SurModics Inc (SRDX)

[Democritus_of_Abdera]

Interest in SRDX seems to be languishing...

I found it notable that today’s CC drew questions from only two analysts. I’ve also noticed that the share volume has fallen markedly during the past month and that there has been very little activity on message boards such as this one. The short interest, however, has remained stable.

I, as one investor, have been holding back waiting to see where the new emphasis on the cGMP facility will lead. Perhaps, this change in direction has made others hesitate as well.

Dew, I find your question regarding the reality of SRDX’s expectation that the Birmingham facility helps generate business relevant to my hesitation. I don’t have sufficient data to answer your question as to whether the Birmingham facility gives customers greater confidence vis-a-vis what SRDX can accomplish as a partner.... however, I thought that the rationale that Bruce Barclay and Phil Ankeny presented in the Q&A of the Q1 CC on Jan 27 regarding the converse (i.e. why SRDX’s research and development work will help generate business for the Birmingham facility) made sense; i.e. :

<Bruce Barclay>: ... it’s our hope and I would say expectation with some programs, contractual commitments in some cases that as we begin to work with the customers on GMP animal studies and then move into Phase I and Phase II clinical trials, that we’ll do that work naturally, because there’s a close connection between the scale-up required for those – for that testing with the R&D work that’s done by our scientific teams. And, while there’s a lot of science with the manufacturer of these products, there’s also a fair amount of art with it as well. I think being able to have the close connection between the bench-top work and then the animal and early clinical scale-up is really important. That’s critical to the success of our cGMP facility. And our customers believe that that connection is important as well. Then the question becomes, once you’ve done the GMP animal Phase I, Phase II, will you be an option for Phase III and commercial? It’s not a given, but once you’ve reached that point, and there is continued good data coming out of the clinic, we think it’s more likely than not that customers would want to stay with us for the large scale Phase III and then the commercial. FDA requirements, I think are significant, as you can keep all of that done at one site; we think there’s a significant advantage for us. We’re also seeing trends in the industry that suggest that pharmaceutical companies are increasingly comfortable with farming out the manufacture of these clinical and commercial product manufacturing requirements. And again, I think we’re counting on that going forward in our facility. So, long answer to your question, I apologize, but there is definitely a connection between the early work that we’re doing for clinical studies and then the Phase III and large commercial manufacturing components.
<Philip Ankeny>: I think we’ve been – articulated this in the past, and Bruce spoke to it well. But, the phrase we hear from customers all the time is ‘risk,’ and how been able to have the program go through its various stages, and particularly, if you get to Phase III clinical trial material production, a customer typically does not want to ever consider moving that from that location to a different location, because it adds risk to the FDA approval and to ultimately getting a successful product that meets all of the GMP requirements, et cetera. And that just then backs up into the earlier stages where, if you cannot transfer even at any stage, you’re just minimizing risk and reducing risk from each stage as you progress. And so, that’s a big reason behind why we felt that this investment in this new facility was so strategic and so compelling.

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Volume and short interest can be found at http://www.nasdaq.com/aspxcontent/shortinterests.aspx?symbol=SRDX&selected=SRDX