SURMODICS INC — Regulatory Filings 2011

May 26, 2011

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VIA EDGAR AND FACSIMILE TO (202) 772-9198

May 26, 2011

Mr. Jim B. Rosenberg, Senior Assistant Chief Accountant Securities and Exchange Commission 100 F Street NE Washington, DC 20549

Re: SurModics, Inc. Form 10-K for Fiscal Year Ended September 30, 2010 Form 10-Q for the Quarter Ended December 31, 2010 File No. 000-23837

Dear Mr. Rosenberg:

On behalf of SurModics, Inc. (the “Company”), we are responding to your letter dated May 12, 2011 setting forth the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) on our response to your letter dated April 13, 2011 regarding the Company’s Form 10-K for the fiscal year ended September 30, 2010 filed by the Company on December 14, 2010, and our Form 10-Q for the quarter ended December 31, 2010 filed by the Company on February 4, 2011. Our responses to the specific comments are set forth below. For the convenience of the Staff, each comment from the May 12 letter is restated in italics prior to the response to such comment.

Notes to Consolidated Financial Statements

1. Commitments and Contingencies, page F-28

| 1. You disclose that at September 30, 2010, the sellers of SurModics Pharmaceuticals, Inc. were
still eligible to receive up to $16.3 million of additional consideration through “calendar”
2011. On page 43, you further disclose that you are likely to incur certain milestone payments,
totaling $5.7 million in “fiscal” 2011, of which $800,000 was initially recognized in the
quarter ended December 31, 2010. Please reconcile the difference between the $5.7 million that
you anticipate incurring in “fiscal” 2011 and the $16.3 million that the seller is eligible to
receive through “calendar” 2011. Disclose the triggering events for each remaining milestone
obligation, reflected in the $16.3 million of additional consideration, and those future periods
when you expect these events to occur. |
| --- |
| Response : |
| At September 30, 2010 the potential contingent consideration totaled $16.3 million, comprised of
$4.9 million associated with achievement of a revenue milestone and $11.4 million associated
with the achievement of various project milestones as shown in the following table. |

9924 West 74th Street Eden Prairie, MN 55344 phone 952-500-7000 fax 952-500-7001 www.surmodics.com

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United States Securities and Exchange Commission May 26, 2011 Page 2

Future Milestone Events as of September 30, 2010 ($ in millions)

Milestone event	$ amount	Final measurement date
Revenue milestone
Achievement of cumulative revenue of $56.7
million for the period beginning on July 1,
2007 through December 31, 2010	$ 4.9	December 31, 2010
Project milestones
First occurrence of a commercial sale milestone	1.3	December 31, 2011
First three occurrences of a Phase II clinical
trial milestone ($0.75 million per occurrence)	2.3	December 31, 2010
First occurrence of a Phase III clinical trial
milestone; amount paid is $3.35 million if
completed by December 31, 2010 with the amount
decreasing to $1.675 million if completed between January 1 and
December 31, 2011	3.4	December 31, 2011
First seven occurrences of a license milestone
(one occurred prior to September 30, 2010
leaving six remaining at $0.75 million per
occurrence)	4.5	December 31, 2010
Grand total	$ 16.3

| In preparation of our Form 10-K for the fiscal year ended September 30, 2010, management
had knowledge of the signing of a license agreement (a project milestone) in the first quarter
of fiscal 2011 and believed the revenue milestone would be achieved sometime within fiscal 2011,
such that payment of $5.7 million in contingent consideration was likely in fiscal 2011.
Accordingly, the Company disclosed this amount on page 43 of our Form 10-K. |
| --- |
| In preparation of our Form 10-Q (the “First Quarter 10-Q”), and updated in our Form 10-Q/A, for
the quarterly period ended December 31, 2010, management reduced the $16.3 million contingent
consideration obligation by $13.4 million to $2.9 million as shown in the following
reconciliation. |

Reconciliation of Change in Contingent Consideration ($ in millions)

Contingent consideration obligation at September 30, 2010	$
Achievement of revenue milestone and one license milestone as of
December 31, 2010	(5.7	)
Expiration of :
First three occurrences of a Phase II clinical trial milestone	(2.3	)
Five remaining occurrences of a license milestone	(3.8	)
Reduction of payment amount associated with the first occurrence of
a Phase III clinical trial milestone for non-achievement by
December 31, 2010	(1.7	)
Contingent consideration obligation at December 31, 2010	$ 2.9

In future filings we will continue to assess whether a milestone event was achieved and recognize the event in our financial statements. If milestone events have not been achieved we will continue to disclose the potential contingent consideration obligation as well as the measurement end date of December 31, 2011. While we believe it is unlikely the remaining project milestones will be achieved at this time, we are unable

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United States Securities and Exchange Commission May 26, 2011 Page 3

| to estimate with any degree of
precision whether and in what future period the remaining milestones could be achieved. |
| --- |
| 2. In the Form 8-K filed on April 27, 2011, you identify an additional $4.9 million milestone
obligation that should have been recognized in the quarter ended December 31, 2010. Please
disclose the events that triggered this additional $4.9 million milestone obligation at December
31, 2010 and explain to us why this obligation was not identified during the preparation of your
Form 10-Q for the quarter ended December 31, 2010. |
| Response : |
| The $4.9 million milestone obligation was associated with the achievement of a specified level
of cumulative revenue of SurModics Pharmaceuticals, Inc. (“SurModics Pharma”) during the
applicable measurement period (i.e., July 1, 2007 through December 31, 2010). In calculating
the cumulative revenue of SurModics Pharma as of December 31, 2010, the Company originally
determined that this milestone obligation had not been achieved. This determination was based
on the Company’s view that revenue received from customer programs that were acquired from PR
Pharmaceuticals, Inc. (“PR Pharma”) 1 should not be included in the calculation of
cumulative revenue of SurModics Pharma because the revenue from those programs was not derived
from products or services incorporating the technology acquired as part of the SurModics Pharma
acquisition in July 2007. |
| After filing its First Quarter 10-Q, the Company determined that the revenue received from the
PR Pharma customer programs should, in fact, be included in the calculation of cumulative
revenue of SurModics Pharma. Based on this determination, the Company recalculated the
cumulative revenue of SurModics Pharma as of December 31, 2010, and determined that the $4.9
million milestone obligation had been achieved as of December 31, 2010. |
| 3. In view of reporting the error in your Form 8-K filed on April 27, 2011, please tell us the
current status of your efforts to pursue strategic alternatives for the Pharmaceuticals
business. |
| Response : |
| The Company continues to make progress in its efforts to pursue strategic alternatives for the
SurModics Pharma business, including a potential sale of that business. To date, the Company
has had meaningful conversations with a number of interested parties. The error disclosed in
the Company’s Form 8-K on April
27, 2011, has not affected to the Company’s knowledge, and is not expected to affect, the
consideration of strategic alternatives, which the Company expects to conclude by the end of
calendar year 2011. |
| As requested in the Staff’s comment letter, the Company makes the acknowledgement that: |

• the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

1 In November 2008, the Company acquired a portfolio of intellectual property and collaborative drug delivery customer programs from PR Pharmaceuticals, Inc. The intellectual property and customer programs acquired from PR Pharma complemented and enhanced the existing portfolio of drug delivery capabilities in existence at SurModics Pharma. Upon the acquisition of these assets from PR Pharma, they were transferred to SurModics Pharma and the Company recognized license fee and research and development revenue from those assets.

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United States Securities and Exchange Commission May 26, 2011 Page 4

| • | Staff comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the filing; and |
| --- | --- |
| • | the Company may not assert Staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States. |

If you have any questions regarding this letter, or if you require additional information, please contact me by telephone at (952) 500-7015 or by fax at (952) 500-7021.

Very truly yours, SurModics, Inc.
/s/ Philip D. Ankeny
Philip D. Ankeny
Senior Vice President and Chief Financial Officer

cc: Gary R. Maharaj, SurModics, Inc. Bryan K. Phillips, SurModics, Inc. Mark A. Lehman, SurModics, Inc. Adam Krasnoff, Deloitte & Touche, LLP Douglas Long, Faegre & Benson LLP

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