Anika Therapeutics Reports 1Q18 Orthobiologic Revenue

Anika Therapeutics (ANIK) posted 1Q18 orthobiologic revenue of US $19.5MM, -3.6% vs. 1Q17.

Following the retirement of Dr. Charles Sherwood in early March, company president Joseph Darling was appointed President and CEO. In his first earnings call in this new role, he reported on a voluntary recall, the progress of CINGAL and suspension of the CE Mark for MONOVISC. Mr. Darling has over 20 years of executive management experience at pharma and device companies, including Abbott, Baxter, ConMed, Smith & Nephew and Wyeth-Ayerst.

First, on the sales decline: revenues in 1Q fell primarily due to lower ORTHOVISC revenue and a double-digit U.S. price decline for ORTHOVISC, as the shift to single-injection treatment continues. Leadership noted that an overall decline in the U.S. viscosupplement market contributed, as well.

However, the decrease was offset by an increase in U.S. MONOVISC revenue. Globally, MONOVISC revenue grew 29% year over year, following international launches (in Australia, India and Taiwan during 4Q17) and the shift from multi-injection to single-injection regimens.

Commenting on earlier reports from Johnson & Johnson on its initiative to rationalize cost from its suppliers and the high degree of price erosion experienced by ORTHOVISC and MONOVISC in 1Q18, CFO Sylvia Cheung said, “What we learned from our partner Mitek is that it’s a combination of reacting to competitive pricing in the market as well as [a] strategic move to secure certain large accounts, and we’re seeing that on our products’ ASP for this quarter.” She continued, “What’s important to know…is that during the first quarter, the market itself declined at a double-digit rate, and despite that, our products’ growth—especially MONOVISC—was very robust. Year-over-year volume of MONOVISC went up 30%; that is certainly positive and reinforces the product differentiating features, as well as the shift in the market from multi-injection to the singe injection segment.”

CINGAL delivered 280% year-over-year growth in 1Q and is now available in 15 markets, up from 10 reported in the 4Q17 call. Rapid uptake is occurring in Canada, specifically. ANIK remains on track for potential FDA approval of the product in mid-2019. Notably, of ~50 U.S. orthopaedic surgeons interviewed, over half indicated that CINGAL would be their first line choice of treatment for knee OA based solely on product profile.

Within 1Q, ANIK commenced a voluntary recall of certain production lots of HYALOFAST, HYALOGRAFT C and HYALOMATRIX following the discovery, during internal quality testing, that the products were at risk of not maintaining certain measures throughout shelf life. No indications of safety of efficacy issues were raised. The revenue impact in the quarter is about $2MM; combined, the affected products comprised ~3% of 2017 revenue. Leadership expects products to be available for shipment by year-end, and the HYALOFAST FastTRACK Phase III trial is not affected.

Late in the quarter, ANIK learned that the CE Mark for MONOVISC was temporarily suspended; this is described as an administrative issue between ANIK and its notified body, following the increase in EU market regulations and the backlog that’s created in the regulatory process there. The temporary suspension does not relate to quality issues, and should be resolved in a few weeks.

Based on 1Q revenue, full-company revenue guidance has been revised to flat growth vs. 2017 as opposed to mid-single digit growth stated in 4Q17.

Source: Anika Therapeutics, Inc.