Sylvia Cheung – CFO Charles Sherwood – President and CEO.

Mark Landy – Summer Street Joe Munda – Sidoti & Company.

Good day, ladies and gentlemen and welcome to the Q3 2014 Anika Therapeutics’ Earnings Conference. At this time, all participants are in a listen-only mode. Later, we will conducting a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the call over to Sylvia Cheung; CFO, you may go ahead..

Thank you, Andrew. Good morning everyone and thank you for joining us. If you have not received a copy of the Anika news release, which was issued yesterday after the market closed or you would like to be added to our distribution list, please contact Sharon Merrill Associates at 617-542-5300.

The news release is also posted in the Investor Relations section of our website at anikatherapeutics.com. In addition, a slide presentation is posted on our website. It illustrates many of the key points we’ll be covering during today’s call. The slides can be found in the Investor Relations section, under the Events, Webcasts and Presentations tab.

We invite you to take a moment to open the file and follow the presentation along with us. Please turn to slide number 2. Before we begin, please remember that, the statements made in this call, which are not statements of historical facts are forward-looking statements as defined in the Securities and Exchange Act of 1934.

These statements are based on current beliefs and expectations of management and are subject to significant risks and uncertainties. The company’s actual results could differ materially from any anticipated future results, performance or achievements. Please see our SEC filings for more information about factors that could affect our results.

Please turn to slide 3 and I will begin our third quarter financial and franchise review. Anika continued to deliver strong results in the third quarter of 2014. Total revenue increased $4.3 million or 24% from the third quarter of last year to $22.1 million. Product revenue grew $5 million or 29% compared with the same period of last year.

In Orthobiologics, our largest franchise, product revenue grew 47% from the third quarter last year. Although product revenues associated with the Monovisc U.S. commercial launch contributed to this growth, U.S. sales of Orthovisc continued to be our major Orthobiologics growth driver during the quarter.

Orthovisc has successfully maintained its position as a market leader in the U.S. multi-injection segment and number two U.S. brand in viscosupplementation overall. As a result of this superior product qualities and our U.S. distribution partner DePuy Synthes Mitek Sports Medicine sales and marketing efforts.

Orthovisc continues to grow at a rate well in excess of the U.S. growth rate. Third quarter Orthovisc’s revenue from end market sales by Mitek grew approximately 15% from the same period last year. Having both Orthovisc and Monovisc in our U.S.

portfolio positions Anika is the only company that offers both a high performance multi-injection product and a novel single injection product. Monovisc continues to be very well received by the orthopedic physician community and by patients and has been steadily gaining domestic market share since its U.S. in the second quarter.

The improvements we expect in reimbursement and access to formularies for Monovisc should significantly strengthen our U.S. single-injection market position in the month and years ahead. In the surgical franchise, revenues for the third quarter of 2014 were up 28% from the third quarter of last year.

This growth primarily reflected order timing of our lead surgical product Hyalobarrier. In the dermal franchise, product revenue increased 50% from the third quarter of last year of a comparatively small base.

In the ophthalmic franchise, revenues decreased 74% from the third quarter, as we have reported on previous conference calls, our major ophthalmic partner Bausch & Lomb has delayed its 2014 orders until the fourth quarter. Also as previously reported, B&L have decided not to renew its contract with Anika beyond 2014.

Given that our Ophthalmic franchise has been low margin and diminishing inside for the past few years. This division should not have a material effect on our results going forward.

Our remaining ophthalmic customers have generated in the low single-digit millions of dollars range of revenue for the past few years and we expect this run rate to continue going forward. Please now turn to slide 4, for the income statement highlights.

Anika’s product gross margin increased 6 percentage points from the third quarter last year to 74% primarily due to favorable product mix and product cost reductions. Our product gross margin is affected by product mix among other internal and external factors.

For the full year 2014, we anticipate product gross margin to be in the high 60% to low 70% range. Moving down to P&L, total operating expenses for the third quarter were up 18% from the same period last year. This increase was primarily due to higher selling, general & administrative expenses.

SG&A increased 27% year-over-year, due to increases in personnel related costs, higher external professional fees and increased corporate governance cost. Cost of product revenue was 6% year-over-year as a result of increase in product revenue. Research and development expenses were slightly higher.

Our research and development spending is primarily focused on Cingal clinical trial, which continues to make good progress. More detail on our research and development activities will be provided later on this call. Operating income for the third quarter of 2014 was $10.3 million, up 32% from $7.8 million in the third quarter of 2013.

Net income increased to $6.2 million or $0.40 per diluted share from $5 million or $0.33 per diluted share a year earlier. Our growth in both operating income and net income for the quarter was driven by the higher product gross profit as well as operating efficiency improvements. Turning to slide 5.

Anika’s cash and investment position grew to approximately $92 million at September 30, 2014 from the $63 million held at last year end. The increase which primarily driven by growth in cash from operations including U.S. Monovisc milestone revenue earned during the first and second quarters of this year.

Anika is well positioned to deliver another year of revenue growth and improved profitability in 2014, but we tempered our internal expectations for the fourth quarter and full year. Among with the others in the viscosupplementation market, we face the challenge of making up ground that was lost during the first half of the year.

The market has bounced back to a high single-digit growth rate from the approximately flat and 6% growth rate in Q1 and Q2 respectively. In addition, we are facing three issues that will put pressure on Q4 revenue growth. First, while physicians and patients continue to react very positively toward Monovisc.

The general J-Code for Monovisc is proving to be more of an impediment than we and Mitek anticipated in physician ordering practices. As a result, we’re unlikely to see a truly meaningful uptick for Monovisc in the U.S. until we can benefit from receiving the unique J-Code, which won’t occur until January 2015 at the earliest.

Second, DePuy Mitek has determined that they can achieve their targeted viscosupplementation product revenue growth in the U.S. with a lower inventory level than in the past. This is expected to impact our 2014 product revenue by close to $2 million.

Internationally, we’re seeing a low single-digit $1 million revenue shortfall for the year, primarily in viscosupplementation area or Orthovisc. This reflects weak European economies and slower than slant expansion in certain European, Middle East and Asian markets.

Against this backdrop, we’re working towards achieving a record $100 million mark for total revenue with the upside of additional milestone revenue up on CMS’s assignment of a unique J-Code for Monovisc. It is important to note that, the demand in the U.S. market remains strong.

At the same time, we’re also refocusing on building momentum and capturing new markets internationally. With anticipated new product and inline extensions within the next 18 months, our near term prospectus continue to be promising. This concludes our financial and franchise review. Please now turn to slide 6, for Dr.

Charles Sherwood’s review of business highlights..

Thank you, Sylvia. I will begin with Orthobiologics, which is now and will continue to be Anika’s largest franchise for the near-term. As we stated previously, our revenue goal is to reach a 15% share of the global viscosupplementation market by the end of 2018. We’re executing on our three part strategy to achieve this goal.

We may progress in each of the areas in the third quarter. The first leg of this strategy is to leverage our leadership in the U.S. as the only branded viscosupplementation offering with both single and multi-injection options. We expect our commercialization of Monovisc in the U.S.

to generate greater brand awareness for Anika, which should drive market share gains and revenue growth for both Orthovisc and Monovisc in 2015 and beyond in the United States and also internationally. Our U.S.

distribution partner DePuy Synthes Mitek Sports Medicine or Mitek is fully committed to supporting this strategy and working to maintain the strong position we’ve already established for Orthovisc in the multi-injection market, while at the same time rapidly capturing single-injection market share with Monovisc. We’re off to good start.

Monovisc continues to be very well received by the orthopedic physician community and by patients. We believe the majority of our U.S. Monovisc sales thus far reflect conversions by physicians and patients, who previously used competing single-injection products rather than cannibalization of the Orthovisc product.

As a result, we’re exiting the third quarter with an approximate 1% share of the U.S. single-injection market, up from zero just a few months ago. This puts us slightly behind in terms of reaching our previously stated goal of 2% to 3% of the U.S. market share by the end of the year.

Monovisc has been well received by the orthopedics physician community but as Sylvia stated reimbursement is proving to be more of an impediment than we and Mitek had anticipated. Monovisc currently has a general NOC or Not Otherwise Classified code instead of a unique J-Code.

Using a general code means the practices starting with Monovisc need to know this code and then amend their systems to addict. This lengthens the time required to process claims and affect payment. While there is huge interest and many accounts are trying the product, the individual order size remain small until reimbursement is assured and simplify.

We started the reimbursement application for Monovisc last year. In May of 2014 we successfully completed a review meeting with CMS. We continued to expect that CMS will announce new unique J-Codes in November and if Monovisc is approved, we anticipate having an active unique reimbursement code starting in January of 2015.

Based on this time table and the positive response we’re seeing in the market place, we believe that, Monovisc has the potential to reach a 5% share of the U.S. single-injection market during 2015. Please now turn to slide number 7.

Strategic goal number 2 in Orthobiologics focus is on driving viscosupplementation product revenue growth internally by expanding our distribution network into new markets where we’ve identified attractive opportunities.

Our progress on this initiative is being driven by international Monovisc sales, which were up 40% in third quarter year-over-year and are on track to achieve a similar growth rate for 2014. Overall, international viscosupplementation revenue was relatively flat to third quarter last year, which was softer than we targeted internal.

Monovisc is cannibalizing Orthovisc to some extent in a number of international markets and we continue to see more intense pricing pressures. Adding new high-quality distribution partners to the network is generally taking longer than we had planned.

We believe that, one of the best ways to address these issues is to focus our international development efforts on Asia, where our single-injection products both Monovisc and our newest single-injection product Cingal will be unique in the market place.

During the third quarter, we signed distribution agreements for Monovisc in Taiwan, Hon Kong and more importantly in Japan. Japan is the world’s second largest viscosupplementation market and when that highly values the kind of product innovation we’ve demonstrated with both Monovisc and Cingal.

Cingal for review is our HA plus steroids single-injection product offering. The product is designed to rise the convenience and efficacy of Monovisc with an added early symptom released benefits of commonly used steroid.

The contract we signed for Monovisc in the third quarter enables us to enter the Japanese market for the first time initially on a named patient basis. We hope this will be the first milestone among many as our presence in Japan expands in the years ahead.

We envision Cingal being part of this presence and we’re currently exploring partnership opportunities for Cingal with a number of Japanese companies. Please now turn to slide number 8. Our third strategic initiative in Orthobiologics is focused on bringing new products to the market. Starting with Cingal, we’ve made progress this quarter.

We’ve completed the clinical work including the patient follow-up phase and our ongoing multinational Cingal trial during third quarter as planned and we’re on track toward completing the bio-statistics analysis and submitting our CE marked application by the end of 2014 or shortly thereafter.

If we meet all our Cingal study endpoints in a clinically and statistically effective fashion we fully intend to take these trial results and submit a PMA for Cingal with the FDA.

Given the success of our recent dialogue with the FDA related to Monovisc, we believe that we’re in good position to put forth a credible PMA for Cingal if the results of the current trial are supportive. During the third quarter, we also initiated planning activities for an open-label extension study of the current Cingal trial.

This extension study is designed to collect safety data from the re-treatment of approximately 240 patients with Cingal to support a re-treatment labeling indication.

We expect the patient follow-up in the study could be completed around mid-2015, and to use the resulting data not only for CE submissions but for potential submissions of the FDA as well. Turning now to Hyalofast. As I mentioned, our goal is to make the product available as a one-step cartilage repair solution in the United States.

Hyalofast delivers proven results as a generic medicine for the knee in the sports medicine setting. Not only it is easy to use and economic to deliver, but our hyaluronic acid capsule has been demonstrated as safe and effective in over 5000 patients internationally.

During the quarter, we’ve received and encouraging response from the FDA on the proposed design for an investigational device human clinical trial protocol for Hyalofast. We had pre-submitted the protocol to the FDA in the second quarter. We remained on track to commence the study in mid-2015.

During the past year, we have made progress from a clinical regulatory and commercial standpoint. However, we need to accelerate our progress in each of those areas to achieve our long-term goals. As a result, we are enhancing our leadership of these critical functions. First, joining us is Chief Technology and Strategy Officer is Dr. Edward Ahn.

Edward will be leading our research and development efforts and developing strategies to accelerate Anika’s growth. He brings a valuable combination of business acumen, corporate strategy, product development and scientific expertise to this position.

He was most recently the Chief Scientific Officer of a strategy and venture capital group focused on M&A transactions in the medical device, biologics and pharmaceutical space. He also has lead the product development and R&D functions for other medical device companies. Mr.

Frank Luppino, who has been in leadership roles of the company for over 10 years will return as Chief Operating Officer on a contract basis. He will be taking over Anika’s operations, quality, clinical and regulatory areas. Recently Frank was instrumental in working with the FDA on our successful approval of Monovisc.

We’re delighted to have Frank leading company in these areas once again. Mr. Edward Gaj, currently our Vice President of Business Development will become our new VP of Commercial Operations.

Ed who has been with the company for a total of 11 years in a myriad of commercial roles was a major contributor in negotiating contracts with Mitek for the distribution of both Orthovisc and Monovisc, which have been key to Anika’s recent success. He also recently worked to secure Medline as a distributor for Hyalomatrix.

We look forward to benefiting from Ed’s experience in his expanded role. All of the functional areas that I’ve discussed had been previously lead our former Chief Scientific Officer and Chief Commercialization Officer who will be leaving the company after a very brief transition period.

All three of our new leaders bring a great deal of relevant experience to their roles and we are confident that, their commitment and expertise will go a long way in moving the Anika team forward at a faster pace. Please turn to slide number 9. Before I turn to the outlook. I have some brief comments on our dermal franchise.

We’re optimistic about the prospectus in our advanced wound care/dermal franchise. We believe that advance wound care is on track toward becoming a double-digit million dollar business for Anika in the next two or three years.

With several Latin America product approvals anticipated in the next couple of months, we expect to see stronger dermal franchise product revenue growth in Latin America in 2015. In the U.S. we’re focusing our current efforts on Hyalomatrix our novel HA capital product for the treatment of severe skin burns and ulcers.

Last quarter, we signed a new distribution agreement for Hyalomatrix with Medline Industries, the largest privately held manufacturer and distributor of health care supplies in the country and number two in the wound care market.

Medline place an initial small product order for Hyalomatrix in the third quarter and they’re now preparing for product launch at December and reimbursement study in 2015. With a U.S.

distribution partner in place and expanding international distribution network and solid progress in product approvals, we believe that our advance wound care franchise is well positioned to deliver high double-digit annual growth in 2015. Let us turn now to the outlook on slide number 10. Looking back at 2014 to-date, U.S.

viscosupplementation market was relatively weak during the first half of the year as Sylvia pointed out. Our product sales grew quiet well nonetheless. U.S. viscosupplementation demand has steadily grew since its slow start and we currently believe the market growth for 2014 will be in the mid to high single-digit range.

With Monovisc rolling out along with ongoing strong demand for Orthovisc, we continue to expect our growth rate for the year to achieve this range. We have two new products, Cingal and Hyalofast advancing toward commercialization.

We are continuing to add the organizational and operational capabilities we need to expand beyond viscosupplementation and deliver on Anika’s growth potential. Our product pipeline is a strong and sustained in many years. At this juncture, I believe it’s important reflect on our past.

Our quarter-to-quarter results have always been somewhat lumpy, but our annual growth has always been consistent. This is one of the characteristics our distributor based business model. Our business and future prospectus due remain very robust, but the quarter-to-quarter variations will remain a part of our growth for the foreseeable future.

Q4 will be an exciting time for Anika with the J-Code decision in the Cingal clinical result forthcoming and we look forward to reporting our company progress on the next earnings call. And with that, I’ll turn the call back over to Andrew to take any questions that you may have..

Thank you. (Operator Instructions). First question comes from Mark Landy of Summer Street. Your line is open..

Good Morning guys..

Good morning..

Good morning..

I guess I use my one question.

Cingal trial, would you press release the data when you get that or how should we think about the release of the Cingal data when you get it?.

I’ll make no commitments to guarantee that we will press release the data when we get the data, because of course in the past we’ve never done that. However we’re still trying to formulate our approach to that.

So, I won’t say yes and I won’t say no, but historically we’ve really haven’t done much in that area before and we’re looking to see what the best thing to do is and also we spent a lot of time trying to understand how we will go beyond that and actually publish the data in a reputable journal as well.

So I can’t make any commitments to you but certainly we’ve build a sub so we have to find some way of communicating the result in a timely way..

My follow up would be it sounds like and you’ve telegraphed in the past that you’re going to be using the current data as the basis for the PMA? So is it fair to assume that, the PMA will be submitted some part in the first half of 2015 probably towards the latter half of the 2015, towards the latter half of the first half of 2015?.

Basically yes, with the caveat that the clinical end points are med in a statistically effective and clinically meaningful fashion, because this is the standard for the FDA. The protocol is one that has very, very similar to what we’ve used in the past.

We’ve powered the study based on our experience in the past and so, if we meet all of our end points with robust performance, there is no reason why the trial would not meet the criteria necessary for PMA approval..

Thank you..

Thank you very much. Our next question comes from the line of Joe Munda from Sidoti & Company. Your line is open, sir..

Good morning, Sylvia and Chuck. Thanks for taking the question..

Good morning, Joe..

Sylvia, I guess my question would be the $100 million that you referenced, was that for 2014 or 2015?.

It’s referring to 2014..

Okay.

Total revenue?.

That is correct..

Okay, and then I guess my follow-up is, Chuck if all goes well with Cingal and the trial, when could you in your mind think of a launch for the product?.

That’s a really difficult question to answer Joe, but if we’re able to, if the trial results were good and then we were able to put together a credible submission and we were able to do that in let’s say 6 to 8 months and given the FDA approval cycle maybe a year you can add up the time and then so maybe sometime in what is that come to late 2015 or early 2017.

That’s if all goes really well. I would point out to you that you mentioned launch, the Cingal product in the United State is still unpartnered. Well, I’ll leave it there, it’s unpartnered..

Okay. Thank you..

Thank you. That’s all the time we have for questions and answers today. I would like to turn the call back over to Mr. Sherwood for any further remarks..

Well, once again I would like to say thank you to everyone who participated in the call for your input and also for your interest in Anika. I truly believe that, these are exciting times for us and we do look forward to reporting to you once again on the fourth quarter and year-end earnings call. Thank you..

Ladies and gentlemen, thank you for your participation in today’s conference. This now concludes the program and you may all disconnect. Everyone have a great day. Speakers’, please remain on the line..