Anika Reports Third Quarter Fiscal 2022 Financial Results
11/08/2022 - 04:05 PM
Third Quarter Revenue Growth of 2%
Third Phase III Clinical Trial for Cingal®, Next Generation Osteoarthritis Pain Product, Achieved Primary Endpoint Demonstrating Superiority Over Steroid Alone
Pivotal Phase III Clinical Trial for Hyalofast®, HA-Based, Single-Stage Cartilage Repair Product, Reaches 96% Enrollment
Positive Feedback from Limited Market Release of New X-Twist™ Fixation System for Soft Tissue Repair; On Track for Full Market Release in Early 2023
On Track to Achieve Stated FY2022 Guidance
BEDFORD, Mass., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Anika Therapeutics, Inc.
Third Quarter 2022 Financial Summary
Revenue in the third quarter of 2022 was $40.3 million , up 2% compared with $39.5 million in the third quarter of 2021. OA Pain Management1 revenue of $25.7 million , down 2% Joint Preservation and Restoration revenue of $11.8 million , up 6% Non-Orthopedic1 revenue of $2.8 million , up 27% Gross margin was 57% , including $1.6 million of non-cash acquisition-related expenses and $2.6 million product rationalization charges; Adjusted gross margin2 was 67% . Net loss was ($4.2) million , or ($0.29) per share, compared to net income of $0.6 million , or $0.04 per diluted share, in the prior year. Adjusted net loss2 was ($0.7) million , or ($0.05) per share, compared to adjusted net income2 of $0.8 million , or $0.05 per diluted share, in the prior year. Adjusted EBITDA2 was $4.1 million , compared to adjusted EBITDA2 of $5.7 million in the prior year. Operating cash flow was $2.7 million ; quarter ending cash was $87.8 million after a $4.3 million payment for acquisition-related contingent consideration, with no outstanding debt. 1 OA Pain Management was previously referred to as Joint Pain Management; Non-Orthopedic was previously referred to as Other.2 See description of non-GAAP financial information contained in this release.
“We’re pleased with our third quarter accomplishments including our limited launch of the X-Twist Fixation System, successful results from our Cingal Phase III clinical trial, significant progress enrolling the Hyalofast pivotal clinical trial, and solid financial performance,” Cheryl R. Blanchard, Ph.D., Anika’s President and CEO, commented. “Our limited launch of the X-Twist platform has been very positive to date, and we remain on track for the full launch in early 2023. We also recently announced the successful results from our third Phase III clinical trial for Cingal which demonstrated superiority over steroid alone and we look forward to meeting with the FDA to determine next steps for U.S. regulatory approval. Despite the global macroeconomic environment, including staffing and supply chain challenges, we are confident that our strong cash position and no debt, robust foundation of clinical data, comprehensive product and technology portfolio, and exciting new product pipeline all position us for accelerated growth as we drive value for Anika shareholders.”
Recent 2022 Business Highlights
Continued Leadership in OA Pain Market Maintained #1 U.S. market share position in OA Pain Management with Monovisc® and Orthovisc®. In August 2022, DePuy Mitek extended our license and supply agreement for Orthovisc for another 5-year term through December 2028. International viscosupplement sales continued accelerated growth, including Cingal which is currently sold in over 35 countries. Building a Best-in-Class Portfolio of Joint Preservation and Restoration Solutions Continued accelerated growth of Tactoset®, Anika’s regenerative solution for insufficiency fractures and soft tissue hardware augmentation, with multiple planned 510(k) filings targeting further expansion. First surgeries were performed with strong positive surgeon feedback during the limited market release of the X-Twist Fixation System, a new addition to the Anika sports medicine portfolio that addresses the needs of surgeons performing high volume soft tissue repair procedures, such as rotator cuff; on track for a full market release in early 2023. Advanced development of multiple new products across the largest and fastest growing parts of the joint preservation market, including new innovative shoulder implants and a regenerative rotator cuff repair system. Ramping Up Medical Education Activities Held multiple medical education events, training more than 400 U.S. surgeons in-person to date this year in addition to other training activities at industry meetings. Advancing Cingal Towards U.S. Regulatory Approval Announced that Cingal, Anika’s next generation product for osteoarthritis patients, successfully achieved its primary endpoint in a third Phase III clinical trial, Cingal 19-01, which demonstrated the superiority of Cingal over steroid alone, for OA pain relief at 26 weeks. Together with previous studies, Cingal has now demonstrated superiority over each of its active ingredients and placebo, and consistently demonstrating strong and durable pain relief in OA patients. Company to engage with the FDA in the coming months regarding next steps for U.S. regulatory approval and explore the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. These efforts will inform next steps, including if and how to proceed with another clinical trial in the United States. Continuing Clinical Trial Enrollment for Hyalofast Pivotal Phase III Clinical Trial Delivered significant progress towards clinical study enrollment for the Company’s differentiated HA-based single-stage cartilage repair product, Hyalofast, which is now 96% enrolled with 193 patients randomized between Hyalofast implantation and the microfracture surgical technique. Company expects the trial to be fully enrolled in early 2023 and remains on track to file a Pre-Market Approval with the FDA in 2025. Fiscal 2022 Outlook
OA Pain Management up mid to upper single-digit percent (previously low single-digit percent) Joint Preservation and Restoration up low to mid single-digit percent (previously mid single to low double-digit percent) Non-Orthopedic down approximately 20% due largely to legacy product rationalization There remains volatility and uncertainty in the global macroeconomic environment and the Company’s outlook for fiscal 2022 is subject to the changing dynamics associated with staffing shortages, supply chain disruption, inflation and other direct and indirect impacts of the COVID pandemic.
Conference Call Information Investor Relations section of Anika’s website, www.anika.com . A slide presentation with highlights from the conference call will be available in the Investor Relations section of the Anika website. A replay of the webcast will be available on Anika’s website approximately two hours after the completion of the event.
About Anika Anika Therapeutics, Inc. (NASDAQ: ANIK), is a global joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care. Leveraging our core expertise in hyaluronic acid and implant solutions, we partner with clinicians to provide minimally invasive products that restore active living for people around the world. Our focus is on high opportunity spaces within orthopedics, including osteoarthritis pain management, regenerative solutions, sports medicine soft tissue repair and bone preserving joint technologies, and our products are efficiently delivered in key sites of care, including ambulatory surgery centers. Anika’s global operations are headquartered outside of Boston, Massachusetts. For more information about Anika, please visit www.anika.com .
ANIKA, ANIKA THERAPEUTICS, CINGAL, HYALOFAST, MONOVISC, ORTHOVISC, TACTOSET, X-TWIST and the Anika logo are registered trademarks of Anika Therapeutics, Inc. or its subsidiaries.
Non-GAAP Financial Information
Adjusted Gross Margin
Adjusted EBITDA
Adjusted Net Income (Loss) and Adjusted EPS
A reconciliation of adjusted gross profit to gross profit (and the associated adjusted gross margin calculation), adjusted EBITDA to net income (loss), adjusted net income (loss) to net income (loss) and adjusted diluted EPS to diluted EPS, the most directly comparable financial measures calculated and presented in accordance with GAAP, is shown in the tables at the end of this release.
Forward-Looking Statements This press release may contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning the Company's expectations, anticipations, intentions, beliefs or strategies regarding the future which are not statements of historical fact, including the subheadings at the top of the press release with respect to the planned launch of the X-Twist and FY2022 guidance, the second, third and final sentences of Dr. Blanchard’s quote, the bullets with respect to the planned launch of the X-Twist, the anticipated meeting with the FDA and potential partnerships regarding Cingal, and the anticipated Hyalofast enrollment and filing of a Pre-Market Approval, all in the section titled Recent 2022 Business Highlights, and the statements made in the section titled Fiscal 2022 Outlook. 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, but not limited to, (i) the Company's ability to successfully commence and/or complete clinical trials of its products on a timely basis or at all; (ii) the Company's ability to obtain pre-clinical or clinical data to support domestic and international pre-market approval applications, 510(k) applications, or new drug applications, or to timely file and receive FDA or other regulatory approvals or clearances of its products; (iii) that such approvals will not be obtained in a timely manner or without the need for additional clinical trials, other testing or regulatory submissions, as applicable; (iv) the Company's research and product development efforts and their relative success, including whether we have any meaningful sales of any new products resulting from such efforts; (v) the cost effectiveness and efficiency of the Company's clinical studies, manufacturing operations, and production planning; (vi) the strength of the economies in which the Company operates or will be operating, as well as the political stability of any of those geographic areas; (vii) future determinations by the Company to allocate resources to products and in directions not presently contemplated; (viii) the Company's ability to successfully commercialize its products, in the U.S . and abroad; (ix) the Company's ability to provide an adequate and timely supply of its products to its customers; and (x) the Company's ability to achieve its growth targets. Additional factors and risks are described in the Company's periodic reports filed with the Securities and Exchange Commission, and they are available on the SEC's website at www.sec.gov . Forward-looking statements are made based on information available to the Company on the date of this press release, and the Company assumes no obligation to update the information contained in this press release.
For Investor Inquiries: investorrelations@anika.com
Anika Therapeutics, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share data) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 40,264 $ 39,536 $ 116,614 $ 111,973 Cost of Revenue 17,485 16,513 47,169 47,164 Gross Profit 22,779 23,023 69,445 64,809 Operating expenses: Research and development 7,301 7,673 20,433 21,327 Selling, general and administrative 21,276 17,500 61,745 53,664 Change in fair value of contingent consideration - (3,450 ) - (21,920 ) Total operating expenses 28,577 21,723 82,178 53,071 (Loss) income from operations (5,798 ) 1,300 (12,733 ) 11,738 Interest and other income (expense), net 436 (48 ) 378 (141 ) (Loss) income before income taxes (5,362 ) 1,252 (12,355 ) 11,597 (Benefit from) provision for income taxes (1,187 ) 694 (2,404 ) 1,670 Net (loss) income $ (4,175 ) $ 558 $ (9,951 ) $ 9,927 Net (loss) income per share: Basic $ (0.29 ) $ 0.04 $ (0.68 ) $ 0.69 Diluted $ (0.29 ) $ 0.04 $ (0.68 ) $ 0.68 Weighted average common shares outstanding: Basic 14,603 14,429 14,542 14,389 Diluted 14,603 14,647 14,542 14,588
Anika Therapeutics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except per share data) (unaudited) September 30, December 31, ASSETS 2022 2021 Current assets: Cash, cash equivalents and investments $ 87,777 $ 94,386 Accounts receivable, net 34,168 29,843 Inventories, net 37,237 36,010 Prepaid expenses and other current assets 8,579 8,289 Total current assets 167,761 168,528 Property and equipment, net 47,390 47,602 Right-of-use assets 30,987 20,957 Other long-term assets 18,342 20,285 Intangible assets, net 76,545 82,382 Goodwill 6,721 7,781 Total assets $ 347,746 $ 347,535 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,353 $ 7,633 Accrued expenses and other current liabilities 17,999 17,847 Contingent consideration - 4,315 Total current liabilities 26,352 29,795 Other long-term liabilities 474 1,258 Deferred tax liability 6,800 10,157 Lease liabilities 29,183 19,240 Stockholders' equity: Common stock, $0.01 par value 146 144 Additional paid-in-capital 76,661 67,081 Accumulated other comprehensive loss (7,497 ) (5,718 ) Retained earnings 215,627 225,578 Total stockholders' equity 284,937 287,085 Total liabilities and stockholders' equity $ 347,746 $ 347,535
Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Gross Profit to Adjusted Gross Profit (in thousands) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Gross Profit $ 22,779 $ 23,023 $ 69,445 $ 64,809 Product rationalization related charges 2,636 2,636 2,063 Acquisition related intangible asset amortization 1,562 1,562 4,686 4,686 Acquisition related inventory step up - 1,458 - 6,244 Adjusted Gross Profit $ 26,977 $ 26,043 $ 76,767 $ 77,802 Unadjusted Gross Margin 57 % 58 % 60 % 58 % Adjusted Gross Margin 67 % 66 % 66 % 69 % Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Net (loss) income $ (4,175 ) $ 558 $ (9,951 ) $ 9,927 Interest and other expense, net (436 ) 48 (378 ) 141 Benefit from income taxes (1,187 ) 694 (2,404 ) 1,670 Depreciation and amortization 1,549 1,789 4,980 5,226 Stock-based compensation 3,876 2,863 10,502 7,919 Product rationalization 2,636 - 2,636 2,063 Acquisition related intangible asset amortization 1,787 1,787 5,361 5,361 Acquisition related inventory step up - 1,458 - 6,244 Change in fair value of contingent consideration - (3,450 ) - (21,920 ) Adjusted EBITDA $ 4,050 $ 5,747 $ 10,746 $ 16,631 Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted Net Income (in thousands) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Net (loss) income $ (4,175 ) $ 558 $ (9,951 ) $ 9,927 Product rationalization, tax effected 2,056 - 1,947 1,590 Acquisition related intangible asset amortization, tax effected 1,394 1,146 3,960 3,898 Acquisition related inventory step up, tax effected - 935 - 4,626 Change in fair value of contingent consideration, tax effected - (1,865 ) - (17,152 ) Adjusted net (loss) income $ (725 ) $ 774 $ (4,044 ) $ 2,889 Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share (per share data) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Diluted (loss) earnings per share (EPS) $ (0.29 ) $ 0.04 $ (0.68 ) $ 0.68 Product rationalization, tax effected 0.14 - 0.13 0.11 Acquisition related intangible asset amortization, tax effected 0.10 0.08 0.27 0.27 Acquisition related inventory step up, tax effected - 0.06 - 0.32 Change in fair value of contingent consideration, tax effected - (0.13 ) - (1.18 ) Adjusted diluted (loss) earnings per share (EPS) $ (0.05 ) $ 0.05 $ (0.28 ) $ 0.20
Anika Therapeutics, Inc. and Subsidiaries Revenue by Product Family (in thousands, except percentages) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 $ change % change 2022 2021 $ change % change OA Pain Management $ 25,665 $ 26,153 $ (488 ) -2 % $ 74,139 $ 69,790 $ 4,349 6 % Joint Preservation and Restoration 11,821 11,193 628 6 % 36,055 35,296 759 2 % Non-Orthopedic 2,778 2,190 588 27 % 6,420 6,887 (467 ) -7 % Revenue $ 40,264 $ 39,536 $ 728 2 % $ 116,614 $ 111,973 $ 4,641 4 %
