Full Press Release Details
Anika Therapeutics Reports 33 Percent Increase in Third Quarter Product Revenues
In Negotiation to Terminate Agreements with Galderma and Retain
Worldwide Rights to ELEVESS Brand
Receives European CE Mark for MONOVISC(R) Single-Injection
Osteoarthritis Product
WOBURN, Mass.--(BUSINESS WIRE)--Nov. 5, 2007--Anika Therapeutics,
Inc. (Nasdaq: ANIK) today reported financial results for the third
quarter ended September 30, 2007. The Company also announced that it
is in negotiations to terminate its license and supply agreements
entered into with Galderma Pharma in June 2006 for the ELEVESS family
Anika reported product revenue of $7,283,000 for the third quarter
of 2007 compared with $5,494,000 in the year-ago period. The increase
in product revenue during the quarter was attributable to strong
domestic and international sales of the Company's ORTHOVISC(R)
product. Product revenue for the first nine months of 2007 was
$18,989,000 compared with $18,876,000 in the nine months ended
Domestic ORTHOVISC revenues increased 67% in the quarter compared
with the third-quarter of 2006 fueled by the unique reimbursement code
assigned to ORTHOVISC in December 2006. Third-quarter 2007
international revenue of ORTHOVISC grew 70% versus the same period in
2006 due to sales increases to the Company's distribution partners in
Turkey, Canada, Austria and Germany.
Revenue for the Company's HYVISC(R) product increased 42% in the
quarter compared with last year's third quarter. Third-quarter 2007
ophthalmic revenue of $2,894,000 was slightly lower than the third
quarter of last year.
During the three and nine months ended September 30, 2007,
licensing, milestone and contract revenue was $682,000 and $2,214,000,
respectively, compared with $706,000 and $2,076,000, respectively, in
the prior year periods.
Total revenue for the third quarter of 2007 was $7,965,000, an
increase of 28% compared with $6,201,000 in the third quarter of 2006.
Total revenue for the nine months ended September 30, 2007 was
$21,203,000 compared with $20,952,000 in 2006.
Product Gross Margin
Product gross margin for the third quarter of 2007 was 57%
compared with 61% in the third quarter of 2006. For the nine months
ended September 30, 2007, product gross margin was 54% compared with
57% for the nine month period in 2006. The decline in product gross
margin for both periods is due primarily to product mix and timing of
orders in both years. Product gross margin for the full year 2007 is
expected to be slightly higher than full-year 2006's gross margin of
Total operating expenses, excluding cost of product revenue, were
$2,947,000 for the third quarter of 2007 compared with $2,359,000 for
the third quarter of 2006. Total operating expenses, excluding cost of
product revenue, for the nine month period ended September 30, 2007
were $8,081,000 compared with $8,331,000 for the same period of 2006.
Operating expenses for the three-month period were higher in 2007 due
to the addition of a new facility currently under construction.
Operating expenses for the nine-month period of 2007 were lower than
for 2006 even with the new facility costs in 2007, as 2006 included
higher R&D expenses related to an ELEVESS clinical trial in Europe.
Net income for the third quarter of 2007 was $1,796,000, or $0.16
per diluted share, compared with $1,325,000, or $0.12 per diluted
share, for the same period last year. Net income for the nine-month
period of 2007 was $4,362,000, or $0.38 per share, compared with
$3,557,000, or $0.32 per diluted share, for the nine month period of
2006. The improvement in net income in both the third quarter and nine
month periods was due to increased product sales, and a lower
effective tax rate. The lower tax rate reflects higher state
investment tax credits as a result of Anika's ongoing investment in
its new facility, as well as increased domestic manufacturing
deductions and tax credits related to R&D spending.
Anika's cash, cash equivalents and short-term investments at
September 30, 2007 were $49,669,000 compared with $47,167,000 at
Comments on the Third Quarter
"We reported strong third-quarter financial results and recently
achieved a key product development milestone for MONOVISC," said
Charles H. Sherwood, Ph.D., Anika's president and chief executive
officer. "We saw increased demand for our flagship
product--ORTHOVISC--in both the domestic and international markets."
CE Mark Approval for MONOVISC(R)
"After the close of the quarter, we received European CE Mark
approval for our new MONOVISC single-injection osteoarthritis
product," continued Sherwood. "We expect to launch MONOVISC in Europe
in the first quarter of 2008. MONOVISC leverages our new technology
platform utilizing a crosslinked, non-animal source of HA, delivered
in an innovative and differentiated format. We also recently filed an
investigational device exemption (IDE) application with the FDA and
expect to begin enrolling patients in a U.S. based pivotal clinical
trial by the end of 2007."
License and Supply Agreements with Galderma
"We have had technical and business disagreements with Galderma
regarding the development and commercialization of the ELEVESS family
of products. These issues concern certain aspects of the formulation
of the current and future products as well as some elements of the
strategy for commercialization. The companies feel that it would be in
the best interest of both parties to terminate their agreements, and
we are currently in negotiations with Galderma to accomplish this and
to reacquire worldwide rights and control of the future development
and marketing of ELEVESS," continued Sherwood. "The feedback thus far
from physicians and patients exposed to ELEVESS has been very
positive. We believe that the product is ready for market, and we want
to proceed expeditiously towards commercialization."
With an enhanced product that is now approved in the U.S.,
European Union and Canada, the Company is seeking a new partner and
expects to launch the product as soon as possible in 2008 with a new
partner, or initially on our own.
"We are looking to the future with much optimism," continued
Sherwood. "Our osteoarthritis franchise continues to gain momentum in