Anika Reports Third Quarter 2017 Financial Results
Completed Enrollment in CINGAL Phase III Clinical Trial;
Advancement of Regenerative Medicine Pipeline;
MONOVISC Revenue Increased 50% Year-over-Year

BEDFORD, Mass.--(BUSINESS WIRE)-- Anika Therapeutics, Inc. (NASDAQ: ANIK), a global, integrated orthopedic medicines company specializing in therapeutics based on its proprietary hyaluronic acid ("HA") technology, today reported financial results for the third quarter ended September 30, 2017, along with business progress in the period.

"Anika made significant progress on multiple fronts executing its long-term growth strategy, highlighted by the early completion of enrollment in the CINGAL® Phase III trial, regulatory clearances for the expansion of MONOVISC® into India, Australia, and Taiwan, pipeline advancements and the bolstering of our executive and commercial leadership team," said Charles H. Sherwood, Ph.D., Chief Executive Officer. "MONOVISC continued to gain worldwide market share in the third quarter as physicians continue to migrate towards single-injection solutions, resulting in MONOVISC revenue growth of 50% year-over-year for the quarter. Additionally, we advanced our regenerative medicine pipeline with the submission of a 510(k) application to the U.S. Food and Drug Administration for our injectable HA-based bone repair treatment, a promising new opportunity gaining attention in the orthopedic space."

Third Quarter Financial Results

  • Total revenue for the third quarter of 2017 increased 5% year-over-year to $27.2 million, compared to $25.8 million for the third quarter of 2016.
  • Worldwide Orthobiologics revenue grew 7% year-over-year in the third quarter of 2017. The main driver of this product revenue growth was an increase in global MONOVISC revenue of 50% year-over-year in the third quarter of 2017, which was partially offset by the continued decline in ORTHOVISC® revenue in the same period, mirroring the industry shift from multiple- to single-injection therapies.
  • International Orthobiologics revenue increased 10% year-over-year for the third quarter of 2017, due primarily to the global expansion of MONOVISC, as well as the growth of CINGAL. Domestically, ORTHOVISC and MONOVISC continue to maintain a combined market-leading position.
  • Total operating expenses for the third quarter of 2017 were $16.9 million, compared to $12.1 million for the third quarter of 2016. The increase in total operating expenses was due primarily to higher research and development investments required to advance the Company's growing pipeline towards regulatory approvals, and the expansion of the commercial team in anticipation of those product launches.
  • Net income for the third quarter of 2017 was $6.9 million, or $0.46 per diluted share, compared to $9.0 million, or $0.59 per diluted share, for the third quarter of 2016. The decline in net income was due primarily to the planned increase in operating expenses previously discussed.

Recent Business Highlights
The Company made key commercial, operational, pipeline, and financial advancements, including:

  • Completing enrollment well ahead of schedule in the second pivotal Phase III trial evaluating CINGAL, the Company's novel HA-corticosteroid combination viscosupplement for the treatment of symptoms associated with osteoarthritis (OA) of the knee. The Phase III trial, which will evaluate 576 patients with mild to moderate knee osteoarthritis, is designed to evaluate the safety of CINGAL as well as its effectiveness in improving pain, function, and quality of life measures over a 26-week period, in comparison to MONOVISC and triamcinolone hexacetonide. Enrollment was completed well ahead of internal estimates largely due to physician and patient interest, and enthusiasm surrounding the immediate and durable joint relief possible with CINGAL.
  • Receiving regulatory approval for MONOVISC in India, Australia and Taiwan for the treatment of pain associated with osteoarthritis of all synovial joints. Sales in those countries are expected to begin in the fourth quarter of 2017.
  • Advancing Anika's regenerative medicine pipeline with the submission of a 510(k) application to the U.S. Food and Drug Administration for its injectable HA-based bone repair treatment. This treatment provides an injectable, self-setting, osteoconductive bone graft substitute that resorbs and is replaced by the growth of new bone during the healing process.
  • Publishing data demonstrating the efficacy and safety of HYALOFAST® in combination with autologous adult mesenchymal stem cells for the treatment of cartilage lesions on the knee in the peer-reviewed journal Knee Surgery Sports Traumatology Arthroscopy.
  • Strengthening the Company's executive leadership team with the appointments of Joseph Darling as President, Steven Chartier as Vice President of Regulatory and Clinical Affairs, and the anticipated appointment of Thomas Finnerty as Chief Human Resources Officer on October 30.
  • Continued progress towards full consolidation of the Company's global manufacturing operations at Anika's Bedford, Massachusetts corporate headquarters.

Conference Call Information
Anika's management will hold a conference call and webcast to discuss its financial results and business highlights tomorrow, Thursday, October 26th at 9:00 am ET. The conference call can be accessed by dialing 1-855-468-0611 (toll-free domestic) or 1-484-756-4332 (international). A live audio webcast will be available in the "Investor Relations" section of Anika's website, www.anikatherapeutics.com. An accompanying slide presentation may also be accessed via the Anika website. A replay of the webcast will be available on Anika's website approximately two hours after the completion of the event.

About Anika Therapeutics, Inc.
Anika Therapeutics, Inc. (NASDAQ: ANIK) is a global, integrated orthopedic medicines company based in Bedford, Massachusetts. Anika is committed to improving the lives of patients with degenerative orthopedic diseases and traumatic conditions with clinically meaningful therapies along the continuum of care, from palliative pain management to regenerative cartilage repair. The Company has over two decades of global expertise developing, manufacturing, and commercializing more than 20 products based on its proprietary hyaluronic acid (HA) technology. Anika's orthopedic medicine portfolio includes ORTHOVISC, MONOVISC, and CINGAL, which alleviate pain and restore joint function by replenishing depleted HA, and HYALOFAST, a solid HA-based scaffold to aid cartilage repair and regeneration. For more information about Anika, please visit www.anikatherapeutics.com.

Forward-Looking Statements
The statements made in the last sentence of the second bullet point and in the fifth bullet point in the section captioned "Recent Business Highlights" of 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 sales expectations with regard to the Company's MONOVISC product and to the Company's appointment of personnel. 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, but not limited to, (i) the Company's ability to successfully commence and/or complete clinical trials of its products on a timely basis or at all; (ii) the Company's ability to obtain pre-clinical or clinical data to support domestic and international pre-market approval applications, 510(k) applications, or new drug applications, or to timely file and receive FDA or other regulatory approvals or clearances of its products; (iii) 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; (iv) the Company's research and product development efforts and their relative success, including whether we have any meaningful sales of any new products resulting from such efforts; (v) the cost effectiveness and efficiency of the Company's clinical studies, manufacturing operations, and production planning; (vi) 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; (vii) future determinations by the Company to allocate resources to products and in directions not presently contemplated; (viii) the Company's ability to successfully commercialize its products, in the U.S. and abroad; (ix) the Company's ability to provide an adequate and timely supply of its products to its customers; and (x) the Company's ability to achieve its growth targets. Additional factors and risks are described in the Company's periodic reports filed with the Securities and Exchange Commission, and they are available on the SEC's website at www.sec.gov. Forward-looking statements are made based on information available to the Company on the date of this press release, and the Company assumes no obligation to update the information contained in this press release.

                           
Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                           
      For the Three Months Ended September 30,       For the Nine Months Ended September 30,
      2017     2016       2017     2016
Product revenue     $ 27,178       $ 25,783         $ 78,899     $ 74,636
Licensing, milestone and contract revenue       6         6           5,133       17
Total revenue       27,184         25,789           84,032       74,653
                           
Operating expenses:                          
Cost of product revenue       6,250         4,998           18,648       16,488
Research and development       5,842         2,822           14,521       7,773
Selling, general and administrative       4,823         4,280           14,862       12,525
Total operating expenses       16,915         12,100           48,031       36,786
Income from operations       10,269         13,689           36,001       37,867
Interest income, net       261         93           335       214
Income before income taxes       10,530         13,782           36,336       38,081
Provision for income taxes       3,643         4,830           12,587       13,619
Net income     $ 6,887       $ 8,952         $ 23,749     $ 24,462
                           
Basic net income per share:                          
Net income     $ 0.47       $ 0.61         $ 1.63     $ 1.66
Basic weighted average common shares outstanding       14,579         14,625           14,572       14,726
Diluted net income per share:                          
Net income     $ 0.46       $ 0.59         $ 1.58     $ 1.61
Diluted weighted average common shares outstanding       15,115         15,077           15,065       15,163
                           
                           
Anika Therapeutics, Inc. and Subsidiaries              
Condensed Consolidated Balance Sheets              
(in thousands, except per share data)              
(unaudited)              
                           
      September 30,     December 31,              
ASSETS     2017     2016              
Current assets:                          
Cash and cash equivalents     $ 126,960       $ 104,261                
Investments       25,750         20,500                
Accounts receivable, net of reserves of $217 and $194 at September 31, 2017 and December 31, 2016, respectively       23,804         27,598                
Inventories, net       20,252         15,983                
Prepaid expenses and other current assets       2,268         2,098                
Total current assets       199,034         170,440                
Property and equipment, net       53,973         52,296                
Other long-term assets       1,283         69                
Intangible assets, net       10,738         10,227                
Goodwill       8,104         7,214                
Total assets     $ 273,132       $ 240,246                
                           
LIABILITIES AND STOCKHOLDERS' EQUITY                          
Current liabilities:                          
Accounts payable     $ 5,189       $ 2,303                
Accrued expenses and other current liabilities       6,516         6,496                
Total current liabilities       11,705         8,799                
Other long-term liabilities       545         2,126                
Deferred tax liability       7,593         6,548                
Commitments and contingencies                          
Stockholders' equity:                          
Preferred stock, $0.01 par value; 1,250 shares authorized, no shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively       -         -                
Common stock, $0.01 par value; 60,000 shares authorized, 14,662 and 14,627 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively       146         146                
Additional paid-in-capital       66,746         61,735                
Accumulated other comprehensive loss       (5,047 )       (7,317 )              
Retained earnings       191,444         168,209                

Total stockholders' equity

       253,289         222,773                
Total liabilities and stockholders' equity     $ 273,132       $ 240,246                
                           

 

                                   
Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
                                   
                                   
Revenue by Product Line and Product Gross Margin
(in thousands, except percentages)
(unaudited)
                                   
      For the Three Months Ended September 30,     For the Nine Months Ended September 30,
Product Line:     2017   %     2016   %       2017   %     2016   %
Orthobiologics     $ 23,990   88 %     $ 22,428   87 %       $ 68,686   87 %     $ 65,319   88 %
Surgical       1,765   7 %       1,173   5 %         4,395   6 %       3,924   5 %
Dermal       358   1 %       594   2 %         1,235   2 %       1,558   2 %
Other       1,065   4 %       1,588   6 %         4,583   5 %       3,835   5 %
Product Revenue     $ 27,178   100 %     $ 25,783   100 %       $ 78,899   100 %     $ 74,636   100 %
                                   
Product Gross Profit     $ 20,928         $ 20,785           $ 60,251         $ 58,148    
Product Gross Margin      

77%

 

        

81%

 

          

76%

 

        

78%

 

  
                                   
                                   
Product Revenue by Geographic Region
(in thousands, except percentages)
(unaudited)
                                   
      For the Three Months Ended September 30,     For the Nine Months Ended September 30,
      2017 %     2016 %       2017 %     2016 %
Geographic Region:                                  
United States     $ 22,227   82 %     $ 21,126   82 %       $ 63,507   81 %     $ 61,032   82 %
Europe       2,832   10 %       2,703   10 %         9,743   12 %       8,240   11 %
Other       2,119   8 %       1,954   8 %         5,649   7 %       5,364   7 %
Product Revenue     $ 27,178   100 %     $ 25,783   100 %       $ 78,899   100 %     $ 74,636   100 %
                                                           

 

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

Source: Anika Therapeutics, Inc.

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