Anika Therapeutics Inc. (ANIK)

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Anika Therapeutics Shares May Rebound

http://seekingalpha.com/article/268191-anika-therapeutics-shares-may-rebound?source=yahoo

Anika Therapeutics (NASDAQ:ANIK) develops and markets bio-polymer (based on naturally occurring polymer hyaluronic acid or HA) joint health and tissue repair products.

After the market close Wednesday, ANIK reported its 1Q11 results, which suffered from a one-time shipment delay (due to equipment problem at Woburn facility) of $1.4 million [M] that was shipped in April (i.e. likely to boost 2Q11 results) as manufacturing operations resumed.

- 1Q11 orthobiologic sales rose 16%, driven by continued strong US sales of ORTHOVISC and acquired Anika S.r.l. product sales increased 22% from year-ago period

- Product revenue declined 5% to $11.1M vs. $11.6M in the year-ago period and 1Q11 total revenue declined 5.8% to $11.7M vs. $12.5M in the year-ago period

- Adjusting for the $1.4M product shipment delay, 1Q11 product revenue would have been $12.5M (a 7.2% increase from the year-ago period)

- operating expenses declined during 1Q11, including R&D (research and development) expenses of $1.5M (vs. $1.9M in year-ago period) and SG&A (selling, general, and admin) expenses of $4M vs. $4.3M in year-ago period

- 1Q11 net income was $324,000 or $0.02 per diluted share vs. $714,000 or $0.05 per diluted share in year-ago period

- As of 3/31/11, had $29.1 million [M] cash / equivalents (up from $28.2M at year-end 2010 due to positive cash flow generated from operations) w/ $10.8M long-term debt and 13.5M shares of common stock outstanding

Below is a summary of four pending FDA medical device submissions for ANIK, which provided guidance on the 1Q11 conference call for a FDA reply within 60 days for MONOVISC following a recent meeting w/ the Agency that was conducted instead of the advisory panel meeting that ANIK previously requested to resolve questions surrounding the PMA. ANIK is also optimistic regarding approval of three pending 510(k) submissions for bio-polymer joint health products acquired w/ FAB that are currently marketed in Europe.

Product Candidate #1) MONOVISC (single-injection, bio-polymer arthritis product)

On 5/5/11, provided update following recent FDA meeting (conducted last week instead of advisory panel meeting that ANIK requested to resolve issues) and expects reply in 60 days (7/5/11 estimate) for PMA submitted in DEC 2009.

No safety issues were discussed and FDA is reviewing the efficacy results after a second submission by ANIK in late 2010 to address questions by the Agency over efficacy analyses performed in support of the PMA filing.

MONOVISC is designed as a follow-on product to ORTHOVISC as a single injection and six-month treatment duration for arthritis symptoms and has been marketed in Europe since 2Q08

Genzyme amended its lawsuit last week to add a third patent that expires after 2020, ANIK working to defend MONOVISC based on the revised claim by Genzyme

Product Candidates #1-4) FDA Decision 510(k) Medical Devices -- Hyalofast, Hyaloglide, and Hyalonect (Bio-Polymer Joint Health Products)

Estimated FDA decisions by mid-2011 (2-3Q11) for three joint health products marketed in Europe from FAB acquisition, including Hyalofast (adult, patient-derived bone marrow stem cell enriched tissue repair pad, Hyaloglide (healing aid gel w/ five-day duration for tendon / nerve surgeries) and Hyalonect (bone wrap mesh that is incorporated into the bone)

I added to my long position in ANIK on the sell-off due to weak quarterly results due to a one-time shipment delay that was sent in April (will be reflected in 2Q11 results), and I believe shares may rebound to the $10+ level now that the FDA has provided a 60-day window for an expected reply on the Company’s most important product candidate pending at FDA, MONOVISC, which is designed as a follow-on product to its top-selling joint health product ORTHOVISC.

In addition, 1Q11 results suffered from a one-time shipment delay to equipment problems that have since been resolved, so 2Q11 results are likely to benefit from the shortfall this quarter, and ANIK continues to enjoy a strong balance sheet with an increased cash position from year-end despite the weak quarterly results.

Disclosure: I am long ANIK.