Anika Therapeutics Announces First-Quarter Financial Results.

Business Editors & Health/Medical Writers

WOBURN, Mass.--(BUSINESS WIRE)--May 14, 2001

Anika Therapeutics Inc. (Nasdaq:ANIK) today announced that revenue for the first quarter ended March 31, 2001, was $2,178,617 compared with $2,720,833 for the same period last year.

The company reported a net loss for the quarter of $2,318,431, or $.23 per share, compared with a net loss of $564,087, or $.06 per share, for the first quarter of 2000.

Gross profit for the quarter was $209,669, or 9.6 percent of revenue, compared with $1,487,865, or 54.7 percent of revenue in the comparable prior-year period. The decrease in gross margin for the most recent quarter is attributable to several factors. Inventory reduction efforts commenced in mid-2000 resulted in charges to cost of sales for underutilized plant capacity of approximately $700,000 in the first quarter of 2001.

Sales of AMVISC(R) and AMVISC(R) Plus to Bausch & Lomb reflect lower unit prices effective April 1, 2000. In addition, the first quarter of 2000 included $100,000 of amortized license fee revenue related to a since-terminated distribution arrangement.

Research and development expenses in the first quarter of 2001 include approximately $700,000 for clinical trial costs. The increase in selling, general and administrative costs in the first quarter of 2001, as compared with the first quarter of 2000, is primarily due to increased professional fees associated with certain corporate matters, as well as expenditures to support the sales and marketing of ORTHOVISC(R) in Europe and Canada. The company ended the quarter with cash and investments of approximately $16.8 million.

Chairman, President and Chief Executive Officer J. Melville Engle said that Anika became Bausch & Lomb's exclusive worldwide supplier for AMVISC and AMVISC Plus effective Jan. 1, 2001. "Despite lower shipment levels in the first quarter of 2001 compared with the fourth quarter of 2000, orders for the second quarter of 2001 are higher and the forecast for unit volume remains strong," he said.

Engle noted that during the quarter, Anika commenced a Phase III human clinical trial for ORTHOVISC.

"The trial is designed to include 360 patients at up to 20 centers in the U.S. and Canada," he said. "The first-quarter results reflect the costs of this effort, as well as other clinical development initiatives including INCERT(R)-S, a cross-linked HA formulation designed to inhibit scarring and reduce pain following spinal surgery."

Subsequent to the end of the quarter, Anika announced that it received pre-market approval from the U.S. Food and Drug Administration for STAARVISC(TM) II, an injectable ophthalmic viscoelastic product. Under a license agreement, Anika will produce STAARVISC(TM) II for Monrovia, Calif.-based STAAR Surgical Co. (Nasdaq:STAA).

About Anika Therapeutics

With headquarters in Woburn, Anika Therapeutics Inc. (www.anikatherapeutics.com) develops, manufactures and commercializes therapeutic products and devices intended to promote the repair, protection and healing of bone, cartilage and soft tissue. These products are based on hyaluronic acid (HA), a naturally occurring, biocompatible polymer found throughout the body.

In addition to ORTHOVISC(R), a treatment for osteoarthritis of the knee (not approved for sale in the U.S.), Anika markets HYVISC(R) in the United States for the treatment of equine osteoarthritis through Boehringer Ingelheim Vetmedica Inc. and manufactures AMVISC(R) and AMVISC(R) Plus, HA viscoelastic products for ophthalmic surgery, for Bausch & Lomb.

STAARVISC(TM) II, an injectable ophthalmic viscoelastic, is produced for STAAR Surgical Co. Therapies currently under development include INCERT(R), a family of HA products designed to prevent post-surgical adhesions.

The statements made in this news release which are not statements of historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve known and unknown risks, uncertainties and other factors. The words "believe," "will," "would," "expect," "anticipate," "intend," "estimate," "plan," "designed," and other expressions which are predictions of or indicate future events and trends and which do not constitute historical matters identify forward-looking statements. 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. In particular, there can be no assurance that the company will: (i) begin clinical trials of INCERT-S; (ii) successfully complete clinical trials of ORTHOVISC(R) or INCERT(R)-S; (iii) obtain clinical data to support a pre-market approval application and/or FDA approval; (iv) receive FDA or other regulatory approvals of ORTHOVISC(R) or that such approvals will be obtained in a timely manner or without the need for additional clinical trials. There can be no assurance that the termination of the distribution agreement with Zimmer will not have a material adverse impact on sales or distribution of ORTHOVISC or that the company will be able to identify or engage appropriate distribution or collaboration partners for sales of ORTHOVISC or INCERT-S or effectively transition the distribution of ORTHOVISC or INCERT-S to such distributors, once engaged. In addition, there can be no assurance that any delay in receiving any such approvals will not adversely effect the company's competitive position or, if completed, meaningful sales of the products will be achieved. There can be no assurances that the company's inventory reduction or other efforts will result in improved gross margins by mid-2001 or ever. There can be no assurances that; (i) the company will achieve incremental sales of its ophthalmic products to Bausch & Lomb Surgical and/or other companies sufficient to offset the effects of the price reduction and royalties to be paid to Bausch & Lomb Surgical, (ii) Bausch & Lomb Surgical will make purchases in accordance with its forecasts. Furthermore, the company cannot make any assurances that the current levels of selling, general and administrative expenses will not continue. Certain other factors that might cause the company's actual results to differ materially from those in the forward-looking statements include those set forth under the headings "Business," "Risk Factors and Certain Factors Affecting Future Operating Results" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2000, as well as those described in the company's news releases and other Securities and Exchange Commission filings.

                        ANIKA THERAPEUTICS INC.
Balance Sheets as of

                                   March 31,            December 31,
                                     2001                  2000
                                  (unaudited)
ASSETS

Current assets:
  Cash and cash equivalents       $  6,386,749         $  8,265,936
  Short-term investments            10,420,246           10,039,849
  Accounts receivable, net           1,251,612            1,692,457
  Inventories                        4,776,952            4,737,645
  Prepaid expenses                     457,447              612,890
      Total current assets          23,293,006           25,348,777

Property and equipment               8,755,940            8,621,579
Less accumulated depreciation       (5,722,717)          (5,498,455)
      Net property and equipment     3,033,223            3,123,124

  Notes receivable from officers       382,000              382,000
  Long-term deposits                   123,765              124,600
      Total Assets                $ 26,831,994         $ 28,978,501

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                     773,821              870,502
  Accrued expenses                   1,590,917            1,395,677
      Total current liabilities      2,364,738            2,266,179


Stockholders' equity:
   Redeemable convertible preferred
    stock, $.01 per value: authorized
    750,000 shares, no shares issued
    and outstanding                         --                   --
   Undesignated preferred stock, $.01
    par value: authorized 1,250,000
    shares; no shares issued and
    outstanding                             --                   --
   Common stock, $.01 par value:
    authorized 30,000,000 shares;
    issued 9,991,943 shares             99,919               99,919
   Additional paid-in capital       31,735,660           31,735,660
   Deferred compensation              (171,184)            (244,549)
   Treasury stock (at cost),
    57,663 shares                     (279,756)            (279,756)
   Accumulated deficit              (6,917,383)          (4,598,952)
      Total stockholders' equity    24,467,256           26,712,322
      Total liabilities and
       stockholders' equity       $ 26,831,994         $ 28,978,501


                        ANIKA THERAPEUTICS INC.
                 STATEMENTS OF OPERATIONS (Unaudited)

                                            Quarter ended
                                               March 31,
                                       2001                 2000


Product revenue                   $  2,178,617         $  2,620,833
Licensing revenue                           --              100,000
     Total revenue                   2,178,617            2,720,833
Cost of sales                        1,968,948            1,232,968
     Gross profit                      209,669            1,487,865
Operating expenses:
     Research and development        1,347,870            1,313,738
     Selling, general and
      administrative                 1,452,810              999,462
         Total operating expenses    2,800,680            2,313,200
         Loss from operations       (2,591,011)            (825,335)
Interest income, net                   272,580              261,248
         Loss before income taxes   (2,318,431)            (564,087)
Provision for income taxes                  --                   --
         Net loss                 $ (2,318,431)        $   (564,087)

Basic and diluted loss per share:
     Net (loss) income            $      (0.23)        $      (0.06)
Shares used for computing basic
 and diluted EPS                     9,934,280            9,804,284