Anika Therapeutics' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Anika Therapeutics, Inc. (ANIK)

Q1 2012 Earnings Call

May 4, 2012 9:00 AM ET


Kevin Quinlan – Chief Financial Officer

Charles Sherwood – President & Chief Executive Officer


Jim Gentrup – Discovery Investment Research

Mark Landy – Summer Street Research

Bill Gibson – Legend Merchant



Good morning, ladies and gentlemen, and welcome to the first quarter 2012 Anika Therapeutics investor conference call. My name is Jeff, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session towards the end of this conference call. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I will now turn the call over to Mr. Kevin Quinlan, Anika’s Chief Financial Officer, and you have the floor sir.

Kevin Quinlan

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

In addition, a slide presentation is posted on the Anika website that illustrates some of the points we’ll be covering during the call today. 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 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, goal, 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 last evening’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. Charles Sherwood.

Charles Sherwood

Thank you Kevin, and good morning everyone and thanks for joining us today. Anika began 2012 on a solid note with record first-quarter earnings and revenue resulting from a 22% total revenue growth for the quarter. That said, the quarter could have been even stronger.

We faced some ordering and supply chain challenges in our Woburn facility that pushed some shipments into the second quarter. I will speak to more details on this later on in the call. The fundamentals of our business continue to be strong. The growth on our top line continues to be driven primarily by sales of Orthovisc in our Orthobiologics franchise, both domestically and internationally.

For the first quarter, Orthovisc in the US market were up 27% from Q1 last year. Orthovisc sales grew 44% in markets outside the United States. On the bottom line, our net income was up substantially from Q1 of 2011. Product gross margin improved to 53% from 49% a year ago. We indicated that results from Anika S.r.l. would be inconsistent from quarter-to-quarter but profitable for 2012 as a whole, and S.r.l. did operate at a loss this quarter as they have historically done for the first quarter, following a very strong fourth quarter last year.

The normal trend was further exacerbated by a change in distribution partners in Italy due to performance issues. This change resulted in Q1 revenue softness as our new partner comes up to speed. Our R&D and SG&A expenses remain tightly managed company-wide, resulting in an EPS of $0.14 for the quarter.

From an operational perspective, as we said on our Q4 conference call in March 1, we received approval from the FDA in Q1 to manufacture Orthovisc and Hyvisc at our Bedford facility for sale in the United States. The FDA also recently approved our proprietary ophthalmic product for manufacturing in Bedford, also for sale in the US. We are currently working closely with Bausch & Lomb to gain approval for the manufacture of Amvisc, Amvisc Plus in Bedford, which we expect around the same time as we close Woburn, namely in June of this year.

Looking at some of our other operational areas, we enlisted the assistance of our Orthovisc distribution partner, DePuy Mitek, in helping us move forward with the FDA in their ongoing review of our PMA for Monovisc. More about this later in the call. And in addition, we continue to make progress towards initiating European clinical trials for Hyalograft C and Cingal.

I will discuss 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 will turn the call back 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 a better start to the year compared to the first quarter of 2011, and by growing revenue and earnings per share greater than 20% for the first quarter, Anika delivered on those expectations.

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