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Anika Therapeutics Reports 20% Total Revenue Growth and Record Third-Quarter Earnings



  Anika Therapeutics Reports 20% Total Revenue Growth and Record Third-Quarter
  Earnings

                     Total Revenue Grows to $17.8 Million

          Net Income Rises to $5.0 Million and EPS Increase to $0.33

Business Wire

BEDFORD, Mass. -- October 30, 2013

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 September 30, 2013.

Management Commentary

“This was another strong quarter for Anika, driven by continued product
revenue growth in our Orthobiologics franchise,” said Charles H. Sherwood,
Ph.D., President and Chief Executive Officer. “Net income and earnings per
share rose to third-quarter record high levels, reflecting strong demand for
our viscosupplementation products as well as our ongoing initiatives to
improve performance across the business. These results measure against a weak
set of financial comparatives in the third quarter of 2012, which reflected
the temporary decline in product shipments that we experienced in that
year-earlier period.”

“Our growth in Orthobiologics continues to reflect solid demand for our
flagship product, Orthovisc^®, in both domestic and international markets,”
said Sherwood. “Our U.S. distribution partner, DePuy Mitek, is continuing to
make strategic investments in patient and physician education and distribution
channel support to expand the Orthovisc franchise and drive sales in
high-potential areas of the viscosupplementation market. Paralleling these
initiatives, our internal commercial and business development team was active
this quarter in efforts to strengthen and expand our international
Orthobiologics distribution network.”

“This was also an active quarter for Anika on the product development front,”
Sherwood said. “We continued to enroll patients in our multinational Phase III
clinical study in support of our CE Mark application for Cingal. Our
third-generation viscosupplementation product, Cingal, is a single-injection
osteoarthritis treatment that includes a therapeutic anti-inflammatory agent.
In connection with the International Cartilage Repair Society annual congress
in Turkey, we hosted a well-received symposium on our Hyalofast™ product as
well as a regenerative product development advisory panel meeting with world
renowned physicians in the orthopedic field.”

“Given the positive demand outlook for our Orthobiologics products and the
improved efficiencies in our business, we believe that Anika is
well-positioned for continued growth and profitability improvement in the
quarters ahead,” concluded Sherwood.

Revenue

Total revenue for the third quarter of 2013 was $17.8 million, compared with
$14.8 million a year earlier. Anika’s revenue continues to be largely driven
by increased domestic and international viscosupplementation product sales.
The favorable comparison with the third quarter of 2012 also reflected lower
product sales in that period. This was the result of a temporary scale-up
issue at Anika’s Bedford manufacturing facility during that quarter, which
resulted in uneven revenue patterns for the last two quarters of 2012.

Product Gross Margin

Product gross margin for the third quarter of 2013 improved to 68%, from 49%
in the third quarter last year. This improvement reflected the company’s
ongoing initiatives to realize the planned operational efficiencies, as well
as more favorable product mix and the elimination of the company’s
unprofitable tissue engineering operations since the beginning of 2013. The
improvement also reflected the higher cost of product revenue reported for the
year-earlier quarter due to new manufacturing facility scale-up activities.

Operating Expenses

Research and development expenses for the third quarter of 2013 rose 33% from
the third quarter a year earlier. The increase reflected expenses for the
company’s Cingal clinical trial and other planned product pipeline
initiatives. Selling, general and administrative expenses decreased 11% from
the third quarter of 2012, primarily as a result of the company’s ongoing cost
reduction initiatives, and certain non-recurring legal expenses last year.

Operating and Net Income

Operating income for the third quarter of 2013 was $7.8 million, compared with
$2.7 million in the same period in 2012. Net income was $5.0 million, or $0.33
per diluted share, compared with $1.6 million, or $0.11 per diluted share, in
the third quarter last year. Operating income, net income and earnings per
share were higher, year-over-year, primarily due to the improvement in product
gross profit.

Cash and Cash Equivalents

Anika’s cash and cash equivalents at September 30, 2013 increased to $64.1
million, from $44.1 million at December 31, 2012, driven primarily by higher
income from operations, increased cash collections on accounts receivable and
option exercises during the year.

Conference Call Information

Anika will hold a conference call to discuss its financial results, business
highlights and outlook tomorrow, Thursday, October 31, 2013 at 9:00 a.m. ET.
In addition, the company will answer questions concerning business and
financial developments and trends, regulatory activity related to Monovisc,
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 877-280-4962 (international callers
dial 857-244-7319) and use the passcode 26253796. 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
anti-adhesion and ophthalmic fields. The company also offers  aesthetic 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 areas such as advanced wound
treatment and ear, nose and throat care. Its regenerative technology advances
Anika’s vision to offer therapeutic products and medical solutions 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) our ongoing initiatives to improve
performance across the business, (ii) our efforts and ability to strengthen
and expand our international Orthobiologics distribution network, (iii) the
company’s plans to continue to drive efficiencies in operations and
manufacturing, (iv) the prospects for the company’s product pipeline,
including regenerative product development, (v) bringing Cingal to market, and
(vi) expectations for future growth and profitability improvement in the
quarters ahead. 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
pre-clinical or clinical data to support domestic and international pre-market
approval applications or 510(k) application, or timely file and receive FDA or
other regulatory approvals or clearances of its products, 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 provide an adequate and timely supply of its ophthalmic,
Orthovisc and other products to its customers, (viii) our ability to
successfully manage and turnaround Anika S.r.l.’s business, 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, 2012, 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 September      Nine Months Ended September 30,
                30,
                  2013             2012             2013             2012        
Product         $ 17,023,346     $ 14,055,440     $ 51,585,242     $ 46,551,045
revenue
Licensing,
milestone and     731,092          711,171          2,244,584        2,200,995   
contract
revenue
Total revenue     17,754,438       14,766,611       53,829,826       48,752,040
                                                                    
Operating
expenses:
Cost of
product           5,377,568        7,221,028        16,530,070       21,718,735
revenue
Research &        1,618,012        1,217,086        5,029,974        4,048,359
development
Selling,
general &         3,188,669        3,601,737        10,536,462       11,061,256
administrative
Restructuring     (196,084   )     -                (442,869   )     -           
charges
Total
operating         9,988,165        12,039,851       31,653,637       36,828,350  
expenses
Income from       7,766,273        2,726,760        22,176,189       11,923,690
operations
Interest
income            (32,816    )     (45,161    )     (108,755   )     (145,493   )
(expense), net
Income before     7,733,457        2,681,599        22,067,434       11,778,197
income taxes
Provision for     2,776,199        1,036,349        8,147,282        4,483,960   
income taxes
Net income      $ 4,957,258      $ 1,645,250      $ 13,920,152     $ 7,294,237   
                                                                    
Basic net
income per
share:
Net income      $ 0.36           $ 0.12           $ 1.03           $ 0.55
Basic weighted
average common    13,682,449       13,287,463       13,534,334       13,237,629
shares
outstanding
Diluted net
income per
share:
Net income      $ 0.33           $ 0.11           $ 0.95           $ 0.51
Diluted
weighted
average common    14,958,965       14,459,154       14,673,879       14,357,791
shares
outstanding
                                                                                 

Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
 
                                             September 30,     December 31,
                                             2013              2012
ASSETS
Current assets:
Cash and cash equivalents                    $ 64,055,438      $ 44,067,477
Accounts receivable, net of reserves of
$369,989 and $337,459 at September 30,         16,496,917        21,462,481
2013 and December 31, 2012, respectively
Inventories                                    11,582,492        8,283,472
Current portion deferred income taxes          1,989,422         2,031,583
Prepaid expenses and other                     878,472           1,539,477    
Total current assets                           95,002,741        77,384,490
Property and equipment, at cost                52,067,759        52,376,013
Less: accumulated depreciation                 (18,805,895 )     (17,263,032 )
                                               33,261,864        35,112,981
Long-term deposits and other                   145,563           171,053
Intangible assets, net                         19,197,226        20,334,636
Goodwill                                       9,275,130         9,065,891    
Total Assets                                 $ 156,882,524     $ 142,069,051  
                                                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                             $ 2,136,679       $ 2,341,838
Accrued expenses                               5,228,399         5,837,044
Deferred revenue                               850,067           2,875,067
Current portion of long-term debt              1,600,000         1,600,000
Income taxes payable                           542,302           1,798,669    
Total current liabilities                      10,357,447        14,452,618   
Other long-term liabilities                    1,172,099         1,541,124
Long-term deferred revenue                     2,027,778         2,152,778
Deferred tax liability                         8,319,038         6,997,397
Long-term debt                                 6,800,000         8,000,000
Commitments and contingencies                  -                 -
Stockholders’ equity:
Preferred stock, $.01 par value; 1,250,000
shares authorized, no shares issued and        -                 -
outstanding at September 30, 2013 and
December 31, 2012, respectively
Common stock, $.01 par value; 30,000,000
shares authorized, 14,266,098 and
13,866,060 shares issued and outstanding       142,661           138,659
at September 30, 2013 and December 31,
2012, respectively
Additional paid-in-capital                     70,281,179        65,431,424
Accumulated currency translation               (2,147,511  )     (2,654,630  )
adjustment
Retained earnings                              59,929,833        46,009,681   
Total stockholders’ equity                     128,206,162       108,925,134  
Total Liabilities and Stockholders’ Equity   $ 156,882,524     $ 142,069,051  
                                                                              

Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
Revenue by Product Line and Product Gross Margin
(unaudited)
                                                             
                            Three Months Ended September 30,
                            2013             2012             % Change
Orthobiologics              $ 12,830,566     $ 9,242,783      39%
Dermal                        267,766          376,251        (29%)
Surgical                      1,136,248        1,426,273      (20%)
Ophthalmic                    1,425,609        1,891,433      (25%)
Veterinary                    1,363,157        1,118,700      22%
Total Product Revenue       $ 17,023,346     $ 14,055,440     21%
                                                               
Product gross profit        $ 11,645,778     $ 6,834,412
Product gross margin          68         %     49         %
                                                               
                                                               
                            Nine Months Ended September 30,
                              2013           2012             % Change  
Orthobiologics              $ 40,620,339     $ 30,262,991     34%
Dermal                        1,066,409        1,033,302      3%
Surgical                      3,955,134        3,874,405      2%
Ophthalmic                    2,818,407        8,515,160      (67%)
Veterinary                    3,124,953        2,865,187      9%
Total Product Revenue       $ 51,585,242     $ 46,551,045     11%
                                                               
Product gross profit        $ 35,055,172     $ 24,832,310
Product gross margin          68         %     53         %
                                                               

                                                 
Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
Total Revenue by Geographic Region
(unaudited)
                                                   
                    Three Months Ended September 30,
                      2013           2012         % Change  
United States       $ 14,485,821   $ 12,628,612   15%
Europe                1,656,656      1,064,165    56%
Other                 1,611,961      1,073,834    50%
Total               $ 17,754,438   $ 14,766,611   20%
                                                   
                                                   
                    Nine Months Ended September 30,
                      2013           2012         % Change  
United States       $ 42,251,336   $ 40,463,657   4%
Europe                5,226,619      3,993,708    31%
Other                 6,351,871      4,294,675    48%
Total               $ 53,829,826   $ 48,752,040   10%

Contact:

Anika Therapeutics, Inc.
Charles H. Sherwood, Ph.D., 781-457-9000
President and CEO
or
Sylvia Cheung, 781-457-9000
CFO
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