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Surmodics Shares Sink After J&J Stent Announcement

From Associated Press (June 15, 2011)

EDEN PRAIRIE, Minn. -- Shares of drug delivery technology company SurModics Inc. tumbled in trading Wednesday after health care giant Johnson & Johnson said that it will stop making the drug-coated Cypher heart stent to focus on other stent types.

SurModics, based in Eden Prairie, Minn., licenses a polymer technology to J&J which uses it to coat stents. J&J, based in New Brunswick, N.J., makes royalty payments to SurModics.

Stents are wire-mesh tubes used to hold arteries open after they are surgically cleared of fatty plaque.

J&J said its Cordis Corp. subsidiary will stop making Cypher and Cypher Select drug-coated stents by the end of the year and stop developing a new drug-coated stent called Nevo. Cordis will focus on other areas of the heart device market where there is greater demand, the company said.

Cypher once was the market leader and is still J&J's top-selling stent, but its market share has fallen steadily over the last several years as rivals Abbott Laboratories, Boston Scientific Corp. and Medtronic Inc. have introduced new stents and grabbed customers.

SurModics said in a separate statement that it had "long anticipated" in its strategic planning a continuing decline in royalties from Cypher. The company also said in a statement J&J remains an important customer, and SurModics technology is used in an array of Cordis products.

Shares of SurModics dropped 17 percent, or $2.29, to close at $11.01. They fell another penny after hours.

Posted: June 2011