SurModics, Inc. announced yesterday that it has signed an exclusive agreement with the Roche Group and Genentech for the licensing of its proprietary drug delivery system. This agreement will also establish a development process whereby a new, sustained-delivery formulation for the highly successful Lucentis® (ranibizumab) injection will be commercialized and brought to market using SurModics’ technology, logistics and expertise.

This incredibly lucrative agreement includes an initial, up-front licensing fee of $3.5 million, and an estimated $200 million in payments if development of the Lucentis formulation and other products is successful. In addition, the agreement indicates that SurModics will be used to develop and manufacture the drug. With the potential to develop other drugs in the future via this agreement, SurModics will also obtain certain undisclosed royalties on sales of developed products.

Lucentis is the only FDA-approved treatment for neovascular (wet) age-related macular degeneration (ARMD), a degenerative condition of the central retina, and is the most common cause of vision loss in U.S. citizens 50 and up. Lucentis was discovered by Genentech and is being co-developed with a special ophthalmology unit of Novartis, with Genentech retaining U.S. rights and Novartis world rights.

President and CEO of SurModics, Bruce Barclay said that partnering with Genentech, one of the world’s leading biotech companies represented a milestone towards his company’s goal of “realizing our strategic vision of developing technologies that address important clinical needs in the large and growing ophthalmology market.”

Barclay went on to say that Lucentis, as well as other products, would leverage existing know-how to satisfy demand for a wide range of diseases in the ophthalmology market. He also said that production of such drugs, incorporating SurModics’ proprietary biodegradable microparticles drug delivery technology, would utilize their new world-class cGMP manufacturing facility in Birmingham, Alabama.

A live webcast was issued today discussing the agreement, and is available at the companies’ website. This webcast showcases the benefit to shareholders outlined in the agreement, such as the initial license, R&D, and manufacturing fees, as well as contingent milestone payments.