SurModics Inc (SRDX)

[DewDiligence]

>I could be mistaken, but I believe Bruce indicated that this announcement falls within the potential $288mm mentioned in the original licensing agreement.<

You’re correct—he did say that potential milestones under the “new” license fall within the $288M figure.

>given the accounting treatment, it will result in more amortised R&D revenue offset by even greater R&D expense for the next few quarters.<

Maybe not! My supposition has been that SRDX was already being paid by MRK for the “new” license and that the unusual accounting treatment (which, as you noted, violates the spirit of GAAP) was selected by SRDX in order to mask the nature the MRK’s payments from investors. If I’m correct, the total payments from MRK will not go up much (maybe not at all) because some payments for the “new” license were already in the mix during the past few quarters.