Anika Therapeutics Reports Unfavorable ORTHOVISC Clinical Trial Results.

Business/Health & Medical Editors

WOBURN, Mass.--(BUSINESS WIRE)--May 30, 2000

Anika Therapeutics, Inc. (Nasdaq:ANIK) today announced that an initial analysis of results from its recently completed Phase III clinical trial of ORTHOVISC(R), its product for treatment of osteoarthritis of the knee, did not show sufficient efficacy to support the filing of a pre-market approval (PMA) application to obtain U.S. Food and Drug Administration (FDA) approval.

"We are disappointed that the results from the study did not achieve the primary efficacy end-point, a measure of pain reduction," said J. Melville Engle, chairman, president and chief executive officer. "We will proceed with a complete analysis of the trial, including safety data, which is not yet available. However, these results indicate that additional clinical data would be necessary to demonstrate the effectiveness required for PMA submission and FDA approval." Engle added that the company must evaluate results in depth before making any decisions about whether to conduct additional clinical trials.

The company completed its ORTHOVISC Phase III clinical trial on February 28, 2000. The study, which consisted of 385 patients with osteoarthritis of the knee, was conducted with rheumatologists and orthopedic surgeons at 22 centers in the U.S. and Canada. Patients enrolled in the study were followed out to six months following the treatment regimen of three injections over a two-week period. The primary efficacy end-point of the trial is a measure of pain reduction as compared with a saline control. This trial represents Anika's second attempt to obtain U.S. regulatory approval for ORTHOVISC. In October 1998, the company received a letter from the FDA requesting additional data to support an earlier PMA application.

According to the company's distribution agreement for ORTHOVISC with Zimmer, Inc., Zimmer may terminate the agreement if ORTHOVISC is not approved by the FDA by January 1, 2001. The company cannot provide any assurance that Zimmer will not seek to terminate the agreement or renegotiate the agreement on terms less favorable to the company. Upon FDA approval, the Zimmer distribution agreement provides for a $2.5 million milestone payment and increased minimum purchases by Zimmer. However, based on the results of the recently completed Phase III clinical trial, there can be no assurances that the company will be able to earn the milestone payment or that Zimmer will be subject to the increased minimum purchase requirements.

Engle noted that the company intends to continue pursuing its product development strategy in the field of tissue repair, protection and healing. As of March 31, 2000, Anika had cash and investments of approximately $19.8 million. ORTHOVISC is currently approved for sale in Europe, Canada and other countries and has been sold in various countries since 1995. In addition, company revenue includes ongoing sales of AMVISC(R) and AMVISC(R) Plus, products for ophthalmic surgery, to Bausch & Lomb Surgical.

The company also announced that it has been informed that the Securities and Exchange Commission (SEC) has issued a formal order of investigation and has required the company to provide further information in connection with certain revenue recognition matters. These matters, relating to the company's historical accounting for sales of its product under a long-term supply and distribution agreement, were the subject of the company's previous March 15, 2000 disclosure concerning an informal SEC inquiry and the restatement of results for 1998 and the first three quarters of 1999. The company has been cooperating fully with the SEC and intends to continue its cooperation.

About Anika Therapeutics

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 Surgical. Therapies currently under development include INCERT(R), a family of HA products designed to prevent post-surgical adhesions. Anika is also collaborating with Orquest, Inc. to manufacture OSSIGEL(R), an injectable formulation of basic fibroblast growth factor combined with HA designed to accelerate the healing of bone fractures, which is also under development.

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 Exchange 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" and other expressions which are predictions of or indicate future events and trends and which do not relate to 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, which include the results of its research and development efforts and timing of regulatory approval. There can be no assurances that: (i) further analysis of the clinical data or any additional clinical data will support the efficacy of ORTHOVISC(R), (ii) the Company will undertake any additional clinical trials of ORTHOVISC, (iii) it will be able to successfully complete an additional clinical trial or (iv) additional clinical trials will support a PMA application and/or FDA approval in a timely manner or at all. There can be no assurances as to the impact that the timing or lack of FDA approval will have on the Zimmer Distribution Agreement. Furthermore, there can be no assurance that Zimmer will place additional orders in 2000 or that Zimmer will not terminate the Zimmer Distribution Agreement in accordance with its terms. In addition, there can be no assurance that any delay in receiving any such approvals will not adversely affect the Company's competitive position. In particular, there can be no assurance that the Company and/or Zimmer will obtain European or other reimbursement approvals or if such approvals are obtained they will be obtained on a timely basis or at a satisfactory level of reimbursement. Moreover, there can be no assurances that the Company's investments in the clinical research and product development in OSSIGEL(R) and INCERT(R) will lead to viable products or revenue growth. 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 December 31, 1999, as well as those described in the Company's other SEC filings.