SurModics Inc (SRDX)

[Democritus_of_Abdera]

Marginalization of Clooney suit through indemnification...

As Bridge pointed out last June, Michael Clooney sued SRDX, Johns Hopkins Univ, Eugene de Juan, etc. on June 8, 2007 to get compensation for InnoRX’s failure to recognize him as an inventor of the I-vation platform when the patents were filed (#msg-20407274).

On May 22, 2007 De Juan et al. (but not SRDX), filed a declaratory judgement action challenging Dr. Clooney’s claim of intellectual rights.

The recent Form 10-Q filed 8/11/07 details SRDX’s actions relative to the Clooney suit. In particular, SRDX has sought indemnification from the original owners of InnoRX. And, SRDX is withholding milestone payments to the InnoRX stockholders pending resolution of the issue.

The relevant paragraphs aret:

“On June 8, 2007, the Company (i.e. SRDX) was named as a defendant in litigation filed in the U.S. District Court for the District of Minnesota by Dr. Cooney. JHU and certain former shareholders of InnoRx, among others, were also named as defendants. The complaint alleges that Dr. Cooney was a co-founder of InnoRx and an inventor of subject matter claimed in the Patent Rights. The complaint seeks an order correcting inventorship, and certain unspecified damages (including punitive damages) based on claims of unjust enrichment, fraud, and breach of fiduciary duties. A trial has not yet been scheduled. Pursuant to the Merger Agreement, the Company has submitted a demand for indemnification of losses (including without limitation, damages, expenses and costs) incurred as a result of the litigation involving Dr. Cooney, including both the Alabama and Minnesota cases described above.”

“In January 2005, we entered into a merger agreement whereby SurModics acquired all of the assets of InnoRx, Inc. by paying approximately $4.1 million in cash and issuing 600,064 shares of SurModics common stock to InnoRx stockholders. In July 2005, we issued 60,002 shares of SurModics’ common stock to the shareholders of InnoRx upon the successful completion of the first milestone involving the InnoRx technology acquired in the purchase of InnoRx. In March 2006, we issued an additional 60,007 shares as a result of completion of the second milestone. The 60,007 shares are held in escrow pending possible indemnification per the merger agreement. Upon the successful completion of the remaining development and commercial milestones involving InnoRx technology acquired in the transaction, we will be required to issue up to approximately 480,060 additional shares of our common stock to the stockholders of InnoRx.”