Company Press Release
Anika Therapeutics Reports Fourth Quarter Financial Results and Completion of Orthovisc Trial
1998 and 1999 Results Restated for Revenue Recognized under ORTHOVISC Distribution Agreement and Adoption of Staff Accounting Bulletin 101
WOBURN, Mass.--(BUSINESS WIRE)--March 15, 2000-- Anika Therapeutics, Inc. (Nasdaq:ANIK - news) today reported financial results for the fourth quarter and year ended December 31, 1999. The company also announced a restatement of previously reported results of operations for fiscal 1998 and the first three quarters of 1999.
Revenue for the fourth quarter of 1999 was $3,618,000 compared with $3,403,000 (as restated) for the fourth quarter of 1998. Net income for the fourth quarter of 1999 was $368,000, or $0.04 per diluted share, compared with $608,000 (as restated), or $0.06 per diluted share, for the same period last year. Revenue, net income and diluted per share earnings for the quarter ended December 31, 1998 were previously reported as $3,339,000, $769,000 and $.07, respectively.
Revenue for the year ended December 31, 1999 was $13,483,000 compared with $13,273,000 (as restated) for 1998. Income before cumulative adjustment for the change in accounting principle for non-refundable fees as described below for 1999 was $1,129,000, or $0.12 per share, compared with $3,752,000 (as restated), or $0.34 per diluted share, for the prior year. Revenue, net income and diluted per share earnings for the year ended December 31, 1998 were previously reported as $13,870,000, $4,349,000 and $0.40, respectively. Including the cumulative adjustment for the change in accounting principle for non-refundable fees, the net loss for 1999 was $2,496,000, or $0.26 per share. The cumulative adjustment of $3,625,000 was retroactively recorded in the first quarter of 1999.
Restated Results
As a result of an informal inquiry by the Securities and exchange Commission (SEC), Anika and its independent public accountants have completed a thorough review of its revenue recognition policy for revenue received from Zimmer, Inc., a division of Bristol-Myers Squibb Co., under a distribution agreement for ORTHOVISC, Anika's osteoarthritis product. As a result of this review, and after consultation with the SEC, Anika has revised its revenue recognition policy for ORTHOVISC sales to Zimmer and is restating its operating results for 1998 and the first three quarters of 1999.
Under the revised revenue recognition policy, revenue will be recognized at the time of shipment to Zimmer based upon the minimum per unit price under the distribution agreement at the time of sale to Zimmer. Anika had previously recognized revenue for ORTHOVISC sales to Zimmer based upon an estimate of the average selling price which would be obtained by Zimmer upon sale of the ORTHOVISC to its customers, as specified under the distribution agreement. Any additional amounts earned by Anika above the contractual minimum per unit price will be recognized when Zimmer sells the ORTHOVISC to its customers and Anika is able to determine its share of the actual per unit sales price. Anika had also recognized revenue in 1998 and the first three quarters of 1999 for ORTHOVISC which was held in its refrigerators at Zimmer's request. Under the company's revised revenue recognition policy, this revenue will be recorded when the ORTHOVISC is shipped to Zimmer. Amounts paid by Zimmer in excess of the amount recognized under the revised revenue recognition policy is recorded by Anika as deferred revenue and amounted to $1,420,000 at December 31, 1999.
The company has also adopted the provisions of SEC Staff Accounting Bulletin 101 (SAB 101) in its restated 1999 operating results. The issuance of SAB 101 changes revenue recognition practices for non-refundable up-front payments, including $2,500,000 and $1,500,000, respectively, received from Zimmer in the fourth quarter of 1997 and the second quarter of 1998. These amounts were previously recognized in the period received. In accordance with SAB 101, the company has retroactively recorded the cumulative effect of the change in accounting principle of $3,625,000 as a charge in the first quarter of 1999. These payments will be recognized as revenue ratably over the 10-year term of the distribution agreement. The amount received and deferred to future periods is $3,225,000 at December 31, 1999 and is included in deferred revenue.
It should be noted that, under the terms of the distribution agreement, Anika has and will continue to invoice Zimmer for ORTHOVISC at the time the product is filled into sterile syringes, QA released and then placed into a segregated, Zimmer-only section of Anika's large refrigerated storage unit. Zimmer is then obligated to pay Anika within 45 days.
The restatement of operating results and change in accounting principle had no effect on the company's cash position.
Operational Highlights
The company reached an important milestone during the quarter, said J. Melville Engle, chairman, president and chief executive officer, with the final patient completing the ORTHOVISC Phase III clinical trial on February 28, 2000. The study, which consisted of 385 patients with osteoarthritis of the knee, was conducted with leading 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.
``We were pleased to see patient drop out rates in the study to be within our internal expectations. Other data from the trial will continue to be blinded until the statistical analysis is completed. According to the study protocol, neither physicians nor patients know whether patients were treated with injections of ORTHOVISC or a saline control,' Engle said. ``The next phase in this process is to have our contract research organization collect and validate the clinical data and to prepare it for independent statistical analysis. If the clinical data are positive, we plan to submit a pre-market approval (PMA) application with the U.S. Food and Drug Administration (FDA) later this year.'
The company incurred approximately $700,000 and $2,100,000, respectively, in expenses primarily related to the clinical trial during the quarter and full year of 1999.
In other events at the company, Engle said Scott P. Bruder, Anika's vice president, research and development, accepted a senior position with DePuy, Inc., a Johnson & Johnson company. Bruder continues his affiliation with Anika as a member of its scientific advisory board and will be available to assist with ORTHOVISC data interpretation and the FDA application.
A conference call will be held today at 11:00 a.m. Eastern Standard Time at which management will discuss the quarter's results. To participate, please call 888-813-7836 five to 10 minutes prior to the start of the call.
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©, a treatment for osteoarthritis of the knee (not approved for sale in the U.S.), Anika markets HYVISC© in the U.S. for the treatment of equine osteoarthritis through Boehringer Ingelheim Vetmedica, Inc. and manufactures AMVISC(TM) and AMVISC(TM)Plus, HA viscoelastic products for ophthalmic surgery, for Bausch & Lomb Surgical. Therapies currently under development include INCERT©, a family of HA products designed to prevent post-surgical adhesions. Anika is also collaborating with Orquest, Inc. to manufacture Ossigel©, an injectable formulation of basic fibroblast growth factor combined with HA designed to accelerate the healing of bone fractures.
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. 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 following, among others. 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. In addition, there can be no assurance that the results of the ORTHOVISC© clinical trial will produce data supporting the efficacy of ORTHOVISC. Even if the results of the Company's clinical trials are validated and support the efficacy of ORTHOVISC, there can be no assurance that the Company will: (i) submit a pre-market approval application in a timely manner or at all or (ii) receive FDA or other regulatory approvals of ORTHOVISC or that such approvals will be obtained in a timely manner or without the need for additional clinical trials. In addition, there can be no assurance that any delay in receiving any such approvals will not adversely effect the Company's competitive position. Furthermore, there can be no assurance that Zimmer will place additional orders in 2000 or that Zimmer will not terminate the distribution agreement. 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 ``Risk Factors and Certain Factors Affecting Future Operating Results' and ``Management's Discussion and Analysis' in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 1999 as well as those described in the Company's other SEC filings for 1999.
-0-
STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
December 31, December 31,
1999 1998 1999 1998
(As Restated) (As Restated)
(Unaudited)
Product revenue $ 3,518,316 $ 3,402,581 $ 13,082,662 $ 11,773,343
Licensing
payments 100,000 -- 400,000 1,500,000
Total revenue 3,618,316 3,402,581 13,482,662 13,273,343
Cost of sales 1,613,694 1,904,867 6,440,166 6,014,181
Gross profit 2,004,622 1,497,714 7,042,496 7,259,162
Operating
expenses:
Research and
development 1,328,563 571,495 4,154,479 1,955,940
Selling,
general and
administrative 764,029 621,700 3,029,394 2,731,142
Total
operating
expenses 2,092,592 1,193,195 7,183,873 4,687,082
Income (loss)
from
operations (87,970) 304,519 (141,377) 2,572,080
Interest income,
net 464,137 329,671 1,302,063 1,307,825
Income before
income taxes 376,167 634,190 1,160,686 3,879,905
Income taxes 7,721 25,829 31,412 127,557
Income before
cumulative
effect of
change in
accounting
principle 368,446 608,361 1,129,274 3,752,348
Cumulative effect
of change in
accounting
principle -- -- (3,625,000) --
Net income
(loss) $ 368,446 $ 608,361 ($ 2,495,726) $ 3,752,348
Basic earnings
(loss) per share:
Income before
cumulative
effect of
change in
accounting
principle $ 0.04 $ 0.06 $ 0.12 $ 0.38
Cumulative
effect
of change in
accounting
principle 0.00 0.00 (0.38) 0.00
Net income
(loss) $ 0.04 $ 0.06 ($ 0.26) $ 0.38
Shares used for
computing basic
EPS 9,941,901 9,791,461 9,740,560 9,885,587
Diluted earnings
(loss) per
share:
Income before
cumulative
effect of
change in
accounting
principle $ 0.04 $ 0.06 $ 0.12 $ 0.34
Cumulative
effect of
change in
accounting
principle 0.00 0.00 (0.38) 0.00
Net income
(loss) $ 0.04 $ 0.06 ($ 0.26) $ 0.34
Shares used for
computing
diluted EPS 10,305,481 10,564,628 9,740,560 11,006,139
Anika Therapeutics, Inc.
Balance Sheets as of, December 31, December 31,
1999 1998
(As Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 6,440,705 $ 10,712,520
Short-term investments 8,184,870 12,007,503
Accounts receivable 2,106,452 3,032,737
Inventories 5,493,701 3,522,019
Prepaid expenses 721,206 250,023
Total current assets 22,946,934 29,524,802
Property and equipment 8,116,233 6,376,405
Less accumulated depreciation 4,587,692 3,809,723
Net property and equipment 3,528,541 2,566,682
Long-term investments 5,558,029 --
Notes receivable from officers 353,000 193,000
Long term deposits 124,600 108,500
Total Assets $ 32,511,104 $ 32,392,984
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 629,080 $ 891,493
Accrued expenses 1,552,661 1,356,586
Deferred revenue 4,617,505 796,368
Total current liabilities 6,799,246 3,044,447
Advance rent payment -- 50,215
Stockholders' equity:
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,
respectively 99,919 99,919
Additional paid-in capital 31,959,316 34,439,676
Deferred compensation (615,001) (1,074,699)
Treasury stock, (at cost)
200,863 and 344,500 shares,
respectively (959,870) (1,889,794)
Accumulated deficit (4,772,506) (2,276,780)
Total stockholders' equity 25,711,858 29,298,322
Total Liabilities and
Stockholders' Equity $ 32,511,104 $ 32,392,984
--------------------------------------------------------------------------------
Contact:
Anika Therapeutics, Inc.
J. Melville Engle, CEO
Douglas R. Potter, Acting CFO
(781) 932-6616
OR
Pondel/Wilkinson Klein
Susan Klein (508) 358-4315
Rob Whetstone (310) 207-9300 |
