SurModics shares tank after Merck ends deal
BANGALORE, Sept 18 (Reuters) - Shares of SurModics Inc (SRDX.O: Quotazione) sank 28 percent to a three-year low Thursday, a day after the drug delivery technology company said Merck & Co Inc (MRK.N: Quotazione) would end a license and research collaboration deal, prompting analysts to temper their views on the stock.
Analysts said the termination of the deal was disappointing, but they see the company signing another ophthalmology licensing agreement in the near future boosting its prospects.
"We believe SurModics will sign another ophthalmic license in coming months with a company that already has product(s) in the market and that the regulatory path for a combined product will be many years shorter than whatever Merck was working on," Craig-Hallum analyst Richard Rinkoff said.
Rinkoff cut his price target to $43 from $60, but maintained his "buy" rating on the stock of the company, which makes the drug delivery technology used in Johnson & Johnson's (JNJ.N: Quotazione) drug-eluting stent.
Avondale Partners analyst Daniel Owczarski downgraded the stock to "market perform" from "outperform" and slashed his price target to $34 from $64, citing the deal termination.
SurModics on Wednesday said Merck will discontinue the agreement, which the companies entered into in June 2007 to co-develop eye disease treatments using SurModics' I-vation drug delivery technology. [ID:nBNG356807]
ThinkPanmure analyst Stephan Ogilvie said the ophthalmology platform has significant opportunities and remains so even without the Merck agreement, but this setback means a commercial product for I-vation will not be approved within a reasonable horizon to predict.
Ogilvie downgraded the stock to "sell" from "buy" and slashed his price target by more than half to $28.
Shares of the Eden Prairie, Minnesota-based company fell 21 percent to $30.72 in afternoon trade, making them one of the top losers on Nasdaq. The stock had touched a low of $28.05 earlier. (Reporting by Esha Dey and Anand Basu in Bangalore; Editing by Deepak Kannan)
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