NEW BRUNSWICK (dpa-AFX) - SurModics Inc. (SRDX), Wednesday responded to the manufacturing termination of Cypher Coronary Stents by Cordis Corporation, a Johnson & Johnson (JNJ) company, stating that its long-term strategic plan of focusing on its core hydrophilic technology would be reinforced by the development. As well, SurModics re-affirmed its previously communicated fiscal year 2011 guidance. The company's shares lost over 17 percent in today's session.
Eden Prairie, Minnesota-headquartered SurModics said it was disappointed by J&J's announcement, but that it had long anticipated the continuing decline of royalties from Cypher. SurModics said its relationship with J&J would remain the same, as its hydrophilic coating technology was used on a broad array of products across the Cordis franchise.
Gary Maharaj, president and chief executive officer of SurModics said today's development reinforced and validated the company's long-term strategic plan of focusing on its core hydrophilic technology and in vitro diagnostics businesses.
Looking ahead, SurModics also reaffirmed its full year 2011 outlook. In April, it lifted its non-GAAP earnings outlook to a range of $0.13 to $0.26 per share. Revenue outlook for the year was raised to a range of $63 to $68 million. The Street currently expects earnings of $0.20 per share and revenues of $65.8 million for the year.
Earlier today, Cordis said unlicensed competition from products that infringed its patents had eroded Cypher Stent pricing, sales and market share, and had dampened the prospects for Nevo Stent commercialization. Cordis would close two facilities in Ireland and Puerto Rico and reduce 900 - 1,000 positions. The company said it would continue to focus on cardiovascular care through its Biosense Webster and Cordis businesses.
Cordis said it would no longer pursue the development of the Nevo Sirolimus-Eluting Coronary Stent, and also stop the manufacture of Cypher and Cypher Select Plus Sirolimus-Eluting Coronary Stents by the end of 2011.
Separately, J&J said it expected to record an after-tax restructuring charge in the range of $500-$600 million in the second quarter of 2011 as a result of restructuring plans announced by Cordis.
SRDX closed Wednesday's regular trading at $11.01, down $2.29 or 17.22%, on the Nasdaq. Over the past year, the stock traded in a range of $8.29 - $17.05.
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