Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Anika Therapeutics Incorporated Earnings Conference Call. My name is Shenele and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Kevin Quinlan, Chief Financial Officer. Please proceed.

Thank you, Shenele, and good afternoon everyone. If you’ve not received a copy of the Anika news release, which was issued after the market closed last evening or you 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 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 today’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. Chuck Sherwood.

Thanks, Kevin, and thank you to everyone for joining us today. The fourth quarter was a strong conclusion to an excellent year for Anika. Total revenue increased 25% from Q4 last year. This growth continued to be driven primarily by strong sales of Orthovisc in our Orthobiologics franchise. We’re continuing to see solid underlying demand for Orthovisc both domestically and internationally. Compared with the fourth quarter of last year, Orthovisc sales in the U.S. market grew 34% and sales outside the U.S. increased 41%. Increased international demand for Monovisc and our orthopedic and advanced wound care products from Anika S.r.l. also contributed to our revenue growth this quarter. This was a strong quarter on the bottom line as well. Compared with Q4 of 2010, our net income and earnings more than doubled with an EPS of $0.21 per share. Our product gross margin improved to 60% and R&D and SG&A expenses remained effectively managed company-wide. We also reached our break even goal of Anika S.r.l. as they achieved their first profit since the acquisition in the fourth quarter of 2011. We also made solid operational progress this quarter. We recently received approval from the FDA to manufacture Orthovisc and Hyvisc at our Bedford facility for sale in the United States. This is one of the final steps towards the consolidation of all of our manufacturing in Bedford, a process that we expect to complete in the first half of 2012. As I’ll discuss in a few minutes, we further expanded our product distribution network and we continue to work through the process with the FDA in their ongoing review of our Monovisc PMA. I’ll 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’ll turn the call back over to you, Kevin.

Thanks, Chuck. Please turn to slide number four in the presentation. I wrapped up my comments last quarter by saying that we were looking forward to solid results for the fourth quarter and the full year of 2011, and Anika delivered on those expectations. Total revenue for the fourth quarter of 2011 increased 25% from the fourth quarter last year to $18.4 million and product revenue was up 25% year-over-year as well. For the full year, total revenue and product revenue both increased 17%. Looking at our product franchises, product revenue for the fourth quarter in the Ophthalmic franchise was down 9%, reflecting primarily the lower level of shipments under our extended contract with Bausch & Lomb. For full year 2011, Ophthalmic product revenue was down 8% for the same reason. Dermal franchise product revenue for the fourth quarter was up 16% from the fourth quarter of last year, primarily driven by sales of Anika S.r.l’s Hyalomatrix advanced wound care product. For the full-year, dermal product revenue was up 3%. Despite a temporary postponement of sales of one of our leading products in the ear, nose and throat category, fourth quarter product revenue in our surgical franchise grew 35% from the fourth quarter last year, driven by continued growth and shipments of Hyalobarrier to customers in Europe, Taiwan, and Korea. For 2011 as a whole, surgical product revenue was up 17%. Focusing specifically on the Orthobiologics franchise in slide number five, total franchise revenue for the fourth quarter grew 39% year-over-year to $11.7 million. For the full year 2011, Orthobiologics total revenue was up 30%. Once again, the majority of this growth was attributable to strong sales of Orthovisc, Monovisc and Anika S.r.l’s orthopedic products. International sales of Monovisc grew 76% for the fourth quarter and 38% for the year.…

Thank you, Kevin. The topics I’ll be covering in this business review are summarized on slide number 10. As Kevin discussed, growth in our Orthobiologics franchise continued to drive Anika’s top line performance in the fourth quarter and for the year as a whole, with the majority of our growth coming from domestic and international sales of Orthovisc. In the U.S. market, our distribution partner, DePuy Mitek, is continuing to expand physician awareness and making strategic investments in and managing the channel very effectively. Orthovisc grew to an estimated 12% of the U.S. market in 2010, and in 2011 market share was 14%. Outside the U.S., we’re continuing to expand our distribution network and seeing continued growth in product demand as a result. Overall, global sales of Orthovisc have grown at an average rate of better than 20% for the past six years. As we expected, international sales of Monovisc rebounded in Q4 as shipment timing issues in Q3 pushed the related product revenue into the quarter resulting in 76% year-over-year growth. For 2011 as a whole, international Monovisc sales were up 38% from the prior year. S.r.l.’s orthopedic products also contributed to our growth in Orthobiologics for the fourth quarter increasing 48% from Q4 of 2010. For the full year, sales of orthopedic products from S.r.l. were up 40% despite continued weakness in our home market of Italy. This growth rate reflects the success of our efforts to expand our distribution channels in markets outside of Italy. These efforts are focused on S.r.l.’s cartilage regeneration products, Hyalofast and Hyalograft C autograft. Hyalograft C autograft is the first product in this category bioengineered for minimally invasive surgery. It has strong long-term clinical follow-up data for up to seven years. We’re currently implementing regulatory and clinical plans to initiate a randomized,…

Thank you. (Operator Instructions). The first question comes from the line of Mark Landy.

You’re making me look bad here with your outperformance, but that’s okay. Anyhow, just a quick couple of questions, could you please give us some more insights, if you will, into the extension of the B&L contracts? And on the last call you had mentioned that you were working on some things. Is there anymore more greater detail you can give into specifically I would think kind of the volume and the revenue commitments relative to the historical contracts, it helps us from a modeling perspective.

Mark, this is Kevin, As Chuck said, we have entered into a three-year second extension. We are anticipating that we’ll see a gradual decline in the revenue from that contract, but we said that in 2010 and so it’s hard to say what will actually come to play. But the levels beyond 2012 in all likelihood will be lower.

Kevin, just to push you a little bit on that, I think you had mentioned on the previous call that you would only re-sign a deal with them if it makes sense for you do so because you did really want to move everything over to the new facility and I understand that it’s a transition down and out, but is that a 50% lower revenue on an annual basis, is it a 30% lower revenue, just if you can help us with some ballpark?

Yes, we really can’t say at this point, Mark, but the manufacturing under that contract will be in the Bedford facility. I’m not sure if there were some confusion on that point.

Yes, we are vacating Woburn in June, for sure. So we’re working on getting approvals over here in Bedford to manufacture the Bausch & Lomb products after that time.

All right. Thanks for that, guys. And then Kevin, I might have missed what you had mentioned, but did you mention that there was some regulatory issue to a product, I think unfortunate during the call, just as you starting to talk about that.

I don’t recall saying anything about a regulatory issue with a product. We have the ophthalmic products yet to go in terms of gaining approval there to manufacture in this facility, but that’s something that we are very comfortable will take place in the timeframe that Chuck had mentioned, March.

Helpful. All right, that’s what happens when you’re trying to juggle two calls at once. And then just lastly two quick questions relating to the tax rate, do you see a further reduction in 2012 or it’s just going to be a stable tax rate that we can anticipate for the next couple of years?

I think we’ll see a little bit more improvement. So, if S.r.l. achieves a profitable year as we said is our goal that will help bring the rate down a little bit on the combined basis for the company because overall the statutory rates in Italy are lower than the U.S. rates.

Okay. Have you guys given any thought to how you’re going to handle the med-tech tax next year?

No, I mean it’s something that we’re certainly keenly aware of and evaluating the best strategy.

Okay. And then lastly with respect to Monovisc, if you’re an optimist, the glass definitely is half full, the rejection on the request for a panel. Could one read into that negatively or it’s just that you had used that strategy to try and get into move off the space. How do you guys look at that, obviously, you can comment if that’s glass half full, glass half empty?

Well, we still believe that we met our endpoint. We still also believe that there is some, there is obviously some disagreement with the reviewer and others at the FDA. We believe there is some misunderstanding also. We’ve attempted to rectify that and unfortunately the avenues that are open to us are to go up the chain in the appeal process. Unfortunately, and I do mean unfortunately, this is becoming not uncommon with the Food and Drug Administration these days. I said something to the effect of we are appreciative of some of the advising guidance we might be able to secure from our partners in Johnson & Johnson and certainly I said that because they have some experience in that organization in working with the appeals process and moving up the line in dispute resolution. So I think we’ll benefit a lot from having them as our partners moving forward to try to get Monovisc into the marketplace.

Sorry, Chuck, just to not make any assumptions, since we last spoke, let’s call publicly on the last quarterly call, you have had some additional discussions with the Agency regarding Monovisc, is that right?

We received a letter. We haven’t had any additional discussions.

When in your best estimate do you think you’ll be able to sit down face to face with them to have some discussions?

I would think that we are working through the ombudsman’s office and we need to put together our position and then I would suspect that get that in, I would suspect that we’re going to reach on some resolution or have some sort of response from them in the next three or four months. I should throw in the caveat that after we had our last meeting, we were promised a response in 60 days and it took nine months.

Okay, fair enough. And then lastly guys, any new color for us on the Genzyme lawsuit, and that will be it from me then.

All I would say on the Genzyme lawsuit is that things are suit with Genzyme are much less or active than the affairs that are going on between Genzyme and Zimmer and Seikagaku, which got to the court first. The second point I would say is that since we’re partnered on the Monovisc, we’re certainly getting support from Johnson & Johnson on the IP issue as well.

Okay. So it sounds like just Johnson & Johnson is being much more than just a distribution partner, they have actually become quite active in assisting you with Monovisc all-round?

Well, we are two partners, really.

Your next question comes from the line of Jim Gentrup, Discovery Investment Research. Jim Gentrup – Discovery Investment Research: Listen, a very nice quarter, a good year and you said that you’re going into 2012 with pretty good momentum, and I think you gave 20% kind of a goal for revenue and profits, is that what you said, Kevin?

Yes, as our goals. Yes. Jim Gentrup – Discovery Investment Research: Now, on the Orthobiologics side, just as far as how the market is shaping up, I know it’s growing double-digits in the States and I saw the report from Millennium, are there any other factors that you really haven’t talked about that any other efficacy type factors from some of the other drugs in the market that are helping you in anyway?

Not off the top of my head, Jim. I think the overall driving factor here is, as you said the new Millennium report indicates that the market may be growing at an even faster rate in the U.S. than their previous report. Jim Gentrup – Discovery Investment Research: Could it be just more economical for patients, just because of the economic conditions, or is it just that you don’t have any more color or clarity into that?

Let me give you some thoughts, Jim. This is Chuck. I don’t think this is a factor, okay? So let me tell you first of all, let me start with the positive. The positive is, I truly believe that Mitek has really figured this out. And I think they understand the target, I think they understand how to market. I think they really get it and they have gotten into the space very, very effectively. So I think the majority of the success we’re seeing is due to that. Now, what I was going to start with was, unfortunately there has been a lot of negative press lately about hip implant problems, and maybe some of that spills all over where people just are really concerned about getting knee replacements too, I don’t know, I’m only speculating. Certainly, there is a trend for lower cost healthcare, so if someone can get a shot they’ll put off the surgery for sure and I think there is just a trend to trying to move away from surgery in general. Jim Gentrup – Discovery Investment Research: Okay, fair enough. Can you also talk about, once Monovisc is approved, which we’re assuming that you’ll get approval ultimately, how soon will that be, how soon will you ramp up the sales with DePuy?

The beauty of having them as our partner is they’ve already given serious thought to the strategy for having a multi-injection in a single injection market and a product in the same market, right. Also, their sales people are trained because of the addition of Monovisc; we’ve been spending a lot more time together. So I think we can get to market very quickly.

And certainly it helps that we have international sales of the products, so we’re making it. We’re already making it on a regular basis. So ramping up manufacturing would also move along pretty quickly. Jim Gentrup – Discovery Investment Research: I think we’ve already established that this is mainly going to incremental opportunity, you’re not going to have too much I guess cannibalism going on from the multi-injection to the single. Is that safe to assume?

There will be some and it will be market dictated, really. It’s DePuy Mitek’s desire to maximize revenue period. So they will keep Orthovisc in accounts where they’re just fine with Orthovisc and then will try to convert or penetrate new accounts as appropriate with the single injection. Jim Gentrup – Discovery Investment Research: Okay, all right. Fair enough. And if we take a look at the other categories, other product categories, dermal and surgical mainly, of those two I would think that it sounds like surgical is the one that’s kind of, I guess, emerging as your, probably your stronger growth category. Is that something we should assume going forward as well?

Yes, we would agree with that. Jim Gentrup – Discovery Investment Research: And can you repeat again, I think you had a distribution agreement that those results were even without the ENT product, that’s the one distributed by Medtronics, correct?

Yes, there is six products that fall into ENT category that Medtronic distributes, but there was one product in particular that as we’ve said in the past was taken off the market, MeroGel injectable and there were no sales of that in 2011. So we’re hopeful that that is something once we’ve transferred the gel product manufacturing from Italy to the United States that we can bring that product back on stream.

Yes, let me add just a little bit more exactness to that, we’re working very hard to try to bring that product back into the market in the second half of this year. Jim Gentrup – Discovery Investment Research: So that’ll be another potential catalyst in the surgical area in the second half then?

Yes, well certainly that was a pretty good product before it left the market. So yes, we would expect an up-tick if we’re successful depending on how quickly we can get it through. Jim Gentrup – Discovery Investment Research: And then on the dermal side, I think you’ve had a new agreement with Misonix, any update there, is there anymore orders from Misonix or have you heard about the sell through, how that’s working?

So far from what we know it’s fine. I think we’ve got a meeting coming up here in a week or so to get an update. They might be interested in expanding with more products, so a lot of things going on there, but I would say that so far I think the product is pretty much in line with our expectations. Jim Gentrup – Discovery Investment Research: Okay. But those two categories, mainly dermal and surgical, you would probably be safe for both those categories to grow more than your 20% I guess stated goal I would think given the small amount that they’re coming from?

Yes. I think it would be fair to say the target is in excess of the average that we’ve stated, but as you point out it’s from a much smaller base, so has less of an impact in growth in the Orthovisc category for example. Jim Gentrup – Discovery Investment Research: Okay. And just turning gross margins for a minute, I mean that was another impressive quarter there and I just was curious, we talked a little bit about this before, but what do you think you can get, how much more expansion can we expect there or should we?

Well, I think we’ll see some small improvement I think in 2012. The next important milestone will be the completion of the manufacturing transfer of the gel products from Italy and that’s targeted for the middle of the year, third quarter to start doing that. There will be inventory to unwind at the old pricing that was manufactured by the previous supplier, so that has to work its way through the system. So the real impact on margins for that will be more in 2013 than 2012. Jim Gentrup – Discovery Investment Research: Okay. But we’re still seeing a positive bias; we could still another, some more uptick there as we move throughout the year?

Small improvement. Jim Gentrup – Discovery Investment Research: Okay. Especially given kind of decent seasonality I guess towards the back half?

Towards the back half, yes. Jim Gentrup – Discovery Investment Research: Back half being stronger I should say?

Yes

Correct.

That’s correct, yes. Jim Gentrup – Discovery Investment Research: And then I’m also assuming that since you’re able to wind down the Woburn plant fairly soon here I guess by the end of March do we say?

No, no, mid-year. Jim Gentrup – Discovery Investment Research: Mid-year, mid-year, end of May then. So then that would also lower your overhead and as far as other operating expenses as well, so that’s safe?

Yes, the way that’s going to work is we will see a small operating expense improvement, but we’re trading, we’ll be bringing the new facility online manufacturing wise and so we’ve got a fair amount of depreciation that we’ll start to record. So what we’re going to see is a reduction in cash expenses from the closing of Woburn and we’ll see an increase in deprecation albeit at a lower level, then the cash expenses slightly lower level. So you’ll see an improvement in the operating margin, but you’ll see an even bigger improvement in EBITDA. Jim Gentrup – Discovery Investment Research: Okay, fair enough. And then one last question and I’ll let somebody else jump on guys. The CFO of $10 million in 2011, the $2.5 million, you received a $2.5 million of cash, does that flow through cash flow from operations right away or is that not impacted?

That would flow through cash from operations.

And as you know, it doesn’t flow through revenue this year.

(Operator Instructions). Your next question comes from (inaudible). John Parsons – Private Investor: Yes, this is John Parsons and I’m a private investor. I just wondered, I think in one of the last conferences two quarters ago I think you talked about building your own sales force for the launch of Monovisc and I just wondered what the status of that was at this point.

Yes, what happened was we had said at that time that we were still considering all alternatives and as we announced this past December, we made a decision to partner that product, the Monovisc product with DePuy Mitek and therefore, we did not move forward with a direct sales force. John Parsons – Private Investor: Okay. So there isn’t any, there wouldn’t be any plans at this point to move forward with our own sales force?

No, there are no...

Not for Monovisc in the U.S. John Parsons – Private Investor: What about ex-U.S., is there any plans to do that?

Not at the current time.

Your next question comes from Neal Gore.

First, in your presentation, I heard something about price competition in Turkey; can you expand on that a little bit?

Not a whole lot, but just we’re hearing in that distributor in particular, we’ve heard comments about competitive products and pricing pressure.

Was that political?

Pardon me?

What product is that for, Orthovisc?

Primarily Orthovisc.

Okay. And can you expand a lot more on the cartridge product that S.r.l has been selling in Europe?

Yes, Hyalograft C autograft, there’s really not a lot more to say on that topic at the moment. We’ve spent a lot of time analyzing it and it looks to us like something that we want to move forward with in terms of clinical work. And in the meantime, we’ve been trying to expand our sales outside of Italy because primarily it’s been sold in the Italian market.

As far as the U.S. market goes, would you look to partner with somebody before you go forward with testing here or might you begin the testing yourselves?

The current strategy is to begin to testing ourselves.

And there are no further questions in the queue. I’d now like to turn the call back over to Dr. Chuck Sherwood for closing remarks.

Thanks, Shenele, and thanks to all of you who listened in on the call today. We appreciate your support and we look forward to speaking with you about our first quarter results. Thanks.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.