Ladies and gentlemen and welcome to the Q2 2013 Anika Therapeutics Earnings Conference Call. My name is Steve and I will be your operator 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) As a reminder this call is being recorded for replay purposes. And now I would like to hand over the call to Sylvia Cheung, Anika’s CFO. Thank you.

Thank you, Steve. Good morning everyone, and thank you for joining us. If you have not received a copy of the Anika news release, which was released 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 also posted in the Anika Investor Relations section of our website at the anikatherapeutics.com. In addition, a slide presentation is posted on the Anika website. It illustrates many of the key points we’ll be covering during today’s call. The slides will 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. Now please turn to slide number two. Before we begin, please remember that the statements made in this call which are not statements of historical facts are forward-looking statements as defined in the Securities and Exchange Act of 1934. These statements are based on current beliefs and the 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. Please see our SEC filings for more information about factors that could affect results. Please turn to slide number three as I turn the call over to Dr. Charles Sherwood.

Thank you, Sylvia. Anika delivered strong results in the second quarter of 2013 with record second quarter revenue and earnings. Total revenue grew 6% from the second quarter last year to $20.8 million. This is measured against the strong set of revenue comparative in the second quarter of 2012, which included an exceptionally large $5 million of ophthalmic product revenue shift prior to closing our Woburn and Massachusetts manufacturing facility in June 2012. Net income for the second quarter grew 58% and earnings increased from $0.26 a year ago to $0.40 a share. The outstanding bottom line growth was primarily driven by higher product gross profit due to the elimination of last year’s dual facilities costs coupled with planned efforts to improve efficiencies and operations in manufacture. Our consistent delivery of product revenue growth and operating efficiencies has enabled us to drive bottom line growth and generate robust cash flow. I’ll turn now to the highlights at the franchise level as illustrated on slide number four. I’ll start with the Orthobiologics franchise. This is where our viscosupplementation business is focused and where we are generating most of our revenue growth. The majority of upward momentum in this area continues to be driven by the U.S. demand for our flagship product Orthovisc. Second quarter domestic revenue from Orthovisc grew 49% from the same period last year, leveraging the differentiated clinical benefits, our U.S. distribution partners Depuy Mitek is executing on their strategic sales and marketing plan to support patient care and enhance position office efficiency. Marketing activities such as physician practice programs, patient awareness programs website and web based tools continuing to increase the awareness and expand Orthovisc’s market reach. The growth in our U.S. Orthovisc revenue indicates these efforts are having a positive impact on product demand, which serves to…

Thank you, Chuck. Please now turn to slide number eight in the presentation, slide eight covers our income statement highlights for the quarter. Anika’s total revenue for the second quarter of 2013 increased 6% from the second quarter of last year to $20.8 million. This growth was centered in our Orthobiologics franchise, driven primarily by strong domestic sales of Orthovisc which were 49% for the quarter. Including international Orthovisc and Monovisc revenue and S.r.l.’s orthopedics products total Orthobiologics franchise revenue increased by $5.6 million or 51% year-over-year. This more than offset the expected $4.8 million decline in the ophthalmic franchise revenue. Our second quarter product gross margin increased to 68.5% from 57.2% in Q2 2012. This improvement reflected the factors that were previously discussed. First in elimination of the redundant facility cost. Second, manufacturing efficiency gains at our Bradford Massachusetts facility. Third, favorable product mix. And lastly, elimination non profitable Italian tissue engineering operations. Although we expect these factors will continue to contribute to improved performance in this area, our product gross margin for the second quarter may not be indicative of future quarters, due to dynamics such as revenue mix. Total operating expenses excluding cost of product revenue and restructuring charges For the second quarter of 2013 had a modest 3% decreased compared with the same period last. Higher R&D expenses primarily related to Cingal clinical trial was more than offset by lower SG&A expenses. The decline in SG&A expenses reflected the impact of our cost reduction initiatives. We expect operating expenses in the second half of 2013 to increase due to the ramp up of our Phase III Cingal clinical trial. Operating income for the second quarter of 2013 increased to $9.3 million from $6.1 million in Q2 of 2012. Net income grew 58% to $5.9 million or $0.40 per diluted share from $3.7 million or $0.26 per diluted share in the second quarter of last year. Consistent with Q1 2013 this quarter’s operating and net income growth was primarily driven by improved product gross profit. While improving our margin performance in manufacturing we are also continuing to reduce cost and enhance efficiency in our operations across the company. And these efforts are improving the operating leverage in our business. For example, after closing S.r.l. tissue engineering operations at the beginning of 2013 we have made good progress this year in turning around the S.r.l. operations and realizing its potential for growth. Turning to slide number nine. Anika generated approximately $10 million of cash during the first half of 2013. In addition to the increased profit, this operating cash flow was driven by continued improvement in our receivables management and auction exercises during the period. We are continuing to closely monitor working capital with the night work reducing our long term debt, reinvesting in the growth of business and maintaining a readiness to make strategic investments with the right opportunity. With that I will turn the call back to Chuck.

Thank you, Sylvia. Turning to slide 10 and the outlook for 2013. Anika’s performance has matched or exceeded our internal expectations through the first six months of the year. We have delivered mid-single-digit top-line growth for the Year-to-date despite the difficult comparison with Q2 last year, at the same time operating income and diluted earnings per share for the first six months of 2013 both are up more than 53% from the same period in 2012. This increased profitability reflect the anticipated gains we made in operations and manufacturing which more than offset the planned increase in R&D expenses. Anika is well positioned for continued growth and profitability improvement in the second half of 2013. Our viscosupplementation business is strong as is our product pipeline and we are continuing to drive efficiencies in operations and manufacturing. As I said on our call last quarter we are completing our planning process to find and deliver on our long-term strategy and we look forward to reporting on the outcomes in that area as the year progresses. And with that, I will turn the call back over to Steve so that we can take any questions you may have. Steve?

(Operator Instructions). Which is from the line of Mark Landy of Summer Street Research. Please go ahead. Mark Landy – Summer Street Research: Good morning, folks and congratulations on a still quarter.

Thank you, Mark. Good morning. Mark Landy – Summer Street Research: Good morning. So Sylvia just a kind of a quick question from around 30,000 feet it seems that as you to the $19 million to $20 million range in revenue, just the earnings leverage to significantly ramps up is that kind of a leverage point or leverage sales number that we should look at or there is some things going on, now if you look back historically that seems to be at that $19 million to $20 million range where the earnings – just explode.

Right. So from a top-line perspective as we had discussed last year’s quarterly trend was very abnormal due to two events happened in the second quarter and the third quarter, in the second quarter being exceptionally high atomic shipments prior to the closure of the old facility and in the third quarter there were some new facility scale up issues which were quickly resolved in Q4. So Q2 and Q4 were exceptionally high in 2012. We expect this year’s quarterly revenue trend to be more comparable with historical patterns meaning Q4 generally speaking being stronger quarter and Q1 lower quarter and we expect the second half of the year to grow from the first half of the year. So in terms of your question about the $20 million level, we do expect growth from that level for the rest of the year. Mark Landy – Summer Street Research: Okay. Let me rephrase my question I was talking about was the kind of the earnings power of revenues above the $19 million to $20 million just really the margin contribution and earnings contribution and what I was saying it seems that from around the $19 million to $20 million number in sales that anything over that seems to just have the margin contribution to earnings is much higher. So my question was is that a good way to look at the earnings leverage that at around the $19 million in sales you start to get the benefit from the fixed cost essentially given that you run more of a fixed cost operation than a traditional sales model that has distributors and compensation associated with sales.

Thank you for the clarification. So from a leverage standpoint, what you said is partially whole true for the gross margin level at the earnings level, at the bottom line level just keep in mind that the Cingal clinical trial just recently commenced and we expect very aggressive and accelerated patient enrolment as a result causing much high R&D spending for the second half of the year. So having that in mind the bottom line for the remainder of the year will not be at the similar level as we saw in the second quarter.

Also I would like to point out to you Mark that the gross margin is a function of product mix and that has a fairly significant impact on gross margin and as we moved away from low margin sales predominantly the ophthalmic to Orthovisc and then in the future Monovisc integrator portion in some of the S.r.l. products which are pretty margin and our margins are increasing. So the trend is upwards for a couple of reason product mix, efficiencies and so on and so forth. I am not so sure that it’s directly tied to the level of revenue only. Mark Landy – Summer Street Research: Okay. And then so we just again looking at the balance sheet just from the end of last year to exiting the second quarter there has been good step up in inventories, can you explain that a little bit?

Sure. As a result of the initial scale up activities at the new manufacturing facility in Bradford Massachusetts we have some scale up issues as I mentioned earlier and we were running very low in our inventory exiting 2012. In the first quarter and more so in the second quarter of this year we had built up our inventory level to a normalized level and also in anticipation of growth in sales. So that is the reason why the inventory balance has increased from last year end.

That was all planned because we were because we were at a level that was in our opinion way too low for our business. Mark Landy – Summer Street Research Okay. So weakness in five quarters running to the issue where again a couple of shift in sales short due to not having inventory on hand do you think it depend odd million dollar level for the remainder of the year, you are good with that or should we see inventories kind of step up a little bit as we go through the year?

I think the inventory level will step up slightly as we go through the remainder of the year. But we are now in a much better and healthier position than the situation in the fourth quarter of last year.

Yeah more comfortable position. Mark Landy – Summer Street Research: I mean if I look at just kind of the U.S. sales which you mentioned is going to bring up on paper we’re definitely skewed by the large ophthalmic order last year this time. The ophthalmic revenue you kind of run with that $400,000 and $900,000 is that something we can now think of as a steady state or do you still expect it to bounce around some?

The ophthalmic revenue quarter-over-quarter may bounce around as you said a little bit, for the full year we as we have previously discussed we expect the full year revenue to be significantly lower than in the past as a result of the new contract. So it would not be at the high single-digit level, it will be at the low to mid-single-digit level for 2013. Mark Landy – Summer Street Research: Okay. So again so if we kind of combine those two quarters we are about $1.3 million do you expect that to be similar in the second half of or relative to the first half how do you kind of anticipate the second half to come out?

We expect the second half to be slightly better than the first half for ophthalmic products. Mark Landy – Summer Street Research: Okay. And then with my next do correct if I normalize the second quarter 2012 ophthalmic revenues to around 1 million U.S. growth would be around 28% this quarter is that a pretty good estimate?

Would you repeat your question to make sure that we understand it? Mark Landy – Summer Street Research: Sure, if I kind of normalize the Q2 ophthalmic number, which at that time was running at around just over $1 million. So if I normalize the 2Q ophthalmic revenue to around $1 million, the U.S. growth this year, year-over-year would be approximately 28% versus the decline that we’ve shown is that a fair way of looking at it and would that be a reasonable number?

Yeah, Mark we still don’t really understand what you are trying to get, maybe we can take this offline later? Mark Landy – Summer Street Research: Chuck so if I basically make ophthalmic revenues last year around $1 million it’s 5.3 to get a normalized rate to kind of take out the effective of stocking order, then U.S. growth this year is around 28%. So I am just asking is that a fair way to kind of look at this year’s growth to try make out the impact of that large stocking order, last year?

Yeah I get the question and I have to think about that a little bit, and I really like move on to something else and then may we can address that offline later. Mark Landy – Summer Street Research: Okay. That’s all the questions I had. Thanks very much guys.

Thank you.

Thank you, Mark.

And your next question is from the line of Joe Munda from Sidoti & Company. Please go ahead. Joe Munda – Sidoti & Company: Good morning guys thanks for, hello can you hear me?

Yes, good morning Joe. Joe Munda – Sidoti & Company: Good morning. Real quick, Chuck I was wondering or Sylvia if you could break out Orthovisc revenue domestically and internationally if possible?

I don’t believe we have the past broken out the Orthobiologics revenue into geographic regions. What we can say is the U.S. revenue is a very significant percentage of the total Orthobiologics revenue. Joe Munda – Sidoti & Company: Would it be well over 50%?

It is over 50%, it’s anywhere between 65% to 80%. Joe Munda – Sidoti & Company: Okay. That’s helpful. Thank you.

We are pushing hard to change that and we’ve made some strike but the U.S. business is pretty strong contributor. Joe Munda – Sidoti & Company: Yeah, okay. And Chuck I mean really what do you think is driving this growth in the U.S.? I mean is it people deferring surgery and opting for the shots or is it more efficacy word of mouth I am just trying to get my hands around it, because there are other products in the space from competitors. So I am really trying to get a sense here what is driving Orthovisc growth?

Okay. I can say to you from my opinion several factors, but I cannot attribute the value of each of these factors necessarily. So first and foremost this is a very, very important product for the [Peumitec] and they put tremendous focus on this. They alter their strategy as they see changes in the marketplace. And so some of the factors that I mentioned web based tools, physician training, trying to work with physicians in the office to make things easier for them to help promote their practice. They signed up with FIFA for promotion. And before they were with the PGA they are targeting certain even the younger patient population focusing on sports medicine. They are doing all, they work with their distribution strategy. So they are doing all the right things and they’re pretty aggressive about the way they are attacking the market that’s one factor probably the biggest. Two, it sounds like I am posturing a bit but Orthovisc is a very, very good product, the safety profile for this product is impeccable. The efficacy results appear to be very, very good. So once they get into a practice, they usually develop a very, very strong alloy in their practice and patients are responding pretty well. So that’s also a factor. All of the orthopedic companies sing the same song. So I will tell you the song and whether or not I don’t have any data really validate it, but what they say is that the number of patients that could benefit from a viscosupplementation injection, namely the market penetration into that population is less than 20%. So we think there is still a lot of upside for the market. The shots do work. People really and I include myself in here with a couple of not so great knees. People don’t look at the prospect of surgery very positively. The second factor is lots of us are feeling like maybe I like expectancies going up and if we take care of ourselves we’ll live longer. So there is a little concern too about getting surgery too early and having your implant where out when you are 90 years old. So there is some of that as well. So it’s a mix also there is a lot more social media information and talk about these kinds of products. People are taking their own healthcare and the management that more seriously. There is more promotion of viscose supplementation so some of the patients are getting more aware of another potential therapy for their knee pain as well. So there are just a lot of things coming into play here. Joe Munda – Sidoti & Company: Okay, Chuck, it is interesting you said that shots do work I guess, you are making a reference to the Academy of Orthopedics, their paper that they put out on Hyaluronic injections, but I mean I wanted to get your thoughts on that.

Orthopedic surgeons want to do surgery, yeah, that’s my first thought. Second, when it, when you look at the data, much of the data is capped in comparison to some sort of placebo treatment and typically that placebo is a saline injection which in itself is an active placebo. So when they say that HA shots or not while they are differentiated from the saline injection therefore HA doesn’t work, that is an inappropriate position to take in my opinion. The benefits that people receive from HA injections in longevity with which they are sustained clearly demonstrates that in a vast majority of patients this treatment does actually provide a benefit. So I think that when our recommendation was being discussed at the academy there were a lot of physicians who had experience with visco supplementation who didn’t agree with what the Committee was putting out so we’ll see. I am not sure that what they said though was that viscose supplementation doesn’t cure defects in the knee and osteoarthritis, of course it doesn’t, of course it doesn’t, but it does provide a legitimate benefit. And certainly that benefit doesn’t cure the disease, and so over time you have to think about coming to the realization that eventually you need some sort of surgery to repair some of the defects in there, unless it is a new technology that comes out. But the product is useful to extend and manage the pain and extend the time to which you come to the ultimate solution. Joe Munda – Sidoti & Company: Okay.

It is not a point but one missed by the academy. Joe Munda – Sidoti & Company: No, Chuck, it is very helpful. Just two more questions and I will head back in the queue. One, you are confidence on Monovisc and even giving a time frame seems like the tone has changed a little bit this quarter from the last one. And my other question is the 54 million in cash, how much of that is overseas at this point.

I will let Sylvia address the cash one first, I will talk about Monovisc.

A very small percent of that, $ 54 million is overseas at the SRL location. Joe Munda – Sidoti & Company: Okay, would you say 10% of that?

No, much less than that. Joe Munda – Sidoti & Company: Okay.

They are, as we said we organized the business. They were in a loss position they are on track to become positive at the end of the year, revenue is growing, cash position is growing but it’s currently is at a very small percentage of the total balance. Joe Munda – Sidoti & Company: Okay, thank you.

You’re welcome.

And Monovisc you know, I am not sure that our position has really changed a lot. We, the FDA remains cooperative with us, they seem to want to work with us and of course, we want to work with them. The document we just sent in, in my opinion is pretty strong. How it’s view at the other side of the table can never be predicted, so we are guardedly optimistic but we are not sure how it is going to be. However, because of the cooperation because of some of the things they told us we think that they feel that it is important that we move in an expeditious fashion. So that’s why we put a time frame on the definitive decision. We talked and the processes become somewhat less formal so I believe that they are really working hard and I believe they ought to be able to get through what we sent them fairly quickly and get to a decision and there are no more data to send in, this is it. Joe Munda – Sidoti & Company: Okay, thanks Chuck, that’s very helpful. I will hop back into the queue.

Thank you, and your next question is from the line of Chuck Dicar of Dicar Management, please go ahead. Daniel Dugoff – Dicar Management.: A couple of questions, first is on Cingal, so just you know, you guys mentioned that OpEx is going to be going up because of that, could you walk me through maybe kind of how to think about that or maybe economics on the cost for that, are you guys still patient on the site?

I’m sorry, I know this is not Chuck Dicar, who is speaking? Daniel Dugoff – Dicar Management.: Daniel Dugoff from Dicar Management.

Okay, okay Daniel. We are trying to move forward with the recruitment as fast as humanly possible. So we are trying to get as many patients recruited and hopefully the full roster by the end of the year. So we are going to spend a fair amount of money doing that and the costs are going to, you know, in R&D as a result of that trial trump up really significantly.

We had previously discussed that the trials total cost will be around $ 5 million and a good portion of that is upfront and a lot of it is related to the patient enrolment phase which Chuck has just described in terms of our strategy and approach. So we expect a fair amount a pretty significant increase as we discussed earlier for R& D expense in the second half of this year. Daniel Dugoff – Dicar Management.: Okay, great, thank you. And then one other question, is just kind of taking a step back. How do you guys and how does management in general look at success for the rest of the year? Where you know, what would be again you know, two quarters from now, what kind of things should I be looking at and you guys would be looking at yourself and say we are really happy with the way the things have gone and it is been an unequivocal success in terms of growth and things like that.

Sure from a top line standpoint we expect as we had previously discussed, growth from the previous year, despite some expected decreases for example, in the uptonic area we expect that our existing successful effort in geographic expansion will continue and provide and contribute to that role. We do believe that the strong visco supplementation product demand would be an important part of that top line growth. From the bottom line standpoint we believe that the product margins will be at the levels that we had anticipated meeting or potentially exceeding the mid 60% that we had discussed before. The earnings level we expect higher growth rate at the earnings level compared to the bottom line due to the leverage that we discussed earlier and also the cost reduction initiative across the company which we had shared previously. So those are some of the metrics that we look at in terms of achievements.

On top of that we want to get the Italian operation on a positive trend so we expect to have that operation possible by US GAAP standards. We are pushing very, very hard to get resolution to the Monovisc question at the FDA hopefully very positively and we are pushing very, very hard to get resolution to the – of this question at the FDA hopefully very positively and we’re pushing very, very hard on this signal trial to get that patient enrolment ramped up very, very, very significantly such that we get full enrollment by the end of the year or very, very close to full enrollment in the trial. And then, so these are some of the large treatments in addition to the financial ones that we hope to have by the end of the year. Daniel Dugoff – Dicar Management.: Great, thanks a lot guys.

Thank you.

Thank you. Your next question comes from the line of Greg Garner of Singular Research. However, due to time restrictions we must be strict participants to two questions each. Thank you. Greg Garner – Singular Research: Thank you for taking my question and first of all congratulations on a great quarter. I guess I have more of follow up questions from the questions that already asked pretty much cover the areas of importance. First of on the Monovisc work there Chuck I member last quarter was mentioned there was like a parallel path taking that there was additional data was being gathered that may not need to be used. Is this the data that was just submitted or is that something that’s also was in your back packet that might come later?

May be I wasn’t clear when I explained before. If additional data were to be required then we wanted to discuss with the FDA the parameters around that. And so we actually did have some discussions with them about that path. But right now we’ve sort of dropped that and we’re pushing very hard with the data that we already had and what we did was, we did some re-analysis under the direction of the FDA. They said take a look at it test way and send us the result so that’s what we really did. Greg Garner – Singular Research: Okay. And confidently that’s the reason for you favorably disposed on the timeframe and such –

Yeah with the cautionary statement that one can never predict what you get in court nor can you predict what you get in the FDA. Greg Garner – Singular Research: And a general question on Ortho I mean it’s such a great improvement here is, are you seeing any feedback that the actual market’s growing or is it really just too short of a timeframe to tell we’re really just seeing how Depuy Mitek is just really performing very well?

I think Mitek is performing very well we’re just usually have to look at the market growth over the span of like a year. So it may be that marketplace is growing a little bit we’ll have to wait till the end of the year, really look at the metrics and see. I think that against competition we are probably doing a little better also on that. So may be a contribution from both areas that are contributing to our own Orthovisc drug. Greg Garner – Singular Research: Okay. And some modeling questions for Sylvia, any sense for how much the R&D in Q2 was for – or is that something that you don’t really want to disclose much?

It’s not something that we will be with that we will disclose. But the majority of the increase from last year is really to think off. Greg Garner – Singular Research: Okay. Appreciate it. And just one last question on the gross margin I mean being above the expectations was there any one time events or that perhaps the same product mix in future quarters that this gross margin would be difficult to achieve again or should we give this as really a more mid 60s gross margin situation that could have some upside blips to it.

It’s the later Greg I think we are very pleased with the achievement for second quarter for a number of reasons which we already covered in descriptive section. We did have very high volume for Q2 which certainly helped in that regard. And in terms of getting back to the earlier point about inventory build, the product mix which Chuck had described and discussed earlier is a factor that always have to be kept inline in terms of future product gross margin trend. So in terms of the mix 60% I think we’re comfortable, we certainly will do our best to aim higher but at this point we need to be also cautious about realistically what can be expected and for the remainder of the year what should be seen. But mix 60 is a good expectation for the full year. Greg Garner – Singular Research: Okay. And just one last item on the re-commercialization of the Dermal product is that with Depuy Mitek or is that a different, totally different strategy for re-commercialization?

Oh the higher metrics. We had a partner in United States and we parted ways and so we’re looking at reestablishing that commercial channel in the U.S. it has nothing to do at this point with Depuy Mitek it’s in the wound care area and not Orthopedic. Greg Garner – Singular Research: Okay. Great, thanks again, a great quarter.

Thanks.

And our final question come from the line of Jim Gentrup of Discovery Investment Research. Please go ahead. Jim Gentrup – Discovery Investment Research: Good morning guys.

Good morning.

Good morning. Jim Gentrup – Discovery Investment Research: Nice quarter.

Thank you. Jim Gentrup – Discovery Investment Research: The aside from ophthalmic what products I think you talked about this a little bit Chuck but aside from ophthalmic what products bring your gross margin down, what is, what makes causes it decline?

The ophthalmic certainly is one driver. Comparatively speaking – is lower margin and some of our SRL products has lower margin which we have taken step to improve upon that. Jim Gentrup – Discovery Investment Research: Okay. Right, thank you.

Some of that also to augment at a little bit I means that in general but it’s not for every single case. Some of the SRL products that are solid base tend to have little bit higher margin and some of the gel based products as well despite the nature of the pricing and so on so forth. Jim Gentrup – Discovery Investment Research: Ophthalmic continues to be a small influence and I guess the point I am trying to get out is that it seems like you could persist about 65% when ophthalmic is very …

Ophthalmic is pretty much at steady state level right now for this year. And when we end the year that was pretty much the low level, the new level that we achieve. But your conclusion I think is correct. We have slipped there. Jim Gentrup – Discovery Investment Research: Okay. The geographic expansion on that you talked about can you just I know you’ve got some good growth occurring I think in Korea. But could you expand a little bit more on may be some new geographies, what is new on that front as far as geographic expansion?

Sure maybe we can take it on franchise-by-franchise level for the Orthobiologics and the Monovisc and Orthovisc were really expanding with our existing distributor. And adding on some Middle-Eastern countries. In the Dermal area our expansion is primarily coming in from Latin America where we had signed up a distributor for nine countries three of which we already received the approval and six more to come between the rest of this year and early next year. In the surgical area the growth, the geographic expansion is primarily Europe and Asia and Korea and Taiwan. Jim Gentrup – Discovery Investment Research: Good that’s the fact what I was looking for. And then could you also talk a little bit about Cingal versus Monovisc?

Cingal and Monovisc are rough you mean in terms of the product or? Jim Gentrup – Discovery Investment Research: Yes the differences in the two products.

They are roughly equivalent except Cingal has active therapeutic in the entire inflammatory component. So it is the next generation version. Jim Gentrup – Discovery Investment Research: And when you get the FDA approval then we are talking about the same maybe ….

You know, by the time we are really actively discussing Cingal we hope it will be approved, so also I know it is highly likely that when we get to discussing Cingal in real earnest with the FDA it will probably be, the drug component will probably be a much more of a significant issue and the …. Will weigh in on the approval if not take a lead on the approval. Jim Gentrup – Discovery Investment Research: Okay, perfect. Then just a couple really quick income statements, the decline in SG&A, I guess it is a two part question, do you, it seems like I should process to the second half and offset some of the R&D just like I did, R&D increases just like it did this quarter, is that something we should assume?

For SG&A cost we believe that for the full year in terms of spending as a percentage of the total revenue will be at the similar level as last year, there are some timing of spending items in the first and the second quarter in terms of non-occurring items and as we continue to expand our commercial support at Chuck was discussing in the scripted section partnering with our distributors supporting their local efforts and so forth will be some slight uptake for Q3 and Q4 but overall we do expect that the percentage of total revenue to be higher.

Yeah, we are prudently adding resources and you know, increasing head count in some of our commercial areas in a planned way so that will be a little bit of an uptake in SG&A. Jim Gentrup – Discovery Investment Research: Okay. And then the last question I had was that the accounts goes up very strong sequentially about almost 30% is that being collected or is there or is that just a function of your increased sales, can you talk about that a little bit?

Sure, it certainly is a function of increased sales and receivable balance is healthy, we do have subsequent collection following the end of the quarter and from a health standpoint the previous receivables meaning in the previous years had some direct receivables from local hospitals in particular in Italy and those tend to be longer and the percentage of those type of receivables is declining and so the overall health is actually improving from an accounts receivable standpoint. The overall growth is as a result of our increase in total revenue. Jim Gentrup – Discovery Investment Research: So your international distributors are, you know they are on time right now.

For the most part, yes. Jim Gentrup – Discovery Investment Research: Okay, thanks guys.

Next, Steve.

Thank you, and now I would like to turn the call over to Dr. Sherwood for closing remarks.

Thank you very much, Steve, and I thank all of you who have joined this call today for your interest and support to Anika. I am positive about the company as we go forward. We are also looking forward also to as I said previously reporting back to you some of our long term strategic plans in addition to some of the things we have talked on a regular basis and I think the future looks reasonably bright. And I also appreciate all of the questions on the call it makes the call a lot more productive and meaningful for us. So thanks again and we will be talking with you in about three months’ time.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Thank you and have a good day.