Financial Data and Key Metrics Changes - Total revenue for Q1 2022 increased by 3% to $23 million compared to $22.3 million in the prior year quarter, driven by solid performance from both Medical Device and In Vitro Diagnostics businesses [10][39] - GAAP diluted loss per share was negative $0.20, while non-GAAP diluted loss per share was negative $0.13 [10][55] - Royalty and license fee revenue totaled $8.1 million, down $1.2 million from the prior year, with royalty revenue declining 13% to $6.9 million [41][55] Business Line Data and Key Metrics Changes - Medical Device business revenue grew 4% year-over-year to $16.9 million, driven by strong product sales [39] - In Vitro Diagnostics business revenue was essentially flat at $6.1 million, with growth in stabilization and colorimetric substrate products offset by a decline in slide product revenue [40][47] - Product revenue in the Medical Device business increased by 22% to $12.3 million, with a 49% growth in product revenue specifically driven by increased demand for coating reagents and medical devices [45][47] Market Data and Key Metrics Changes - The company faced challenges due to COVID-19, including elective procedure delays and staffing shortages impacting both suppliers and internal operations [8][9] - The company estimates that more than half of its royalty revenues are associated with devices used in elective or moderately urgent procedures, which have been deferred due to the pandemic [37] Company Strategy and Development Direction - The company aims to achieve PMA for SurVeil and support Abbott's commercialization efforts, while also focusing on becoming a first-line treatment for patients with its Sublime Radial platform [11][12] - The company is prioritizing the commercialization of its Sublime and Pounce platforms, with a focus on building a robust sales pipeline and increasing market awareness [19][28] - The company plans to continue investing in its commercialization pipeline to drive consistent double-digit revenue growth beginning in fiscal 2023 [29][33] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about achieving fiscal 2022 financial and strategic objectives despite recent headwinds from COVID-19 [9] - The company reaffirms its fiscal 2022 guidance, expecting revenue to range from $97 million to $101 million, with GAAP EPS losses projected between $2.05 and $1.55 [58] - Management anticipates sequential revenue growth in Q2 2022 compared to Q1, assuming the current COVID wave subsides [83] Other Important Information - The company reported a product gross margin of 64%, an increase from 63% in the prior year quarter, with improved margins in both Medical Device and IVD businesses [49] - R&D expenses increased to $11.7 million, representing 51% of revenue, driven by investments in Pounce venous thrombectomy device readiness [50][51] - The company expects to finish the year with approximately $20 million in cash, excluding potential milestone payments [57] Q&A Session Summary Question: Will Q2 results be lower than Q1 due to market headwinds? - Management indicated that Q2 results will likely be influenced by a significant milestone payment recognized in the prior year, but they expect year-on-year revenue growth overall [62][63] Question: Has the success with Sublime and Pounce changed the long-term strategy regarding partnerships? - Management expressed caution, emphasizing the importance of early market validation and the competitive nature of the market for sales personnel [64][65] Question: What is the timeline for SurVeil's FDA approval and commercialization? - Management outlined that after a pre-submission meeting in late April, a 90-day review period would follow, with potential approval expected in the second half of 2022 [81][82] Question: Why is additional analysis requested for Sundance? - The Steering Committee requested further analysis to ensure adherence to trial protocols, not due to safety concerns [72][74] Question: How will revenue be recognized once SurVeil is approved? - Revenue will be recognized from product sales and profit sharing, with more details to be provided as the situation develops [99]

1 | --- | --- | |-----------------------------------------------------------|-------| | | | | | | | Gary Maharaj President and CEO | | | Tim Arens | | | Senior Vice President of Finance, IT and CFO January 2022 | | © 2022 Surmodics, Inc. CONFIDENTIAL All rights reserved. 2 Safe Harbor Some of the statements made during this presentation may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, ...

[Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) This section outlines the nature of forward-looking statements, their inherent uncertainties, and key factors that could cause actual results to differ [Forward-looking Statements Content](index=3&type=section&id=Forward-looking%20Statements%20Content) This section outlines the nature of forward-looking statements, which are not strictly historical facts but rather expectations or forecasts of future events. It highlights various areas where such statements apply, including the impacts of COVID-19, clinical studies, growth strategies, product development, regulatory approvals, financial projections, and potential risks. Investors are cautioned against undue reliance on these statements due to inherent risks and uncertainties - Forward-looking statements cover expectations regarding the impacts of the global COVID-19 pandemic, clinical studies (results, timing), growth strategies (license agreements, product launches), future product attributes, regulatory submissions and approvals, potential milestone payments (e.g., SurVeil™ DCB), future revenue growth, clinical investment plans, gross margins, operating expenses, cash flow, and potential lawsuits[12](index=12&type=chunk) - Key factors that could cause actual results to differ materially include the impacts of the COVID-19 pandemic on revenue and operations, reliance on significant customers (Abbott, Medtronic), clinical and regulatory developments for paclitaxel-coated products (like SurVeil DCB), general economic conditions, liquidity, new product development and approval processes, effectiveness of operating expenses for new technologies, acquisition integration, and other risks detailed in 'Risk Factors'[13](index=13&type=chunk)[14](index=14&type=chunk) Part I This section covers the company's business operations, risk factors, properties, legal proceedings, and executive officer information [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Surmodics, Inc. is a leading provider of surface modification technologies for intravascular medical devices and chemical components for in vitro diagnostic (IVD) tests. The company's core strategy is to develop and commercialize highly differentiated medical devices, leveraging its expertise in surface technologies and device manufacturing. It operates through two reportable segments: Medical Device and In Vitro Diagnostics, with primary revenue sources from product sales, royalties & license fees, and research & development services - Surmodics' mission is to improve the detection and treatment of disease, focusing on surface modification technologies for medical devices and chemical components for IVD tests[15](index=15&type=chunk) - The company operates two reportable segments: Medical Device (surface modification coatings, drug-delivery coatings, vascular interventional medical devices) and In Vitro Diagnostics (components for immunoassay and molecular tests)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - Primary revenue sources include IVD segment chemical component sales, Medical Device segment reagent chemical sales, vascular intervention medical device sales, royalties from licensing surface modification and medical device technologies, and license fees (e.g., SurVeil™ DCB agreement with Abbott)[19](index=19&type=chunk) [Medical Device Segment](index=6&type=section&id=MEDICAL%20DEVICE%20SEGMENT) The Medical Device segment focuses on developing a portfolio of highly differentiated vascular intervention products and commercializing surface modification coating technologies through licensing. Key product platforms include drug-coated balloons (DCBs), mechanical thrombectomy devices, and radial access devices, all designed to address unmet clinical needs and improve patient outcomes. The segment also generates significant revenue from licensing its proprietary coating technologies to other medical device manufacturers - The Medical Device segment's strategy is to develop and commercialize **highly differentiated vascular intervention products** for large, under-penetrated markets, leveraging its surface modification coating technologies and device design capabilities[22](index=22&type=chunk)[25](index=25&type=chunk) - The segment's product pipeline includes Drug-Coated Balloons (DCBs) for peripheral artery disease (PAD) and arteriovenous (AV) fistulae, mechanical thrombectomy devices for clot removal, and radial access devices for lower extremity interventions[25](index=25&type=chunk) - Surface modification coating technologies, including PhotoLink™ and Serene™ hydrophilic coatings, are commercialized through licensing agreements, generating royalties and reagent sales. These coatings enhance device performance (lubricity, biocompatibility, drug-delivery)[25](index=25&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) [Vascular Intervention Products](index=6&type=section&id=OVERVIEW:%20VASCULAR%20INTERVENTION%20PRODUCTS%20MEDICAL%20DEVICE%20SEGMENT) This section details the company's proprietary vascular intervention medical device products, including drug-coated balloons (DCBs), mechanical thrombectomy devices, and radial access devices. It outlines their development stages, regulatory approvals, and strategic partnerships, emphasizing the goal to capture more revenue and operating margin than through licensing alone - The company's strategy for vascular intervention products is to develop and manufacture its own proprietary devices, leveraging surface modification coating technologies and engineering capabilities, to increase relevance and capture more revenue/operating margin[25](index=25&type=chunk) [Drug Coated Balloons (DCBs)](index=6&type=section&id=Drug%20Coated%20Balloons%20MEDICAL%20DEVICE%20SEGMENT) Surmodics has developed multiple DCB devices, including SurVeil DCB (paclitaxel-coated for PAD, EU approved, US PMA pending with Abbott partnership), Sundance™ DCB (sirolimus-coated for below-the-knee PAD, Breakthrough Device designation, SWING study complete), and Avess™ DCB (paclitaxel-coated for AV fistulae, promising early safety data). The SurVeil DCB is a key focus, with a potential $30 million milestone payment from Abbott upon FDA PMA - SurVeil DCB, a paclitaxel-coated balloon for PAD, has received CE Mark approval for EU commercialization and met primary safety and efficacy endpoints in the TRANSCEND pivotal clinical trial. The PMA application for U.S. approval is in its final stages, with additional data requested by the FDA[26](index=26&type=chunk)[31](index=31&type=chunk) - Abbott holds exclusive worldwide commercialization rights for SurVeil DCB and has made **$60.8 million** in upfront and milestone payments as of September 30, 2021. An additional **$30 million** (or **$27 million** if after Dec 31, 2022) milestone payment is contingent upon FDA PMA[29](index=29&type=chunk)[32](index=32&type=chunk) - Sundance DCB, a sirolimus-coated balloon for below-the-knee PAD, received FDA **'Breakthrough Device' designation**. The SWING first-in-human clinical study is complete, with the clinical report expected in Q1 fiscal 2022[26](index=26&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Avess DCB, a paclitaxel-coated balloon for AV fistulae in ESRD patients, showed **promising early safety and performance** in its first-in-human study. Further clinical investment strategy will be informed by the SurVeil DCB PMA process[27](index=27&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [Thrombectomy Devices](index=9&type=section&id=Thrombectomy%20Devices%20MEDICAL%20DEVICE%20SEGMENT) The company has developed two FDA 510(k) approved mechanical thrombectomy devices: Pounce Arterial Thrombectomy System for arterial clots in legs and ReVene Venous Thrombectomy Catheter for venous clots. These devices aim to provide effective, cost-efficient, single-session clot removal, potentially reducing the need for thrombolytics. The ReVene device was acquired through the Vetex Medical Limited acquisition in fiscal 2021 - Pounce Arterial Thrombectomy System received FDA 510(k) clearance in fiscal 2020, with an indication expansion in fiscal 2021 for smaller vessels (down to **3.5 mm**), expanding its applicability to infrapopliteal arteries. Clinical product evaluations show **positive results**, with minimal blood loss and thrombolytic use[42](index=42&type=chunk)[44](index=44&type=chunk)[222](index=222&type=chunk) - ReVene Venous Thrombectomy Catheter, acquired via Vetex Medical Limited in fiscal 2021 for **$39.9 million** upfront, received FDA 510(k) clearance and CE Mark approval. It's designed for large, mixed-morphology blood clots in venous vascular beds, aiming for single-session treatment without capital equipment[45](index=45&type=chunk)[46](index=46&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[222](index=222&type=chunk) - Process and manufacturing validations for ReVene Venous Thrombectomy Catheter are ongoing through Q2 fiscal 2022, with clinical product evaluations expected to start in H2 fiscal 2022. The company intends to pursue regulatory actions to expand its field of use to DVT, PE, and ischemic stroke[47](index=47&type=chunk)[49](index=49&type=chunk)[222](index=222&type=chunk) [Radial Access Devices](index=10&type=section&id=Radial%20Access%20Devices%20MEDICAL%20DEVICE%20SEGMENT) Surmodics has developed the Sublime portfolio of radial access devices, including a guide sheath and PTA dilatation catheters, which have received FDA 510(k) approval. These devices are designed for peripheral interventions via radial (wrist) access, offering benefits like improved patient comfort, reduced recovery times, and lower access site complications. Clinical product evaluations have shown strong performance and physician interest, leading to initial commercial orders - The Sublime portfolio includes a guide sheath and .014 RX and .018 RX PTA Dilatation Catheters, all FDA 510(k) approved and purpose-built for above- and below-knee peripheral interventions via radial or transfemoral access[50](index=50&type=chunk)[52](index=52&type=chunk) - Key advantages include the Sublime Guide Sheath's **5F profile** up to **150cm length** for **minimal radial artery spasm** and **superior trackability**, and the Sublime .014 RX PTA Dilatation Catheter being the **longest of its kind** in the U.S. market (**250 cm**) for challenging lesions[53](index=53&type=chunk) - Clinical product evaluations in fiscal 2021 yielded **positive physician feedback**, leading to requests for commercial access and orders. The company expects modest but growing revenue from Sublime and Pounce products starting in Q3 fiscal 2022, with potential long-term commercialization

Financial Data and Key Metrics Changes - For fiscal year 2021, the company generated $105.1 million in revenue, an increase of 11% from $94.9 million in fiscal 2020, driven by growth in both medical device and in vitro diagnostic businesses, which grew 10% and 15% respectively [8][9] - The company reported GAAP diluted earnings per share of $0.30 for the full year, benefiting from a $3.6 million reimbursement associated with the CARES Act, which positively impacted earnings per share by $0.19 [10] - In Q4 fiscal 2021, revenues grew 6% to $24 million compared to $22.5 million in the prior year quarter, with the Medical Device business revenue growing 1% to $17.4 million and the In Vitro Diagnostics business growing 23% to $6.6 million [39] Business Line Data and Key Metrics Changes - The Medical Device business reported product revenue of $6.3 million in Q4, an 18% increase from $5.4 million in the prior year quarter, driven by strong coating reagent sales and new product launches [42] - The In Vitro Diagnostics business reported product revenue of $6.2 million, up 19% compared to the same prior year period, benefiting from increased demand for antigen products [43] - R&D services revenue increased by 24% to $2.6 million, reflecting increased customer development programs leveraging medical coatings [44] Market Data and Key Metrics Changes - The IVD business is expected to outperform the immunoassay market growth of 3%, while medical device coatings revenue is expected to grow low to mid-single digits, in line with the endovascular device market [38] Company Strategy and Development Direction - The company aims to achieve PMA approval for SurVeil and support Abbott's commercialization efforts, while also focusing on becoming the first-line treatment for patients with the Sublime radial platform and Pounce thrombectomy systems [27][28] - The company plans to build a small commercial team to drive customer adoption and demonstrate the commercial viability of its products, with an investment of approximately $10 million to support initial commercialization efforts [35][36] - The company is strategically holding off on deep negotiations with larger companies to maximize shareholder value from its innovative products [81] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the FDA's evolving requirements for long-term mortality data, which have shifted the approval process for SurVeil [60][62] - The company remains optimistic about its product pipeline and the potential for significant value creation, emphasizing the importance of demonstrating commercial viability in the market [69][92] - The outlook for fiscal 2022 anticipates revenue between $97 million and $101 million, with expectations for growth in legacy businesses and new product introductions [54][90] Other Important Information - The company faced ongoing supply chain issues affecting key components required for validation devices, which could delay timelines [25] - The company reported a loss per share of $0.02 in Q4 fiscal 2021, compared to a loss of $0.22 in the prior year quarter, with non-GAAP EPS showing a similar trend [52] Q&A Session Summary Question: Can you comment on the competitive landscape for SurVeil? - Management noted that the FDA's requirements have shifted, creating a more challenging environment compared to competitors with less stringent data requirements [60][63] Question: Is the company confident in its ability to go it alone in commercialization? - Management expressed confidence in their capabilities to demonstrate commercial value and maximize shareholder returns by building a small sales team [68][81] Question: What is the rationale behind building a direct sales force? - The decision to build a sales force is based on the desire to capture the full value of their products and respond to physician demand for continued use of their devices [83][84] Question: How does the revenue guidance for 2022 compare to 2021? - Management clarified that the guidance reflects a normalization of revenue, excluding one-time items from 2021, indicating solid growth in legacy businesses [89][90]

| --- | --- | --- | |--------------------------------------------------------|-------|-------| | | | | | | | | | | | | | Gary Maharaj President and CEO | | | | Tim Arens Senior Vice President of Finance, IT and CFO | | | | AUGUST 2021 | | | © 2021 Surmodics, Inc. CONFIDENTIAL All rights reserved. SAFE HARBOR Some of the statements made during this presentation may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not hist ...

Financial Performance - The company generated $23.9 million in revenue for Q3 2021, a decline of 11% compared to $26.9 million in the same period last year, which included a $6.7 million milestone payment from Abbott [5][24][32] - Excluding the milestone payment, revenue grew by 17% year-over-year, driven by record IVD revenue and significant royalty revenue growth [6][24] - The GAAP loss per share was $0.24, including $0.03 related to acquisition costs, while the non-GAAP loss per share was $0.17 [6][32] Business Line Performance - Medical Device revenue decreased by 18% to $16.8 million, while IVD revenue reached a record $7.1 million, growing 12% year-over-year [24][30] - Royalty revenue increased by 63% to $7.8 million, benefiting from an easier comparison to the prior year, which was impacted by COVID-19 [26][27] - Product revenue was flat at $12.1 million, with Medical Device product revenue down 5% due to softness in legacy balloon catheter sales [27][28] Market Data - The IVD business experienced strong growth, driven by favorable order timing for distributed antigen products and microarray slide development projects [24][30] - The company reported broad-based growth in its royalties portfolio, with serene hydrophilic coatings doubling compared to the prior year [22][27] Company Strategy and Industry Competition - The company completed the acquisition of Vetex Medical, which strengthens its thrombectomy portfolio and provides opportunities to expand into other vascular beds [19][20] - The company is focused on advancing its product pipeline, including the SurVeil drug-coated balloon and the Pounce thrombectomy platform, while optimizing cash flow from its IVD and Medical Device businesses [8][19] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the potential for significant long-term shareholder value creation through a robust product portfolio [23][38] - The company expects to generate product revenue from the Vetex acquisition in the second half of calendar 2022, with a low to mid-single-digit U.S. market share necessary for the acquisition to be accretive to non-GAAP earnings [37][38] Other Important Information - The company has a strong cash position, with $72 million in cash and investments as of June 30, 2021, and no debt [33][34] - The updated fiscal 2021 revenue guidance is between $103.5 million and $105.5 million, reflecting growth in royalty revenue and including $16 to $17 million of license fee revenue from the Abbott agreement [38][39] Q&A Session Summary Question: Timing for SurVeil revenue post-PMA approval - Management indicated that while they are targeting a PMA approval by December 2021, it is more likely to occur in the second fiscal quarter of 2022, with order fulfillment taking an additional 3 to 4 months [43][44] Question: Commercialization of Vetex products - Management confirmed that Vetex's ReVene system has received both U.S. 510(k) clearance and CE Mark, allowing for commercialization in Europe and the U.S. [45] Question: Paclitaxel sentiment and FDA outlook - Management expressed optimism regarding the clinical use of paclitaxel, citing overwhelming evidence in its favor and a potential positive shift in FDA regulations [48][50] Question: Impact of patent expirations on core business - Management reported that the unfavorable impact from patent expirations has diminished, with a broad-based growth in the royalty portfolio across all patent families [51] Question: Future acquisitions and product distribution strategy - Management confirmed an active corporate development program, indicating a willingness to pursue complementary high-value technologies while evaluating distribution strategies for their products [67][68]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File Number: 0-23837 Surmodics, Inc. (Exact name of registrant as specified in its charter) Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identi ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2021 increased by 53% to $35 million compared to $22.8 million in the prior year quarter, benefiting from a $10.8 million revenue recognition from the SurVeil clinical report milestone [7][25][24] - Excluding the milestone payment, total revenue grew by 6% year-over-year [8][25] - Diluted GAAP earnings per share were $0.58, up from $0.11 in the prior year quarter, while non-GAAP earnings per share were $0.62 compared to $0.04 in the prior year [37][8] Business Line Data and Key Metrics Changes - Medical Device revenue increased by 71% to $27.9 million, including the milestone revenue; excluding this, it grew by 5% year-over-year [25] - In Vitro Diagnostics (IVD) revenue reached a record $7.1 million, up 9% year-over-year, driven by demand for diagnostic test components [21][25] - Royalty and license fee revenue totaled $20.1 million, up from $11.8 million in the prior year, primarily due to the milestone payment [26] Market Data and Key Metrics Changes - The IVD business unit generated operating income of $3.8 million, with an operating margin of 54%, up from 53% in the prior year [35] - The Medical Device business reported operating income of $8.6 million, compared to an operating loss of $1.5 million in the prior year [34] Company Strategy and Development Direction - The company aims to complete the final PMA submission to the FDA for the SurVeil drug-coated balloon and continue advancing its product pipeline [9][12] - The focus is on optimizing cash flow from IVD and Medical Device businesses to support strategic growth initiatives [9][22] - The company is excited about the potential of the Sundance drug-coated balloon and the Avess AV fistula DCB, with expectations for significant market opportunities [14][15][77] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, believing that better times lie ahead following a challenging year [23] - The company expects fiscal year 2021 revenue to range from $101 million to $105 million, with growth in royalty revenue anticipated [39] - Management highlighted the importance of strategic partnerships, particularly with Abbott, to overcome market inertia and drive product adoption [60][69] Other Important Information - The company reported a strong cash position with $70 million in cash and investments, providing capacity to support strategic growth initiatives [38][106] - R&D expenses increased by 8% to $12.9 million, reflecting ongoing clinical and regulatory activities [32] Q&A Session Summary Question: Interest from potential partners regarding pipeline projects - Management acknowledged external interest but emphasized the importance of understanding clinical feedback before engaging in discussions [46][47] Question: R&D spending expectations - R&D spending is expected to remain flat in dollar terms, but as revenue grows, the percentage of revenue spent on R&D is likely to decline [48][50] Question: Manufacturing capabilities after management changes - Management reassured that the new executive manager in Ireland is well-prepared and has been training for the role [52][53] Question: Timing for SurVeil PMA submission and approval - Management confirmed the expectation to submit the PMA in Q4 and receive approval by the end of calendar 2021 [57] Question: Clinician feedback on TRANSCEND results - Management noted that initial clinician feedback has been lukewarm but expressed confidence in Abbott's marketing capabilities to address this [58][60] Question: Opportunities and timelines for pipeline products - Management highlighted optimism for the Avess and Sundance products, with expectations for significant contributions to revenue by fiscal 2023 or 2024 [78][83] Question: IVD business performance and revenue sources - Management clarified that the IVD revenue growth was primarily driven by COVID-related testing, with core business growth being modest [89] Question: Valuation of the IVD business as a standalone asset - Management indicated that the IVD business has shown remarkable growth and could be valued positively based on its EBITDA performance [93][95] Question: Capital allocation strategy with increased cash reserves - Management stated that the strong cash position allows for dynamic capital allocation to support growth initiatives and potential acquisitions [106][109]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-23837 Surmodics, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Ident ...

Financial Data and Key Metrics Changes - Revenue for Q1 fiscal 2021 declined 1% to $22.3 million compared to $22.6 million in the prior year [28] - Medical device revenue decreased 7% to $16.2 million, while In Vitro Diagnostics (IVD) business grew 17% to $6.1 million [28] - Royalty and license fee revenue totaled $9.3 million, down 8% from the prior year, primarily due to patent expirations and lower procedure volumes [29][30] - On a GAAP basis, diluted earnings per share was a loss of $0.02 compared to earnings of $0.01 in the prior year [38] Business Line Data and Key Metrics Changes - Medical device product revenue decreased 9% to $4.6 million, while IVD product revenue grew 12% to $5.5 million [32][33] - R&D services revenue increased 15% to $2.9 million, benefiting from increased customer development project opportunities [34] - Medical device operating results reported a loss of $600,000, while IVD business grew operating income by 24% to $3.2 million [34][35] Market Data and Key Metrics Changes - The IVD business experienced strong demand for distributed antigen products, leading to a 17% year-over-year revenue growth [24] - The medical device business faced challenges due to COVID-19, impacting elective procedures and overall revenue [23] Company Strategy and Development Direction - The company aims to build traction with SurVeil and advance its product pipeline through development and regulatory clearances [7] - Focus on optimizing cash flow from IVD and medical device coatings to support strategic growth initiatives [7] - The company is well-positioned to deliver sustained growth and shareholder value over the long term despite the pandemic [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving PMA approval for SurVeil by the end of calendar 2021 [13] - The company is optimistic about the long-term safety data required by the FDA and believes it will support their product's market entry [12][76] - Management noted that while the pandemic creates uncertainty, they continue to execute their strategic plan [25] Other Important Information - The company has a strong cash position with no debt, starting the quarter with $61.1 million in cash and short-term investments [39] - The SurVeil distribution and development agreement with Abbott Vascular is expected to generate significant revenue, including a $15 million milestone payment [40][41] Q&A Session Summary Question: Will Abbott launch SurVeil immediately upon approval? - Management has not discussed launch timing in detail yet, but competitive reasons may influence the timing [45] Question: Will Pounce thrombectomy product be in clinical use before the end of the fiscal year? - Clinical use is expected to occur before the end of the fiscal year, with a focus on gathering data to support distribution agreements [46][48] Question: Will royalty headwinds continue after fiscal 2021? - The impact from the Gen 4 patent expiration is expected to diminish throughout fiscal 2021, becoming a tailwind in 2022 [51] Question: What are the long-term opportunities beyond SurVeil? - Management highlighted the potential of the AV Fistula and Sundance products, emphasizing their large addressable markets [60][62] Question: Will R&D spending levels change as revenue grows? - R&D spending as a percentage of revenue is expected to decrease as revenue ramps up, but funding will continue for promising opportunities [67][70] Question: Is there any anecdotal data on the recovery of procedures post-vaccine? - Management noted that there hasn't been significant change in procedure volumes yet, but they are monitoring the situation closely [78] Question: Will SG&A expenses increase in the back half of fiscal 2021? - SG&A expenses are expected to ramp up in Q3 and Q4, with low-double-digit growth anticipated [79] Question: Is the strong performance of the IVD business sustainable? - The IVD business is expected to continue mid-to-high single-digit revenue growth, independent of COVID testing [80] Question: What is the total addressable market for radial access and thrombectomy? - The total addressable market for thrombectomy is estimated at $400 million globally, while radial access has significant growth potential due to low current penetration [85][88]