A huge milestone payment added to the winning results for this biotech in its last quarter, and a healthy pipeline and new president promises to keep the company in a fast-growth mode.
Anika Therapeutics (ANIK)
From The Periscope Report
Anika Therapeutics (ANIK) provides therapeutic pain management solutions for patients with degenerative orthopedic diseases and traumatic conditions. The company develops its therapeutic products based on its proprietary hyaluronic acid (HA) technology.
The orthobiologics products comprise ORTHOVISC, MONOVISC, and CINGAL for the treatment of osteoarthritis of the knee.
Management confirmed its guidance for the full-year 2017, with total revenue growth in the high single-digit to the low double digits. Management expects total operating expenses for the full-year 2017 to be in the high $60 million to low $70 million range. Capital expenditures are expected to be $8 - $12 million for the year. Management did not provide earnings guidance. Management provided guidance for the 3Q of 2017, with a “slight improvement in the rate of product revenue growth from the first half of 2017.”
For the 2Q of 2017, management was expecting revenue to be “up marginally” on a YoY basis. Actual revenue growth came in at 26% due to a large one-time milestone payment. For the 2Q ended June 2017, total revenue increased 26% YoY to $33.5 million, after increasing 5% YoY in the prior quarter. Revenue was up 43% sequentially.
Gross Profit increased 32% YoY to $27.1 million, after increasing 3% YoY in the prior quarter. The GPM increased 350 basis points YoY to 80.7%, up from 77.2% a year ago, and up from 74.0% in the prior quarter. Operating Income increased 31% YoY to $17.7 million, after decreasing 25% YoY in the prior quarter. This was the first increase in OPM in five quarters, a significant event.
Net earnings increased to $0.76 per share, up from $0.57 per share a year ago, and up from $0.37 per share in the prior quarter. ANIK clobbered the mean estimate by 32 cents. (Research Note: the beat was due to ANIK receiving an “unexpected” $15 million milestone payment in the quarter, which we discuss below.)
On the conference call, CEO Charles Sherwood, Ph.D., said the “unusually strong 2Q” was driven by very robust demand for MONOVISC worldwide. MONOVISC U.S. end-user revenue increased 56% YoY and significantly exceeded expectations for the 2Q.
Plus, the 2Q included $5.0 million in milestone revenue earned as a result of MONOVISC achieving $100 million in U.S. end-user sales within a consecutive 12-month period.
International Orthobiologics revenue increased 50%. Additionally, CINGAL continued to gain momentum in Canada and Europe, and ANIK made considerable progress enrolling patients in the supplemental Phase III trial of CINGAL during the 2Q.
ANIK is advancing its product pipeline with continued progress on enrolling patients in the FastTRACK Phase III HYALOFAST study for cartilage repair, as well as the Phase III MONOVISC study for the treatment of osteoarthritis pain in the hip.
During the 2Q, ANIK hired a new President in Joseph Darling who has more than 20 years of executive management experience from commercial-stage, publicly-traded companies, including ConMed, Baxter, Smith & Nephew, and Wyeth.
ANIK has a $25 million accelerated share repurchase program in place for 2017.
ANIK is well-positioned to achieve a $250 million annual revenue run rate by 2020, assuming the approval of CINGAL in the U.S. as planned. ANIK has a deep and differentiated late stage pipeline to drive sustained growth. There are five strong developments programs underway based on the HA technology platform and each program represents a significant marketing opportunity.
This was great quarter mainly due to the huge milestone payment that greatly improved margins. With a new facility in Massachusetts and another one in Italy, plus expected FDA approvals on two new products, we think the company will deliver hyper-growth for 2018 – 2020.
Tom Byrne, The Periscope Report, t2byrne@gmail.com, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602-9799, 406-465-4663, July 2017