Johnson & Johnson’s Cypher drug-eluting stent business woes are having a negative effect on SurModics(NASDAQ:SRDX).

The Eden Prairie, Minn.-based company, which makes drug-delivery and surface-modification technologies for medical devices, said sales for the three month period ended on December 31st were down some 13 percent during the first quarter to $15.2 million, compared to $17.3 million during the same period last year. The shrinking top line was due to declining royalties from JNJ’s Cypher drug-eluting stents, the company said.

Earlier this week JNJ reported that its worldwide DES sales were down 38 percent during the fourth quarter and 31 percent during 2010.

The declining sales swung Surmodics to a net loss of $377,000, compared to a $1.9 million profit for the same period last year.

On its first earnings call since naming a new CEO in December and resolving a brief standoff with activist shareholder, Ramius LLC, newly appointed CEO Gary Maharaj spoke about a need to identify and refocus on the company’s efforts on a “well-defined core.” What exactly that core is, however, is yet to be defined.

“I’m narrowing in very early on: what is the secret sauce at SurModics?” Maharaj said. “And to be honest, I’m still in the discovery mode.”

Maharaj said the ability to modify surfaces has ubiquitous uses in healthcare. The key for the company will be to identify technologies in its pipeline that can bring value to customers products within the next couple of years.

It still appears that “well-defined core” will not include pharmaceuticals. The company said last month that it had hired investment bank Piper Jaffray to explore “strategic alternatives,” including a sale, for its pharmaceutical unit.

“There’s really not a lot we can share at this point,” Chief Financial Officer Phil Ankeny said when asked for an update. “We’ve been pleased with how the process is unfolding, but it’s really too early to give any indications on where we are and exactly how much time we expect it to take.”

Ankeny said the company expects to lose $10 million this year operating its year-old pharmaceutical facility in Birmingham, Alabama.

Ankeny and Maharaj also spoke about the possibility of using cash flow for targeted investments in the business, but when pressed for specifics could not yet provide them.

Said Maharaj: “If it were simple, at this point we’d already be there.”