Eden Prairie's Surmodics, long known for designing special surface coatings for other companies' medical devices, has struck its first-ever distribution deal for a drug delivery product designed in-house.
Abbott Laboratories announced Tuesday that it could pay Surmodics up to $92 million under a worldwide commercialization and distribution agreement for its SurVeil Drug-Coated Balloon device, which is working toward approval from the U.S. Food and Drug Administration.
It's the first time that Surmodics has licensed a whole product combining its surface-coating technology with its more recent foray in the medical balloon manufacturing business.
"I'm really proud of the company. ... I hope [the agreement] validates for investors, and the community as well, that innovation is still alive in small- to medium-sized companies," Surmodics CEO Gary Maharaj said Tuesday. "We spend 60 percent of our revenue back into R&D. For a public company, that is breathtaking."
Surmodics stock rose 9.7 percent on the news Tuesday, closing at $29.85.
Surmodics' SurVeil device is intended to treat blood-vessel blockages in the superficial femoral artery below the knee that lead to a growing condition known as peripheral artery disease. PAD affects more than 200 million people worldwide, including at least 12 percent of Americans over age 60. The SurVeil balloon is coated with a drug that is transferred to the artery wall when inflated at the site of a blockage.
Early clinical trial work with the SurVeil was strong enough to lead to a second, "pivotal" trial, which is ongoing at up to 60 health care sites. Up to 446 PAD patients in the trial will be randomized to be treated with either the SurVeil device or Medtronic's In.Pact Admiral Drug-Coated Balloon to see how the Surmodics device compares to the Medtronic product. The last patient is expected to be enrolled by 2019, and FDA approval could come the year after.
The agreement calls for Abbott to pay Surmodics $25 million up front and an additional $67 million down the road for "various product-development milestones," the companies said in a joint news release Tuesday. Following FDA approval, Surmodics will be responsible for manufacturing commercial quantities of the device and will share in revenue from initial sales and sales to third-party distributors.
Abbott also announced that it has received options to negotiate agreements for Surmodics pipeline devices, including what it described as "below-the-knee and arteriovenous (AV) fistula drug-coated balloon products."
Abbott said the SurVeil will fit into its growing portfolio of endovascular medical devices for peripheral artery disease, part of a $30 billion global market for cardiovascular devices. Last year Abbott made a major play when it acquired Minnesota's St. Jude Medical in a roughly $25 billion deal.