e8vk
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 24, 2007
SurModics, Inc.
(Exact name of Registrant as Specified in its Charter)
Minnesota
(State or Other Jurisdiction of Incorporation)
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0-23837
(Commission File Number)
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41-1356149
(IRS Employer
Identification No.) |
9924 West 74th Street
Eden Prairie, Minnesota 55344
(Address of Principal Executive Offices and Zip Code)
(952) 829-2700
(Registrants telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition.
On January 24, 2007, SurModics, Inc. issued a press release announcing the results for the
quarter ended December 31, 2006. The copy of the full text of the press release is furnished as
Exhibit 99.1 to this report.
Item 9.01 Financial Statements and Exhibits.
(a) |
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Financial Statements: None. |
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(b) |
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Pro forma financial information: None |
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(c) |
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Shell company transactions: None |
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(d) |
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Exhibits: 99.1 Press Release dated January 24, 2007. |
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 hereunto duly authorized.
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SURMODICS, INC.
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By |
/s/ Philip D. Ankeny
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Date: January 24, 2007 |
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Name: |
Philip D. Ankeny |
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Title: |
Chief Financial Officer |
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
EXHIBIT INDEX
to
FORM 8-K
SURMODICS, INC.
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Date of Report: |
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Commission File No.: |
January 24, 2007 |
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0-23837 |
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Exhibit No. |
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ITEM |
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99.1
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Press Release dated January 24, 2007. |
exv99w1
Exhibit 99.1
FOR IMMEDIATE RELEASE
SurModics Reports First Quarter 2007 Results
23% Growth in Non-CYPHER Revenue
EDEN PRAIRIE, Minnesota January 24, 2007 SurModics, Inc. (Nasdaq: SRDX), a leading
provider of surface modification and drug delivery technologies to the healthcare industry, today
reported financial results for the first quarter ended December 31, 2006.
First Quarter Highlights (GAAP):
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Revenue of $16.7 million, up 2% year-over-year |
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Operating income of $8.1 million; operating margin of 48% |
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Net income of $6.0 million |
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Operating cash flow of $11.8 million |
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Non-CYPHER-related revenue increased 23% year-over-year |
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Two new licenses signed with SurModics customers |
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Four new customer products introduced |
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Completed the repurchase of $17.5 million of common stock |
SurModics is pleased to report 23% growth in non-CYPHER revenue for the first quarter of
fiscal year 2007, said Bruce Barclay, President and CEO. Our overall performance during the
period was negatively impacted by reduced penetration in the drug eluting stent market resulting
from the controversy around late stent thrombosis, and as we had expected, lower R&D revenue
compared to historical levels. However, we remain pleased with the progress we are making on our
strategic plan for sustainable growth, and are confident in our ability to achieve our long-term
goals.
SurModics continues to experience strong customer interest in our ophthalmology technologies, and
we are making significant progress in driving these projects forward, continued Barclay. While
R&D revenue was $0.8 million in the quarter, down from
$1.8 million a year ago, we have recently signed new R&D agreements with various ophthalmology customers
totaling more than $2.5 million, with more R&D agreements expected based on current negotiations.
Based on these new and expected agreements and meaningful progress on other customer projects
across the business, we expect R&D revenue for all of fiscal 2007 to approximate or possibly even
exceed last years near-record R&D revenue of $5.7 million.
Additionally, we continue to have encouraging customer interest in our prohealing and drug
delivery polymer technologies, continued Barclay. Our In Vitro Technologies business had a
particularly robust quarter, and our Hydrophilic Technologies business continues to do well.
Revenue for the first quarter of fiscal 2007 was $16.7 million, an increase of 2% from $16.5
million in the year earlier period. Operating income was $8.1 million, a 5% decrease from $8.6
million in the prior year period. Net income was $6.0 million, a 4% decrease from $6.2 million in
the same period last year. Diluted earnings per share was $0.32, compared with $0.33 in the first
quarter of fiscal 2006. Prior year results include a $465,000, or $0.02 per diluted share, benefit
related to the reversal of a tax reserve; there was no such benefit in the first quarter of fiscal
2007.
SurModics pipeline continues to represent significant potential. The company signed two
new licenses in the first quarter, with many more potential licenses currently in negotiation. The
company has a goal of 18 new licenses for fiscal year 2007, and we remain confident in our ability
to achieve that objective. Our customers launched four new products in the marketplace during the
quarter, bringing to 14 the number of launches achieved toward our goal of 30 launches between
April 2006 and September 2007. As of December 31, 2006, SurModics customers had 89 licensed
product classes generating royalty revenue, up from 80 in the prior-year period; the total number
of licensed product classes not yet launched was 80, compared with 74 in the prior-year period; and
major non-licensed opportunities totaled 80, compared with 67 a year ago. In total, SurModics now
has 160 potential commercial products in development representing each of the companys four focus
markets Cardiovascular, Ophthalmology, Orthopedics and Neurology.
SurModics cash and investment balance was $99.6 million as of December 31, 2006, and we have no
debt. Operating cash flow for the quarter was $11.8 million, a 14% increase from $10.4 million in
the prior year period. SurModics remains in excellent financial condition, said Phil Ankeny,
Senior Vice President and Chief Financial Officer. We were pleased to complete the repurchase of
$17.5 million of stock during the quarter under the $35 million share repurchase program authorized
by our Board in September. We continue to manage our expenses responsibly, without compromising our
investment in R&D. Furthermore, our business development pipeline continues to grow, as we evaluate
potentially compelling opportunities to grow our business and put our balance sheet to work.
Live Webcast
SurModics will host a webcast at 5:00 p.m. ET (4:00 p.m. CT) today to discuss the quarterly
results. To access the webcast, go to the investor relations portion of the companys web site,
www.surmodics.com, and click on the first quarter webcast icon. A replay of the first quarter
conference call will be available by dialing 800-405-2236 and entering conference call ID 11081575.
The audio replay will be available beginning at 7:00 p.m. CT on Wednesday, January 24, until 7:00
p.m. CT on Wednesday, January 31.
About SurModics, Inc.
SurModics, Inc. is a leading provider of surface modification technologies in the areas of
biocompatibility, site specific drug delivery, biological cell encapsulation, and medical
diagnostics. SurModics partners with the worlds foremost medical device, pharmaceutical and life
science companies to bring innovation together for better patient outcomes. Recent collaborative
efforts include the implementation of SurModics Bravo drug delivery polymer matrix as a key
component of the first-to-market drug-eluting coronary stent. SurModics is also active in the
ophthalmology market with a sustained drug delivery system that is currently in human trials for
treatment of retinal disease. A significant portion of SurModics revenue is generated by royalties
earned from the sale of our customers commercial products. SurModics is headquartered in Eden
Prairie, MN. More information about the company can be found at www.surmodics.com. The content of
SurModics web site is not part of this release or part of any filings the company makes with the
SEC.
Safe Harbor for Forward Looking Statements
Certain statements contained in this press release may be deemed to be forward-looking statements
under federal securities laws, and SurModics intends that such forward looking statements be
subject to the safe harbor created thereby. SurModics does not undertake an obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
Contact
Phil Ankeny, Senior Vice President and Chief Financial Officer
(952) 829-2700
SurModics, Inc.
Statements of Income
(In thousands, except per share data)
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Three Months Ended |
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December 31, |
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2006 |
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2005 |
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(Unaudited) |
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Revenue: |
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Royalties and license fees |
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$ |
13,219 |
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$ |
12,275 |
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Product sales |
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2,726 |
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2,347 |
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Research & development |
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795 |
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1,843 |
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Total revenue |
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16,740 |
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16,465 |
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Operating expenses: |
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Product |
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1,086 |
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681 |
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Research & development |
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5,207 |
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4,593 |
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Sales & marketing |
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311 |
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324 |
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General & administrative |
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2,027 |
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2,287 |
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Total operating expenses |
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8,631 |
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7,885 |
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Income from operations |
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8,109 |
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8,580 |
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Investment income |
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1,329 |
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728 |
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Income before income taxes |
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9,438 |
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9,308 |
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Income tax provision |
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(3,446 |
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(3,090 |
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Net income |
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$ |
5,992 |
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$ |
6,218 |
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Basic net income per share |
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$ |
0.32 |
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$ |
0.34 |
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Diluted net income per share |
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$ |
0.32 |
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$ |
0.33 |
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Weighted average shares outstanding |
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Basic |
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18,456 |
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18,436 |
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Diluted |
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18,556 |
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18,643 |
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-more-
SurModics, Inc.
Condensed Balance Sheets
(In thousands)
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December 31, |
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September 30, |
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2006 |
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2006 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash & investments |
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$ |
50,375 |
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$ |
58,813 |
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Accounts receivable |
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12,537 |
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14,493 |
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Inventories |
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933 |
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952 |
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Other current assets |
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1,992 |
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1,838 |
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Total current assets |
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65,837 |
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76,096 |
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Property & equipment, net |
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11,446 |
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11,686 |
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Long-term investments |
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49,243 |
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47,758 |
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Other assets |
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25,204 |
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21,862 |
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Total assets |
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$ |
151,730 |
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$ |
157,402 |
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Liabilities & Stockholders Equity |
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Total current liabilities |
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$ |
10,052 |
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$ |
8,989 |
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Other liabilities |
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3,357 |
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3,210 |
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Total stockholders equity |
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138,321 |
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145,203 |
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Total liabilities & stockholders equity |
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$ |
151,730 |
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$ |
157,402 |
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-more-
SurModics, Inc.
Condensed Statements of Cash Flows
(In thousands)
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Three months ended |
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December 31, |
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2006 |
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2005 |
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(Unaudited) |
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Operating Activities |
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Net Income |
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$ |
5,992 |
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$ |
6,218 |
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Depreciation and amortization |
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986 |
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878 |
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Net other operating activities |
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878 |
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982 |
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Net change in operating assets and liabilities |
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3,924 |
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2,277 |
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Net cash provided by operating activities |
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11,780 |
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10,355 |
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Investing Activities |
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Net purchases of property and equipment |
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(1,226 |
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(2,823 |
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Net other investing activities |
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2,016 |
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(10,051 |
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Net cash provided (used) by investing activities |
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790 |
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(12,874 |
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Financing Activities |
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Issuance of common stock |
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1,428 |
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359 |
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Repurchase of common stock |
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(17,516 |
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Net other financing activities |
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43 |
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Net cash provided (used) by financing activities |
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(16,088 |
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402 |
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Net change in cash and cash equivalents |
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(3,518 |
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(2,117 |
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Cash and Cash Equivalents |
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Beginning of period |
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3,751 |
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3,921 |
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End of period |
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$ |
233 |
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$ |
1,804 |
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