility for the development and growth of the company’s primary product lines: Bair Hugger therapy forced-air warming blankets, the Ranger blood/fluid warming system, and most recently, the Bair Paws patient adjustable warming system. Each of these products has become a leader in its respective category and has contributed significantly to Arizant’s growth and competitive strength in worldwide patient temperature management.

During his 18 years in the healthcare industry, Maharaj has served as Vice President of Philip Adam and Associates, a product development management consulting firm, and in various management and research positions for the orthopedic implant and rehabilitation divisions of Smith & Nephew, PLC.

Maharaj earned a bachelor’s degree in physics from the University of the West Indies-Trinidad and Tobago, and a master’s degree in biomedical engineering from the University of Texas at Arlington and the University of Texas Southwestern Medical Center at Dallas. He also holds an MBA from the University of Minnesota’s Carlson School of Management.

Maharaj is the author of numerous technical articles on medical devices and holds nineteen patents in eight countries (including the U.S.), all in the medical device field.

Maharaj resides in Eden Prairie, Minn., with his wife, son and two daughters.

So...they are repeatedly trying to take over biotech firms with depressed share prices. It is certainly not because they would have a better understanding of the business or make better managers than the people who have been working away at it for years. What is their general strategy? Presumably it needs to be making a quick buck...so..what...is it the selling off of assets that is key? How does that translate into lining their pockets? Incentive payments to (new) officers upon the sale? A overall stock price that is undervalued relative to the sum of the parts? Does the lack of debt / ability to debt finance going forward play any role that is attractive to them?

FP, DoA et al: You guys may want to track what Ramius is doing with CYPB as an additional data point in evaluating whether Ramius is a good thing or a bad thing for SRDX investors. Here’s a story on the CYPB machinations from Sep 2010:

http://www.fiercebiotech.com/story/ramius-raises-offer-cypress/2010-09-15

Regards, Dew

Thank you for doing all that very thorough groundwork.

I know little of the corporate world but I find it hard to believe that investors out for short term gain would be good for the long term growth of the company.

I have continually bought SRDX with each major collapse in share price over the last several years and expected to hold the stock for at least 10 years - likely longer. I find it very distressing that anyone not intending to be with the company long term would be at the wheel. I'm not looking for a gain over the next year or two, I'm looking for an asset that will appreciate over the longer haul.

I don't see how any of this could possibly be good for the long term investor.

Dew...do you have any thoughts?