SEC Filing | Surmodics, Inc.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission File Number 0-23837 SurModics, Inc. (Exact name of registrant as specified in its Charter) MINNESOTA 41-1356149 (State of incorporation) (I.R.S. Employer Identification No.) 9924 West 74th Street Eden Prairie, Minnesota 55344 (Address of principal executive offices) Registrant's telephone number, including area code: (612) 829-2700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ The number of shares of the registrant's Common Stock, $.05 par value per share, outstanding as of April 30, 2000 was 7,816,820.

PART I - FINANCIAL INFORMATION Item 1. Financial Statements SURMODICS, INC. Condensed Balance Sheets (In thousands, except share data) March 31, September 30, 2000 1999 ------------------ ----------------- ASSETS (Unaudited) CURRENT ASSETS: Cash & cash equivalents $2,640 $1,975 Short-term investments 10,415 3,947 Accounts receivable, net 1,360 1,433 Inventories 511 459 Prepaids and other 618 260 ------------------ ----------------- Total current assets 15,544 8,074 ------------------ ----------------- PROPERTY AND EQUIPMENT, net 6,879 5,275 LONG-TERM INVESTMENTS 9,246 15,917 DEFERRED TAX ASSETS 1,374 2,465 OTHER ASSETS, net 216 227 ------------------ ----------------- $33,259 $31,958 ================== ================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $641 $710 Accrued liabilities 1,021 1,261 Deferred revenues 160 268 ------------------ ----------------- Total liabilities 1,822 2,239 ------------------ ----------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series A Preferred stock- $.05 par value, 150,000 shares authorized; no shares issued or outstanding -- -- Common stock- $.05 par value, 45,000,000 shares authorized; 7,802,805 and 7,701,921 shares issued and outstanding 390 385 Additional paid-in capital 31,904 32,009 Unearned compensation (216) (267) Stock purchase notes receivable (38) (58) Accumulated other comprehensive loss (287) (187) Accumulated deficit (316) (2,163) ------------------ ----------------- Total stockholders' equity 31,437 29,719 ------------------ ----------------- $33,259 $31,958 ================== ================= The accompanying notes are an integral part of these condensed balance sheets. 2

SURMODICS, INC. Condensed Statements of Income (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, ---------------- ---------------- 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES: Royalties $2,503 $1,530 $4,853 $2,836 License fees 160 60 260 325 Product sales 1,188 1,160 2,422 1,790 Research and development 590 558 1,055 996 ------ ------ ------ ------ Total revenues 4,441 3,308 8,590 5,947 ------ ------ ------ ------ OPERATING COSTS AND EXPENSES: Product 467 397 862 679 Research and development 1,776 1,213 3,384 2,379 Sales and marketing 354 437 732 835 General and administrative 693 670 1,255 1,198 ------ ------ ------ ------ Total operating costs and expenses 3,290 2,717 6,233 5,091 ------ ------ ------ ------ INCOME FROM OPERATIONS 1,151 591 2,357 856 ------ ------ ------ ------ OTHER INCOME: Investment income, net 307 260 600 530 Gain (loss) on sale of investments (11) (3) (10) 95 ------ ------ ------ ------ Other income, net 296 257 590 625 ------ ------ ------ ------ INCOME BEFORE PROVISION FOR INCOME TAXES 1,447 848 2,947 1,481 INCOME TAX BENEFIT (PROVISION) (543) 257 (1,100) 549 ------ ------ ------ ------ NET INCOME $904 $1,105 $1,847 $2,030 ====== ====== ====== ====== NET INCOME PER SHARE: Basic $0.12 $0.15 $0.24 $0.28 Diluted $0.11 $0.14 $0.22 $0.26 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic weighted average common shares outstanding 7,782 7,270 7,750 7,250 Dilutive effect of outstanding stock options 563 722 557 670 ------ ------ ------ ------ Diluted weighted average common shares outstanding 8,345 7,992 8,307 7,920 The accompanying notes are an integral part of these condensed financial statements. 3

SURMODICS, INC. Condensed Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended March 31, ----------------------------- 2000 1999 ------------- ------------- OPERATING ACTIVITIES: Net income $1,847 $2,030 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 485 346 Amortization of unearned compensation, net 43 30 Change in deferred rent -- (12) Change in deferred tax 1,091 (552) Change in assets and liabilities: Accounts receivable 73 (371) Inventories (52) (52) Prepaids and other (358) (13) Accounts payable and accrued liabilities (309) (434) Deferred revenues (108) (66) ------------- ------------- Net cash provided by operating activities 2,712 906 ------------- ------------- INVESTING ACTIVITIES: Purchases of property and equipment, net (2,078) (758) Purchases of available-for-sale investments (13,626) (15,434) Sales/maturities of available-for-sale investments 13,729 14,631 Repayment of stock purchase notes receivable 20 68 ------------- ------------- Net cash used in investing activities (1,955) (1,493) ------------- ------------- FINANCING ACTIVITIES: Issuance of common stock, net (92) 408 ------------- ------------- Net increase (decrease) in cash and cash equivalents 665 (179) CASH AND CASH EQUIVALENTS: Beginning of period 1,975 1,344 ============= ============= End of period $2,640 $1,165 ============= ============= The accompanying notes are an integral part of these condensed financial statements. 4

SURMODICS, INC. Notes to Condensed Financial Statements (Unaudited) (1) Basis of Presentation: In the opinion of management, the accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles and reflect all adjustments, consisting solely of normal recurring adjustments, needed to fairly present the financial results for these interim periods. These financial statements include some amounts that are based on management's best estimates and judgments. These estimates may be adjusted as more information becomes available, and any adjustment could be significant. The results of operations for the three months and six months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the entire fiscal year. According to the rules and regulations of the Securities and Exchange Commission, the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. Read together with the disclosures below, management believes the interim financial statements are presented fairly. However, these unaudited condensed financial statements should be read together with the financial statements for the year ended September 30, 1999 and footnotes thereto included in the Company's form 10-KSB as filed with the Securities and Exchange Commission. (2) New Accounting Pronouncements The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 137, "Deferral of the Effective Date of SFAS No. 133," which establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. If certain conditions are met, a derivative may qualify for hedge accounting. Based on current operations, the Company anticipates that the adoption of SFAS No. 133 at the beginning of fiscal 2001 will not have a significant impact on its results of operations. (3) Comprehensive Income The components of comprehensive income for the three-month and six-month periods are as follows: Three months ended Six months ended March 31, March 31, ------------------ ------------------ (dollars in thousands) 2000 1999 2000 1999 --------- -------- -------- --------- Net income $904 $1,105 $1,847 $2,030 Other comprehensive income: Change in unrealized loss on available-for-sale securities (4) (117) (100) (312) -------- -------- -------- ---------- Total comprehensive income $900 $988 $1,747 $1,718 ======== ======== ======== ========== 5

(4) Operating Segments Research & (dollars in thousands) Licensing Manufacturing Development Corporate Consolidated ------------ ---------------- --------------- --------------- --------------- Six Months Ended March 31, 2000 Revenues: PhotoLink $3,475 $1,106 $668 $ - $5,249 Diagnostic 1,638 - - - 1,638 Stabilization & other - 1,316 - - 1,316 Government - - 387 - 387 ------------ ---------------- --------------- --------------- --------------- Total Revenues 5,113 2,422 1,055 - 8,590 Expenses - 862 3,384 1,987 6,233 ------------ ---------------- --------------- --------------- --------------- Operating income (loss) 5,113 1,560 (2,329) (1,987) 2,357 Other income 590 590 Income tax provision (1,100) (1,100) --------------- Net income $1,847 =============== Six Months Ended March 31, 1999 Revenues: PhotoLink $1,834 $775 $492 $ - $3,101 Diagnostic 1,327 - - - 1,327 Stabilization & other - 1,015 - - 1,015 Government - - 504 - 504 ------------ ---------------- --------------- --------------- --------------- Total Revenues 3,161 1,790 996 - 5,947 Expenses - 679 2,379 2,033 5,091 ------------ ---------------- --------------- --------------- --------------- Operating income (loss) 3,161 1,111 (1,383) (2,033) 856 Other income 625 625 Income tax benefit 549 549 --------------- Net income $2,030 =============== (5) 1999 Employee Stock Purchase Plan On November 15, 1999 the Board of Directors adopted, and on January 24, 2000 shareholders approved, the Company's 1999 Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Stock Purchase Plan permits all full-time and part-time employees (including officers) of the Company to purchase stock of the Company. The Stock Purchase Plan does not allow an employee to purchase stock through the Stock Purchase Plan if immediately after the grant of an option, he or she would own stock representing 5% or more of the total combined voting power or value of all classes of the stock of the Company. The Stock Purchase Plan will terminate on February 28, 2010, unless the Board of Directors extends the term of the Plan. 6

(6) Stockholders' Equity On January 24, 2000 shareholders approved an amendment to the Articles of Incorporation to eliminate all references in the Articles to a class of Convertible Preferred Stock, shares of which were automatically converted as part of the Company's initial public offering in 1998. Additionally, the Amendment increased the total number of authorized shares of the Company to 50,000,000 consisting of 45,000,000 shares of Common Stock, $0.05 par value per share, 150,000 of Series A Preferred Stock, $.05 par value per share, and 4,850,000 undesignated shares. 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. General SurModics is a leading provider of surface modification solutions to medical device manufacturers. The Company's revenues are derived from four primary sources: fees from licensing its patented technology to customers; royalties received from licensees; the sale of photoreactive chemical compounds to licensees and stabilization products to the diagnostics industry; and research and development fees generated on projects for commercial customers and pursuant to government grants. Results of Operations Three Months Ended March 31, 2000 and 1999 Revenues. The Company's revenues were $4.4 million for the second quarter of fiscal 2000, an increase of $1.1 million, or 34%, over the same period of fiscal 1999. The revenue components were as follows (in thousands): $ Increase % Increase 2000 1999 (Decrease) (Decrease) ---- ---- ----------- ---------- PhotoLink revenue: Royalties $1,571 $814 $757 93% License fees 160 60 100 167% Reagent chemical sales 501 530 (29) (5%) Commercial development 396 283 113 40% --- --- --- Total PhotoLink revenue 2,628 1,687 941 56% Other revenue: Diagnostic royalties 933 716 217 30% Stabilization & other products 686 630 56 9% Government research 194 275 (81) (29%) --- --- ---- Total revenues $4,441 $3,308 $1,133 34% ====== ====== ====== Second quarter revenue growth of 34% was primarily a result of a 56% increase in PhotoLink-related revenue. The 93% growth in PhotoLink royalties was due mostly to increased sales of coated products sold by the Company's licensees. During the quarter, approximately 82% of the PhotoLink royalties received were earned royalties based on the clients' sale of coated products. The remaining royalties were minimum payments made to SurModics prior to a medical device reaching the market. There were no additional license agreements signed during the second quarter. The $160,000 of license revenue was due to progress payments on PhotoLink license agreements signed in previous periods. The Company has license agreements with 46 companies covering over 100 different products. The 5% decrease in reagent chemical sales (those chemicals used by licensees in the PhotoLink coating process) was partially due to the reduction of sales to a single client as a result of collaborative efforts to improve processing efficiencies. While sales to this client continued to represent more than half of the reagents sold during the quarter, reagent sales to all other customers increased 22% over the same period last year. Commercial development revenue increased 40% due mostly to a large development project for a single client. While this project is continuing, the level of effort is expected to revert back to a more normal level. Therefore, commercial development revenue may decrease in the third quarter. The 30% 8

increase in diagnostic royalty revenue contributed to the majority of revenue growth outside of PhotoLink. These royalties were impacted by a one-time spurt in sales. It is anticipated that the diagnostic royalties will be lower than historical levels over the next several quarters until certain manufacturing issues of a licensee are resolved. Product costs. The Company's product costs were $467,000 for the second quarter of fiscal 2000, an increase of $70,000, or 18%, over the same period of fiscal 1999. Overall product margins decreased to 61% in the second quarter of fiscal 2000 from 66% in the same period of fiscal 1999. The margin decline was primarily due to the scrapping of several production lots that failed to meet quality standards in the second quarter. It is expected that margins will return to recent levels in the third quarter. Research and development expenses. Research and development expenses were $1.8 million for the second quarter of fiscal 2000, an increase of $563,000, or 46%, over the same period of fiscal 1999. The change was primarily due to compensation and benefits associated with technical personnel added by the Company over the last year, increased patent and legal fees, and supplies cost to equip the newly completed laboratory space. Sales and marketing expenses. Sales and marketing expenses were $354,000 for the second quarter of fiscal 2000, an $83,000 or 19% decrease from the same period of fiscal 1999. Increased promotional expenses were more than offset by decreased compensation and benefit costs due to open positions. The company is currently attempting to fill these open positions. General and administrative expenses. General and administrative expenses were $693,000 for the second quarter of fiscal 2000, an increase of $23,000, or 3%, over the same period of fiscal 1999. The increase was the result of higher compensation and benefit costs and offset by lower outside consulting costs. Income from operations. The Company's income from operations was $1.2 million for the second quarter of fiscal 2000, an increase of $560,000, or 95%, over the same period of fiscal 1999. Other income, net. The Company's other income was $296,000 for the second quarter of fiscal 2000, an increase of $39,000, or 15%, over the same period of fiscal 1999. The increase is due to higher investment balances in the current period. Income tax expense. The Company's income tax provision was $543,000 for the second quarter of fiscal 2000 versus a $257,000 income tax benefit recorded in the same period of fiscal 1999. Net income for the second quarter of fiscal 1999 included the reversal of income tax valuation reserves of approximately $571,000 reducing the Company's tax provision at statutory rates to a net credit of $257,000. Excluding the effect of the reversal of income tax valuation reserves, the Company's net income and diluted income per share would have been as follows on a proforma basis: Proforma Three Months Ended March 31, 2000 1999 ---- ---- Net income before provision for income taxes $1,447,000 $848,000 Income tax provision (543,000) (314,000) --------- --------- Net income $ 904,000 $534,000 ========= ========= Diluted net income per share $0.11 $0.07 ===== ===== 9

Other comprehensive loss. The Company's other comprehensive loss was $4,000 for the second quarter of fiscal 2000. This loss was due to a reduction in the market value of the Company's long-term investments available-for-sale due to increases in interest rates. As of March 31, 2000, the Company had a net $287,000 unrealized loss related to those investments. Six Months Ended March 31, 2000 and 1999 Revenues. The Company's revenues were $8.6 million for the first six months of fiscal 2000, an increase of $2.6 million, or 44%, over the same period of fiscal 1999. The revenue components were as follows (in thousands): $ Increase % Increase 2000 1999 (Decrease) (Decrease) ---- ---- ----------- ----------- PhotoLink revenue: Royalties $3,215 $1,509 $1,706 113% License fees 260 325 (65) (20%) Reagent chemical sales 1,106 775 331 43% Commercial development 668 492 176 36% --- --- --- Total PhotoLink revenue 5,249 3,101 2,148 69% Other revenue: Diagnostic royalties 1,638 1,327 311 23% Stabilization & other products 1,316 1,015 301 30% Government research 387 504 (117) (23%) --- --- ----- Total revenues $8,590 $5,947 $2,643 44% ====== ====== ====== The overall revenue growth of 44% for the first six months was distributed across several operating segments but resulted primarily from a 69% increase in PhotoLink-related revenue. The 113% growth in PhotoLink royalties was due primarily to increased sales of coated products sold by the Company's licensees. In addition, the first quarter royalties included a one-time royalty payment of $225,000 from a client as the result of a license renegotiation. During the period, approximately 84% of the PhotoLink royalties received were earned royalties based on the clients' sale of coated products. The remaining royalties were minimum payments made to SurModics prior to a medical device reaching the market. The 43% increase in reagent chemical sales was due to growing production of PhotoLink-coated devices by SurModics' clients. SurModics signed five new PhotoLink license agreements during the first six months. The fees from these agreements, in addition to progress payments made on previously executed license agreements resulted in $260,000, a 20% decrease from the $325,000 recorded on the seven license agreements signed in the same period last year. Stabilization and other product sales increased 30% from the same period in fiscal 1999. This rate of growth is not expected to continue since stabilization sales have leveled out over the last few quarters. Product costs. The Company's product costs were $862,000 for the first six months of fiscal 2000, an increase of $183,000, or 27%, over the same period of fiscal 1999. Overall product margins increased to 64% in the first six months of fiscal 2000 from 62% in the same period of fiscal 1999. The continued margin improvement was the result of efficiencies achieved in manufacturing reagent chemicals and stabilization products based on increased production volumes. 10

Research and development expenses. Research and development expenses were $3.4 million for the first six months of fiscal 2000, an increase of $1.0 million, or 42%, over the same period of fiscal 1999. The change was primarily due to compensation and benefits associated with technical personnel added by the Company over the last year, increased patent and legal fees, and supplies cost to equip the newly completed laboratory space. Sales and marketing expenses. Sales and marketing expenses were $732,000 for the first six months of fiscal 2000, a $103,000 or 12% decrease from the same period of fiscal 1999. Increased promotional expenses were more than offset by decreased compensation and benefit costs due to open positions. General and administrative expenses. General and administrative expenses were $1.3 million for the first half of fiscal 2000, an increase of $57,000, or 5%, over the same period of fiscal 1999. The increase was primarily the result of higher compensation and benefit costs. Income from operations. The Company's income from operations was $2.4 million for the first six months of fiscal 2000, an increase of $1.5 million, or 175%, over the same period of fiscal 1999. Other income, net. The Company's other income was $590,000 for the first half of fiscal 2000, a decrease of $35,000, or 6%, over the same period of fiscal 1999. An increase in investment income in the current period was offset by a decrease in realized gains on the sale of investments. The first half of fiscal 1999 included a $95,000 realized gain from the sale of investments. Income tax expense. The Company's income tax provision was $1.1 million for the first six months of fiscal 2000 versus a $549,000 income tax benefit recorded in the same period of fiscal 1999. Net income for the first half of fiscal 1999 included the reversal of income tax valuation reserves of approximately $1,062,000 reducing the Company's tax provision at statutory rates to a net credit of $549,000. Excluding the effect of the reversal of income tax valuation reserves, the Company's net income and diluted income per share would have been as follows on a proforma basis: Proforma Six Months Ended March 31, -------------------------- 2000 1999 ---- ---- Net income before provision for income taxes $2,947,000 $1,481,000 Income tax provision (1,100,000) (513,000) ----------- ---------- Net income $1,847,000 $ 968,000 ========== ========= Diluted net income per share $0.22 $0.12 ===== ===== Other comprehensive loss. The Company's other comprehensive loss was $100,000 for the first six months of fiscal 2000. This loss was due to a reduction in the market value of the Company's long-term investments available-for-sale due to increases in interest rates. As of March 31, 1999, the Company had a net $287,000 unrealized loss related to those investments. Liquidity and Capital Resources As of March 31, 2000, the Company had working capital of $13.7 million and cash, cash equivalents and investments totaling $22.3 million. The Company's investments principally consist of U.S. government agency obligations and investment grade, interest-bearing corporate debt securities with varying maturity dates, the majority of which are one year or less. The Company 11

generated positive cash flows from operating activities of $2.7 million in the first six months, which was an increase of 199% for the same period of last year, primarily due to the change in the deferred tax asset as described above. Approximately $2.0 million of cash was used for investing activities during the first six months compared to $1.5 million last year. The significant change in investing activities between years was the construction of additional laboratory and office space that was completed in December 1999. The total cost of the additional space was approximately $1.0 million. Finally, a net $92,000 was utilized in financing activities due to the exercise of stock options, net of stock swaps during the first six months of the year. As of March 31, 2000, the Company had no debt, nor did it have any credit agreements. The Company believes that its existing capital resources will be adequate to fund the Company's operations into the foreseeable future. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company maintains an investment portfolio in accordance with its investment policy. The primary objectives of the Company's investment policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. The Company's investment policy requires investments with high-credit-quality issuers and limits the amount of credit exposure to any one issuer. The Company's investments principally consist of U.S. government and government agency obligations and investment grade, interest-bearing corporate debt securities with varying maturity dates, the majority of which are three years or less. All of the Company's cash equivalents and marketable securities are classified as available-for-sale securities. The securities held in the Company's investment portfolio are subject to interest rate risk. Changes in interest rates affect the fair market value of the available-for-sale securities. The Company has determined that a hypothetical ten percent increase in interest rates would result in an approximate $150,000 decrease in the fair value of the Company's available-for-sale securities as of March 31, 2000, but would have no material impact on the results of operations or cash flows. SurModics does not use derivative instruments in its investment portfolio. Forward Looking Statements The statements contained in this quarterly report relating to future revenue growth and expense levels are based on current expectations and involve a number of risks and uncertainties. These statements are forward looking and are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. The following factors could cause royalty revenue to materially and adversely differ from that anticipated: the ability of the Company's licensees to successfully gain regulatory approval for, market and sell products incorporating the Company's technology; the amount and timing of resources devoted by the Company's licensees to market and sell products incorporating the Company's technology; the Company's ability to attract new licensees and to enter into agreements for additional applications with existing licensees; the Company's ability to maintain a competitive position in the development of technologies and products in its areas of focus; and business and general economic conditions. 12

PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities and Use of Proceeds. Use of Proceeds for the period ending March 31, 1999. (1) Effective Date: March 3, 1998 SEC File Number: 333-43217 (2) Offering Date: March 3, 1998 (4)(i) The offering has terminated; all securities registered were sold. (4)(ii) Managing Underwriter: John G. Kinnard and Company, Incorporated (4)(iii) Title of Securities: Common Stock (4)(iv) Amount Registered: 2,300,000 Aggregate Offering Price: $17,250,000 Amount Sold: 2,300,000 Aggregate Offering Price Sold: $17,250,000 (4)(v) Underwriting Discount and Commissions $ 1,293,750 Other Expenses $ 435,148 Total Expenses $ 1,728,898 All the above items represented direct or indirect payments to others. (4)(vi) Net Offering Proceeds $15,521,102 (4)(vii) Use of Net Offering Proceeds: Research and development $ 1,772,000 Sales and marketing $ 1,173,000 Property and equipment upgrades $ 7,180,000 Patent protection $ 143,000 Working capital and general corporate purposes $ 852,000 Administration $ 124,000 Money market funds $ 4,277,102 All the above items represented direct or indirect payments to others. 13

Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - 27 Financial Data Schedule (b) Reports on Form 8-K - None 14

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SurModics, Inc. May 15, 2000 By: /s/ Stephen C. Hathaway Stephen C. Hathaway Vice President & CFO (Principal Financial Officer) 15

Exhibit Index Exhibit Number Description -------------- ----------- 27 Financial Data Schedule

5 1,000 U.S. Dollars 6-MOS SEP-30-2000 OCT-01-1999 MAR-31-2000 1 2,640 10,415 1,400 40 511 15,544 11,388 4,509 33,259 1,822 0 0 0 390 31,047 33,259 2,422 8,590 862 6,233 0 0 0 2,947 1,100 1,847 0 0 0 1,847 .24 .22