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Biotech / Medical SRDX - SurModics - Biotech IPO

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To: Lance Bredvold who wrote (60)	4/28/2022 4:04:29 PM
From: Lance Bredvold	1 Recommendation of 83

And one more thing to keep in mind. I've always been impressed that neither Gary or Tim try to maximize earnings to goose the stock price. SRDX has a $30mm progress payment due upon premarketing approval of Surveil with Abbott. That drops to $27mm if it does not happen before 1/23, but I suspect it will. And there was no emphasis placed upon that eventuality because they simply don't count their chickens before they hatch. And that's why I trust these guys and it's been that way since I first bought shares back in 2000 or so (except for the period when they got that hot shot from California to be CEO for a few years. Now they are back to the understated Minnesota culture which I appreciate so much. Let's see--about $26mm net (not yet expensed) I believe ought to be over $2 a share and might even bring them to breakeven for the year despite predictions of over $1 loss. I guess there are plenty of investors who also trust these guys, as the price has remained up far above what the predicted losses would normally justify--I had hoped they would be in the $30's when those predictions first came out, but the price just would not get down where I wanted it.

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To: Lance Bredvold who wrote (61)	1/19/2023 8:06:47 AM
From: Lance Bredvold	of 83

Well, that's a bummer. Premarket approval delayed by FDA request for more data and also a labelling requirement. Price is down 20% premarket offering $26 at the moment from over $37 yesterday at the close. Gary says an immediate reduction of spending will be called for and meeting with the committee. It must be serious and he says additional data will be required so certainly more time for SurVeil before sales could begin. But again, I'm impressed that Gary bites the bullet at 0700ET and does not sugar coat a bad situation to improve my hopes. I have been disappointed that Value Line dropped regular coverage of SRDX last year and now this with the sales force costing a lot. I have no idea how long this delay will be--or if it might require a complete retreat to the old model and reduction in selling expense--I doubt that, but it's possible. Remember, SRDX was always profitable until last year when they made a conscious decision to sell stents independently. The progress payment almost certainly now maximizes at $27mm and, I think I recall that there are further reductions by Abbott if PMA is delayed still further. Ouch.

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To: Lance Bredvold who wrote (62)	1/19/2023 9:38:17 AM
From: Lance Bredvold	of 83

I need to remind myself that SurVeil is not the only arrow in SRDX's quiver. In fact, I guess it is not the prime hope for that sales force they've been building though I'd have to do some more review in order to remember just what other products are in queue. At market open the price has come back up to about $30 and I could buy for $28 most likely. But I'm not quite sure enough to place an order. SubLime, a dilation catheter, for example. Guess I'll go over to their website and do some more checking after which my options are apt to offer less potential.

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From: Lance Bredvold	2/27/2023 6:07:42 PM
	of 83

I've never understood why SRDX stock seems so bouyant. Good steady earnings and enough patents to keep the business going. But last year we were told of a whole new strategy which would require losses for the year of 2022. A sales force was recruited and built and FDA trials required money and time. All went as expected until the FDA asked for more data on SurVeil which will delay approval. Or perhaps mean approval will not be possible. So why is the price down below $25 after remaining in upper 30's throughout the speculative year of 22? I regard that setback as just part of the approval process as I've seen it happen so many times with other biotechs--if SRDX can even be called a biotech. Seems to me it's more of a medical device company but upon dependency to FDA's processes developed the fears and uncertainties typical of early stage biotechs. So looking at the setback as just a necessary step in a process, I don't see that all that much has changed and I bought again at $25. Will buy just over $20 if we get there also. I guess we are in a bit more danger now having spent so much money without productive uses for the results, and there will be wastage due to releasing some of the sales people, but otherwise, I think we are further along than we were when the price hung around $35 and I'm hopeful of approval finally. Or are we being dumped on by bigger producers of stents and balloon catheters? They are probably not tickled to have another competitor though as I recall there are plenty of them already many of whom buy surface modification products from SRDX.

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From: Lance Bredvold	3/28/2023 11:28:45 AM
	of 83

"..."We are delighted with our progress towards achieving a PMA for the SurVeil DCB," said Gary Maharaj, Chief Executive Officer of Surmodics, Inc. "The feedback from the FDA provides the necessary clarity on the process and content required to successfully amend our PMA application. Importantly, we do not anticipate the need for additional biocompatibility studies, which will significantly reduce our initial assumptions of the time and cost to amend our PMA application. With this alignment and clarity, we are preparing our amended PMA application for submission in the third quarter of our fiscal 2023 with a target of receiving premarket approval in the fourth quarter of our fiscal 2023." Letter from FDA announced today is about what I hoped and expected. Now a bump in the road to probable acceptance and the stock has bounced 10% so far. The company took dramatic action for a worst case scenario by reducing the sales team it had built and cutting back on expenses just in case. I would think the consolidation of sales territories might actually be beneficial as those which are less promising or people who are less enthusiastic might be culled. Thus, while I'm not convinced all is rosy, it sure looks pretty good and I bought (too much) at $25 and then just a bit more at $19.70. Clearly wish I'd waited for $16 but the budget was spent by then. I still expect to make money in the next year or so as we watch the rollout of SurVeil--maybe. I have faith that SRDX scientists know what they are doing as they've been helping others with coatings and balloons for so many years.

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From: Lance Bredvold	6/8/2023 4:16:13 PM
	of 83

Today SRDX rose 8% without any apparent justification except that investors seem to feel Surveil may be approved any moment. And I am pleased with my analysis suggesting the delay is just a typical FDA speed bump which every biotech I'm involved in has suffered many times. Thus the shock which brought SRDX down to $16 was not justified by that one event and offered an opportunity to me to buy more. Wish I'd bought more than I did and started way up at $25 which has not been achieved yet, but I feel the volatility being displayed indicates investors really don't know which way to jump yet. I own a significant portion of my portfolio in SRDX and have for many years (2003). And despite the EPS going sideways most of the time, I feel I've had a good return on my investment by buying low and selling high. Plus lots of call sales due to wonderful volatility.

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To: Lance Bredvold who wrote (65)	6/18/2023 5:48:21 PM
From: Lance Bredvold	of 83

And another 22% moderating to about 15% on June 6 or so. Can be attributed to the approval announcement for some POUNCE thrombus removal stents, both arterial and venous plus a positive review by Needham. We still await approval of the SurVeil drug coated balloon ( Wow! 250 cm .14mm and through the wrist to feet) stents but the sales people have several products to sell now. I'm a little disappointed in the rapidity of sales increases though management talks like they think them a great success. If/when the SurVeil approvals come through I expect the stock to jump back to the $40 range and then probably moderate a bit as sales and profits don't take off as fast as we speculators hoped.

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From: Lance Bredvold	6/20/2023 10:06:38 AM
	of 83

Tue, June 20, 2023 at 4:30 AM MDT In this article: SRDX +10.12% Watchlist Watchlist Performance Outlook 2W-6W 6W-9M 9M+ Surmodics to receive $27 million milestone payment from Abbott EDEN PRAIRIE, Minn., June 20, 2023--( BUSINESS WIRE)--Surmodics, Inc. (NASDAQ:SRDX), a leading provider of medical device and in vitro diagnostic technologies to the health care industry, today announced the receipt of U.S. Food and Drug Administration (FDA) approval for the SurVeil™ drug-coated balloon (DCB). The SurVeil DCB may now be marketed and sold in the U.S. to physicians for percutaneous transluminal angioplasty, after appropriate vessel preparation, of de novo or restenotic lesions (= 180 mm in length) in femoral and popliteal arteries having reference vessel diameters of 4 mm to 7 mm. The SurVeil DCB received CE Mark Certification in the European Union in June 2020. "Obtaining FDA approval for our SurVeil DCB is one of the most important achievements in Surmodics’ history," said Gary Maharaj, President and CEO of Surmodics. "It represents a major milestone in our efforts to develop next-generation products to help millions of people affected by peripheral artery disease and the physicians that treat them. I would like to thank our internal SurVeil DCB team and our external advisors, investigators and partners for their multi-year efforts to make this achievement possible." Abbott has exclusive worldwide commercialization rights for the SurVeil DCB. Surmodics will manufacture and supply the product and realize revenue from product sales to Abbott and a share of profits from Abbott’s third-party sales. Surmodics will also receive a $27 million milestone payment from Abbott. The company expects to recognize approximately $24.0 to $24.5 million of revenue related to the milestone payment in the third quarter of its fiscal year 2023. Mr. Maharaj continued, "Building on our recent progress, Surmodics remains focused on supporting Abbott and its exclusive worldwide commercialization rights for the SurVeil DCB. We’ll discuss details on the developments and update our fiscal year 2023 financial guidance during our third quarter earnings call."

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From: Lance Bredvold	6/25/2023 9:41:30 AM
	of 83

And now I'm full of SRDX common having bought significant amounts right around $30 on the assumption that the price will increase to $40. Also $35 puts sold for Nov expiration and net cost of less than $30. The 150 week moving average is still at $41 after a year of weak prices and I don't really expect more than almost breakeven EPS for 2023 after the ABT progress payment of $27mm. Revenues will not grow much during this year as ABT will be just starting their efforts with SurVeil and POUNCE along with currently marketed drug coated stents seem to grow sales at only a few percent at this point. I'm hopeful it will look like a small profit in 2024 with lots of potential on the small share base (<15mm last I checked). I'm not counting on much more than $40 though the stock has always been surprisingly buoyant to me. Getting as high as $82 in 2018 was just plain nutty.

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From: Lance Bredvold	7/6/2023 12:25:09 PM
	of 83

Resilience of SRDX stock has surprised me for a few years. This morning the entire market dropped and SRDX was one the the larger decliners in my portfolio. Down to $28.82 and a bounce followed by another frightened dive, but now it's one of the few greens in my view. I've believed that $30 should be easily supportable even with zero earnings given that it has been as high as $70 and a pretty steady $45 or so for years with only the promise of device approvals. Now we actually have the FDA approvals. I really suspect it will be a few years before much of a profit is showing again, but the fact that $45 could be sustained on just a small profit and a promise and, like today, the fact that someone supports the price when it dives and every other company stays in the doldrums while SRDX reverses I find comforting. I expect the $40's again but only after some time being disappointed in how fast earnings grow. It will take ABT some time to get up to speed and I've already been a little surprised that POUNCE and stent sales have not grown a lot. Still at just over $100mm in sales. But this year we'll have that $27mm from ABT (net $24 or 5) to bring us close to breakeven. 2024 I suspect will be breakeven also as R&D grows to support our product catalogue. I've bought nearly all I want at a max of $30 and now have lower offers for sales of puts and direct purchases in the $28 area--but if I don't get them, I feel full though not quite at 3.3% of my portfolio. I think I'm confident enough to go to 5% at $28 now.

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