SurModics, Inc., a leading provider of surface modification and drug delivery technologies to the healthcare industry, announced that Merck & Co., Inc. has notified the company that it will discontinue the License and Research Collaboration Agreement the companies signed in June 2007. Merck's decision triggers an additional $9 million payment to SurModics from Merck.

Merck's decision to discontinue the collaboration was made following a strategic review of its business and product development portfolio. This decision was not based on any concerns about the safety or efficacy of I-vation TA, the I-vation platform or any of SurModics' other sustained drug delivery systems. Clinical data on I-vation TA generated to date has provided strong support for the tolerability profile of I-vation TA, and more generally, that of the I-vation sustained delivery platform.

"We understand and respect that our partners must undertake strategic reviews which on occasion result in a change of focus or even the discontinuation of projects," said Bruce Barclay, president and CEO of SurModics. "Merck has been an exceptional partner, and we have a great deal of respect for their development capabilities and highly skilled personnel. While we are disappointed by this decision, our diversification strategy has yielded a broad base of customers and development programmes within ophthalmology, as well as across our other areas of business."

"We remain committed to and confident in the promising future of our ophthalmology business. This commitment includes our development partners, clinicians and the patients that will ultimately benefit from our innovative technologies," continued Barclay. "Today, we have multiple ongoing customer development programs in ophthalmology evaluating several different drug delivery platforms, including I-vation, microparticles and biodegradable implants. We are in advanced licensing discussions on multiple platforms. In addition, our ability to structure agreements with existing and prospective customers in connection with the I-vation platform is now enhanced. We will continue to work in tandem with our partners to meet their required timelines in developing products for the treatment of diseases of the eye, including diabetic macular edema (DME), age-related macular degeneration (AMD), and other indications."