Anika Therapeutics Reports Fourth Quarter and Full Year 2013 Financial Results

  Anika Therapeutics Reports Fourth Quarter and Full Year 2013 Financial
  Results

                       Monovisc^® Achieves FDA Approval

       EPS Increases 42% to $0.44 in Quarter and 70% to $1.39 for Year

            Cingal^TM Phase III Clinical Trial Enrollment Complete

                Total Revenue for 2013 Grows to $75.1 Million

Business Wire

BEDFORD, Mass. -- February 26, 2014

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 and full year ended December
31, 2013.

Management Commentary

“Anika concluded a record year for revenue and earnings, driven by solid
demand for our viscosupplementation products as well as productivity
improvements in operations and manufacturing,” said Charles H. Sherwood,
Ph.D., President and Chief Executive Officer. “Our top-line results for the
fourth quarter were measured against a strong set of financial comparatives in
the fourth quarter of 2012, which reflected a significant and temporary
increase in product shipments in that year-earlier period.”

“Growth in 2013 continued to be fueled primarily by increased sales of our
flagship product, Orthovisc^®, in both domestic and international markets,”
Sherwood said. “We also made good progress this year in lowering our cost
structure and improving the efficiency of our underlying operations. As a
result, despite an increase in R&D spending due mainly to our multinational
Phase III clinical study in support of our CE Mark application for Cingal^TM,
Anika’s profitability for 2013 improved substantially year-over-year.”

“We are beginning 2014 in a strong position. Demand for our
viscosupplementation products is growing, both in the U.S. and
internationally. The FDA approval of Monovisc^® in the U.S. enhances our
strength and flexibility in that market which should allow us to significantly
increase market share. We are encouraged by the potential from our product
pipeline, including Cingal^TM and Hyalofast^®. In addition, we are making good
progress in building the internal capabilities that we need to expand beyond
viscosupplementation and deliver on Anika’s potential in regenerative
therapies. We believe that Anika is well-positioned for continued growth and
profitability in the quarters ahead,” concluded Sherwood.

Revenue

Total revenue for the fourth quarter of 2013 was $21.3 million, compared with
$22.6 million in the fourth quarter of 2012. For the full year 2013, total
revenue grew 5% to $75.1 million, from $71.4 million a year earlier despite an
approximately $4 million anticipated decline in Ophthalmic revenue. Anika’s
non-ophthalmic revenue increased 13% which continues to be largely driven by
increased domestic and international viscosupplementation product sales. The
comparison with the fourth quarter of 2012 reflected higher product sales in
that period. This was the result of a temporary scale-up issue at Anika’s
Bedford manufacturing facility during the third quarter of 2012, which was
rectified quickly and resulted in uneven revenue distributions for the last
two quarters of that year.

Product Gross Margin

Product gross margin for the fourth quarter of 2013 improved to 69%, from 66%
in the fourth quarter of 2012. For the 12 months ended December 31, 2013,
product gross margin increased to 68%, compared with 57% for full year 2012.
This improvement reflected the company’s ongoing initiatives to realize the
planned operational efficiencies, as well as more favorable product mix, the
elimination of dual manufacturing facilities in Massachusetts in mid-2012, and
the elimination of the company’s unprofitable tissue engineering operations in
Italy since the beginning of 2013.

Operating Expenses

Research and development expenses for the fourth quarter of 2013 rose 52% from
the fourth quarter a year earlier. The increase reflected expenses for the
company’s Cingal^TM clinical trial and other planned product pipeline
initiatives. Selling, general and administrative expenses decreased 35% from
the fourth quarter of 2012, primarily reflecting a cash settlement received
related to a legal dispute as well as the company’s ongoing cost reduction
initiatives.

Operating and Net Income

Operating income for the fourth quarter of 2013 was $10.4 million, compared
with $7.8 million in the same period in 2012. For the 12 months ended December
31, 2013, operating income increased to $32.6 million from $19.7 million a
year earlier. Net income for the fourth quarter of 2013 was $6.7 million, or
$0.44 per diluted share, compared with $4.5 million, or $0.31 per diluted
share, in the fourth quarter last year. For full year 2013, net income grew to
$20.6 million, or $1.39 per diluted share, from $11.8 million, or $0.82 per
diluted share, in 2012. 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 December 31, 2013 increased to $63.3
million, from $44.1 million at December 31, 2012. The approximately $19
million increase in cash and cash equivalents reflected an $8.4 million
prepayment of long-term debt in November 2013. The overall cash balance
increase was 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, February 27, 2013 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 855-468-0611 (international callers
dial 484-756-4332) and use the conference ID number 57118538. 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) the company and its partner’s ability to
commercialize Monovisc in the U.S., (ii) our ability to capitalize on the
strengths of our viscosupplementation portfolio, (iii) our ongoing initiatives
to improve performance across the business, (iv) our efforts and ability to
strengthen and expand our international Orthobiologics distribution network,
(v) the company’s plans to continue to drive efficiencies in operations and
manufacturing, (vi) the prospects for the company’s product pipeline,
including regenerative product development, (vii) bringing Cingal to market,
and (viii) 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) applications, 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.; (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
                                                                 
                    Three Months Ended December 31,       Year Ended December 31,
                    2013               2012               2013             2012
Product revenue   $ 20,188,488       $ 21,459,124       $ 71,773,730     $ 68,010,169
Licensing,
milestone and       1,062,840          1,147,341          3,307,424        3,348,336
contract
revenue
Total revenue       21,251,328         22,606,465         75,081,154       71,358,505
                                                                           
Operating
expenses:
Cost of product     6,235,334          7,269,886          22,765,404       28,988,621
revenue
Research &          2,029,901          1,339,677          7,059,875        5,388,036
development
Selling,
general &           2,399,539          3,667,406          12,936,001       14,728,662
administrative
Restructuring       156,026            2,537,988          (286,843)        2,537,988
charge
Total operating     10,820,800         14,814,957         42,474,437       51,643,307
expenses
Income from         10,430,528         7,791,508          32,606,717       19,715,198
operations
Interest income     (18,431)           (42,284)           (127,186)        (187,777)
(expense), net
Income before       10,412,097         7,749,224          32,479,531       19,527,421
income taxes
Provision for       3,757,728          3,286,001          11,905,010       7,769,961
income taxes
Net income        $ 6,654,369        $ 4,463,223        $ 20,574,521     $ 11,757,460
                                                                           
Basic net
income per
share:
Net income        $ 0.47             $ 0.33             $ 1.46           $ 0.89
Basic weighted
average common      14,272,606         13,324,942         14,086,912       13,260,739
shares
outstanding
Diluted net
income per
share:
Net income        $ 0.44             $ 0.31             $ 1.39           $ 0.82
Diluted
weighted
average common      15,084,738         14,299,211         14,825,599       14,344,577
shares
outstanding
                                                                           
                                                                           
Anika Therapeutics, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
                                                                           
                    December 31,       December 31,
ASSETS              2013               2012
Current assets:
Cash and cash     $ 63,333,160       $ 44,067,477
equivalents
Accounts
receivable, net
of reserves of
$593,023 and        18,736,845         21,462,481
$337,459 at
December 31,
2013 and 2012,
respectively
Inventories         10,996,785         8,283,472
Current portion
deferred income     659,040            2,031,583
taxes
Prepaid
expenses and        865,957            1,539,477
other
Total current       94,591,787         77,384,490
assets
Property and
equipment, at       52,413,423         52,376,013
cost
Less:
accumulated         (19,474,712)       (17,263,032)
depreciation
                    32,938,711         35,112,981
Long-term
deposits and        69,080             171,053
other
Intangible          18,998,409         20,334,636
assets, net
Goodwill            9,443,894          9,065,891
Total Assets      $ 156,041,881      $ 142,069,051
                                                                           
LIABILITIES AND
STOCKHOLDERS’
EQUITY
Current
liabilities:
Accounts          $ 2,793,911        $ 2,341,838
payable
Accrued             5,537,881          5,837,044
expenses
Deferred            180,433            2,875,067
revenue
Current portion
of long-term        -                  1,600,000
debt
Income taxes        770,276            1,798,669
payable
Total current       9,282,501          14,452,618
liabilities
Other long-term     1,133,544          1,541,124
liabilities
Long-term
deferred            2,054,941          2,152,778
revenue
Deferred tax        7,936,864          6,997,397
liability
Long-term debt      -                  8,000,000
Commitments and
contingencies
Stockholders’
equity:
Preferred
stock, $.01 par
value;
1,250,000
shares
authorized, no      -                  -
shares issued
and outstanding
at December 31,
2013 and
December 31,
2012
Common stock,
$.01 par value;
30,000,000
shares
authorized,
14,289,308 and      142,893            138,659
13,866,060
shares issued
and outstanding
at December 31,
2013 and 2012,
respectively
Additional          70,606,031         65,431,424
paid-in-capital
Accumulated
currency            (1,699,095)        (2,654,630)
translation
adjustment
Retained            66,584,202         46,009,681
earnings
Total
stockholders’       135,634,031        108,925,134
equity
Total
Liabilities and   $ 156,041,881      $ 142,069,051
Stockholders’
Equity


Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
                                                                                         
                                                                                                          
Revenue by Product Line and Product Gross Margin
(unaudited)
                                                                                                          
                 Quarter Ended December 31,                     Year Ended December 31,              
                 2013           %      2012           %        2013         %        2012         %
Orthobiologics     $              76%      $              92%      $              78%      $              74%
                   15,325,654              19,691,121              55,956,067              49,954,112
Dermal             750,193        4%       351,101        2%       1,816,602      3%       1,384,403      2%
Surgical           1,500,653      7%       1,148,051      5%       5,445,715      8%       5,022,456      7%
Ophthalmic         1,838,156      9%       268,851        1%       4,656,562      6%       8,784,011      13%
Veterinary        773,832      4%       -            0%       3,898,784    5%     2,865,187    4%
Total Product     $            100%     $            100%     $            100%     $            100%
Revenue            20,188,488              21,459,124              71,773,730              68,010,169
                                                                                                          
                                                                                                          
Product gross      $                       $                       $                       $
profit             13,953,154              14,189,238              49,008,326              39,021,548
Product gross      69%                     66%                     68%                     57%
margin
                                                                                                          
                                                                                                          
Total Revenue by Geographic Region
(unaudited)
                                                                                                          
                 Quarter Ended December 31,                     Year Ended December 31,              
                 2013           %        2012         %        2013         %        2012         %
Geographic
Location:
United States      $              77%      $              77%      $              78%      $              81%
                   16,248,878              17,513,010              58,490,142              57,976,667
Europe             2,177,223      10%      2,225,182      10%      7,411,568      10%      6,218,890      9%
Other              2,825,227    13%      2,868,273    13%      9,179,444    12%      7,162,948    10%
Total Revenue      $            100%     $            100%     $            100%     $            100%
                   21,251,328              22,606,465              75,081,154              71,358,505

Contact:

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