Anika Therapeutics Reports Record First-Quarter Revenue and Earnings

  Anika Therapeutics Reports Record First-Quarter Revenue and Earnings

       Total Revenue Grows 22% and Earnings Increase to $0.14 per Share

Business Wire

BEDFORD, Mass. -- May 03, 2012

Anika Therapeutics, Inc. (Nasdaq: ANIK), a leader in products for tissue
protection, healing, and repair, based on hyaluronic acid (“HA”) technology,
today reported financial results for the quarter ended March 31, 2012.

Revenue

For the first quarter of 2012, Anika’s product revenue increased 23% to $13.6
million, from $11.1 million in the first quarter of 2011. Total revenue for
the first quarter of 2012 increased 22% to $14.4 million in the first quarter
of 2012, from $11.7 million in the first quarter of 2011. This growth was
primarily driven by strong domestic sales of Anika’s flagship product,
Orthovisc^®. Higher international sales of Orthovisc, Monovisc^® and post
operative adhesion prevention products from Anika S.r.l., as well as U.S.
shipments of ophthalmic products, also contributed to the revenue increase.

Product Gross Margin

Driven by a more profitable product mix, product gross margin for the first
quarter of 2012 improved to 53%, from 49% in the first quarter of last year.

Operating and Net Income

Operating income for the first quarter of 2012 increased to $3.1 million, from
$557,000 in the same period in 2011. Net income rose to $1.9 million, or $0.14
per diluted share, from $324,000, or $0.02 per diluted share, in the first
quarter a year earlier. This growth was driven by a combination of increased
revenue, higher gross margin, and lower selling, general and administrative
expenses. The Company’s effective tax rate for the first quarter of 2012 was
36.5%, versus 37.1% for the first quarter of 2011.

Operating Expenses

Research and development expenses for the first quarter of 2012 at $1.5
million was approximately the same compared to last year’s first quarter.
Anika continues to expect R&D expense to increase modestly in the second half
of 2012 on a year-over-year basis due to the anticipated initiation of new
preclinical and clinical studies.

Selling, general and administrative expenses in the first quarter of 2012
decreased to $3.4 million, from $4.0 million in the first quarter of 2011. The
decrease in expense for the quarter was primarily due toplacing in service the
remainder of the Bedford manufacturing facility. Prior to this quarter, the
previously unoccupied space was expensed to SG&A.

Cash and Cash Equivalents

Anika’s cash and cash equivalents at March 31, 2012 were $34.0 million,
compared with $35.8 million at December 31, 2011. The decrease was primarily
the result of lower cash collections on accounts receivable due to a high
proportion of the Q1 2012 sales occurring in March 2012, and inventory build
during the quarter.

Management Commentary

“Anika began 2012 on a solid note with a record first-quarter with respect to
earnings and 22% total revenue growth,” said Charles H. Sherwood, Ph.D.,
president and chief executive officer. “The growth on our top line continues
to be driven primarily by sales of Orthovisc in our orthobiologics franchise,
domestically and internationally. This also was a strong quarter for
international sales of Monovisc and our post operative adhesion prevention
products from Anika S.r.l., as well as U.S. sales of our ophthalmic products.”

“This also was a good quarter for Anika from an operational perspective,” said
Sherwood. “We received approval from the FDA to manufacture Orthovisc and
Hyvisc^® as well as our proprietary ophthalmic products for manufacture at our
Bedford, Mass. facility for sale in the United States. We are working with
Bausch & Lomb to obtain approval to manufacture their ophthalmic products in
the Bedford facility. This is the final step toward significantly improving
our operational efficiency by consolidating all of our manufacturing in
Bedford – a process we expect to complete in June of this year.”

“Anika performed well in the first quarter, and could have done even better
but for some supply/demand imbalances in our Woburn facility that pushed some
shipments into the second quarter, and some softness in Anika S.r.l.’s revenue
due to a first-quarter distribution partner change in Italy. These issues have
been addressed, and we believe that we are well-positioned for record results
in the second quarter and year, and also to achieve our stated targets for
growth in revenue and operating margin, as further operational improvements in
2012 unfold,” Sherwood concluded.

Conference Call Information

Anika will hold a conference call to discuss its financial results, business
highlights and outlook tomorrow, Friday, May 4, 2012 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 866-314-4865 (international callers
dial 617-213-8050) and use the passcode 73814055. 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 “Investor Relations” 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. Anika’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 offersaesthetic dermal fillers for
the correction of facial wrinkles. Anika’s Italian subsidiary, Anika S.r.l.,
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. Anika S.r.l.’s regenerative tissue
technology advances Anika’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, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.These statements include, but are
not limited to, those relating to: (i)the timing of the completion of the
transfer of manufacturing and shipping of Anika products to the Bedford
facility, and (ii) expectations regarding research and development spending in
future 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 or clearances of its products and Bedford
facility, or that such approvals will not be obtained in a timely manner or
without the need for additional clinical trials, other testing or regulatory
submissions, as applicable; (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 clinical studies,
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, (vi) the company’s ability to launch
Monovisc in the U.S., if at all; (vii) the company’s ability to obtain an
appeal hearing regarding the FDA’s non-approvable letter for Monovisc, and the
timing and results of such review; (viii) the company’s ability to provide an
adequate and timely supply of its ophthalmic, Orthovisc and other products to
its customers, and (ix) the company’s ability to achieve its stated growth
targets.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, 2011,
as well as those described in the company's other press releases and SEC
filings.

                                        
Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
                                             Three Months Ended March 31,
                                             2012              2011
Product revenue                            $ 13,613,328        $ 11,060,159
Licensing, milestone and contract            747,332            677,520     
revenue
Total revenue                                14,360,660          11,737,679
                                                                 
Operating expenses:
Cost of product revenue                      6,413,481           5,604,562
Research & development                       1,533,103           1,532,664
Selling, general & administrative            3,351,016          4,043,774   
Total operating expenses                     11,297,600         11,181,000  
Income from operations                       3,063,060           556,679
Interest expense, net                        (51,203     )       (40,921     )
Income before income taxes                   3,011,857           515,758
Provision for income taxes                   1,099,738          191,346     
Net income                                 $ 1,912,119        $ 324,412     
                                                                 
Basic net income per share:
Net income                                 $ 0.15              $ 0.03
Basic weighted average common shares         13,162,824          12,688,819
outstanding
Diluted net income per share:
Net income                                 $ 0.14              $ 0.02
Diluted weighted average common shares       14,089,946          13,744,710
outstanding
                                                                 
                                                                 
Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
                                             March 31,           December 31,
ASSETS                                       2012                2011
Current assets:
Cash and cash equivalents                  $ 34,003,178        $ 35,777,222
Accounts receivable, net of reserves
of $344,520 and $334,473 at                  17,002,797          17,307,786
March 31, 2012 and December 31, 2011,
respectively
Inventories                                  9,080,323           7,302,483
Current portion deferred income taxes        1,918,926           1,918,926
Prepaid expenses and other                   1,947,394          1,831,127   
Total current assets                         63,952,618          64,137,544
Property and equipment, at cost              51,541,804          50,850,630
Less: accumulated depreciation               (14,868,205 )       (14,380,752 )
                                             36,673,599          36,469,878
Long-term deposits and other                 151,744             205,042
Intangible assets, net                       23,300,273          23,148,563
Goodwill                                     9,150,273          8,883,407   
Total Assets                               $ 133,228,507      $ 132,844,434 
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                           $ 3,880,840         $ 4,299,680
Accrued expenses                             4,297,387           5,321,594
Deferred revenue                             2,866,667           2,866,667
Current portion of long-term debt            1,600,000           1,600,000
Income taxes payable                         235,326            450,482     
Total current liabilities                    12,880,220         14,538,423  
Other long-term liabilities                  1,556,399           1,548,652
Long-term deferred revenue                   4,302,773           5,019,440
Deferred tax liability                       7,028,515           7,375,141
Long-term debt                               9,200,000           9,600,000
Commitments and contingencies                -                   -
Stockholders’ equity:
Preferred stock, $.01 par value;
1,250,000 shares authorized, no
shares issued and outstanding at March       -                   -
31, 2012
and December 31, 2011
Common stock, $.01 par value;
30,000,000 shares authorized,
13,763,191 and 13,630,607 shares             137,631             136,305
issued and outstanding at
March 31, 2012 and December 31, 2011,
respectively.
Additional paid-in-capital                   64,269,349          63,441,433
Accumulated currency translation             (2,310,720  )       (3,067,181  )
adjustment
Retained earnings                            36,164,340         34,252,221  
Total stockholders’ equity                   98,260,600         94,762,778  
Total Liabilities and Stockholders’        $ 133,228,507      $ 132,844,434 
Equity
                                                                             

                                                          
Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
Revenue by Product Segment and Product Gross Margin
(unaudited)
                            Quarter Ended March 31,             
Product Segment:            2012               2011               %
Orthobiologics              $ 10,116,845       $ 8,036,298        26  %
Dermal                        501,315            589,153          -15 %
Ophthalmic                    1,323,994          897,808          47  %
Surgical                      983,628            1,113,728        -12 %
Veterinary                   687,546          423,172         62  %
Total Product Revenue       $ 13,613,328      $ 11,060,159      23  %
                                                                  
Product gross profit        $ 7,199,847        $ 5,455,597
Product gross margin          53%               49%        
                                                                  
                            Quarter Ended March 31,             
Geographic Location:        2012               2011               %
United States               $ 10,390,045       $ 8,343,114        25  %
Europe                        2,155,729          2,033,198        6   %
Other                        1,067,554        683,847         56  %
Total Product Revenue       $ 13,613,328      $ 11,060,159      23  %
                                                                  

Contact:

Anika Therapeutics, Inc.
Charles H. Sherwood, Ph.D., 781-457-9000
CEO
or
Kevin W. Quinlan, 781-457-9000
CFO
 
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