Surmodics Inks Licensing Deal

On Tuesday, SurModics Inc. (SRDX - Analyst Report) announced that it licensed its drug delivery technology to Roche (RHHBY) and its wholly owned subsidiary, Genentech. Drug delivery technologies create and support site specific drug delivery polymers and coating technologies for use in drug/device combination products in chosen markets. 
 
Under the terms of the agreement, SurModics is entitled to an up-front payment of $3.5 million. Furthermore, the deal could be worth up to $200 million in delayed payments if multiple products are successfully developed. SurModics will also receive royalties on product sales. SurModics will receive payments for its development services. Under the terms of the agreement, Roche and Genentech have the right to obtain manufacturing services from SurModics.
 
The transaction provides Roche and Genentech complete access to the biodegradable microparticles developed by SurModics. They intend to use the products in a long-lasting version of their optical drug Lucentis (ranibizumab injection), a prescription medicine approved for treating patients with wet age-related macular degeneration.
 
Lucentis, discovered by Genentech, is being co-developed with Novartis Ophthalmics Business Unit for eye related diseases or disorders. Genentech has commercial rights in the United States and Novartis (NVS - Snapshot Report) for the rest of the world.
 
We believe the deal provides further opportunities to Roche, one of the world's biggest drugmakers, and Genentech, which was acquired in 2008, to develop additional compounds for the treatment of ophthalmic diseases. This will broaden the treatment opportunities for patients suffering from eye diseases.
 
The news had a positive effect on SurModics and its shares rose by over 19%, closing Tuesday at $29.04.
 
SurModics, which provides surface modification and drug delivery technologies to medical device and pharmaceutical companies, competes mainly with Angiotech Pharmaceuticals Inc. (ANPI).

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