Anika Therapeutics, Inc. Q2 FY2025 earnings call

Hyalofast Update

• U.S. pivotal Phase III trial missed statistical significance on co-primary endpoints but showed consistent improvements. Plan to submit third PMA module in H2 2025, extend commercial timeline to 2027.### Cingal Progress
• Advancing toward NDA filing, on track to initiate bioequivalence study by year-end.### Integrity Performance
• Exceeded 2024 performance, on track to double in 2025, led 41% growth in regenerative solutions. Received 510(k) clearance for 2 new shapes/sizes for tendon repairs.### Financial Results
• Overcame manufacturing yield challenges, total operating expenses down 17%, adjusted EBITDA roughly flat. Cash and liquidity strong with $53M cash and no debt. Divestiture of Parcus and Arthrosurface completed.

In the second quarter, total revenue was $28.2 million, down 8% from Q2 2024. Commercial channel revenue was flat at $11.9 million, with regenerative solutions up 41% driven by Integrity. OEM channel revenue was $16.3 million, down 13%. International OA pain sales declined 10% due to lower yields but expected to recover. Regenerative solutions (including Integrity) contributed significantly to growth, with Integrity exceeding full year 2024 revenue and on track to double in 2025. OEM channel was impacted by Orthovisc and Monovisc pricing and demand.

Full Year 2025

• Maintained commercial channel revenue guidance $47M-$49.5M (12%-18% growth), OEM channel $62M-$65M (16%-20% decline).### Hyalofast Impact
• Revised commercial channel growth outlook to 10%-20% in 2026-2027 due to 12-month delay in FDA launch timing. Anticipate $3M revenue from Hyalofast in 2027 with full release in 2028.

Manufacturing Risks

• Prior lower production yields impacted revenue.### Clinical Trial Risks
• Hyalofast trial missed primary endpoints, affecting FDA review timeline.### OEM Channel Risks
• Pricing variability for Monovisc and Orthovisc in OEM channel.

Q: Congrats on a strong quarter. Your gross margin guidance of 58% to 59% implies gross margins returning to about 62% to 63% in the back half. What will drive the sequential improvement?

A: Gross margin for second half expected in 58%-59% range, driven by timing and pricing dynamics for J&J products.

Q: Do you have any progress to report on additional OEM partnerships to diversify your OEM revenue away from J&J?

A: No specific progress to report today, but Cingal may fit into OEM channel and will become more visible in future.

Q: Integrity has demonstrated impressive growth in shoulder. How should we think about the expanded market opportunity with new configurations for foot and ankle, knee, and hip?

A: New shapes/sizes are purpose-fit for these locations, serving $40M addressable market, with increased opportunity going forward.

Q: Given the missed primary endpoints for Hyalofast, what gives confidence FDA could approve based on secondary endpoints and international data?

A: Hyalofast has breakthrough device designation, FDA encouraged submission of full data package including secondary endpoints and international data.

Q: With regard to gross margin, how should we think about gross margin going forward as the commercial channel becomes a bigger piece of revenue?

A: Gross margin expected in range shared for second half, affected by growth in commercial channel and new products' margins.

Q: Could you sign a distribution deal prior to release of Cingal or wait for FDA approval?

A: Focus is on driving shareholder value, decision on timing driven by best way to drive value, progress ongoing with FDA.

Q: Is there sufficient capacity to meet demand for Integrity, Cingal, Hyalofast over the next several years?

A: Continued investment in facility, CapEx forecasted is appropriate for ramp, but will continue to upgrade equipment.

Q: Any more detail on reduced sample size, higher dropout in Hyalofast trial?

A: Study had 200 patients, dropout in microfracture arm, missing data due to COVID, FDA encouraged submission of full data package including all analyses.

Q: Is the $14 million investment in the regenerative portfolio still holding?

A: Investment is still on track, but constantly evaluating strategic investments for optimal outcomes.

Q: Any update on Integrity surgery numbers?

A: Focus on top-line performance, but Integrity is overachieving and on track to double, with more updates to come.