SurModics Inc (SRDX)

[Democritus_of_Abdera]

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.