Anika Therapeutics Reports 2003 Third Quarter Financial Results.

Business Editors

WOBURN, Mass.--(BUSINESS WIRE)--Nov. 6, 2003

Anika Therapeutics, Inc. (NASDAQ:ANIK) today announced financial results for the third quarter and nine-months ended September 30, 2003.

For the third quarter, Anika posted revenue of $3,688,000, a 27% increase, compared with $2,905,000 for the same period last year. Net income for the quarter was $420,000, or $.04 per share, compared with a net loss of $908,000, or $.09 per share, for the third quarter of 2002.

For the nine-month period ended September 30, 2003, revenue increased 19% to $10,390,000 versus $8,716,000 in the comparable period in 2002. The company reported net income for the nine-month period in 2003 of $26,000, or $0.00 per share, compared with a net loss of $3,869,000, or $0.39 per share in 2002.

"This quarter the company continued to benefit from strong HYVISC(R) sales, our treatment for equine osteoarthritis, and steady momentum in the ORTHOVISC(R) business, our product for the treatment of osteoarthritis of the knee, compared with the same period last year," said Charles Sherwood, Ph.D., president and chief executive officer. "Our distribution partner for ORTHOVISC in Turkey has devoted additional resources to marketing efforts that are beginning to produce tangible results in that market and we are looking to expand market share in Europe with our recently established alliances." In September the company announced it had expanded the sales territory in Europe to include Germany and France. Marketing efforts have begun in Germany but will not begin in France until reimbursement approval has been received. Dr. Sherwood also said the company's ophthalmics business was steady in the third quarter, with a 10% increase year-over-year and a 13% increase on a sequential quarterly basis.

"We are dedicating increased attention to establishing a distribution partner to commercialize ORTHOVISC in the U.S., pending FDA marketing clearance, and to building our product pipeline," continued Dr. Sherwood. "To this end, we are focusing on preclinical studies for a cosmetic tissue augmentation product using our patented cross-linked hyaluronic acid gel to correct dermal defects and moving INCERT(R), our product for the prevention of post-surgical adhesions, into human clinical trials as soon as practicable."

Gross margin for the third quarter rose to 47.7% compared with 32% in the same period last year and 44.4% in the preceding second quarter, primarily reflecting ongoing improvements in manufacturing efficiencies. For the nine-month period, gross margin was 44.7% versus 28.1% in the comparable period last year.

As expected, research and development expenses declined 52% to $482,000 in the most recent quarter compared with the third quarter of 2002 when the company was still conducting its pivotal Phase III clinical trial for ORTHOVISC, which was completed in late 2002. Similarly, for the nine-month period, research and development expenses declined 38% to $1,939,000 compared with $3,139,000 incurred in the first nine months of 2002.

Selling, general and administrative expenses of $885,000 for the 2003 third quarter were on par with the same period last year and declined slightly from $945,000 in the preceding quarter. For the nine months ended September 30, selling, general and administrative expenses declined 13% to $2,945,000.

Cash, restricted cash and short-term investments at September 30, 2003 totaled $12.9 million compared with $11.5 million at June 30, 2003.

Conference Call Information

The company will hold a conference call to review its financial results Friday, November 7, 2003 at 11:00 a.m. EST. To listen to the conference call, dial 706-634-1550 approximately 10 minutes before the starting time and reference Anika Therapeutics. In addition, the conference call will be available to interested parties through a live audio Internet broadcast at http://www.anikatherapeutics.com/newset.htm. The call will be archived and accessible on the same Web site for one year beginning at 2:00 p.m. EST  Friday, November 7, 2003.

About Anika Therapeutics, Inc.

Headquartered in Woburn, Mass., 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 U.S. 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. It also produces CoEase(TM), which is marketed by Advanced Medical Optics, Inc., STAARVISC(TM)-II distributed by STAAR Surgical Company and Shellgel(TM) for Cytosol Ophthalmics, Inc.

The statements made in this press 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, including, without limitation, statements that may be identified by words such as "expectations," "remains," "focus," "expected," "prospective," "expanding," "building," "continue," "progress," "efforts," "hope," "believe," "objectives," "opportunities," "will," "seek," and other expressions which are predictions of or indicate future events and trends and which do not constitute historical matters identify forward-looking statements. These statements also include statements regarding: (i) the Company's efforts and expectations in entering into long-term arrangements to market and distribute ophthalmic and osteoarthritis products, (ii) the level of the Company's revenue or sales in particular geographic areas and/or for particular products, (iii) the market share of any of the Company's products, (iv) expectations regarding future results of operations, including the Company's expectations regarding cash utilization, (v) the Company's intention to strengthen, expand and grow its ophthalmic franchise and the growth of the Company's ophthalmic business, (vi) the Company's goal of obtaining FDA approval for ORTHOVISC(R), (vii) the Company's expectations of the size of the United States and European markets, including Germany and France, for osteoarthritis of the knee, (viii) the Company's intention to increase market share for ORTHOVISC(R) in international (and, eventually, domestic) markets or otherwise penetrate growing markets for osteoarthritis of the knee, and (ix) the Company's corporate objectives and research and development and collaboration opportunities, including, without limitation, intended preclinical development of potential cosmetic tissue augmentation products and commencement of INCERT(R) clinical trials. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks, uncertainties and other factors. 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 including: (i) the Company's ability to successfully commence and/or complete clinical trials of its products on a timely basis or at all, obtain clinical data to support a pre-market approval application and/or FDA approval, and/or receive FDA or other regulatory approvals of its products, including ORTHOVISC(R), or that such approvals will not be obtained in a timely manner or without the need for additional clinical trials; (ii) the success of the Company's efforts to improve the financial performance of its core business; (iii) the Company's research and product development efforts and their relative success, including whether the Company has any meaningful sales of any new products resulting from such efforts; (iv) the cost effectiveness and efficiency of our manufacturing operations and production planning; (v) the strength of the Turkish, German and French economies, in general and other economies in which the Company operates or will be operating, as well as the political stability of any of those geographic areas or (vi) future determinations by the Company to allocate resources to products and in directions not presently contemplated. Any delay in receiving any regulatory approvals may adversely affect the Company's competitive position. Even if regulatory approvals are obtained, there is a risk that meaningful sales of the products may not be achieved. There is also a risk that (i) the Company's existing distributors or customers will not continue to place orders at historical levels or that any of them will seek to modify or terminate existing arrangements, (ii) the Company's efforts to enter into long-term marketing and distribution arrangements will not be successful, including enlisting a domestic distribution partner for ORTHOVISC(R), (iii) new distribution arrangements will not result in meaningful sales of the Company's products, or (iv) increased sales of the Company's products, including HYVISC(R), ORTHOVISC(R), or its ophthalmic products, will not continue or sales will decrease or not reach historical sales levels, any of which may have a material adverse effect on the Company's business and operations. 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 each of the Company's Annual Report on Form 10-K for the year ended December 31, 2002, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and Current Reports on Form 8-K, as well as those described in the Company's other press releases and SEC filings.

              Anika Therapeutics, Inc. and Subsidiaries
                Consolidated Statements of Operations

                       Three Months Ended        Nine Months Ended
                          September 30,             September 30,
                        2003        2002         2003         2002
                     ----------- ----------- ------------ ------------

Product revenue      $3,666,000  $2,889,000  $10,339,000   $8,690,000
License revenue          22,000      16,000       51,000       26,000
                     ----------- ----------- ------------ ------------
  Total revenue       3,688,000   2,905,000   10,390,000    8,716,000
Cost of product
 revenue              1,930,000   1,975,000    5,745,000    6,264,000
                     ----------- ----------- ------------ ------------
  Gross profit        1,758,000     930,000    4,645,000    2,452,000
Operating expenses:
  Research and
   development          482,000     999,000    1,939,000    3,139,000
  Selling, general
   and administrative   885,000     900,000    2,945,000    3,368,000
                     ----------- ----------- ------------ ------------
Total operating
 expenses             1,367,000   1,899,000    4,884,000    6,507,000
                     ----------- ----------- ------------ ------------
Income (loss) from
 operations             391,000    (969,000)    (239,000)  (4,055,000)
  Interest income,
   net                   29,000      61,000      111,000      186,000
                     ----------- ----------- ------------ ------------
Income (loss) before
 income tax             420,000    (908,000)    (128,000)  (3,869,000)
  Income tax benefit         --          --      154,000           --
                     ----------- ----------- ------------ ------------
Net income (loss)      $420,000   $(908,000)     $26,000  $(3,869,000)
                     =========== =========== ============ ============

Basic net income
 (loss) per share         $0.04      $(0.09)         $--       $(0.39)
                     =========== =========== ============ ============
Shares used to
 calculate basic net
 income (loss) per
 share                9,959,904   9,934,280    9,945,195    9,934,280
                     =========== =========== ============ ============

Diluted net income
 (loss) per share         $0.04      $(0.09)         $--       $(0.39)
                     =========== =========== ============ ============
Shares used to
 calculate diluted
 net income (loss)
 per share           10,422,066   9,934,280   10,271,681    9,934,280
                     =========== =========== ============ ============




              Anika Therapeutics, Inc. and Subsidiaries
                     Consolidated Balance Sheets

                                               Sept. 30,    Dec. 31,
                                                 2003         2002
                                             ------------ ------------
                   ASSETS
Current assets:
   Cash and cash equivalents                 $12,611,000  $11,002,000
   Restricted Cash                               253,000           --
   Marketable securities                              --    2,500,000
   Accounts receivable, net                    1,909,000    1,198,000
   Inventories                                 3,342,000    2,924,000
   Prepaid expenses and other current assets     141,000      320,000
                                             ------------ ------------
       Total current assets                   18,256,000   17,944,000
Property and equipment, at cost                9,785,000    9,619,000
Less:  accumulated depreciation               (8,427,000)  (7,679,000)
                                             ------------ ------------
                                               1,358,000    1,940,000
Long-term deposits                               143,000      143,000
Notes receivable from officers                        --       59,000
                                             ------------ ------------
Total assets                                 $19,757,000  $20,086,000
                                             ============ ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                             $428,000     $845,000
   Accrued expenses and other current
    liabilities                                1,145,000    1,703,000
   Customer deposit                                   --      327,000
   Deferred revenue                            1,030,000      147,000
                                             ------------ ------------
       Total current liabilities               2,603,000    3,022,000

Stockholders' equity:
   Preferred stock, $.01 par value; 1,250,000
    shares authorized, no shares issued and
    outstanding                                       --           --
   Common stock, $.01 par value; 30,000,000
    shares authorized, 9,991,943 shares
    issued                                       100,000      100,000
   Additional paid-in capital                 31,572,000   31,640,000
   Treasury stock (at cost, 30,538 and 57,663
    shares)                                     (148,000)    (280,000)
   Accumulated deficit                       (14,370,000) (14,396,000)
                                             ------------ ------------
       Total stockholders' equity             17,154,000   17,064,000
                                             ------------ ------------
Total liabilities and stockholders' equity   $19,757,000  $20,086,000
                                             ============ ============