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Commitments and Contingencies
12 Months Ended
Sep. 30, 2020
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11.  Commitments and Contingencies

Litigation. From time to time, the Company may become involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, which if granted, could require significant expenditures or result in lost revenue. The Company records a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.

On January 17, 2018, the Company entered into a settlement agreement fully resolving the previously disclosed litigation involving Merit Medical Systems, Inc. (“Merit”) and NorMedix.

In April 2018, a customer notified the Company that it believed it had overpaid hydrophilic coating royalties to the Company from January 2009 through December 2017. During fiscal 2018, the Company recorded $1.0 million in selling, general and administrative expenses related to this claim. During fiscal 2019, the Company settled this claim and made a payment to the customer totaling $0.4 million, resulting in a reduction of selling, general and administrative expenses of $0.6 million in fiscal 2019.

InnoCore Technologies BV. In 2006, the Company entered into a license agreement whereby Surmodics obtained an exclusive license to a drug-delivery coating for licensed products within the vascular field which included peripheral, coronary and neurovascular biodurable stent products. The license requires an annual, minimum payment of approximately $0.2 million (at the Euro to U.S. dollar exchange rate of as of September 30, 2020) until the last patent expires, which is currently estimated to be May 2027. The total minimum future payments associated with this license are approximately $1.7 million. The license is currently utilized with one of Surmodics’ drug-delivery technology customers.

 

Clinical Trials. The Company has engaged CRO consultants to assist with the administration of its ongoing clinical trials. The Company has executed separate contracts with two CROs for services rendered in connection with the TRANSCEND pivotal clinical trial for the SurVeil DCB, including pass-through expenses paid by the CROs, of up to $30 million in the aggregate. As of September 30, 2020, an estimated $10 million remains to be paid on these contracts, which may vary depending on actual pass-through expenses incurred to execute the trial. The Company estimates that the total cost of the TRANSCEND clinical trial will be in the range of $35 million to $40 million from inception to completion. In the event the Company were to terminate any trial, it may incur certain financial penalties, which would become payable to the CRO for costs to wind down the terminated trial.

Asset Acquisitions. In fiscal 2019, the Company acquired certain intellectual property assets to support ongoing development of the Company’s medical device pipeline and paid the sellers $0.8 million. In addition, the Company is obligated to pay up to $1.3 million of additional consideration upon achievement of certain strategic milestones within a contingency period ending in 2022, of which $0.2 million is guaranteed to be paid in fiscal 2021. In fiscal 2019, the Company recorded a charge totaling $0.9 million related to this acquisition in acquired in-process research and development expense on the consolidated statements of operations.

In fiscal 2018, the Company acquired certain intellectual property assets of Embolitech, LLC (the “Embolitech Transaction”). As part of the Embolitech Transaction, the Company paid the sellers $5.0 million in fiscal 2018 and $1.0 million in fiscal 2020. The Company is obligated to pay additional installments totaling $3.5 million in several installments in fiscal 2021 through fiscal 2024, including $1.0 million as a result of the achievement of a contingent milestone in fiscal 2020, which is payable in fiscal 2021. These payments may be accelerated upon the occurrence of certain sales and regulatory milestones. An additional $1.0 million payment is contingent upon the achievement of a certain regulatory milestone within a contingency period ending in 2033. In fiscal 2018, the Company recorded a charge totaling $7.9 million related to this acquisition in acquired in-process research and development expense on the consolidated statement of operations.

As of September 30, 2020, $1.1 million and $2.2 million related to these asset acquisitions was recorded in other accrued liabilities and other long-term liabilities, respectively, on the consolidated balance sheets. As of September 30, 2019, $1.0 million and $2.1 million related to these asset acquisitions was recorded in other accrued liabilities and other long-term liabilities, respectively, on the consolidated balance sheets.