Recently, SurModics Inc. (SRDX) introduced a new product – BioFX TMB Enhanced HRP Membrane Substrate (ESPM) – through its subsidiary, SurModics IVD (In Vitro Diagnostics).
The IVD segment at SurModics includes components and technologies for diagnostic test kits and biomedical research applications such as microarray slide technologies, protein stabilization reagents, substrates, and antigens. The IVD segment holds a leading position for immunoassay reagents for diagnostic test kits aimed at detecting the presence or absence of a disease.
ESPM — an immunodiagnostic reagent is characterized by a one-component formulation. The product offers room temperature stability for two years, and is, therefore, ideal for diagnostics kits and point-of-care applications. The new offering from SurModics also helps to bring down membrane wash out at higher peroxidase concentrations. Consequently, it permits the measurement of an extended dynamic range.
The launch of ESPM is a good addition to SurModics’ IVD unit and its sales should augment the top line at SurModics. We note that the IVD segment is one of the three units at SurModics. The other two divisions of the company are Medical Devices and Pharmaceuticals. SurModics has been reporting through these three segments since the organizational restructuring effected in October 2010.
However, in December 2010, SurModics announced that it is looking at options regarding the Pharmaceuticals business, including its sale. SurModics constituted a core group to evaluate options regarding its Pharmaceuticals division. The move was aimed at streamlining operations and increasing efficiencies.
SurModics has undertaken many measures, such as organizational restructuring and job-cuts to improve its efficiencies and serve customers in a better manner.SurModics also brought about a change at its helm in December 2010 by appointing Gary R. Maharaj as its President and Chief Executive Officer. Maharaj is the former President and CEO of Arizant Inc., which was sold to 3M Co. (MMM) in October 2010.
Our Recommendation
We prefer to remain on the sidelines until these efforts of SurModics, which are aimed at streamlining operations and increasing efficiencies, start showing results. Consequently we have a long-term Neutral recommendation on the stock.
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