SurModics shares plunge as Eden Prairie firm posts loss

Shares of Eden Prairie-based SurModics Inc. tumbled 31 percent Thursday, a day after the life sciences company reported results that fell well short of expectations.

SurModics, which develops drug delivery technologies, has been hit hard by the recession. The company significantly invested in expanding its presence in the pharmaceutical industry over the past few years, a strategy that backfired when the economy turned sour and the pharma industry scaled back research and development.

"It was pretty ugly," said Daniel Owczarski, a senior research analyst at Avondale Partners, who had estimated that SurModics would earn 16 cents per share in the fourth quarter. The company posted an adjusted loss of 5 cents a share.

"We were just hoping that things were going to stabilize and move forward and now we don't know where the bottom is," Owczarski said.

SurModics' revenues plunged 19 percent from a year earlier to $15.5 million in the three months ending Sept. 30. The company reported a net loss of $21.7 million, compared with a net income of $2.7 million during the fourth quarter in 2009.

"It's just disappointing from all the potential the company had two or three years ago, to where it's ended up," Owczarski said. "It's probably a combination of bad choices, bad economy and bad luck."

Shares plunged $4.07 to close at a 52-week low of $9.04.

Nonetheless, SurModics said it expects earnings to continue to be challenged next year, and gave estimates ranging from a loss of 15 cents a share to a gain of 5 cents a share for fiscal 2011.

Ankeny said the company's Birmingham manufacturing and development facility, which opened in January, has cost more to operate than it is generating in revenue. The facility was a key component to SurModics' pharma strategy to work with its partners on developing drug delivery technologies from early development to commercialization.

In recent weeks, SurModics reduced its workforce by 13 percent, which should save $3 million to $3.5 million annually. The firm also is continuing its search for a CEO to replace Bruce Barclay, who resigned in June.