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Anika Therapeutics Reports 29% Total Revenue Growth in Third Quarter 2010

^{Published on 2010-11-08 15:30:25 - Market Wire}
 

BEDFORD, Mass.--([ BUSINESS WIRE ])--[ Anika Therapeutics, Inc. ] (Nasdaq: ANIK), a leader in products for tissue protection, healing, and repair, based on [ hyaluronic acid ] (aHAa) technology, today reported financial results for the quarter ended September 30, 2010.

"We hit critical building system and validation milestones on schedule. As a result, we are now fully operational in Bedford for Anikaa™s entire cross-linked product line."

Third-Quarter Highlights

• Total revenue and product revenue up 29% and 31%, respectively
• Orthobiologics revenue rises 25%, driven by strong U.S. sales of ORTHOVISC^®
• 510(k) submissions completed for three FAB joint health products
• Continued progress on PMA application for MONOVISC
• Key milestones achieved in FAB information systems integration

Revenue

Anikaa™s consolidated product revenue increased 31% to $13.2 million for the third quarter of 2010, from $10.1 million in the third quarter of 2009. Excluding revenue from Fidia Advanced Biopolymers, s.r.l. (aFABa), which was acquired by Anika late in the fourth quarter of 2009, product revenue grew 14% from the third quarter last year. This growth was primarily due to continued strong U.S. sales of the Companya™s [ ORTHOVISC ]^® product line as well as increased contribution from international sales of [ MONOVISC ]^TM.

Total revenue for the third quarter of 2010 increased 29% to $13.9 million, from $10.8 million in the year-earlier quarter.

Product Gross Margin

Product gross margin for the third quarter of 2010 was 54%, compared with 65% in the third quarter last year. The decrease in product gross margin largely reflected the addition of FAB products into Anikaa™s overall product mix, and duplicate manufacturing expenditures during the transition from Woburn to our Bedford, MA facility.

Operating Expenses

Research and development expenses for the third quarter of 2010 decreased to $1.8 million, from $2.4 million in the third quarter of 2009. Spending declined subsequent to the completion of Anikaa™s U.S. MONOVISC clinical trial in the third quarter of 2009. This decline was partially offset by the inclusion of FABa™s R&D expenses.

Selling, general and administrative expenses for the third quarter of 2010 increased to $3.9 million from $2.8 million in the same quarter of 2009, primarily as a result of the addition of FABa™s SG&A costs including integration costs.

Operating and Net Income

Operating income for the third quarter grew 3% to $2.1 million, compared with $2.0 million in the same period last year. However, this operating income increase was more than offset by higher taxes as the Company increased its estimated tax rate for 2010 to 39.6% from 38% estimated in the second quarter. The reasons for the tax rate increase in 2010 are lower investment tax credits and R&D credits in 2010 versus 2009, and the impact of FABa™s losses on our blended tax rate. As a result, net income for the third quarter of 2010 decreased to $1.2 million, or $0.09 per diluted share, compared with $1.5 million, or $0.13 per diluted share, for the same period last year. The comparison with the third quarter of 2009 was also negatively impacted by the dilutive effect of the FAB acquisition.

Cash and Cash Equivalents

Anikaa™s cash and cash equivalents at September 30, 2010 were $25.8 million, compared with $24.4 million at December 31, 2009.

Management Commentary

aAnika continued to perform well in the third quarter,a said Charles H. Sherwood, Ph.D., president and chief executive officer. aDriven by strong domestic sales of ORTHOVISC, it was our 13^th consecutive quarter of year-over-year product revenue growth, and we advanced in significant ways on our key goals. The first of these goals is to continue growing sales of ORTHOVISC. All the key indicators for ORTHOVISC are moving in the right direction, including growth in sales and market share.a

aWith FAB, our pipeline is broader and stronger than ever, and our second goal is to receive FDA approval and launch FAB orthobiologics products in the United States,a said Sherwood. aWe submitted 510(k) applications for three FAB products in the third quarter, and expect to receive our first approval by year-end 2010 with two others to follow in the first quarter of 2011.a

aOur third key goal focuses on the U.S. launch of MONOVISC a" our single-injection osteoarthritis product,a Sherwood said. aWe continued to make progress on our PMA application in the third quarter, submitting our responses to questions stemming from our meeting with the FDA in May 2010. At the same time, we are continuing efforts to expand distribution of FABa™s tissue technology products outside of Italy, which is our fourth goal.a

aOur fifth goal is to reduce FABa™s operating loss,a Sherwood said. aA key focus in our efforts to improve FABa™s bottom line is to drive FAB product revenue growth, and launching the first FAB joint health and advanced wound care products into the U.S. market will be an important step in this direction. At the same time, our FAB integration process is moving forward on schedule and is beginning to deliver the anticipated cost savings.a

aThis was also another quarter of progress toward our sixth goal a" consolidating Anikaa™s U.S. manufacturing operations in Bedford, Massachusetts,a said Sherwood. aWe hit critical building system and validation milestones on schedule. As a result, we are now fully operational in Bedford for Anikaa™s entire cross-linked product line.a

aIn summary, Anika again delivered solid top-line growth in the third quarter, while we continued to execute successfully on our strategic goals,a Sherwood said.

Conference Call Information

Anika will hold a conference call to discuss its financial results, business highlights and outlook tomorrow, Tuesday, November 9, 2010 at 9:00 a.m. ET. In addition, the Company will answer questions concerning business and financial developments and trends, and other business and financial matters affecting the Company, some of the responses to which may contain information that has not been previously disclosed.

To listen to the conference call, dial 800-291-5365 (International callers dial 617-614-3922) and use the passcode 62761665. Please call approximately 10 minutes before the starting time and reference Anika Therapeutics. In addition, the conference call will be available through a live audio webcast in the [ aInvestor Relationsa ] section of the Anika Therapeutics website, [ www.anikatherapeutics.com ]. An accompanying slide presentation also can be accessed via the Anika Therapeutics website. The conference call will be archived and accessible on the same website shortly after the conclusion of the call.

About Anika Therapeutics, Inc.

Headquartered in Bedford, Mass., [ Anika Therapeutics, Inc ]. develops, manufactures and commercializes therapeutic products for tissue protection, healing, and repair. These products are based on [ hyaluronic acid (HA) ], a naturally occurring, biocompatible polymer found throughout the body. Anikaa™s products range from orthopedic/joint health solutions led by [ ORTHOVISC ]^®, a treatment for osteoarthritis of the knee; to surgical aids in the [ ophthalmic ] and [ anti-adhesion ] fields. The company also offers [ aesthetic dermal fillers ] for the correction of facial wrinkles. Anikaa™s Italian subsidiary, Fidia Advanced Biopolymers, S.r.l (FAB), provides complementary HA products in orthopedic/joint health and anti-adhesion, as well as therapeutics in new areas such as advanced wound treatment and ear, nose and throat care. FABa™s regenerative tissue technology advances Anikaa™s vision to offer therapeutic products that go beyond pain relief to protect and restore damaged tissue.

The statements made in this press release which are not statements of historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements that may be identified by words such as "expectations," "remains," "focus," "expected," "prospective," "expanding," "building," "continue," "progress," aplan,a "efforts," "hope," "believe," "objectives," "opportunities," "will," "seek," aexpecta and other expressions which are predictions of or indicate future events and trendsdo not constitute historical matters and identify forward-looking statements.These statements also include those relating to: (i) the timing of FDA approval, if at all, and the launch of key FAB orthobiologics products in the United States, (ii) expectations relating to approval and launch of MONOVISC, (iii) the reduction of FABa™s operating loss, (iv) the consolidation of Anikaa™s manufacturing operations in Bedford, Massachusetts, and (v) growth in sales and market share for ORTHVISC, and(vi) Anikaa™s ability to deliver growth in margins and earnings over the next several quarters.These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks, uncertainties and other factors.The Company's actual results could differ materially from any anticipated future results, performance or achievements described in the forward-looking statements as a result of a number of factors including: (i) the Company's ability to successfully commence and/or complete clinical trials of its products on a timely basis or at all, obtain clinical data to support a pre-market approval application or timely file and receive FDA or other regulatory approvals of its products, or that such approvals will not be obtained in a timely manner or without the need for additional clinical trials; (ii) the Company's research and product development efforts and their relative success, including whether the Company has any meaningful sales of any new products resulting from such efforts; (iii) the cost effectiveness and efficiency of our manufacturing operations and production planning; (iv) the strength of the economies in which the Company operates or will be operating, as well as the political stability of any of those geographic areas; (v) future determinations by the Company to allocate resources to products and in directions not presently contemplated, or (vi) the Companya™s ability to launch MONOVISC in the U.S., if at all.Any delay in receiving any regulatory approvals may adversely affect the Company's competitive position.Even if regulatory approvals are obtained, there is a risk that meaningful sales of the products may not be achieved.There is also a risk that (i) the Company's existing distributors or customers will not continue to place orders at historical levels or that any of them will seek to modify or terminate existing arrangements, (ii) the Company's efforts to enter into long-term marketing and distribution arrangements, including with new international distributors for ORTHOVISC and MONOVISC, will not be successful, (iii) new distribution arrangements will not result in meaningful sales of the Company's products, (iv) the Companya™s distributors will be unable to achieve performance and sales threshold milestones in its distribution agreements, (v) competitive products will adversely impact the Company's product sales, (vi) the estimated size(s) of the markets which the Company has targeted its products will fail to be achieved, (vii) lack of adequate coverage and reimbursement provided by governments and other third party payers for our products and services could have a material adverse effect on our results of operations, or (viii) increased sales of the Company's products, including HYVISC, ORTHOVISC , or its ophthalmic products, will not continue or sales will decrease or not reach historical sales levels, or even if such increases occur that such increases will improve gross margins, any of which may have a material adverse effect on the Company's business and operations.Certain other factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include those set forth under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, as well as those described in the Company's other press releases and SEC filings.