Oct. 7--Shares of Eden Prairie-based SurModics surged nearly 20 percent Tuesday on word of a licensing and development agreement with pharmaceutical giant Roche and its biotech subsidiary Genentech.

Under the agreement, Roche and Genentech have obtained an exclusive license to use a SurModics system to develop and commercialize a sustained drug delivery formulation of Lucentis, a widely used drug for patients with an eye disorder known as age-related macular degeneration.

SurModics will receive an up-front licensing fee of $3.5 million and could be eligible to receive up to approximately $200 million in fees and milestone payments in the event of the successful development and commercialization of multiple products. The agreement provides Roche and Genentech with opportunities to develop compounds other than Lucentis for the treatment of eye diseases.

The local company employs about 250 people, including about 150 in Minnesota.

"The prospect of developing a sustained delivery formulation for a known, approved and highly successful drug in Lucentis is a tremendous opportunity for SurModics," said Bruce Barclay, chief executive officer of SurModics, in a statement.

Lucentis generated U.S. sales of $910 million during 2008, according to IMS Health, a Pennsylvania-based health care information and consulting company.

For years, SurModics has been seeking growth through agreements with pharmaceutical companies to develop drug delivery technologies that treat eye

conditions.

In 2007, the company's stock surged 19 percent in one day after announcing one such agreement with Merck and Co. But the shares sank in 2008 when Merck said it was terminating the multiyear deal.

Diversification has been necessary at SurModics, in part because of slowing revenue growth in the market for drug-coated stents. Stents are metal mesh tubes used by doctors in angioplasty procedures to prop open heart arteries.

SurModics has an arrangement with pharmaceutical giant Johnson and Johnson in which the local company supplies the polymer matrix used in the JJ Cypher drug-coated stent, but that product has lost market share to newer products.

Shares of SurModics rose $4.77 Tuesday to $29.04.

Christopher Snowbeck can be reached at 651-228-5479.

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