Good day ladies and gentlemen and welcome to the fourth quarter 2008 Anika Therapeutics investors conference call. (Operator Instructions). I would now like to turn the call over to Mr. Kevin Quinlan, Anika’s Chief Financial Officer.

Good morning everyone. If you have not received a copy of the Anika news release which was issued yesterday after the market closed or would like to be added to our contact list, please contact Sharon Merrill Associates at 617-542-5300. The news release is also posted on Anika Therapeutics’ website at www.anikatherapeutics.com. Also, I want to mention that we have slides posted on the Anika website that illustrates some of the financial information we will be discussing during today’s call. These slides can be found on the Investor Relations section of the site 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. Before we begin, please remember that the statements made in this call which are not statements of historical fact are forward-looking statements as defined in the Securities Exchange Act of 1934. Words such as will, believe, appear, plan, expect, anticipate, forward, seek, continue target, goals, objectives, on track, intend, pursue, outlook, as well as other expressions which are predictions or indications of future events or trends and which do not constitute historical matters identify forward-looking statements. These statements are based on the 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 described in the forward-looking statements as a result of a number of factors which include those set forth in last evening's press release, the company's SEC filings, and other press releases. Please move to slide 3 as I turn the call over to Anika's President and Chief Executive Officer, Dr. Charles Sherwood.

Thanks to everyone for joining us this morning. Since this is our year-end call, I would like to start with a quick review of our accomplishments in 2008. Then, Kevin will review our financials for the fourth quarter and for the year, and I will be back with a discussion of each of our product franchises. Looking at the full year, we turned in another solid financial performance. We grew total revenue by 16% and product revenue by 23% on the strength of our expanding suite of innovate HA-based healthcare products. Very favorable demographics and marketing trends continue to help drive the demand that we are seeing in our markets. We also completed our sixth consecutive profitable year. As expected, earnings per share went down from $0.53 per share to $0.32 per share as a result of the significant investments that we are making in our state-of-the-art facility and in the development of some exciting new products. We see these investments as instrumental in taking Anika to the next level and expect them to yield substantial benefits. Kevin will add some additional data on this later on in the call. We are particularly proud of the progress we made in advancing our joint health franchise. We achieved record ORTHOVISC US product revenue in 2008, and we believe we are on our way to another record-breaking year in 2009. US product revenue grew 31% in 2008 from the prior year. Internationally, we saw significant revenue growth in several European territories including Germany, Austria, Hungary, Italy, Greece, and Turkey. Another accomplishment is the investment we have made in new product development. We launched two new products in Europe in 2008 including Monovisc, our single injection osteoarthritis product as well as ORTHOVISC mini for the treatment of smaller joints. We also completed enrollment of our US pivotal clinical trial for Monovisc and received positive 6-month data from our European trial. Later in the call, I will provide more insight into Monovisc, which we see as a strong growth driver for Anika. We have also made great progress in the development of our new facility. The associated manufacturing approval process is moving forward on schedule, and we see this as an important achievement for this year. So, with that as a recap of the year, I would like to turn the call back over to our CFO, Kevin Quinlan to review our financial results, and then I will be back to go over our operations in some more detail and provide an outline of our goals for 2009.

Anika ended a successful year that Chuck just spoke about with a solid fourth quarter performance. We achieved record US sales in the quarter for our ORTHOVISC product line and continued to grow the entire joint health franchise. We expect this trend to continue as we ramp sales of our newest products in this franchise, Monovisc and ORTHOVISC mini. Please turn to slide 4 in the presentation. Total revenue in the fourth quarter was $9 million. Although this is a decline from a year ago, it is important to note that we recorded $1.2 million of revenue related to the termination agreement with Galderma in the fourth quarter of 2007. Excluding this payment, we would have seen year-over-year growth for the quarter. Year end 2008 total revenue on slide 5 was $35.8 million, up 16% from last year, and on slide 6, you can see that 2008 product revenue at $33.1 million increased 23% over 2007. This is due to the growth of our joint health franchise as well as incremental sales of HYVISC and ELEVESS. Looking in depth at each of our product areas, if you turn to slide 7, you will see that joint health revenue increased by 9% for the quarter and 38% for the full year. As you can see, the growth occurred in both international and the US markets. For the full year, ORTHOVISC revenue was up 33%. International sales of ORTHOVISC grew 36% over 2007 and domestic sales of ORTHOVISC were 31% higher than in 2007, continuing a favorable trend. We continue to see sales growing in Europe for Monovisc, our single injection osteoarthritis treatment. We have high expectations for this product and believe that Monovisc will continue to gain traction in Europe. We are focused on the development and expansion of Monovisc in…

Let us get right into our product franchises starting with joint health. This is the franchise where we see the greatest growth opportunity for Anika and where we have made the most progress in the past year and in Q4. As Kevin mentioned, ORTHOVISC performed very well in the quarter. Domestically, Mitek turned in another strong quarter in terms of unit sales with a 21% year-over-year increase in Q4. Given the strong efficacy of this product and a safety profile that is among the best if not the best on the market, we believe we will continue to grow market share in the US. Mitek estimates that they have now captured 10% market share domestically and we expect that to grow in 2009. During the quarter, we made strides in broadening our presence throughout the world with new relationships in Europe, the Middle East and Southeast Asia. We continue to see a significant opportunity for ORTHOVISC abroad considering the still narrow distribution of the product around the globe. Currently, ORTHOVISC is the only product approved for use in all synovial joints. We are very active right now independently and in conjunction with our partners to pursue post marketing studies to gain additional clinical data in support of the expansion of this product into other joints. Already we offer ORTHOVISC mini, our formulation in the smaller size intended for use in small joints such as thumb, big toe, and ankle. Monovisc, our first osteoarthritis treatment that could be administered as a single injection continued to gain traction in the quarter. Monovisc was approved in Europe and has received enthusiastic response from patients and clinicians since its limited launch in May. We also expect to receive marketing approval very soon in Canada, and recently renewed our distribution agreement in that country to…

(Operator instructions). Our first question comes from the line of Gary S. Siperstein - Eliot Rose Asset Management.

Congratulations on a very solid fourth quarter, it was much better than I was expecting. I have several questions, I want to start off with Chuck; you mentioned how the weak economy wasn’t negatively affecting ORTHOVISC and just the contrary it might help ORTHOVISC, so is that sort of what you saw in the fourth quarter after Lehman Brothers went out of business and the world took a dive down in October-November, it didn’t seem to affect, it was steady for the quarter and continued into this year?

Gary, Kevin is going to grab most of the questions because I am a bit under the weather with a flu.

We did see the business hold up just fine in the fourth quarter. As I mentioned at the very tail end of my remarks, we are seeing some cautiousness in terms of behavior, I think that’s only practical at this point with some of our distributors, so, we might not come out of the box as fast as we would like, but we do not see this being a long-term impact and we think that the year can be a solid year in terms of growth for us.

As in situ, we network with several orthopedic companies and we heard some rumblings about sales of joint replacement products being down or starting to be affected by the recession, so we put two and two together.

So is that actually happening out there, where for these surgeons and different people that they are not making money, the docs themselves on knee replacement, they’ll go to the injections?

Well, we’ll have to see, there was a bit of speculation on our part, but I think people might be more amenable to giving viscosupplementation a try because it’s a pretty economical treatment option.

Spectacular improvement on the gross margin in Q4, was that a fluke or was it due to the growth in sales, so that really didn’t entail obviously any improvement from the new facility?

Q4 was more of a fluke and I would look to the full year 50% figure as being representative of the year where we expect to be in that same neighborhood, may be slightly better for the full year 2009, but don’t go by the 66% in Q4.

Okay, 60 is great as well, but once you’re in production in Bedford, would we look for that to improve in 2010?

I think initially for 2010 you’ll have to take a look at it from a standpoint of, this is kind of a complicated answer, but you’ve got a facility that’s pretty much at full capacity in Woburn, and you’ve got a facility that’s both for a much larger volume of business and it’s much much bigger in terms of square footage. So, your cost structure is higher; as you would expect, our fixed cost in the new facility would be higher, so we may step back a little bit in 2010 in terms of margin, but we also expect that 2010 volume will be a lot higher which will absorb some of that. So, we’re going to start hitting more probably in the 2011 timeframe. So, I’ve seen improvement in 2009 in our margin because most of our production will take place in the existing Woburn facility, may be step back a little bit in 2010 and then see improvements from there.

What do you expect total capacity to be in Bedford?

That’s a tough question to answer, I’ll just say it’s going to be a lot more than what we’re doing currently with the volume.

Kevin, were there any charges in the fourth quarter or write-offs associated with Artes and ELEVESS?

Nothing significant.

And you mentioned you took down the balance of the loan for the fit of Bedford and spent $29 million, you said total of 32; so the 3 million left, and then we’re sort of done with that outside of regular CapEx going forward?

That’s correct.

Just before you go on, I want to partially amend my answer about the US mark write-offs and there weren’t any significant ones as I said; however, as you may imagine, there was some revenue that was generated in terms of product shipments in the fourth quarter which of course did not in the end get corrected or reflected as sales, but that was all within the fourth quarter.

And do you guys have any ETA on when you’ll be submitting the Monovisc approval? Kevin W. Quinlan Yes, before the end of the year, we expect to submit a PMA application.

We got over 350 patients in this study and about 35% of them were done as of February, and we believe that we will complete just about 85% of them by the end of April. So, by June we should be done with the 6-month evaluations and then it’s a matter of putting the data together for the submission and getting it in. We made pretty good progress on getting patients through the study.

So, the application by year end ’09; would they have 180 days to respond or…

Yes, we’re hoping to get the use of modular approach and get some of the preclinical work in early such that we’re left at the end of the year with only the clinical section, and the value of doing something like that is that you get the questions on all of the preclinical and other early work out of the way and then when you submit the clinical, all they’re really looking at is the clinical. So, that’s our plan at the current time.

Last year you guys got Mitek to, I believe it was take over South America; can you give us any color on the progress in various countries for them to get registered and ready to sell?

Yes, certainly. They’re in high gear in terms of the registration process for the various countries that are involved. As you might guess, there are 4 or 5 key countries, Brazil and Mexico among them, where they’re initially focused on the approval process. It’s anywhere from 6 to 9 months timeframe or so to get to that approval process, up to a year in Mexico. So, we should start seeing sometime in the second half of 2009 some revenue coming out of that area.

Second half of ’09; super. I have more questions, but I’ll give someone else a chance and get back in queue.

Our next question comes from the line of Shaun Bevik - SIG.

I have a few here. With regard to the new distribution partner for ELEVESS, do you have any expected timeframe on when we might see that?

Yes, we’re working diligently on that we’re hopeful that by mid year we’ll have someone signed up.

Is this by any chance one of the partners that you guys had looked at previously or are you looking at new partners as well?

I think you could say that there are some people that we’d looked at previously that are candidates currently.

What kind of impact do you guys anticipate with the approval of Genzyme’s Synvisc-One in the US? Do you think that will have a hit on ORTHOVISC in the US?

I think that’s an interesting question. We do not expect it to have a significant impact on ORTHOVISC. The number of injections is not the primary driver in terms of the marketplace and which products are going to be used. There is a segment of the market that will adopt single-injection products, but had a 10% market share which is roughly where we’re at currently in the US. We’re still at a nice level in terms of taking market share and growing. We don’t expect it to impact our business.

The questions that were just previously answered; you think that the Monovisc could probably get approval by the end of this year in the US?

No, we said we would submit the application for approval by the end of this year, and we’d be looking at sometime in mid to second half of 2010 for approval.

How should we think about R&D in 2009 versus 2008; are you guys going to keep spending more for these clinical trials or would it be a flat line with what we saw in 2008?

Certainly, we’re not going to see the dramatic increases in either R&D or for that matter SG&A that we saw in 2008 versus 2007, and so we’ll see more modest growth in those areas more consistent with revenue growth; probably less than the revenue growth.

Did FX have any impact this quarter?

No, pretty much all of our revenue is based on US dollars and while we have a supply contract or two that are somewhat tied to foreign exchange. They’re not material enough to have a big impact.

Lastly, what was the cash from Ops in the quarter?

I’m sorry. What did we generate for that?

Cash from Ops? Yes, in the quarter.

That was about $3 million approximately; I actually don’t have that with me.

But roughly somewhere around $3 million?

Yes.

Our next question comes from the line of John Capano – [firm unknown].

Thanks for the update on the CapEx remaining for the new facility, that’s a good inflow. My first question, you just said to the Susquehanna guy that we can expect SG&A and R&D to not grow too much in ’09, but we’re not going to see those expenses decrease in ’09?

That’s correct. We still have some important clinical trials that are going on and we’re a growing company; I would not expect to see any of our expense items decreasing as we’re growing.

When are we going to start seeing these expenses coming up for the Cingal trials; ’09 or ’10?

We’re going to partly see them in ’09.

ELEVESS in Canada; Canderm, when can we expect to see a launch from those guys?

I think at this point we’re still in discussion about what’s the plan there for the launch.

So, not anytime soon?

Not sure.

Our next question comes from the line of Gary Siperstein - Eliot Rose Asset Management.

You just talked about ELEVESS in Canada; didn’t we sign up some countries in South America, are they also waiting to launch, waiting for the US launch before everything goes; is it expected to be a coordinated launch?

We have signed up some countries in South America and they are currently selling in couple of the smaller countries. We’re also about to sign up several countries in Europe and expect to have some contracts signed there shortly.

But separate from contracts, are all these ancillary countries waiting for the US partner to…

No, it has nothing to do with that. They’re completely separate.

So we can start seeing some launches this calendar year prior to assuming you get a US partner by June 30th as you mentioned, if they take 3 or 4 months to launch in the US, but we could possibly have some launches prior to that in some of these other countries?

Right, international sales are independent of US sales. So, we’re waiting to get some of the final promotion and launch plans together outside of the States, but we’ll certainly see some sales in Europe and potentially also in Latin and South America in 2009, independent of what happens in the US.

In terms of Cingal; you’re billing exclusively 100% of the cost on Monovisc to extensively get a better deal for distribution once you get FDA approval; is that the similar game plan on Cingal and would the party who wants Monovisc also be interested in Cingal?

I would think that the party who might be interested should partner Monovisc would be very interested in Cingal as well, and the timing is such that if there’s a deal involving both of them and one is still in a developmental phase then presumably the ongoing developmental expenses for that product maybe covered by the partner, but it’s all about timing Gary.

Yes, that’s what I was going after; might they pick up some of the Cingal expenses going forward, whether that’s in calendar 2010. Is it possible to have a partner on Monovisc post submission to the FDA, but prior to their decision?

Sure.

And is that the game plan? Obviously, you can get more value after an FDA approval, but to take some of the risk away; is it the company’s game plan to try to have a partner before the FDA decision?

I think if we’re going to go down the partnering route, yes. It wouldn’t make sense really to wait until after we got approval because then of course we would have a gap in the timeframe between the approval and when we could actually launch the product. So, the obvious time to conclude discussions with a partner is after you’ve made your PMA filing.

So, the PMA is late ’09 and you hear back from the FDA by June 30, 2010, at the latest, and sometime in the first half of ’10 ideally you partner up?

Or before.

Or before, okay. I know it’s been a bad market and so forth and so on and it’s hard to get analyst coverage, but we’re down to one analyst in print. I’m wondering if you’re satisfied with the current IR firm and maybe we can get some new blood in there who could be more productive; any thoughts on that?

Considering they’re on the line I’ll let Kevin answer that.

I don’t think this is the place for that type of a conversation. Overall, I think we are very satisfied with the IR firm, and keep in mind that there are two parties involved, there is the company and management and getting out on the road and seeing prospective investors as well as the IR firm that’s helping to provide materials, coordinate the process, identify prospects, and we have been putting our focus on a number of very important business aspects for the company during 2008 and have spent a lot less time on the road than they would have liked us to expend. So, you can’t do both in a small company. I think you’ll see us spending some more time on this now that the market seems to be close to a bottom; I’m talking about the overall broad market. To a certain degree we felt the second half of the year we were going to be fighting a tide regardless because as everyone knows, the worldwide stock markets have been abysmal.

Okay, that’s fair, and you guys mentioned responding to some earlier questions about the fact that as a growing company, the expenses will go up and then obviously will be absorbing some of the expenses of Cingal before that’s partnered off, however, that’s all in your projection where you say you expect revenue growth and profitability growth this year, is that correct?

That’s correct, and I don’t expect to see dramatic increases as I said in those expense areas in ’09 versus ’08 as we did see in ’08 versus ’07 where we embarked on several important initiatives.

Just want to give you kudos on that slide 13 which tried to make an apples-and-apples comparison, that was very very helpful; the fact that showing us the investments we made and that earnings would have been just almost essentially flat, roughly $0.43 to $0.45 in the absence of those investments, but looking at valuation, in light of everything that’s been said on this call, I just want to see if I understand this correctly, so with about $2.50 per share in net cash and the stock being at $3.20 bid, so there’s a $0.70 enterprise value on the company and with interest rates generally nominal so there’s no big interest income and earning $0.32, we’re about 2-1/2 times last year’s earnings and if you grow earnings this year hypothetically to $0.40, 1.8 times earnings and with 2 bucks plus under book, am I missing anything here?

That’s a lot of numbers that you threw out there, I’m not sure I agree with all of them. We can talk offline about that.

Okay, sounds good.

That concludes the Q&A portion of the presentation. I would now like to turn the call over to Dr. Charles Sherwood.

I’d like to thank everyone who participated in the call today. It was a bit of a tough economic climate out there but I believe we’re holding strong, I believe we made good progress last year and we’re actually looking forward to reporting our first quarter results to you in a few months. So, thanks very much for your interest in Anika and thanks for being on the call today.

Thank you for your participation in today’s conference. That concludes the presentation. You may now disconnect.