Replies to post #49007 on Biotech Values

[DewDiligence]

SRDX up 19% in early trading (eom).

[Biowatch]

SRDX Yes their platform is promising for this therapeutic area, as discussed previously. Does the $20 million up front and everything else on the back end seem like a minor investment on MRK's part in your opinion?

It doesn't seem like a resounding endorsement by MRK.

"SurModics will receive an up front licensing fee of $20 million and will be eligible to receive up to an additional $288 million in fees and development milestones associated with the successful product development and attainment of appropriate U.S. and EU regulatory approvals for these new combination products. In addition, Merck will reimburse SurModics for its development activities, and SurModics will be responsible for the manufacture and supply of clinical and commercial products. SurModics will also receive royalties on product sales."

[DewDiligence]

SRDX CC notes:

1. No one on the Q&A asked about sirna-027. There are two explanations for this: a) the analysts who cover SRDX and the medical-device arena do not know about sirna-027; or b) the analysts consider sirna-027 to be AGN’s drug rather than MRK’s. I think a) is the more likely explanation.

2. The next 10Q (the one for the June quarter) will almost certainly be the most anticipated one SRDX has ever filed. It will contain the redacted agreement between SRDX and MRK. The extent of the redactions remains to be determined. The redactions may leave enough of the agreement in view to shed some light on the scope of the exclusivity terms in the agreement.

3. SRDX has generated $353M in cumulative revenue in its history, of which $130M was attributable to Cypher. Thus, if the full $308M in development and regulatory milestones is achieved in the MRK deal, it will amount to more than twice as much as the cumulative revenue from Cypher. Moreover, manufacturing income and royalties on commercial sales are not included in the $308M.

4. Eight minutes into the CC was this statement by SRDX’s VP of ophthalmology: “This removability feature is a key advantage in the eyes of physicians.” I started wondering why this advantage doesn’t also apply when patients' eyes are implanted :-)