Full Press Release Details
Therapeutics Reports 52% Total Revenue Growth in Second Quarter 2010
Drive 24% Organic Growth
Reports Progress on FAB Integration
BEDFORD, Mass.--(BUSINESS WIRE)--August 9, 2010--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 June 30, 2010.
Total revenue and product revenue grew 52% and 56% respectively
Progress on FAB integration as FAB products perform well in quarter
Orthobiologics revenue rose 38%, driven by strong global sales of
Anika's product revenue increased 56% to $13.7 million for the second
quarter of 2010, from $8.8 million in the second quarter of 2009.
Excluding revenue from Fidia Advanced Biopolymers, s.r.l. ("FAB"), which
was acquired by Anika late in the fourth quarter of 2009, product
revenue increased 24% from 2009's second quarter. This growth was
primarily due to continued strong sales of the Company's ORTHOVISC
product line in U.S. and international markets.
Total revenue for the second quarter of 2010 grew 52% to $14.5 million,
from $9.5 million in the second quarter last year.
Product Gross Margin
Product gross margin for the second quarter of 2010 was 57%, compared
with 62% in last year's second quarter. The decrease in product gross
margin largely reflected the addition of FAB products into Anika's
overall product mix and increased inventory reserves of $267,000.
Research and development expenses for the second quarter of 2010
decreased to $1.8 million from $2.3 million in the second quarter of
2009. This reflected a decline in R&D spending due to the completion of
Anika's U.S. MONOVISC clinical trial in the third quarter of 2009,
partially offset by the inclusion of FAB R&D expenses.
Selling, general and administrative expenses for the second quarter of
2010 increased to $5.0 million from $2.7 million in the same quarter of
2009, primarily driven by the inclusion of SG&A costs at FAB,
integration costs, and increased reserves of $270,000 related to Coapt
Systems accounts receivable.
Net income for the second quarter of 2010 increased 12% to $1.1 million,
compared with $956,000 for the same period last year. Earnings per share
for the second quarter was $0.08 per diluted share for both 2010 and
2009. The comparison with the 2009 period was negatively impacted by the
dilutive effect of the FAB acquisition.
Cash and Cash Equivalents
Anika's cash and cash equivalents at June 30, 2010 were $23.6 million,
compared with $24.4 million on December 31, 2009.
Litigation and Other Legal Matters
On July 7, 2010, Genzyme Corporation filed a complaint against the
Company in the United States District Court for the District of
Massachusetts seeking unspecified damages and equitable relief. The
complaint alleges that the Company has infringed U.S. Patent No.
5,143,724 by manufacturing MONOVISC in the United States for sale
outside the United States and will infringe U.S. Patent Nos. 5,143,724
and 5,399,351 if the Company begins manufacture and sale of MONOVISC for
sale in the United States. The Company believes that neither MONOVISC,
nor its manufacture, does or will infringe any valid and enforceable
claim of the asserted patents.
The Trustee in Bankruptcy of Artes Medical, Inc. ("Artes") asked the
Company to pay $359,768 to the Trustee, representing the total amount of
three payments received by the Company from Artes within the 90 days
prior to the filing of Artes' liquidating bankruptcy case under Chapter
7 of the United States Bankruptcy Code. The Trustee asserts that the
payments are recoverable as preferences under the Bankruptcy Code. The
Company believes that the payments either do not meet the legal
requirements of avoidable preferences or are subject to one or more
exceptions to the Trustee's powers to recover preferences and recently
so advised the Trustee.
Coapt Systems, Inc., the Company's distributor for its HYDRELLE product,
made a general assignment for the benefit of creditors and an Assignee
began the liquidation of Coapt's assets. The Company's Distribution
Agreement with Coapt has been terminated, and the Company plans to
directly distribute HYDRELLE in the interim while it determines its
worldwide strategy for this product franchise.
Management Commentary
"We made good progress executing on our key goals and driving revenue
growth during the second quarter," said Charles H. Sherwood, Ph.D.,
president and chief executive officer. "Our total revenue increased by
52% year-over-year, while product revenue grew 56%. Organic revenue was
up 24% from the second quarter of 2009, driven by strong domestic and
international sales of ORTHOVISC. Domestic ORTHOVISC sales were up 31%
year-over-year, while international ORTHOVISC sales increased 18% during
"Our second-quarter net income grew 12%, tempered by the dilutive effect
of the FAB acquisition," said Sherwood. "One of our key goals for the
year is to reduce FAB's operating loss, and we made progress on that
goal during the quarter. At the same time, we made progress during the
quarter in generating further cost synergies through the integration of
FAB's operations with those of Anika. We completed the integration of
the Anika and FAB research and development functions, implemented
organizational changes at FAB, and began installing a new network and
ERP system that will enable FAB and Anika to operate more effectively."
Sherwood continued, "on the regulatory front, during the quarter, in a
meeting with the FDA on Anika's PMA for our single-injection
osteoarthritis product MONOVISC, the FDA requested additional
statistical analyses. We expect to submit the additional data requested
and responses to the FDA's questions in September. This lengthens our
approval process, and we currently believe will delay our timeline for
launching MONOVISC in the U.S. market into 2011. We are also working on
510(K) applications for a number of FAB products, and anticipate the
first approval by year-end 2010 with the other approvals to follow in
"We continue to execute successfully on our strategic goals and produce
solid financial results, both on a consolidated and organic basis," said
Sherwood. "We are clearly advancing toward our vision to provide
innovative therapeutic products which we believe will expand Anika's
opportunities and position us for earnings growth."