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Biotech / Medical : SRDX - SurModics - Biotech IPO -- Ignore unavailable to you. Want to Upgrade?

To: Lance Bredvold who wrote (22)	7/18/2003 2:39:31 AM
From: Lance Bredvold	Read Replies (1) \| Respond to of 84

Something wrong with my numbers on the last post. After looking again at the quarterly report, it does seem royalties from Cordis ought to be from $5 to $6mm for the months of May and June. If 50,000 stents were sold at approximately $3000 each, royalties would be based upon $150,000,000 and it would take a royalty rate of over 3% to reach the total amount I am estimating. The royalty rates I've heard about are between 1 and 2%, so presuming 2% is the actual, it sounds like perhaps 90000 stents at $3195 each or $287mm total sales on which 2% in royalties were received? That is much more positive than I had been thinking. $5mm in royalties from Cordis alone would be roughly $1 per share per year. Of course, sales probably ramped very quickly and there was a fair amount of product in Cordis inventory before approval on 26 April which was shipped immediately. I think first indications are that $1 a share is likely over this and 3 more quarters and that with current customers and products, $2 is makable by next year. But the Cypher is just the biggest and most current of the products on which royalties are received. In fact royalties are received this quarter on 68 products. And I was surprised to hear Olseth say they are working with 3 to 6 stent companies and then modified that to say probably on the low side of that now at 3 or 4 stent companies. And by that I gather he means SRDX is being paid to do development work by them since he categorized customers who are in the "getting to know each other" stage as those which have not agreed to pay for development work. Reagent sales did not increase by as much as I would have expected, but then I suppose that Cordis was probably producing pretty fast and pretty geared up to go even in the 1st calender quarter. It looks like reagent sales are also important at perhaps 40 or 50% of royalty income. A pretty amazing company and I feel very secure owning my shares purchased under $33. In fact, I think I'll buy some more if it gets back down to $33 again. best regards, Lance