Acquisition

12 Months Ended

Sep. 30, 2011

Acquisition [Abstract]

Acquisition

4. Acquisition

PR Pharmaceuticals, Inc. On November 4, 2008, the Company’s SurModics Pharmaceuticals subsidiary entered into an asset purchase agreement with PR Pharmaceuticals, Inc. (“PR Pharma”), whereby it acquired certain contracts and assets of PR Pharma for $5.6 million consisting of $2.9 million in cash on the closing date, additional consideration of $2.4 million (paid in fiscal 2009) based on successful achievement of specified milestones and $0.3 million in transaction costs. The sellers of PR Pharma are still eligible to receive up to an additional $3.0 million in cash based on successful achievement of specified milestones for successful patent issuances and product development. Potential milestones of $0.6 million were not earned and lapsed in fiscal 2011. The Company agreed to indemnify Evonik for certain contingent consideration obligations when it sold substantially all of the SurModics Pharmaceuticals assets to Evonik on November 17, 2011. The purchase price was allocated as follows as of November 4, 2008 (in thousands):

Core technology	$	1,400
Customer relationships		900
In-process research and development		3,200
Trade names		20
Non-compete agreements		50
Total purchase price	$	5,570

The acquired developed technology is being amortized on a straight-line basis over 18 years, customer relationships are being amortized over nine years, and non-compete agreements were amortized over two years. The trade names had a life of less than one year and were fully amortized in fiscal 2009. As part of the acquisition, the Company recognized fair value associated with in-process research and development (“IPR&D”) of $3.2 million. The IPR&D was expensed on the date of acquisition and relates to polymer-based drug delivery systems. The value assigned to IPR&D is related to projects for which the related products have not achieved commercial feasibility and have no future alternative use. The amount of purchase price allocated to IPR&D was based on estimating the future cash flows of each project and discounting the net cash flows back to their present values.