Surmodics, Inc.

Philip D. Ankeny – Senior Vice President and Chief Financial Officer Bruce J.

Barclay – President and Chief Executive Officer

Ross Taylor – C.L. King & Associates, Inc.

Richard Rinkoff – Craig-Hallum Capital Group LLC Daniel Owczarski – Avondale Partners LLC

Thank you very much. Good afternoon and welcome to SurModics’ fiscal 2009 first quarter conference call.

Thanks for joining us today. I’m Phil Ankeny, and our press release reporting quarterly results was issued earlier this afternoon and is available on our website at www.surmodics.com.

Joining me on the call today is Bruce Barclay, our President and Chief Executive Officer. Before we begin, it is my duty to inform you that this conference call is being webcast and is accessible through the Investor Relations section of the SurModics website, where the audio recording of the webcast will also be archived for future reference.

I will remind you that some of the statements made during this call may be considered forward looking. The 10-K for fiscal year 2008 identifies certain factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements made during this call.

The Company does not undertake any duty to update any forward-looking statements as a result of new information or future events or developments. Please be advised that during the call, non-GAAP financial measures will be used to provide information pertinent to ongoing business performance.

These measures are reconciled to the GAAP measures and are available in today’s earnings press release. In today’s call, I will cover the Company’s quarterly financial results.

Bruce will then highlight quarterly achievements and update you on pipeline opportunities and finally we will open the call to your questions. I will begin with an overview of the first quarter financial results and follow that with specifics on discreet line items.

Next I will discuss significant revenue drivers and breakdown revenue by component and market. Finally, I will cover expenses and review our balance sheet and cash flow.

First quarter revenue was a record $63.2 million, a significant increase from $23.8 million in the year earlier period. Revenue from Merck had a significant impact on quarterly results, as a result of the termination of our collaborative research and license agreement, which became effective in mid-December.

Upon termination, we recognized $34.8 million of revenue, which was previously being deferred. In addition, as previously disclosed, Merck’s decision to terminate the agreement triggered an additional $9 million payment to SurModics, which was received and recognized in the quarter.

Moving down the income statement, the Company reported operating income of $42.7 million, compared with $7.6 million in the prior year period. Net income was $27.1 million, during the period compared with $5.6 million in the same period last year.

Diluted earnings per share was $1.53, compared with $0.31 in the first quarter of fiscal 2008. These are all record figures but again the Merck termination was the principal driver in making them so.

In addition, included in the first quarter GAAP results were two event-specific charges. We recorded restructuring charges of $1.8 million relating to our previously announced organizational changes and downsizing.

We also recorded an in-process research and development charge of $3.2 million, in connection with the acquisition of drug delivery technology and collaborative programs from PR Pharmaceuticals in November. Also in connection with the PR Pharmaceuticals acquisition, we recorded amortization of intangibles of approximately $34,000.

Going forward, the intangibles amortization will be approximately $50,000 per quarter. I will now provide a brief review of the quarter on a non-GAAP basis, which we’ve often said provides a better indicator of our results.

Please refer to the supplemental non-GAAP tables in our press release for further details. We adjust for the accounting related to Merck by backing out the amounts recognized during the quarter, which had previously been deferred, or $34.8 million.

The $9 million milestone payment, which was billed and collected in the quarter, is reflected in both GAAP revenue and in the non-GAAP results. We also adjust for the event-specific charges we incurred during the quarter, including the restructuring charges and IPR&D charge for the PR Pharmaceuticals’ acquisition: Taking all of this into consideration, our non-GAAP results were as follows: Total revenue was $28.4 million, compared with $25.3 million in the first quarter of fiscal 2008; Operating income was $12.9 million, compared with $9.1 million in the prior year period; Net income was $8.4 million, compared with $6.6 million a year ago; and Diluted earnings per share was $0.48, compared with $0.36 in the first quarter of fiscal 2008.

Next, let’s turn to the CYPHER Sirolimus-eluting Coronary Stent from Cordis Corporation, a Johnson & Johnson Company. Last week, J&J reported worldwide CYPHER sales of approximately $272 million, down 34% year-over-year as the product continues to be impacted by the recent U.S.

market entries of Abbott’s Xience and Boston Scientific’s Promus drug eluting stents. J&J reported that it had an estimated 15% market share in the U.S.

and 32% outside the U.S. during the quarter.

Although outside the U.S., sales of CYPHER were down 10% year-over-year on a reported basis. They were actually up 5% sequentially, again on a reported basis.

While these new market entrants have challenged CYPHER’s market share, they are also contributing to the growth of the overall drug-eluting stent market, as penetration increased this quarter to an estimated 73% in the United States, up from 61% just a year ago. This is positive for us, given our continued broad-based participation in the drug-eluting stent space including CYPHER and other promising products.

J&J also reiterated during their conference call last week that they expect a file for CE mark approval in Europe on the NEVO Sirolimus-eluting Coronary Stent in 2009. Recall that SurModics provided the Hydrophilic Coating on NEVO.

I would also like to mention a recently announced positive development on the CYPHER front. Cordis had a significant win at the Federal Appeals Court responsible for patent cases, which invalidated certain claims of the Ding patent, which was the subject of litigation between Boston Scientific and Cordis.

The Appeals Court found that one of the key claims of the Ding patent was invalid, rendering it unenforceable against third parties. The bottom line here is that an injunction against CYPHER is now highly unlikely.

Next I will review results across markets. As we announced in November and consistent with our patient focused vision, SurModics has reorganized into clinically and market focused business unit to improve the visibility, marketing and adoption of the Company’s broad array of technologies.

In connection with the changes in our organizational structure, we are reevaluating our segment reporting and intend to report our revenue under two segments going forward - a Therapeutic segment and Diagnostic segment. These segments underscore our focus on improving patient lives through technology innovation.

The Diagnostic segment is quite straightforward as it contains our In Vitro Technologies’ business unit. The Therapeutic segment consists of our drug delivery and surface modification technologies.

In order to help investors understand the moving parts of this business, we will provide additional disclosure breaking out revenue by market within in the Therapeutic segment. Accordingly, in this segment, we will break out revenue into three distinct markets - Cardiovascular, Ophthalmology and Other markets.

We include in each of these market areas, all revenue from across the enterprise, including what was formerly included in our drug delivery, Hydrophilic Technologies, Regenerative Technologies and Orthopedics business unit. Results from Brookwood Pharmaceuticals are also classified into these three market areas.

As you might expect given Brookwood’s pharma and biotech customer base, a substantial amount of Brookwood’s revenue falls into other markets such as Oncology, Neurology and Dermatology, to name a few.

Next, in Ophthalmology, we generated revenue of $44.8 million on a GAAP basis, compared with $1.5 million in the first quarter of fiscal 2008. Recall that Merck revenue in the prior year was recognized in accordance with EITF 00-21.

Rounding up the Therapeutic segment, revenue in other markets was $3.8 million for the quarter, a 14% decrease from $4.4 million in the first quarter of fiscal 2008. Absent flows of activity in some of our customer development projects as well as some softness in product sales, attributed to the decrease, which we consider near-term in nature.

And lastly, revenue for our In Vitro Technologies business now reported under the Diagnostic segment was $4.3 million, down 23% from $5.5 million in the prior year. Sales of our In Vitro products were soft during the quarter.

Conversations with customers reveal that the reduction in demand is related to the slowing economy as several customers have cutback on inventory investment and sales of their own products experienced some weakness during the quarter as well. In addition, royalties in this segment decreased as both Abbott and GE Healthcare royalties were lower than prior year results.

As you may recall, SurModics licensed several patents for lateral flow immunoassay technology to Abbott, which expired in December 2008. As we report these royalties on a one-quarter lag, royalty revenue is expected to continue to flow through the second quarter even though the patents expired in December.

On a revenue component basis, royalties and license fees were $47.7 million, compared with $13.2 million in the year ago quarter. Merck was the most significant contributor to this growth in royalties and license fees, which more than offset the impact of the 34% decrease in CYPHER sales.

Product sales were $3.9 million, a 26% decrease from $5.2 million in the first quarter of fiscal 2008. As I mentioned earlier sales of our In Vitro products have been impacted by the difficult economic environment.

Reagent and polymer sales were similarly affected for some of our customers. Lastly, research and development revenue was $11.6 million during the quarter, compared with $5.4 million in the first quarter of fiscal 2008.

On a non-GAAP basis, R&D revenue for the first quarter of 2009 was $5.4 million, which is flat with the prior year if you exclude Merck. We are satisfied with this outcome in light of the current environment.

Presently, we are seeing some customers taking a more cautious approach to R&D investment than they have in the recent past. Some large customers are facing more constrained budgets for R&D projects and not all projects are getting funded.

Merck was a perfect example of how even highly promising projects are vulnerable in this challenging environment. Our smaller customers are witnessing an extremely difficult financing market and those that have only limited cash are been resourceful in finding ways to make the cash go further.

Fortunately, our broad portfolio of customer projects has allowed us to continue to drive strong R&D revenue with the ultimate and more important goal of helping advance customers products to the marketplace. Next I will turn to a review of operating expenses.

SurModics’ ongoing efforts to maximize profitability and optimize its resources, let us to change our organizational structure and eliminate approximately 5% of our workforce. These changes resulted in restructuring charges of $1.8 million during the first quarter, which consisted of $0.5 million of severance related costs, and $1.3 million charge in connection with the consolidation of our Minnesota facility.

We had previously occupied a lease facility near our headquarters and the recent headcount reduction has allowed us to consolidate all Minnesota personnel into our headquarters. In connection with these initiatives, SurModics expects to save approximately $2 million on an annualized basis.

However, only a fraction of this benefit was realized in the first quarter given the timing of the announcement. In the first quarter of the 2009, R&D expense was $9.4 million, constituting 67% of total operating expenses excluding product cost and the event-specific charges, as SurModics continues to invest in support of our technology leadership and innovation.

The recent changes in our organizational structure include implementing a more centralized R&D function designed to enhance the effectiveness of existing and new technologies across multiple clinical applications. We expect these changes to improve the return on our R&D investment, as we can now more easily allocate resources to the right opportunities across the company including Alabama, California, and Minnesota.

SG&A expense was $4.7 million in the quarter, roughly flat compared with last year. And lastly our effective tax rate for the quarter was approximately 37.4%.

We believe that approximately 37.5% is a reasonable rate to use in modeling our results for the balance of the fiscal year. Now, let’s turn to the balance sheet, which remains healthy and a source of significant strength and stability in these difficult economic times.

As of December 31, SurModics had a cash and investments balance totalling $69.9 million and no debt. Cash flow from operations was $17.4 million in the quarter, compared with $4.4 million in the year ago quarter.

The increase in operating cash flow principally reflects the $9 million milestone payment from Merck and tax payments in the first quarter of fiscal 2009 relative to the first quarter of fiscal 2008. We continue to put our strong balance sheet to productive use and remain active in the deployment of capital with the goal of enhancing shareholder value.

Towards this end, we’ve been quite active in our share repurchase program. In the first quarter, we purchased approximately 540,000 shares of SurModics stock for $12.8 million at an average price of $23.70 per share.

Since the November 2007 announcement of our second share repurchase program, through the first quarter of fiscal 2009, we’ve purchased over 800,000 shares and it has been approximately $25.5 million. As of December 31, we had approximately $9.5 million remaining under our $35 million authorization.

In addition, SurModics remains active in business development including the November asset acquisition from PR Pharmaceuticals, which Bruce will touch on momentarily. A quick word on the high level outlook we’ve provided in our year-end conference call in November.

As a reminder, we articulated in expectation of roughly flat revenue and diluted earnings per share on a non-GAAP basis compared with fiscal 2008 non-GAAP results. This high level outlook assumed a continued decline in CYPHER royalties, and the discontinuation of the Abbott royalty stream beginning in the third quarter.

Additionally, the current economic environment has presented us with new headwinds. Recent headlines confirmed that even healthcare companies are cutting back.

Credit is in short supply and potential changes in healthcare legislation are being proposed. In sum, these are highly uncertain times, and this uncertainty could impact our customers’ decision-making process including the products they buy, the projects they continue to fund, or new ones they might approve.

Many companies view R&D projects as discretionary items. It might also have an impact on sales of our customers’ products upon which we receive royalties.

We still believe we can achieve the outlook we provided on our year-end conference call. However, there is no doubt that some other fundamentals in the broader economy and even the healthcare industry, have deteriorated since our call in early November.

This level of uncertainty has added risk to the environment for everyone and SurModics is no exception. On the positive side, we continue to see growth in many parts of our business including ophthalmology and other markets where our Brookwood business has a number of exciting growth opportunities.

We also have added new opportunities with our recent PR Pharma acquisition. Even though there was little top line impact from PR Pharma in the first quarter, we expect it to contribute to the growth of our business this year.

And our Cardiovascular franchise remains very healthy. As an example, the number of customers using our technologies for stent now extends into the double digits.

On the expense front, our recent restructuring has allowed us to trim approximately $2 million in annual expense, which only partially benefitted the first quarter’s results and our share repurchase activity improves earnings per share as our sharecount has been reduced. With that, I will now turn the call over to Bruce.

Thank you, Phil, and welcome everyone to the call. My comments today will briefly highlight quarterly achievements, review some of our key opportunities and bring you up to-date on the product pipeline and our progress against fiscal 2009 goals.

First a word about the quarter. While we are pleased to announce a record quarter, we acknowledge it was the cancellation of the Merck agreement that made it so.

Looking at the quarter on a non-GAAP basis, receiving $9 million in cash for Merck in this economy was definitely a positive event. However, we understand that absent the Merck payment, it was a down quarter.

Product sales were soft and our R&D revenue engine has not yet replaced all the build activity we previously were doing for Merck. However, the first quarter results in no way diminish our optimism and excitement about SurModics’ future and our management team and our employees are committed to returning to growth.

In addition, we believe SurModics’ business model strikes an excellent balance between safety and growth especially over the long-term. We participate with our customers and many large markets in healthcare, where our technology is used to create sophisticated diagnostic tools and to solve a variety of unmet clinical needs.

The demographics of healthcare was strong growth in the over 60 population, help drive the opportunity we see. Further within healthcare, we are very well diversified.

In fact we view the diversification of our portfolio as a significant asset, as we offer both diagnostic and therapeutic solutions with nearly 300 products and projects spanning multiple technologies and more than 10 different clinical areas. Additionally, we believe we have a highly profitable business model and while many companies our size are struggling to survive in the current environment, we have a solid foundation and a long history of delivering positive earnings and cash flow.

Our strong balance sheet with no debt, is the result of a disciplined approach to capital allocation, which creates a margin of the safety today that many other companies do not enjoy and allows us to pursue value enhancing opportunities such as share buybacks, business development opportunities and facilities investments. We believe our growth prospects were enhanced by our recent reorganization into clinically and market focussed business units and by centralizing our R&D function within our legacy business.

These changes will enable us to better understand and help solve the needs of patients within specific clinical indications and more effectively leverage existing and new technologies across multiple clinical applications. Going forward, SurModics will have four business units: Cardiovascular: Ophthalmology; In Vitro Technologies and Brookwood Pharmaceuticals.

Importantly, the new Cardiovascular business unit will be responsible for marketing all of the company's drug delivery, Hydrophilic and Regenerative Technologies to cardiovascular customers. And I want to emphasize that while the drug delivery, Hydrophilic Technologies, Regenerative Technologies and Orthopedics are no longer organized as business units, we remain committed to these areas of opportunity and our technologies that address them.

Coated and drug-eluting stents remain an important opportunity for us. As you may recall, one of our fiscal 2008 highlights was the successful initiation of the first in human trial of the Nexeon PROTEX Coronary Stent System.

That trial continues to enroll patients in Europe and the preliminary results look encouraging. Yesterday we're pleased to announce the signing of a second license agreement with Nexeon to collaborate on the development of a novel stent system for the treatment of renal artery disease, a disease of the peripheral vasculature.

This new stent system incorporates SurModics’ proprietary FINALE prohealing coating technology, and Nexeon’s bare metal KODIAK peripheral stent. Ophthalmology and Brookwood are also strong opportunities for us, and we’ll provide a more detailed update on both at our annual meeting next week.

During the quarter we also added an important component to our drug delivery business through the acquisition of proprietary drug delivery technologies, and collaborative customer programs from PR Pharmaceuticals. These technologies enable the delivery of injectable drugs including proteins with microparticles trough smaller diameter needles compared to competing technologies.

PR Pharmaceuticals’ technologies are synergistic to the SurModics and Brookwood technology basis and I’m pleased to report that the technology transfer is proceeding according to plan and the collaborative programs utilizing these technologies are integrating well. Beyond our multiple growth drivers, SurModics has a broad portfolio of opportunities that enables us to continue to diversify our revenue streams and deliver solid growth long-term.

We regard our business as a portfolio of opportunities with approximately 100 license products generating royalties and nearly 200 projects in our pipeline not yet on the market. As of December 31, we had a total of 104 licensed customers, several with multiple licenses compared with 100 in the prior year period.

SurModics customers had 99 licensed product classes on the market, generating royalty revenue compared with 100 a year ago. Total number of licensed products not yet launched was a 107, up from a 105 in the prior year period and major non-license opportunities stood at 87, compared with 93 a year ago.

In total, the company had 194 potential commercial products and development as of December 31. The magnitude of our R&D work we are doing on behalf of our customers is a testament to the value that they place on our capabilities in addition to demonstrating the significant potential value we see in our pipeline.

Looking forward, particularly on this challenging economic environment, we believe our portfolio of technologies and the deep capabilities of our employees will allow us to continue to add new customer opportunities and so many of our technologies are already well known in the development community, and especially by the FDA. Customers find that they can reduce risk in their programs by choosing a SurModics technology over many alternatives.

And of course, we continue to add to our portfolio of technologies, which allows customers to develop multiple generations of products leveraging SurModics. At this point, I’ll now touch on SurModics fiscal 2009 objectives.

At still very early in the year, reportable progress is limited. To view 2009 objectives in their entirety, please see our shareholder letter, which you received in the mail recently and that can also be found on our website.

As in previous years, these objectives are designed to offer insight into how we manage our business and to provide a view of the company’s future opportunities. These goals are aspirational in nature only, as often we don’t control the timing of all aspects related to our customer objectives.

This year we articulated a goal of signing 18 new licenses with our customers in fiscal 2009. I’m pleased to report that SurModics had a terrific quarter on this front as we added eight new licenses agreements with our customers.

We’re already in that. One of our fiscal 2009 goals was the signing of a new customer license using SurModics drug delivery technology outside of ophthalmology.

We are very pleased to have reached an agreement with this customer for an exciting application of our technology in the cardiovascular space. We look forward to sharing more details with you about this potentially significant product in the future as the program unfolds.

As another goal we expect our customers to launch ten new product classes in fiscal 2009. In the first quarter, customers launched two new product classes into the marketplace.

On the whole, we believe we are on track to achieve the rest of our fiscal 2009 goals. Before concluding, I want to take a moment to welcome a new member to our Board of Directors.

Mary Brainerd was nominated in November and will join the Board on February 2, the date of our Annual Meeting of Shareholders. Mary, as you know is the President and Chief Executive Officer of HealthPartners, a family of non-profit healthcare organizations headquartered here in Minneapolis and brings significant healthcare experience to her new role.

We’re very much looking forward to her many contributions to our Company and to the Board of Directors. I also look forward to providing more of an update on our Company at next Monday’s Annual Meeting of Shareholders, which I hope you will attend or listen-in via the webcast.

In closing, our Company remains financially healthy with a solid balance sheet and strong cash generating ability, which we view as a true competitive advantage. We are also well diversified across the healthcare sector, which has historically held us better than others during recessionary periods.

SurModics demonstrated a history of growing and diversifying revenues, especially important in the current environment. And lastly, we have a number of exciting growth opportunities ahead of us as a result of our deep commitment to addressing significant unmet clinical needs through our enabling technologies that extend and improve the lives of patients around the world.

Operator, that concludes my prepared remarks. We’d now like to the open up the call to any questions.

Hi. I got a couple of questions.

First, I wondered if within you mean the royalty revenues or your diagnostic revenues, I mean how much you can give any information about how much you are getting from the Abbott royalties that expired in December?

We’re not breaking that number out. As we said the number was down year-over-year and so it definitely had an impact on the results, but it’s not our intent to break those out.

Okay. And I mean is there any chance, can you say anything about - how it was sequentially versus the September quarter?

Sequentially it was up.

Okay. And, another question would be, you said you still thought it was a reasonable chance to get your rough earnings guidance for the year-end.

What would have to change versus the current quarter to make it more likely you could actually achieve that guidance because it looks like both your revenues would have to improve pretty materially from this quarter to get to that guidance?

We see several positive indicators for the rest of the year and Phil touched on them I think nicely in his prepared remarks. We see potential growth in our Brookwood business on the organic basis and also with the PR Pharma technology that we acquired.

In the quarter we had a very small amount of customer projects that were transferred over from PR Pharma, hitting the top line in Q1, and we expect that to hit in mass in Q2 and beyond. We also have a number of activities going on within the ophthalmology space and in particular we signed one of the largest R&D agreements in our recent history in ophthalmology in the last quarter, even though, the license has not yet been signed by that particular customer.

So we have a number of customers still working in that space and paying us to do the work and we are very much – very optimistic about that going forward.

Okay, all right. That’s helps.

Thanks very much.

Thank you.

Thanks. A couple of micro questions.

On that ophthalmology agreement that you just signed, was that an R&D agreement and was there any of that in the quarter that we just saw?

Yes Rick, it was an R&D agreement and there was some in the quarter not by no means the majority.

So should we expect R&D sequentially to move higher?

You said that you are on track, you believe today to hit the rest of your goals for the year. One of them is signing an ophthalmology license agreement.

Could you give us any more color and is the agreement that you just signed in first place to sign that license agreement?

I really can’t give anymore color than that other than we’ve had customers who and the one particularly we talked about last year, who have decided to spend more money on R&D to get – to continue to generate results before they enter into the - what we think would be the final license negotiation for rights going forward. So, I can’t say anything more than that other than there is lots of activity in ophthalmology.

This recent agreement helped us substantially, but there are other companies as well that are paying R&D fees that we know we’re also talking to about – when the right time would be for the license discussion. So, and in fact that the number of customers who were supporting in ophthalmology continues to grow, so that business is very healthy.

On the expense side, you said that the reductions were not fully felt in the quarter. Can you give us some idea of what the expense lines will look like for the rest of the year?

[We’re already] through that I would say that rolling forward expect some modest decrease in each of the R&D and SG&A lines, but in aggregate as we said we see a couple of million dollars of expense save, but it is pretty well balanced between the three quarters there that remain.

Its $2 million less than what you had budgeted, but we didn’t know what you originally budgeted?

Well, and since I’m saying that we didn’t - if you look at the current quarter there wasn’t a tremendous impact there. It should trend down from there and I think a couple of million is probably spread more through the back half of the year or back three quarters of the year.

Do you envision making additional expense reductions?

No not at this point. Obviously it’s something we’ll keep a close eye on, but we continue to manage the business I think very well in terms of our discretionary spending in things you would imagine, R&D and travel and those types of things, we will continue to keep a close eye on that.

Okay. One more macro question.

If you take Merck out, which is when all of the expectations did, all the consensus expectations, you basically did about $19.5 million, let’s call it $20 million, multiply by four, you get $80 million, at Merck you get $89 million and your guidance was a $111 million, so do you still really believe that you can make up that difference between now and the end of September?

We’ve done the same math Rick and we are still standing by what Phil said in his prepared remarks, again not to repeat everything he said this is clearly more risk than when we said that originally three months ago because of the economy. But having talked with several customers, and understanding what they are going through and their particular issues, the reasons we’ve said we continue to see – we continue to standby what was said in the prepared remarks.

Thank you.

Thank you.

Okay.

Good afternoon.

Hi, Dan.

Can you talk a little bit about what’s going on at the [facility] or the build out of Brookwood, as far as is that still on track, is that – do you take your foot off the gas there a little bit, or how does this, all this big economic changes impact your build out there?

That is still on track, and I think the comments we made in our 10-K it still stand, which is that we expect to spend between 20 to $25 million in fiscal 2009 on that building. We don’t expect it to come up until the fall of 2009 calendar, which would be Q1 of fiscal 2010.

We continue to have strong customer interest in not only the expanded space, but also this expanded ability to manufacture project – products on a cGMP basis either for late-stage of clinical trial or for commercial capabilities. So, we continue to see that being an important part of our business long-term and it is continuing on.

Okay, and then as far as number of projects that they are working on, is that number still consistent or are people dropping off there? I think you talked about some of the smaller customers trapped for cash.

What about Brookwood's pipeline or partnership pipeline?

They have had a couple of drop-offs, some of the smaller ones. We don’t know whether that’s temporary or longer-term.

At the same time, as you’ve seen from the R&D number we've had more revenue from some of the larger ones which help offset that, so it’s something that we’re watching closely and talking with our customers, but in the conversations we’ve had with customers over the last several weeks, their long-term plans are not changing. They continue to see significant upside in formulating new drugs especially drugs that are coming off-patent in the next three to five years and better sustained delivery vehicles and we think Brookwood offers a tremendous opportunity for them.

And, again that’s been our long-term premise all along for the business and we are sticking by that.

Okay and then just last on drug eluting stents, I think you mentioned maybe double-digit, projects there. Are those timelines been stretched out now that the FDA, is the FDA asking for more data or making things a little bit more difficult than those projects are slower to come to - into development?

I would say, I’m not that close to that to note precisely Dan, relative to the FDA. We – for a lot of our customers in the DES space, we’ve done early work with them and then we somewhat step out and they continue to process from there.

So, given the fact we have as many as customers as we do, we said previously that in most, but not all of those we have better financial terms and what we had with CYPHER and it continues to be a large market with penetration rates increasing here in the U.S. at least we continue to see good upside in that business.

Certainly, FDA is an issue for our customers. Funding for smaller customers is also an issue they need to deal with, but again we are continuing to be optimistic with what’s going on there.

Okay, thank you.

Thanks for the call.

Okay, thanks operator. We want to thank you again for participating in this quarter’s call.

We look forward to speaking with you again at our Annual Meeting next Monday, February 2, and then in April, when we announce our second quarter results. Thank you very much.