SurModics Inc. (SRDX) 2007年年度報告「NASDAQ」.pdf

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1、2007 Annual Report&Shareholder LetterTo Our Shareholders:Fiscal 2007 was an exceptional year for SurModics.In prior years,the number one question we heard from investors was:“Whats next after the Cypher stent?”In fi scal 2007 we unveiled several signifi cant developments that illustrate whats next a

2、nd position the company well for continued growth.In just one example,our new agreement with Merck&Co.,Inc.has the potential to generate more revenue in total for SurModics than Cypher will.To date,we have received over$135 million in total revenue from our pioneering work with Cypher.By comparison,

3、our agreement with Merck,signed in 2007,has the potential to generate more than$300 million in fees and development milestones,as well as other possible sources of revenue,including royalties.Thanks to the ongoing dedication and teamwork of our talented employees,we have established a leadership pos

4、ition as experts in surface modifi cation,drug delivery technologies and biomaterials.We achieved record revenue for the tenth consecutive year since our IPO in 1998,and continued to build strength in our broad and growing portfolio,as well as deliver on numerous benchmarks and goals.While our busin

5、ess focus has historically been and continues to be particularly strong in the cardiovascular market,our growing presence in the ophthalmology,orthopedics,pharmaceuticals and biotechnology industries positions the company favorably for years to come.The broad applicability of our technology and lice

6、nsing business model allows SurModics to participate in diverse product offerings used for either diagnosing or treating patients.We take great satisfaction in SurModics role in improving the health and quality of life of millions of people touched by our technologies and products.As outlined in las

7、t years letter to you,our seven point revenue growth strategy is working,and several successes in 2007 provide evidence of that.We have long articulated and executed a strategy of accelerating our technology leadership while diversifying our revenue streams.Meeting Unmet Clinical NeedsThe companys f

8、ocus on market demands and addressing unmet clinical needs complements our passion for innovation and has positioned us at the forefront of the convergence of drugs and devices.SurModics has sought to optimize its technology offerings through relentless R&D to create additional intellectual property

9、 and by acquiring technologies developed outside the company.In addition,we can expedite the time to market for new products,reduce the risk of new product development and enhance product effi cacy,while at the same time maximize manufacturing effi ciency and reliability once product commercializati

10、on begins.Healthcare remains an exciting market,and today SurModics is participating in several large and growing opportunities resulting from favorable healthcare demographics,encouraging trends in patient diagnosis and treatment,and the ability to participate at several points in the patient care

11、cycle.Substantial worldwide growth in the age 60+population segment is expected to result in greater numbers of patients requiring improved diagnoses and treatment of a range of cardiovascular,peripheral vascular,retinal,orthopedic and metabolic disorders,tt,oAnswering the Question:“What s Next?”At

12、left:Following our acquisition of Brookwood Pharmaceuticals,scientists from both companies have been actively combining technologies in pursuit of synergistic outcomes.Shown in these photos are actual examples of Brookwood microparticle technology in combination with SurModics surface modifi cation

13、and drug delivery technologies,creating new and improved ways of delivering drugs site-specifi cally.35:18:32 PMamong others.Increasingly,procedures that previously required open surgery are now minimally invasive.These procedures have the potential to greatly expand the use of SurModics technologie

14、s;for example,the use of angioplasty and stenting in place of coronary artery bypass surgery has been profound and is a signifi cant benefi t to our business.There is also a clear trend toward site-specifi c and local drug delivery because of the benefi ts from those technologies,which include the a

15、bility to reduce side effects,improved patient quality of life,convenience and enhanced patient compliance with less frequent dosing.Delivering on Diversifi cationSurModics employs a unique and evolving business model that creates the ability to both grow and diversify revenue.In fi scal 2007 SurMod

16、ics total revenue was$73.2 million,marking the tenth consecutive year of record revenue.During those ten years,revenue has grown at a compounded annual rate of 25%.Historically,the Johnson&Johnson Cypher drug-eluting stent has been a signifi cant revenue driver for SurModics.However,during the past

17、year,SurModics stent-related revenue has been impacted in part by a contraction of the drug eluting stent(DES)market.While drug eluting stents remain an important revenue generator for SurModics,the current situation highlights the need for,and benefi ts of,revenue expansion and diversifi cation.We

18、have made signifi cant progress on this front.In fi scal 2007,royalties from Johnson&Johnson constituted 33%of total revenue.This fi gure is down from 47%of total revenue in fi scal 2006,and far below the peak of 52%in fi scal 2004.In the three years since then,revenue from the rest of our business

19、has more than doubled,growing at a 27%compounded annual rate.The companys revenue growth and diversifi cation efforts include broadening our reach within the stent market,and we are pleased to have expanded our reach to include exciting new customer relationships.Additionally,our research efforts ar

20、e actively advancing the development of next generation solutions that may help address late stent thrombosis,a key issue that has contributed to the contraction of the DES market,and which may continue to affect the market going forward.SurModics has funded various preclinical and clinical efforts

21、evaluating our technologies,and we have expanded our development organization.The opportunities afforded by those investments are demonstrated by the Merck agreement for which SurModics received an up-front license fee of$20 million and will be eligible to receive up to an additional$288 million in

22、fees and development milestones associated with the successful product development of these new combination ophthalmology products.The Merck agreement is truly historic for SurModics and its employees,as it marks the announcement of the fi rst license of our sustained drug delivery platforms in the

23、large and strategically important ophthalmology market,which Dale R.Olseth will be retiring from the SurModics board of directors in January 2008,after more than 20 years of leadership at the company.In November he was named chairman emeritus by the board.Dale fi rst joined SurModics in 1986,and ser

24、ved as its president,CEO and chairman until July 2005.He served as the companys executive chairman until July 2006.Prior to joining SurModics,Mr.Olseth served for a decade as chairman,president and CEO of Medtronic,Inc.The entire SurModics family expresses its deep gratitude to Dale for his tireless

25、 efforts in raising early capital,recruiting an effective board and scientifi c team,providing strategic insight and direction,guiding the company through its IPO,and creating substantial shareholder value in the ensuing years.The company has been shaped immeasurably by his vision,leadership and cha

26、racter.His efforts have positively infl uenced the SurModics employees,investors and board members whom he has greatly inspired.SurModics agreement with Merck comprises I-vation ophthalmology-based products.Above is a magnifi ed image of an I-vation implant.Drug is slowly released from the coated su

27、rface to the interior of the eye over several months,or even years.industry experts anticipate will develop into a multi-billion dollar market over the next fi ve years.This collaboration was made possible in part by the fl exibility of our technology licensing business model.The enabling nature of

28、the technology we licensed to Merck allowed us to negotiate an agreement capable of driving both short-and long-term revenue and cash fl ow.Merck will lead and fund all future development,clinical and commercialization activities for selected I-vation combination products.Additionally,Merck has agre

29、ed to utilize SurModics as the exclusive manufacturer for clinical and commercial products,while not precluding us from collaborating with others on the I-vation sustained drug release technology.Upon commercialization of products under our agreement with Merck,we will also receive royalties on sale

30、s of these products.In 2007 we continued to pursue business development activities that support our growth strategy and enhance our market position.SurModics completed two acquisitions this year,purchasing Brookwood Pharmaceuticals and BioFX Laboratories.Brookwood is a leading polymer-based drug del

31、ivery company that provides proprietary technologies to companies developing improved pharmaceutical products.This highly strategic acquisition deepens SurModics capabilities in drug delivery to include both systemic and site specifi c drug release,among other benefi ts.As a new and distinct busines

32、s unit of SurModics,Brookwood has particular strength in proprietary injectable microparticles and implant technology,both of which are based on biodegradable polymers,to provide sustained drug delivery.Brookwood has 31 customer-paid development projects in progress with top pharmaceutical,biotechno

33、logy and medical device customers as well as smaller public and private companies.These customer projects target a number of key clinical indications in the diabetes,oncology,ophthalmology,cardiovascular,orthopedics,dermatology,central nervous system(CNS)and alcoholism markets,in addition to other f

34、i elds.We see multiple opportunities for technology synergies as we cross pollinate Brookwood polymers in the device arena,and SurModics polymers in the systemic drug delivery arena.The photos on the front cover of this report exemplify the work already underway between Brookwood and SurModics.BioFX

35、 is a leading manufacturer of substrates,a critical component of diagnostic test kits used to detect and signal that a certain reaction has taken place.BioFX offers both colorimetric and chemiluminescent substrates(shown in photo on next page)as well as other products for use in in vitro diagnostic

36、tests.We believe the opportunity to sell our existing products to BioFXs current customers offers signifi cant growth potential,and that by combining the BioFX products with our own,we can offer higher-value critical components to a broader customer base in the in vitro diagnostics market.Another po

37、tential engine for revenue growth and diversifi cation has been our technology partnership with Donaldson Company and Corning Life Sciences.Key Fiscal 2007Accomplishments Achieved records for annual revenue,operating cash fl ow,non-J&J revenue,new licenses signed and new product classes launched Ann

38、ounced a license,development and manufacturing agreement with Merck to pursue the joint development and commercialization of our I-vation sustained release drug delivery system in ophthalmology Acquired Brookwood Pharmaceuticals,broadening our technology base and strengthening our position in the ph

39、armaceutical industry Acquired BioFX Laboratories,expanding our product offerings in the in vitro diagnostics industry In concert with Donaldson Company and Corning Life Sciences,developed and launched the fi rst synthetic extracellular matrix products into the cell culture labware market Signed a l

40、icense agreement with a major orthopedics customer in October 2007 Successfully completed our fi rst ever share repurchase programIn August,SurModics announced the acquisition of Brookwood Pharmaceuticals.Above is a microscopic image of Brookwoods proprietary microparticles,composed of biodegradable

41、 polymer and drug.These microparticles can be introduced into the body to deliver pharmaceutical agents or vaccines on a sustained release basis.Together we are developing synthetic extracellular matrix cell culture products that provide cell growth conditions more closely resembling those found in

42、the body.These products have the potential to improve outcomes in cell culture,cell-based bioassays and other in vitro cell-related applications.In April,Corning launched four initial products into an existing market for labware that is estimated to be approximately$600 million.Additional products a

43、re in development.We are successfully executing on our plan to broaden our portfolio of offerings,and customer demand for our technologies and products has never been stronger.At fi scal year end,100 licensed customer product classes were generating royalty revenue,with 94 licensed products awaiting

44、 launch and an additional 75 non-licensed opportunities in the pipeline.In addition,as mentioned earlier,31 projects are in development at Brookwood Pharmaceuticals.SurModics also signed a record 27 new customer licenses during the year,including an important agreement with Paragon Intellectual Prop

45、erties,LLC related to our Finale prohealing coating technology.We are pleased with the volume and breadth of the potentially marketable innovation occurring at SurModics,and continually strive to further enhance our internal development.As such,we invested$28.5 million in R&D during fi scal 2007,an

46、increase of 28%compared with fi scal 2006,and representing 39%of total revenue.By accelerating our technology leadership and focusing on customer and clinical needs,SurModics is well positioned to achieve sustained revenue growth and further diversifi cation in the years to come.Deployment of Capita

47、l to Enhance Shareholder ValueSurModics was active during fi scal 2007 in the deployment of capital with a goal of enhancing shareholder value.Initiatives included the successful completion of our fi rst ever share repurchase program.In the$35 million repurchase program,we retired in excess of one m

48、illion shares at an average price of$34.76 per share,facilitating a reduction of approximately 5%in total shares outstanding.In November 2007,we announced that our Board of Directors approved a new share repurchase program,authorizing the company to purchase up to$35 million of our outstanding commo

49、n stock.Brookwood Pharmaceuticals,as described above,was acquired for$40 million in cash at closing and up to an additional$22 million in cash upon the successful achievement of specifi ed milestones.BioFX Laboratories was purchased for$11.3 million in cash at closing and up to an additional$11.4 mi

50、llion in cash upon the successful achievement of specifi ed revenue targets.Despite having deployed over$86 million of cash in these various initiatives,our cash and investment balance remains strong at more than$70 million.We believe our activities and accomplishments in fi scal 2007 have strengthe

51、ned our ability to build long-term value for our investors.Further,we believe our ability to generate signifi cant cash fl ow will enable us to pursue various strategies to enhance long-term shareholder value.David A.Koch will be retiring from the SurModics board of directors in January 2008 after n

52、early 20 years of dedicated service as a director.David is well known for his leadership roles at Graco Inc.,where he serves as chairman emeritus,in addition to having served as chairman,CEO and president during his 45-year tenure.He is also recognized for his active community involvement,particular

53、ly his philanthropic activities.His counsel and leadership as an early investor in the company and throughout his two decades of service have helped SurModics become the successful company it is today.The entire SurModics organization has benefi ted from his insight,leadership and integrity.We are g

54、rateful for his signifi cant contributions to the company.Substrates from newly acquired BioFX Laboratories are used in customers diagnostic test kits.For example,when an enzyme of interest was present in the sample above,light was emitted from a BioFX chemiluminescent substrate.This light was then

55、detected and measured by sensitive instruments to determine the outcome of the diagnostic test.Financial Highlights*Total Revenue(dollars in millions)1998 1999 2000 2001 2002 2003 2004 2005 2006 200769.99.813.518.322.729.543.249.762.473.2*Certain charges include:2007-in-process research and developm

56、ent charge of$15.6 million.Including this charge,diluted EPS was$0.18.2006-Novocell impairment charge of$4.7 million.Including this non-cash charge,diluted EPS was$1.09.2005-in-process research and development charge of$30.3 million;Bloomington facility impairment charge of$2.5 million.Including the

57、se charges,diluted EPS was($0.45).2004-Bloomington facility impairment charge of$16.5 million.Including this non-cash charge,diluted EPS was$0.41.10New CustomerLicenses Executed2000 2001 2002 2003 2004 2005 2006 2007212017148927Operating Cash Flow(dollars in millions)1998 1999 2000 2001 2002 2003 20

58、04 2005 2006 20074.47.47.814.317.123.426.135.350.72.1R&D Spending(dollars in millions)1998 1999 2000 2001 2002 2003 2004 2005 2006 200720.416.112.611.89.78.028.54.55.26.8Diluted EPS(in dollars;excluding certain charges*)1998 1999 2000 2001 2002 2003 2004 20052006 2007 1.33 1.27 0.99 0.78 0.44 0.38 0

59、.22 0.13 1.04 0.12Forward-Looking Statements Certain statements contained in this communication 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.Actual results may dif

60、fer and factors that may cause such results or differ are identifi ed in the companys fi scal 2007 Form 10-K and subsequent fi lings.I-vation,Eureka,and Finale are trademarks of SurModics,Inc.Cypher is a registered trademark of Cordis Corporation,a Johnson&Johnson companyEndeavor is a registered tra

61、demark of Medtronic Vascular,Inc.In fiscal 2007,we also strengthened our senior management team with the addition of Arthur J.Tipton,Ph.D.,and the promotion of Bryan K.Phillips,Esq.Dr.Tipton joined us in August through the Brookwood acquisition and was named vice president of SurModics and president

62、 of Brookwood Pharmaceuticals.Mr.Phillips was promoted to deputy general counsel and corporate secretary.Promising FutureSurModics is dedicated to its mission of enhancing the well-being of patients around the world,and remains committed to its values of integrity,customer service and innovation.Our

63、 goals for fi scal 2008 are challenging,but we fully expect to present additional examples answering“whats next.”We are confi dent in our ability to deliver further revenue growth and diversifi cation over time,creating value by meeting customer needs and effectively allocating our capital.There are

64、 many reasons to be optimistic about SurModics future.On behalf of everyone at SurModics,thank you for your continued support of the company.Bruce J Barclay Kendrick B.MelrosePresident and CEO Chairman of the BoardSurModics hosted its inaugural Investor Day event in November at the NASDAQ MarketSite

65、 in New York City.Bruce Barclay,president and CEO,along with other members of the senior management team,presented SurModics business overview and strategies,in addition to outlining the fi scal 2008 corporate goals.9924 West 74th StreetEden Prairie,MN 2007 SurModics,Inc.All rights reserved.Fiscal 2

66、008 GoalsCorporate Sign 18 licenses Exceed$10 million in cash(pro forma revenue)in commercial R&D Launch 10 new product classes by our customersOphthalmology Sign a second customer license using SurModics drug delivery technology Initiate the next-phase clinical trial for I-vation TA Complete a deve

67、lopment milestone under the Merck license and research collaboration agreementCardiovascular Customer conducts a fi rst-in-human procedure with a next generation drug-eluting device incorporating SurModics technology Achieve a fi rst-in-human implant with our Finale prohealing technology Medtronic t

68、o launch the Endeavor DES in the US with SurModics hydrophilic technologyBrookwood Pharmaceuticals Sign at least one license agreement Sign a development agreement with a Top 50 pharma company Exceed$17.5 million in revenueIn Vitro Technologies Exceed$4 million in revenue from BioFX productsNew Technologies Sign fi rst Eureka biodegradable polymer license Generate further data on sustained protein delivery