Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 Anika Therapeutics Investor Conference Call. My name is Pamela, and I’ll be your coordinator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions) I would now like to turn the conference over to Mr. Kevin Quinlan, Anika’s Chief Financial Officer. Please proceed Mr. Quinlan.

Thank you, Pamela, and good morning, everyone. If you have not received a copy of the Anika news release, which was issued after the market closed yesterday or if would like to be added to our contact 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. Also, I want to mention that we have slides posted on the Anika website that illustrates some of the points we’ll be covering during today’s call. These slides can be found on the Investor Relations section under the Events, Webcasts & 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 two. 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 and the company’s SEC filings. Please turn to slide number three, as I turn the call over to Anika’s President and Chief Executive Officer, Dr. Charles Sherwood.

Thank you, Kevin. Good morning everyone and thanks for joining us today. This was another excellent quarter for Anika. Product revenue was up 35% from Q3 last year. Total revenue increased by 33%. Our operating income was up 132%. Net income rose 151%, and earnings more than doubled to $0.22 per share. This growth was mainly driven by strong sales of Orthovisc and Orthobiologics franchise. In addition to benefitting from strong underlying demand for Orthovisc in the United States and in markets around the world, we resolved the international backorder situation that we talked about last quarter. As a result U.S. sales were up 28% and sales outside the U.S. increased by 72% compared with the third quarter of last year. Our product revenue growth for the third quarter was also driven by the revenue associated with the extension of our contract with Bausch & Lomb and our ophthalmics franchise. And finally, by growing sales of the sales of the advanced wound care from Anika S.r.l. that we have added in our dermal franchise. In addition to delivering top line growth, Anika S.r.l. continued its progress towards reaching breakeven by year-end. The FDA has completed their inspection of the Bedford facility and we await their approval. We remain on schedule to complete the consolidation of our manufacturing operations in Bedford in the first quarter of 2012. Anika’s momentum is strong on many fronts and we are looking forward to reporting solid results for the fourth quarter of 2011 and the full year. I will review the recent activity in each of our product franchises and conclude with some comments on the business outlook after Kevin’s financial review. And with that I will turn the call back over to you Kevin.

Thanks, Chuck. Please turn to slide number four in the presentation. Anika’s total revenue for the third quarter of 2011 increased 33% from the third quarter last year to $18.5 million. And product revenue was up 35% year-over-year primarily driven by another strong quarter for our orthobiologics franchise. Product revenue in our ophthalmic franchise grew 37% from the third quarter or last year, primarily due to the extension of our contract with Bausch & Lomb. This was also a quarter of strong sales in our dermal franchise. Dermal product revenue more than doubled year-over-year driven by Anika S.r.l.’s Hyalomatrix advanced wound care product. Product revenue in our surgical franchise was down 10% from the third quarter of last year, as growth in international shipment of Hyalobarrier Gel and Gel Endo to Europe, Taiwan and Korea were offset by lower sales in the ear, nose and throat products in the U.S.A., primarily due to order timing. Year-to-date our surgical franchise is still up 26% over last year. Turning to slide number five, total orthobiologics franchise revenue grew 35% from the third quarter 2010, to $10.4 million. Domestic sales of Orthovisc were up 28% year-over-year for both the quarter and year-to-date periods. This was another strong quarter for Orthovisc in markets outside the U.S. as well, where product revenue 72% from the third quarter last year and is up 14% for the first nine months of 2011. Sales of Monovisc rose only 3% from the third quarter of last year, but are still 23% ahead of last year’s first nine months and expected to have a strong finish to the year. With a 59% increase, Anika S.r.l.’s orthopedic products continue to show good growth and revenue despite weakness in the Italian tissue engineered product sales. Looking at total orthobiologics sales on a…

Thank you. The topics I will be covering in this business review are summarized on slide number ten. As I mentioned in my opening remarks, 2011 is shaping up to be an outstanding year for our orthobiologics franchise fueled by continued robust sales of Orthovisc. We have a strong relationship with our U.S. distribution partner DePuy Mitek, and they are doing a great job generating awareness of Orthovisc in the physician community across the country. They are making strategic investments and being very effective in the way they are managing the channel, and the results speak for themselves. With a domestic growth rate of 28% for the quarter, it’s evident that Orthovisc is continuing to increase its share of the U.S. market. Internationally, as expected, we resolved the backorder situation that held back sales of Orthovisc outside the U.S. in Q2. We are seeing increased traction for the product through our existing international distribution network and we are continuing to expand the size of that network. S.r.l.’s orthopedic products which grew more than 59% from Q3 last year, also contributed to our growth in orthobiologics this quarter. Sales in Italy, S.r.l.’s core market remained very soft due to the weakness in the Italian economy and increased pressures on reimbursement as that country works to deal with its deficits and debt. However, we have worked hard this year to expand our distribution channels in European markets outside Italy as well as in markets in Asia. And those efforts are delivering results. We have also recently added several distributors in the EU, including the UK, for our cartilage regeneration product Hyalograft C, and Hyalofast. The only challenged we faced this quarter in orthobiologics related to international sales of Monovisc, which had shipments below expectation due to timing issues that pushed the related…

(Operator Instructions) And your first question comes from the line of Nathan Kelly with Noble Financial. Please proceed.

Hey, guys, good morning. Congratulations on a nice quarter. Thank you for taking the questions. Just a couple. Do you plan to do any acquisitions over the next 12 months, and if you do what kind of acquisitions would those be?

We do not have any acquisition plans at this time.

Okay.

Over the next 12 months.

For the dermal product line, could you just talk about the market there and a little bit more detail about the applications you are targeting?

The dermal line is primarily -- consists primarily of our advanced wound care products, and they are used both in chronic wounds such as leg ulcers, but they are also used -- a diabetic leg or foot ulcers -- and they are also used in burn treatments as well. That’s the primary targets for those products.

Does that U.S. market roughly, would you say in $2.5 billion to $3 billion range?

The total wound care, yes.

Total wound care. Okay. On a percentage of revenue basis do you see that your product mix somewhat continues along the lines that what we have seen thus far over the past six to 12 months?

I am not sure I understand your question, Nathan.

So for your products lines and your percentage of revenue, as far as the revenue growth in the expected different product lines, dermal, orthobiologics, do you expect that trend to somewhat continue on a percentage of revenue basis, so your orthobiologics line was the highest on a percentage of revenue basis? Do you expect any of those product lines to sort of gain some additional momentum over one or the other or do you see a product mix of about the same for the different indications?

So we have had very good momentum on the orthobiologics and we are optimistic that that will continue. We think that the advanced wound care products in the dermal section have very good potential as Chuck had mentioned in his comments. Misonix has done their clinical sampling process and now are kicking into the sales, a point in their sales process. We think that that area has got good growth potential as well as the surgical products in particular the anti-adhesion surgical products, also with good growth potential. So at the moment we don’t have anything beyond that to give you in terms of any guidance but we do have -- we do feel very good about those areas.

Okay. And then just, as far as sales reps and -- I know that you guys touched a little bit about this, but as far as the strategy to grow the top and the bottom line over the next 12 months. Could you just go on to a little bit of guidance there?

Yeah. First off, our business model is distributor based. So we don’t have any sales people. We have discussed publicly that the Monovisc product for distribution in the U.S., that one of the options that is still under consideration is direct distribution. We have not yet announced what our plans are for that product, as to whether we will partner it or whether we will sell it directly. But heretofore we have had no direct sales force. So our strategy has been to increase the territories within which we are distributing that products to help our distributors to increase their sales within their own territories as well as to try to expand the indications for which the products are considered useful.

And your next question comes from the line of James Liberman with Wells Fargo Advisors. Please proceed.

Thank you, this is really a spectacular quarter and shows the results of a lot of the work you have been putting in place. I wonder could you comment on the other product coming out of S.r.l. that might be targeted for the U.S. market, such as anti-adhesion and cartilage inflammation. Are those being targeted toward this market down the road?

Yeah. We are certainly looking very closely at both those areas, the cartilage regeneration and also the anti-adhesion product. Both of those products would require PMAs and so there would be no near term revenue. I will define that as one to three years there would be no near term revenue from those products. We will expand on this next -- at the year-end and beyond that in next year’s calls as we move forward with our decisions about introducing those products.

Nonetheless that sounds like a great horizon to be looking at. Thank you very much.

And your next question comes from the line of Mark Landy of Summer Street Research. Please proceed.

Good morning, folks. Good morning, congratulations on an excellent quarter, job well done. If I could, I just wanted to get into a little bit in terms of the difference of the revenue flows between the third quarter -- this quarter and next quarter. So if I understand kind of the prepared remarks, it looks like ophthalmic was higher than expected and we can get into kind of the timing of the B&L flows a little later, but the products and the orders that pushed out into the fourth quarter, the Monovisc and then the surgical. Would that be sufficient to make up for the stocking orders in dermal and perhaps some of the higher orders from Bausch & Lomb this quarter?

Yeah, Mark, which time periods are you comparing, asking for comparison to?

This quarter and next quarter. So obviously with stocking orders, they do vary from quarter to quarter so I am just trying to smooth out or get an understanding of the full year number relative to some of the push of products into next quarter from this quarter and some of the orders that fell perhaps into this quarter, that could have been taken from the fourth quarter -- from this quarter?

Yes. There was a -- relative to an $18 million revenue figure, there was a relatively small amount of Orthovisc that pushed into the third quarter that benefitted the third quarter. I am talking now on the interracial distribution of Orthovisc. If you look at the -- what's going to happen in the fourth quarter, the Orthovisc number will still be strong. And on the Monovisc side we did have some product that has slipped into the fourth quarter. And so the Monovisc will be much stronger on the fourth quarter then it was in the third quarter. The ophthalmic product, we will still have some very good numbers for the third quarter on the ophthalmic but it will be reduced a bit -- I am sorry, the fourth quarter, but it will be reduced a bit from the third quarter number.

Correct. So I think that’s my point. Is that it looks the third quarter perhaps was a little bit stronger than expected. Perhaps on maybe Bausch & Lomb orders or for whatever is was. The question is the reduction in fourth quarter ophthalmic orders were the orders that have been pushed into the fourth quarter from the third quarter on surgical and on Monovisc be sufficient to make up for that?

Yeah. Probably not, but we expect it to be a strong fourth quarter revenue wise.

Okay. I am just trying to get the smooth out in the delta, so. Okay. So, perhaps may be just a bit of a shortfall in terms of the timing and then obviously with Orthovisc being strong that makes up the bulk of the growth in the fourth quarter, correct.

Yeah. It’s a little hard to say but again we are expecting strong revenue for the fourth quarter.

Okay. Turing a little bit to the J&J, shoulder data, the Mitek data. Will that be made public or peer reviewed before ultimate approval of the product? Will there be a change to see some of that data, from you sooner or then later.

I would say not likely that it will be made public prior to the approval process.

Those two events are parallel path. So once we get all of the data in its final form ready to submit to the FDA, then we will start talking about peer-reviewed publications. And then it sort of depends on which happens first.

Certainly it doesn’t take a year to get a peer review, because right now the way as far as viscosupplementation products are running it’s an 18 months to three year process for approval. So would it -- I mean would you wait that long to have it peer reviewed?

No.

Okay. The Hyalofast and Hyalonect, I think you have, believing the past that kind of on track for 510(k) before the end of the year. Is that something that should still happen. Or any updates there?

I think the Hyalonect might be more of a possibility. The Hyalofast may require some additional clinical data, that’s the early indication we are getting. I talked about our frustration with the Food and Drug Administration early in the prepared remarks. Our frustration extends also into their timeliness in getting back to us on these 510(k) applications as well.

So do you think that perhaps you are begin caught up somewhat in -- perhaps may be the project that the FDA is going through to figure out really how to improve and streamline the 510(k) process or do you think it’s just the FDA really just being the FDA in terms of how they drag their feet for a good period of time.

I think it’s both. I just can't assess for you the magnitude of each contribution but when we submitted these things we tried to get some fast action because we anticipated that if things went along for a while we would get caught up in the revisions. And it appears that we didn’t get things done fast enough and to some degree we are caught up there. And then I can't fathom what's going on in the FDA these days, but certainly there seems to be a lack of adherence to committed dates and I am not exactly sure why, but I only see the end results. I mean we only see the end result. And I don’t think that this is anything particular to Anika Therapeutics either, I think it’s pretty much medical device industry-wide.

I was going to say that. You shouldn’t feel too badly about it because you are in some pretty good company.

Unfortunately, yeah.

A point taken. And in the last question that I had, and I suppose I am going to open up the can of worms, I apologize for that. You have also had some time to sit down and think about and strategize over the (bolsted) Genzyme patent portfolio and lawsuit, specifically as it relates to the single-shot injection. Are you comfortable with perhaps may be giving some insights into what you have come up with thus far, what your thoughts or would you like to perhaps may be reserve commentary on that until you have got a plan in place and are ready to share it with us.

I think that I would like to pass. I can tell you we do have a plan in place and then at such time as we make some significant moves we will certainly publicly announce those.

Okay. And I am assuming you and Zimmer find yourself in the same boat relative to the claims of being assessed and then patents that are being assessed, correct?

Yes, for the same boat. Their boat is moving a little faster because of course they have a approved product. They have had it for a while. They’re desirous to move towards launch quickly and so that the whole matter vis-à-vis Zimmer, Seikagaku vs Genzyme is on a faster track then the activities that are going on Genzyme vs Anika.

And the next question comes from (inaudible). Please proceed.

Good morning, guys. Congratulations on the quarter. Question on S.r.l. and the projected breakeven in Q4. What if anything could prevent that prevent from happening in Q4 and beyond that is there anything we should be thinking about in terms of a growth trajectory there?

For S.r.l., it’s really a matter of revenue and revenue generation, and that’s the key. And we are obviously feeling good about the potential revenue for the fourth quarter which is why we have made this statement. And that will be the key going forward because we have done our restructuring, we have done our cost initiative, saving programs, and there is not a lot more cost to wring out of the operation. It’s really to move forward on the revenue. We have moved forward. We have made some excellent progress, particularly outside of Italy. We have got some, we have got a product that we are just introducing into the U.S. Products that have started to go into the Far East and into Korea. And some potential and some additional markets there. So it’s a revenue solution and we are working on that.

(Operator Instructions) Your next question comes from the line of Jim Gentrup of Discovery Investment Research. Please proceed.

Good morning, gentlemen. I wondered if you could talk a little bit about the Visco Technologies expected contribution in 2012. I know you have already said that B&L is going to be around for the first half. Can you tell us a bit more about Anikavisc?

Yeah, I think on the Anikavisc product, they have just gotten started in the middle of this year with that product. In terms of their own generation of revenue it’s one of many ophthalmic products that they have and that they are offering to physicians. We think they have got some good potential to increase the sales of that product. But beyond that we haven’t really given any guidance as to what kind of numbers that might translate into.

Okay. But in general ophthalmic should still be, should be down considerably in 2012 I imagine.

At this point, it’s an area that’s in flux. There is some real interesting dynamics that are going on that we can't go into a whole lot of detail on, but the relationship with B&L, Bausch & Lomb, has obviously continued longer than we had indicated to people back in 2010. We mentioned in this particular conference call that there is additional orders that we have now received for 2012 delivery. And there is potential there for an ongoing relationship beyond that. It’s going to be difficult to model that one.

All right. Thanks for that update.

Let me add. This is Chuck. Bausch & Lomb owns the registrations for, Amvisc and Amvisc Plus. We own the registrations for all of our other products. Our move from Woburn to Bedford is well, well on its way and we have, as I said, we had our inspection. We have orders for Bausch & Lomb for next year and since they are behind Anika in filing the paperwork for allowing the production of Amvisc and Amvisc Plus in the Bedford, we had to keep Woburn open. We still believe there is a good possibility that we will have a long-term relationship with Bausch & Lomb that provides us some benefit. But we are only going to make product for them in Woburn over the first two quarters 2012 and they are going to have to get their act together and get this Bedford facility qualified to make Amvisc and Amvisc Plus, if we are going to have a ongoing relationship with them. So we don’t exactly know what will happen after the first or second quarter of 2012, but we believe we will continue to have an ongoing product relationship with Bausch & Lomb. But we will be manufacturing here in Bedford.

That’s good information. I would assume then that if they do continue past the first half, that your profit or your margins on this would get better moving into Bedford or --?

Relatively speaking, it would have a positive impact on what the margins otherwise would be in Bedford.

Because you would be savings, whatever from the Woburn expansions and overhead?

And generating additional volume. So the combination of the two would have a positive impact on what it would be without additional Bausch & Lomb revenue.

So very good news all around there. Well moving on then to the Endo product for Korea. Do you expect more -- I missed part of your prepared remarks, so I apologize, but do you expect growth there in 2012 in Q4, I guess, (inaudible) in there, but do you expect more sales in to Korea then to that distributor?

Yes. I mean we expect this will be ongoing relationship. And they seem optimistic about the potential for that product in their home markets. And their interest in some additional Asian markets as well. So there is good potential there.

But in the short term, do they still have to work of that initial stocking order I imagine?

I don’t -- it’s not such a large order that it would significantly impact their future purchases. So I guess I would have to say probably not a big impact.

All right. And it sounded - I appreciate that color -- just moving on to Misonix and it sounds as if that there is momentum building there as well. I mean do you expect -- what kind of level of orders you expect from them going forward in Q4 and then in 2012 do you expect pretty good growth, if it will be material or --?

Well I think the next -- we don’t really give future guidance on individual products in terms of levels of sales and so forth. But I think the potential for the product is certainly one that should get into seven figures.

Okay. And you had a -- if I remember right you had a $500,000 backlog in Orthovisc going into Q3, is that correct?

Yes. That was a number and that’s also -- it was in our second quarter 10-Q filing, that specific number.

Right. So if you back that out, you still had, I believe it would have been 20% growth in Orthovisc, if my numbers are correct. So I guess, that seems to be accelerating that number, that growth. And I am just wondering if you guys, again if you have already touched on this, but could you just expand a little bit on why we are seeing this acceleration? Is that continued good execution by DePuy or can you give us a little more detail there?

Yeah. I wouldn’t call it accelerated growth. They have had been at a very high level of growth, in the high 20s, low 30s, for the last three years. And so it’s, I would call it a continuation but it hasn’t accelerated from last year or the year before. So as we said, year-to-date they were up 28%, and then have been around that 30% level for a couple of years now.

Okay. All right. Fair enough. And did you also talk about the legal costs so far. What it’s costing you -- last quarter for the Genzyme suit?

No, we had not talked about what we are spending on that, but suffice to say it’s not having a huge impact on SG&A.

I would imagine that those will scale up a little bit as we move long though?

Depends of the course of events there and I think as Chuck said earlier, the focus right now is probably more on Zimmer Seikagaku then Anika because they have an approved product.

Okay.

I am talking about Genzyme’s focus obviously.

And your last question comes from the line of [Neil Gore], a private investor. Please proceed.

Good morning. Talking about your deal with Misonix, it’s a deal domestically. Who is selling Hyalomatrix for Anika S.r.l. throughout the world?

Neil, similar to Orthovisc, we have a number of individual or small regional -- not small but regional players. Individual country and/or regional players that distribute the products in Europe and the rest of the world. Not names that would necessarily be recognizable. And they are not global players.

And as Misonix grows, at least it appears to be growing, with its own international sales force now, how solid are contracts with these other people or how lengthy are they? Because it seems like we have a great marriage with Misonix products to clean wounds and our products that heal wounds that we may want to be with them throughout the world?

Well, Misonix, outside the U.S. is using a distributor model, similar to what we are using. So they do not have a direct sales force outside the U.S.

Well, than they are building one because if you read their last press release, they, for these products they were building their own worldwide sales force.

In some countries. Let me take this. Basically the option to expand our relationships with Misonix is an option. We have talked about that. We evaluated on a case by case basis, region by region, when and if they will present us with a marketing plan. The distribution of Hyalomatrix throughout the world, at this point is not all that extensive. There are sales in Asia and Italy is a large territory where we move a lot of products but we don’t have a lot of distribution partners for Hyalomatrix around the world that are locked into long-term contracts. So Misonix may very well be an excellent option for us.

And changing the subject a bit. When Bausch & Lomb originally extended their desire to buy our product they agreed to pay our rent in Woburn for six months. And now it seems that we are going to be there for an additional six months as well. Are they still going to take care of the rent in Woburn or are we going to have to take that for their product?

The pricing that we are getting still reflects a good deal for Anika.

And with no further questions in queue I would like to turn the call back over to Dr. Charles Sherwood for closing remarks.

Thanks, Pamela, and thanks to everyone who has joined us today. Again, very good questions. We appreciate that and we look forward to speaking with you in a few months about Q4 and year-end results. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, you may now disconnect and have a great day.