Kevin W. Quinlan – Chief Financial Officer, Treasurer & Secretary Charles H. Sherwood, Ph. D. – President, Chief Executive Officer & Director

Jim Gentrup – Discovery Investments Greg Garner – Singular Research Andre Thomas – Summer Street Research

Welcome to the second quarter 2012 Anika Therapeutics investor conference call. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I will now turn the call over to Mr. Kevin Quinlan, Anika’s Chief Financial Officer.

If you have not received a copy of the Anika news release which was issued yesterday after the market closed or you would like to be added to our contact list, please contact Sharon Merrill Associates at 617-542-5300. The news release is posted in the investor relations section of our website at www.AnikaTherapeutics.com. In addition, the slide presentation is posted on the Anika website that illustrates some of the points that we’ll be covering during today’s call. The slides can be found on the investor relations section 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. 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.

Overall, Q2 was another good quarter for Anika. We generated all time record quarterly revenue and earnings while making solid progress towards some key strategic goals. Even with the success, not everything moved forward as rapidly as we had hoped and our business in Italy and other parts of Europe fell short of our expectation, a situation that we will address and improve as the year progresses. Total revenue was up 22% from the second quarter last year driven primarily by strong sales of our bonded products and Orthovisc, both domestically and internationally. Domestic sales of Orthovisc increased both domestically and internationally. Domestic sales of Orthovisc increased 22% from Q2 of 2011 and Orthovisc sales to markets outside the US grew 16%. Our second quarter earnings reflect this overall top line growth. Product gross margin improved to slightly over 57% and companywide R&D and SG&A expenses remained well managed and net income for the second quarter grew to $3.7 million or $0.26 per diluted share from $2.3 million or $0.17 in Q2 last year, an increase of 53%. From an operational perspective we successfully closed our Woburn facility and consolidated all of our manufacturing in Bedford by the end of the quarter on schedule. We had a positive meeting with the FDA regarding our PMA application for Monovisc and we made further progress on our preparations for initiating clinical trials for Hyalograft C and Cingal in Europe. I’ll discuss these items in detail including some comments on the business outlook after Kevin’s financial review. With that I’ll turn the call back to you Kevin.

Please turn to Slide Number Four in the presentation. Anika delivered record revenue and earnings per share in the second quarter of 2012. Total revenue increased 22% from the second quarter last year to $19.6 million. Product revenue was also up 22%. This growth reflected strong performance in our ophthalmic franchise as well as continued growth and demand for Orthovisc in our orthobiologics franchise. Turning to orthobiologics on Slide Number Five, total franchise revenue for the second quarter grew 12% year-over-year to $10.9 million. As I said this growth was primarily driven by strong sales of Orthovisc in both the US and international markets. However, other than Orthovisc this was a challenging quarter internationally. Sales of Monovisc were lower than Q2 last year primarily due to order timing, a shift in distributors taking place in Turkey, and cautious ordering and inventory management by our European distributors in general related to the current macroeconomic conditions including Euro weakness versus the dollar. International sales of our orthopedic products from S.r.l. were also lower as a result of several factors. Besides the impact of macroeconomic factors I just described, it is taking longer for our new Italian distributor to come up to speed in that market. Nonetheless we’re optimistic about the prospects in Europe for our products. We’re working to increase S.r.l.’s orthopedic sales in the coming quarters by expanding our distribution network for these products in markets outside of Italy which will be discussed later in the presentation. Product revenue for Q2 in our other franchises are summarized on Slide Number Six. As I said this was a strong quarter for our Ophthalmic product franchise where product revenues increased 105% from the second quarter of 2011. This growth was driven by increased product shipments to Bausch & Lomb as part of our…

The topics I’ll be covering before we go to your questions are summarized on Slide Number 11, focusing first on our orthobiologics franchise. Orthobiologics continues to drive our top line growth fueled primarily by US sales of our flagship product Orthovisc. Our US distribution partner for Orthovisc DePuy Mitek, is continuing to expand physician awareness of Orthovisc with an outreach program focused on peer-to-peer physician education. Mitek is backing up this outreach with effective product distribution which has recently been expanded to include the pharmacy channel. At the same time they’re successfully navigating the private payer landscape and gaining acceptance for Orthovisc as a preferred multi-injection product and getting on a larger number of formularies. They’re also being aggressive and innovative in generating patient awareness of Orthovisc as an alternative to knee replacement surgery, and connecting perspective patients with prescribing physicians. This year along Mitek expects to host more than 100 evening seminars across the country where doctors meet with patients to educate them about osteoarthritis treatment options and the benefits of Orthovisc. In many cases these connections will stem from patient visits to the Orthovisc website www.Orthovisc.com which Mitek has designed to effectively leverage the baby boomer generation’s growing reliance on the Internet for medical education. One final comment here on Mitek is that they continue to gain share in a growing market. The impeccable safety profile and the flexibility to use either a three or four injection regiment to treat patients with Orthovisc have been very strong selling points with clinicians. As I mentioned in my opening remarks Orthovisc sales for the second quarter were up 16% year-over-year in markets outside the US. We’re continuing to make progress internationally in expanding both physician and patient awareness and the increasing revenue numbers reflect this. Shifting gears, this was a…

The growth for this quarter in the US was about 24%. Jim Gentrup – Discovery Investments: So really the kind of slow down, the 12% year-over-year and internationally was focused on Monovisc and international weakness, correct?

Monovisc and S.r.l. products. Jim Gentrup – Discovery Investments: I think you said the second half some of this should rebound? That’s what I inferred, if you could maybe give us some more color on what you’re seeing so far this quarter and why it gives you confidence? Obviously, we’ve got some weakness overall in Europe but can you give us a little bit more color on what you’re seeing there right now?

Not really other than to say we’re working with our distributors to improve performance. As we mentioned we saw some cautiousness in order and inventory management in the second quarter so some of that will cause numbers to improve. But basically we’re just working with our distributors to improve performance.

I would say one other thing, and I mentioned it in my remarks so I’ll reiterate it. At the end of last year we changed our distribution and marketing partner in Italy. It took some time for them to get up to speed so to speak and we’re still working through that. So Italy is a reasonably sizeable market for us in orthopedics. That’s the biggest market for our tissue engineered products and so that has slowed some of our progress but we have been meeting regularly. The plans we have in place are solid, the efforts we’re putting forth are good, so we do anticipate that will improve a fair amount in the second half of the year. Jim Gentrup – Discovery Investments: Then in the ophthalmic area I think you gave us some color already, the second half I’m assuming we might see a small decline or decrease in sales from last year?

As we said in our remarks, the expectation would be that the ophthalmic area would be lower in the second half of the year than the first half of the year. Jim Gentrup – Discovery Investments: In dermal it’s down 53% for the first half of the year, can you play catch up there as well? I don’t remember what you said about that can you repeat that as well?

Just that we indicated that the Hyalomatrix product line which is the number one product in the advanced wound care area , the revenue is down mainly because of lower shipments to the US and in Italy. I think that’s a situation that’s going to take a little time to improve on. Jim Gentrup – Discovery Investments: So maybe we expect continued weak results there until much later in the year or maybe in the next year?

Perhaps that’s a more likely scenario. Jim Gentrup – Discovery Investments: Then finally, the vet business was surprisingly higher. Typically that’s a pretty steady type of contributor so I don’t know if there’s something – I know you mentioned middle east distribution, is that having that big of an impact or are there timing issues here as well?

I think it’s a little bit of both but I think the middle east is having an impact there for our distribution partner Boehringer Ingelheim Vetmedica.

There’s also a larger demand in the United States for Hyvisc I think the market is probably increasing a little bit and Hyvisc is a very solid product segment in which it competes so that’s part of it as well. Let’s go back to ophthalmics. The second quarter was just a huge quarter because we’re trying to get out of Woburn and we met a lot of orders but this will still be a strong year for ophthalmics for us overall. Second, one can never guarantee what’s going to happen moving forward but we do have a contract that guarantees us a certain level of business. We’re not sure – there’s multiple suppliers for these products, we’re not sure what the other supplier is actually doing and why our volume was up so great this year. We’re also talking to Bausch & Lomb about some other expanded opportunities. These may or may not happen but the impression I want to leave you with is that this will be a pretty strong year for ophthalmics and there is the potential to continue on in the ophthalmics business in a reasonably strong way. Lots of things have to happen and we’ll see but about a year ago we kind of indicated that maybe this would fall off the radar screen but that’s not going to happen. Jim Gentrup – Discovery Investments: But the second half though I think overall after being up 90% already year-to-date you’re going to show growth but the second will not be nearly that kind of growth, correct?

That’s correct. You almost had a reverse of last year where the second half of the year was very strong coming on the heels of a very good first half of the year and it’ll probably reverse the situation this year, a very strong first half and a good second half. Jim Gentrup – Discovery Investments: But just to get closure on that business, you’re up 55% year-over-year, could that give you 20% growth for the full year? Is that something where you definitely are going to see or do you have that kind of visibility?

The visibility at the moment is that it’s going to be a very good year for the vet business. Jim Gentrup – Discovery Investments: The gross margin 57.2% with the move now to Bedford, that was surprisingly high, a pleasant surprise. I think you’ve mentioned before goals, I think, close to 60% is that something that number one am I right on that number? Number two, could we inch towards that goal?

We have a stated goal, we started to say that last year and it was a time period three to five years out that got us into the 60s. We’ll see some improvement next year in our margin. I’m not expecting big improvements in the second half of this year. Jim Gentrup – Discovery Investments: The ophthalmic revenue comes at a lower gross margin correct?

That’s correct. Jim Gentrup – Discovery Investments: So really when you have less contribution there that should actually be bullish for the margin?

Correct. Although again, as both Chuck and I stated, the second half of the year is going to be good it’s not going to be a situation where it’s falling off the table.

Your next question comes from Greg Garner – Singular Research. Greg Garner – Singular Research: The Orthovisc was a strong driver this quarter, is there any sense for how much the market is growing for Orthovisc?

It’s an interesting market, the Millennium Research Group has indicated that the market was going to grow about 13% this year. Our contacts at Mitek think that that number is a good number and maybe even a little bit better than that. It has been and continues to be a good growing market here in the US. Greg Garner – Singular Research: That’d be 13% in the US, any sense for international or primarily Europe?

The Europe numbers, if you believe it, are lower. They’re more in the 5% range but that was also done outside of the current economic condition so it’s less clear what that might be. Greg Garner – Singular Research: The Monovisc down in Europe, I mean that’s where it’s sold quite a bit, it sounds like there is too much in the channel? Is that it when you talk about the timing of orders? I understand where you’re trying to adopt the Mitek strategy to correct that situation but it just seems like it’s quite a drop there. Is there more competitive forces there? Is there something else happening in Europe? Can you give us some more color there?

We’re working very hard to penetrate additional territories in Europe and otherwise. A large percentage drop on a small number has not so much affect on the overall financial picture. So the Monovisc numbers are not where we’d like them to be and we think that in certain markets in Europe single injection products are not very popular and other markets we hope to establish they will be very, very popular. Getting back to where we were I think there’s just a large caution about economic conditions by a lot of our distributors so the ordering patterns have gone way back, inventories have been cut way back. In some cases in the marketplace we’ve seen a little bit of a slowing for products in general. So we are pretty bullish about this product. We’re working on targeting certain markets where we think we can be very, very successful in Europe and in other places and it just takes a little more time to penetrate these markets and to find partners that can actually do the job for us effectively. Greg Garner – Singular Research: Discussions on Monovisc with the FDA, it was mentioned about feedback from the FDA by the end of the summer. Does that mean by the end of this month, August?

Probably the last time we got a commitment from them the FDA didn’t meet it so you have to be realistic about this. We got our material in about a week and a half or so ago. We thought it might take one to two months to really get a response back from them. Greg Garner – Singular Research: If their response is favorable how long does it take to ramp up and start marketing in the US? Will that be a few months or longer?

It depends on what the response is and when it comes but we’ve had a fair amount of discussion with our partner in the US Mitek so we’ve done much of the things that we could do but it will still take several months to I can’t really quantify that, three, four, five, I don’t know to really ramp up and get the product out there. I think we’ve done the basic things. We’ve talked about positioning but until we see the labeling, the final promotional things can’t really be put in place so it’s going to take a quarter or maybe a little longer to get going. I think when we ramped up Orthovisc after approval we got it out in the first quarter after approval but we didn’t really hit full stride until just about six months later after approval. Greg Garner – Singular Research: Staying with a single injection product for a single product with the EU process that you mentioned that there’s one key point that would support the US approval. Are you talking about an endpoint for this, a short term study that would help for the application for the [inaudible] in the US? I just want to make sure I understand that properly.

What I’m talking about is the European situation is very clear, we understand the protocol, we’re finalizing it and getting ready to go. In the US we’re still talking to the FDA. So we know the study is going to be the main crux of our approval application but we’re saying it will be the key piece. We’re still negotiating whether it will be the only key piece or whether there will be additional pieces. Greg Garner – Singular Research: So that would be earliest first half 2013?

The trial starting. Greg Garner – Singular Research: The surgical markets in Asia, you mentioned how that could expand from Korea. Is that really more of a long term commentary or is this something you’re actively working on right now?

We’re actively working on it but it’s not a one quarter exercise. Greg Garner – Singular Research: But is that something you might see some positive impact in 2013?

2013, yes. Greg Garner – Singular Research: Just finally moving manufacturing to Bedford from Italy, what are the positive impacts moving the gel based production there? Are there some margin improvements or just better control over the process?

We currently have a contract manufacturer making the product in Italy. Moving the product to Bedford will allow us some margin improvements. It will allow us to do some actual product improvements and it will certainly allow us to have much greater control over product manufacturing and supply. It will provide us with some real logistical benefits. Greg Garner – Singular Research: A forecasting question, this is about the R&D expense, it’s expected to increase here in the second half due to the clinical trials, with it being relatively low does that mean it should increase say 50% or would it perhaps even double?

I think when we hit full stride on the clinical trial which will be sometime next year we’ll see a ramp up in the R&D spending up to maybe 15% of revenue. We’re currently around 9%, I think it was for the first six months this year. We will see it increase significantly. Injections will start hopefully in September but by the time we really get going on this it will be sometime in the second quarter or so of next year, or midyear. Greg Garner – Singular Research: We’re really talking about the Hyalograft C being the real driver initially but you’re thinking the Cingal will also start in 2013? That’s where you’re thinking the total of about 15% of revenue?

I think our modeling is showing that as a likely spot for the expenses.

Your next question comes from the line of Andre Thomas – Summer Street Research. Andre Thomas – Summer Street Research: I have one quick question, can you shed some light on the impact of foreign currency on the quarter?

It’s not a major impact for us, it’s a good portion, about a third of the S.r.l. revenues is dollar denominated and the operations in S.r.l. are significantly smaller than the US operations. It’s not a big number.

I would now like to turn the call over to Dr. Sherwood for closing remarks. GG Thanks to everyone who was on the call who asked questions, we appreciate it. We look forward to speaking to you about our progress next quarter. Thank you and good bye.

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