Anika Therapeutics' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Anika Therapeutics Inc. (ANIK)

Q4 2011 Earnings Call

March 01, 2012 01:00 PM ET


Kevin Quinlan – CFO

Chuck Sherwood – President & CEO


Mark Landy

Jim Gentrup – Discovery Investment Research

John Parsons – Private Investor

Neil Gore



Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Anika Therapeutics Incorporated Earnings Conference Call. My name is Shenele and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Kevin Quinlan, Chief Financial Officer. Please proceed.

Kevin Quinlan

Thank you, Shenele, and good afternoon everyone. If you’ve not received a copy of the Anika news release, which was issued after the market closed last evening or you would like to be added to our contact list, please contact Sharon Merrill Associates at 617-542-5300. The news release is also posted in the Investor Relations section of our website at

Also, I want to mention that we have slides posted on the Anika website that illustrates some of the points we’ll be covering during today’s call. These slides can be found on the Investor Relations section under the Events, Webcasts & Presentations tab. We invite you to take a moment to open the file and follow the presentation along with us.

Please turn to slide number two. Before we begin, please remember that 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 are 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 in today’s press release and the company’s SEC filings.

Please turn to slide number three, as I turn the call over to Anika’s President and Chief Executive Officer, Dr. Chuck Sherwood.

Chuck Sherwood

Thanks, Kevin, and thank you to everyone for joining us today. The fourth quarter was a strong conclusion to an excellent year for Anika. Total revenue increased 25% from Q4 last year. This growth continued to be driven primarily by strong sales of Orthovisc in our Orthobiologics franchise.

We’re continuing to see solid underlying demand for Orthovisc both domestically and internationally. Compared with the fourth quarter of last year, Orthovisc sales in the U.S. market grew 34% and sales outside the U.S. increased 41%. Increased international demand for Monovisc and our orthopedic and advanced wound care products from Anika S.r.l. also contributed to our revenue growth this quarter.

This was a strong quarter on the bottom line as well. Compared with Q4 of 2010, our net income and earnings more than doubled with an EPS of $0.21 per share. Our product gross margin improved to 60% and R&D and SG&A expenses remained effectively managed company-wide. We also reached our break even goal of Anika S.r.l. as they achieved their first profit since the acquisition in the fourth quarter of 2011.

We also made solid operational progress this quarter. We recently received approval from the FDA to manufacture Orthovisc and Hyvisc at our Bedford facility for sale in the United States. This is one of the final steps towards the consolidation of all of our manufacturing in Bedford, a process that we expect to complete in the first half of 2012.

As I’ll discuss in a few minutes, we further expanded our product distribution network and we continue to work through the process with the FDA in their ongoing review of our Monovisc PMA. I’ll review the recent activity in each of our product franchises and conclude with some comments on the business outlook after Kevin’s financial review.

And with that, I’ll turn the call back over to you, Kevin.

Kevin Quinlan

Thanks, Chuck. Please turn to slide number four in the presentation. I wrapped up my comments last quarter by saying that we were looking forward to solid results for the fourth quarter and the full year of 2011, and Anika delivered on those expectations.

Total revenue for the fourth quarter of 2011 increased 25% from the fourth quarter last year to $18.4 million and product revenue was up 25% year-over-year as well. For the full year, total revenue and product revenue both increased 17%.

Looking at our product franchises, product revenue for the fourth quarter in the Ophthalmic franchise was down 9%, reflecting primarily the lower level of shipments under our extended contract with Bausch & Lomb.

For full year 2011, Ophthalmic product revenue was down 8% for the same reason. Dermal franchise product revenue for the fourth quarter was up 16% from the fourth quarter of last year, primarily driven by sales of Anika S.r.l’s Hyalomatrix advanced wound care product. For the full-year, dermal product revenue was up 3%.

Despite a temporary postponement of sales of one of our leading products in the ear, nose and throat category, fourth quarter product revenue in our surgical franchise grew 35% from the fourth quarter last year, driven by continued growth and shipments of Hyalobarrier to customers in Europe, Taiwan, and Korea. For 2011 as a whole, surgical product revenue was up 17%.

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