Anika Therapeutics CEO Discusses Q3 2010 Results – Earnings Call Transcript
Anika Therapeutics, Inc. (
)
Q3 2010 Earnings Call Transcript
November 10, 2010 9:00 am ET
Executives
Kevin Quinlan – CFO, Treasurer and Secretary
Charles Sherwood – President and CEO
Analysts
Jim Lieberman – Wells Fargo Securities
Larry Anderson – Raymond James
Neil Gore – UBS
Gary Siperstein – Elliot Rose Asset Management
Presentation
Operator
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Previous Statements by ANIK
»
Anika Therapeutics, Inc. Q2 2010 Earnings Call Transcript
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Anika Therapeutics Inc. Q1 2010 Earnings Call Transcript
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Anika Therapeutics, Inc. Q4 2009 Earnings Call Transcript
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Anika Therapeutics Inc. Q3 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the third quarter 2010 Anika Therapeutics investor conference call. My name is Francis and I will be your coordinator for today. At this time all participants are in listen-only mode. (Operator instructions)
I will now turn the call over to Mr. Kevin Quinlan. Anika's Chief Financial Officer, please proceed, Mr. Quinlan.
Kevin Quinlan
Thank you, Francis, and good morning everyone. If you have not received a copy of the Anika news release which was issued yesterday after the market closed or would like to be added to our contact list, please contact Sharon Merril Associates at 617-542-5300. The news release is also posted in the investor relations section of Anika therapeutics website at anikatherapeutics.com.
Also, I want to mention that we have slides posted on the Anika website that illustrate some of the financial information we will be discussing during today's call. These slides can be found on the investor relations section of the website under the events, webcast and presentation tab.
We invite you to take a moment to open the file and follow the presentation along with us. Please turn the slide two. Before we begin, please remember that the statements made in this call which are not statements of historical fact are forward-looking statements as defined in the Securities Exchange Act of 1934. Words such as, will, believe, appear, plan, expect, anticipate, forward, seek, continue, target, goals, objectives, on track, intend, pursue, outlook, as well as other expressions which our predictions or indications of future events or trends and which do not constitute historical matters identify forward-looking statements. These statements are based on the current beliefs and expectations of management and are subject to significant risks and uncertainties.
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 which include those set forth and last evening's press release and the company's SEC filings.
Please move to slide three, as I turn the call over to Anika's President and Chief Executive Officer, Dr. Charles Sherwood.
Charles Sherwood
Thank you, Kevin. Good morning, everyone and thanks for joining us today. Anika continued to perform well in the third quarter. It was our thirteenth consecutive quarter of product revenue growth compared with the same quarter of the previous year and we advanced in significant ways on all six of our major goals.
All the key indicators for ORTHOVISC are moving in the right direction, including growth and product revenue and market share. With FAB, our pipeline is broader and stronger than ever and we're making good progress on four upcoming product approvals in our Orthobiologics franchise headlined by the U.S. approval and launch of MONOVISC.
With the operational integration of FAB going well and the near-term consolidation of our manufacturing in a single facility we're setting the stage for stronger margins and earnings going forward. I’ll have more to say about our progress in each of these areas after Kevin's financial review and then we will be happy to take your questions. Kevin?
Kevin Quinlan
Thanks, Chuck. Please turn to slide four in the presentation. Anika preformed well from a financial perspective in Q3. Total revenue in the third quarter of 2010, including FAB, grew 29% from the third quarter last year to $13.9 million. On an organic basis, that is excluding FAB, our product revenue increased 14% from the third quarter last year.
Consolidated product revenue grew 31%. This revenue growth was driven primarily by the continued strong performance of our joint health franchise. As you can see on the slide, FAB is also contributing to our total revenue in additional therapeutic areas.
As shown on slide five, revenue and our orthobiologics franchise which includes our joint health products increased 25% to $7.7 million from the third quarter of 2009. Primarily reflecting strong domestic sales of ORTHOVISC, as well as an increase in international sales of MONOVISC and the contributions from FAB.
Domestic Orthobiologics sales were up 30%. International Orthobiologics sales including FAB were up 13% and down to 6%, excluding FAB, as we saw the continued impact on sales from the economic weakness in Greece, Italy and Turkey.
Slide six illustrates the impact of this revenue growth on the other lines in our income statement. Our third quarter consolidated product gross margin was 54% compared with 65% in the third quarter last year.
The decline this quarter largely reflected the addition of FAB products into the overall mix. On an organic basis, Anika's gross margin was 59% down from the third quarter, due largely to added inventory reserves and duplicate manufacturing expenditures during our transition from Woburn over into Bedford.
I've mentioned this latter point on previous calls, the transition of manufacturing operations to our Bedford facility is causing a decline in margins for 2010 compared with 2009. This is because we are manufacturing in both our Woburn and Bedford facilities with significant portion of the year.
Operating income for the third quarter of 2010 increased 3% to $2.1 million. However, net income for the third quarter of 2010 was down 22% to $1.2 million or $0.09 per diluted share from $1.5 million or $0.13 per diluted share in the third quarter last year.
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