UPDATE 1-SurModics - Merck to use its system to develop new drug

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Jan 28 (Reuters) - SurModics Inc (SRDX.O) said Merck & Co Inc (MRK.N) will develop a new proprietary investigational compound to treat eye diseases using SurModics' I-vation drug delivery system, under an existing license agreement.

In a statement, the company which makes the drug delivery technology used in Johnson & Johnson's (JNJ.N) drug-eluting coronary stent, said Merck will lead and fund development and commercialization activities.

SurModics will get a licensing fee and payment for its development activities.

SurModics, which will be responsible for the manufacture and supply of clinical and commercial products, will also get royalties on product sales, it said.

The I-vation intravitreal implant is a drug delivery system capable of delivering a variety of drugs on a sustained release basis for more than a year and can be removed once the drug has been fully released.

On June 27 last, SurModics had formed a partnership with Merck to develop eye disease treatments using SurModics' I-vation delivery technology.

(Reporting by Swagata Gupta in Bangalore; Editing by Gopakumar Warrier)