SurModics: Investors Looking Under The Hood (SRDX, MRK, JNJ)
SurModics Inc. (NASDAQ: SRDX) is seeing a sharp drop after recent news. Its partner Merck & Co. (NYSE: MRK) is still under an agreement with the SurModics in Phase IIb I-vation trials, but Merck has suspended enrollment in the study as it is studies the design. This follows a recently published study comparing laser treatment and intravitreal injections of triamcinolone acetonide in patients with diabetic macular edema. The one downgrade we have seen today is from Barrington Research.
SurModics also makes the coatings for the Johnson & Johnson (NYSE: JNJ) Cypher dreg-eluting stents. As drug-eluting stents went through a two-year controversy, that part of SurModics’ business has not grown as much as some were hoping. This company still has many applications not yet on the market, so neither situation takes the “call option” out of this company as far as evaluating its potential worth which you can see on its applicable uses on its site.
The company now has a market cap of $710 million and its most recent tangible book value after backing out goodwill and other intangibles was about $108 million. The 52-week trading range is $38.17 to $56.75, and shares this morning went as low as $38.51.
This company is actually lucky that it has only traded 360,000 shares as of 12:55 PM EST, as that is still well over double an average day but is not indicative of institutional holders throwing in the towel all over again.
Jon C. Ogg
August 11, 2008