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Anika Therapeutics, Inc. (Nasdaq: ANIK) today reported financial results for the second quarter and six months ended June 30, 2006.
Revenue
Product revenue increased 74% to $7,115,000 for the second quarter of 2006 from $4,084,000 in the same period last year. Product revenue for the six-month period increased 37% to $13,381,000 from $9,761,000 in the six-month period a year ago. Product revenue for both 2005 periods was negatively impacted by a voluntary product recall that reduced ophthalmic sales in the second quarter of 2005 by $1,300,000.
Licensing, milestone and contract revenue for the second quarter of 2006 was $683,000 compared with $2,935,000 in the second quarter of 2005. Licensing, milestone and contract revenue in the second quarter of 2005 included $2,200,000 of contract revenue in connection with the company's development and commercialization contract with OrthoNeutrogena for its hyaluronic acid-based cosmetic tissue augmentation product, which was terminated in the third quarter of 2005.
License, milestone and contract revenue for the first six months of 2006 was $1,370,000 compared with $4,550,000 in the same period of 2005. The six- month 2005 period includes $3,167,000 related to the OrthoNeutrogena contract.
Total revenue for the second quarter of 2006 increased to $7,798,000 from $7,019,000 in the second quarter of 2005. Total revenue for the first six months of 2006 increased to $14,751,000 from $14,311,000 for the comparable period of 2005.
Product Gross Margins
Product gross margin for the second quarter of 2006 increased to 59% from 48% in last year's second quarter. For the six-month 2006 period, product gross margin was 56% compared with 48% for the first six months of 2005. The improvement in both periods was due to higher production volume and lower raw material prices. In addition, second-quarter and six-month 2005 product margins were adversely impacted by costs incurred from last year's voluntary ophthalmic product recall.
Net Income
Net income for the second quarter of 2006 was $1,352,000, or $0.12 per diluted share, compared with $1,336,000, or $0.12 per diluted share, for the same period last year. The impact from the adoption of SFAS 123R reduced second-quarter 2006 earnings per diluted share by $0.02.
Net income for the first six months of 2006 was $2,233,000, or $0.20 per diluted share, compared with $2,539,000, or $0.22 per diluted share, for the same period last year. The impact from the adoption of SFAS 123R reduced earnings per diluted share by $0.04.
Please refer to the schedule at the end of this news release for a reconciliation of Non-GAAP diluted net income per share.
Operating Expenses
Total operating expenses were $5,997,000 for the second quarter of 2006, compared with $5,053,000 for the second quarter of 2005. For the six month period of 2006, operating expenses were $11,911,000 compared with $10,538,000 in the same period in 2005. The increase in operating expenses for the second quarter and first half of 2006 included $350,000 and $733,000, respectively, of stock-based compensation from the adoption of SFAS 123R. Higher professional fees in selling, general & administrative expenses also contributed to the increase in operating expenses year-over-year.
Balance Sheet
Anika's cash and cash equivalents at June 30, 2006 totaled $46,127,000. Anika has no short or long term debt. Capital expenditures for the second quarter and first half of 2006 were $666,000 and $1,032,000, respectively, and were primarily related to upgrading the company's manufacturing capabilities.
Second-Quarter Highlights and Outlook
"Anika performed very well during the second quarter both financially and operationally," said Charles H. Sherwood, Ph.D., Anika's president and chief executive officer. "The highlight of the quarter was the signing of worldwide marketing and distribution agreements with Galderma Pharma, a premier dermatology company for our cosmetic tissue augmentation (CTA) product. In addition, we posted significant increases in product sales of OrthoVisc, both domestically as well as internationally, led by Mitek's improved sales in the second quarter of 2006 compared with both the year ago quarter and this year's first quarter."
"The outlook for the second half of 2006 remains positive as we continue to execute against our 2006 plan," continued Sherwood. "We look forward to leveraging our distribution partnerships to drive sales of OrthoVisc worldwide, working toward regulatory approval and commercialization of our CTA product, and moving our preclinical products further along the development pipeline."
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