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SurModics Acquires Brookwood Pharma

It will pay $40 million for the privately held drug-delivery technology company.

SurModics

(SRDX) - Get Surmodics Inc Report

said Wednesday that it will pay $40 million for fellow drug-delivery technology company Brookwood Pharmaceuticals.

The company will pay $40 million in cash to the Southern Research Institute, which owns Brookwood. An additional $22 million in cash is tied to milestone payments.

Brookwood specializes in injectable microparticles and implant technology that's based on biodegradable polymers to provide sustained drug delivery. The companies said that similar to SurModics, Brookwood's business model includes revenue from research and development fees, polymer sales and royalty and milestone-generating licenses.

The deal will add systematic and site-specific drug release to SurModics drug-delivery capabilities as well as expand the markets in which it can participate to include diabetes, oncology, ophthalmology, orthopedics and alcoholism.

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Additionally, SurModics said it expects the acquisition to support key projects with

Merck

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and other customers.

"The combination of our two companies is compelling given the similarity of our business models, focus on innovative drug delivery technologies and talented teams," SurModics CEO Bruce Barclay said.

SurModics rose $1.92, or 4.2%, to $47.79 in recent trading.