If there was any doubt that the osteoarthritis treatments offered by Anika Therapeutics (ANIK) are gaining traction, take a look at this week's earnings results from the Massachusetts-based biotech.
First-quarter net income was 45 cents a share, up a whopping 96% from 23 cents a year ago and trouncing views of 28 cents from analysts polled by Thomson Reuters. Total revenue for the quarter grew 44% to $22.3 million, which also soundly beat analyst views, predicted at $19.3 million.
Clearly, patients are seeking the injectable therapies that Anika offers -- known as hyaluronic acid viscosupplementation products -- even though some surgeons have raised questions about their effectiveness.
"Surgeons get paid more to do a surgery than to do an injection," Joe Munda, analyst with First Analyst Securities Corp., told IBD. "But you’re starting to see that rhetoric (about the efficacy of hyaluronic injections) cool."
Helping The Active, And Inactive
Anika's treatments help both the active, aging baby boomer that suffers from osteoarthritis in the knee, as well as the overweight couch potato. They're designed to not only ease varying stages of pain, but also stave off expensive knee surgeries or replacements.
The worldwide market for hyaluronic treatments is roughly $2 billion, says Anika Chief Executive Charles Sherwood. He adds it’s "growing 5% to 8% per year."
Some private payers had stepped away from covering hyaluronic treatments. In 2013, the American Academy of Orthopaedic Surgeons revised its clinical practice guideline for treating knee arthritis. It said the medication was "no longer recommended" as a method of treatment for patients with osteoarthritis of the knee.
But then some reinstituted reimbursement, Sherwood said in an interview with IBD, while other medical practitioners embraced hyaluronic therapy.
"While studies of (hyaluronic) injections have occasionally yielded disappointing results, many doctors who treat osteoarthritis say that the weight of scientific evidence -- and their own clinical experience -- suggests that a shot in the knee (of hyaluronic) can produce significant relief for some patients," The Arthritis Foundation says in an article on its website.
This past January, the American Medical Society for Sports Medicine said it "recommends the use of (hyaluronic) for appropriate patients with knee osteoarthritis." It also said there are "multiple trials indicating high-quality evidence" that demonstrate the benefit of the therapy.
"Anika is taking market share in the viscosupplementation market," Mike Petusky, an analyst with Barrington Research, told IBD. He rates the company’s stock "outperform."
"We like the fundamentals of the company," Munda said, though he added he currently has an equal weight or market perform rating on the stock. "We feel like the stock has moved very far, very fast."
Two Main Products
Anika’s two hyaluronic products are Orthovisc and Monovisc -- its multi-injection and single-injection treatments for osteoarthritis. Anika’s competitors include French drug giant Sanofi (SNY), Italy's Fidia Farmaceutici S.p.a., Ferring Pharmaceuticals and Seikagaku Corp. of Tokyo.
Carbylan Therapeutics (CBYL) of Palo Alto, Calif., was developing a hyaluronic injectable product, but it announced on April 15 that it has suspended further development of the product. It said it is "actively pursuing a strategic transaction, including a merger or acquisition of the company."
Other competition could come from plasma and stem cell therapies, but Sherwood says those have yet to be proven effective.
Anika also sells hyaluronic-based products for wound care. And it markets a filler for skin smoothing. But its development efforts are focused on using its proprietary formula in additional joints for pain and lubrication, and for regeneration therapies.
“They’re not standing still; they’re continuing to innovate,” said Munda.
It’s latest injectable, Cingal, is already approved for use in Canada and Europe.
"It’s a single-shot injectable of viscosupplementation (or hyaluronic), but it also includes a corticosteroid to provide faster pain relief," said Sherwood. Anika has already run a Cingal trial in the U.S., which Sherwood said was "highly successful."
"Approval (in the U.S.) is not a question of if, but when," Sherwood said on this week's earnings call with analysts. He noted Cingal is a combination of two already approved therapies.
It’s just beginning an international clinical trial of Hyalofast, a cartilage regeneration therapy. Sherwood calls it a "scaffold" that’s made out of hyaluronic acid and is then soaked in stem cells. It entraps the cells to treat lesions in cartilage and regrow cartilage.
U.S. trials, which are just starting, focus on the knee joint. So it will be a couple of years before a product makes it to market. European regulators move more quickly.
"We’ve had European approval for Hyalofast for six or seven years, and it’s being used in knees and ankles, and a little in the hip," said Sherwood.
With help from a partner, Anika also is pursuing approval in the U.S. for clinicians to use Monovisc, it’s single-shot hyaluronic injectable, to treat osteoarthritis in hips. DePuy Mitek, a subsidiary of Johnson & Johnson (JNJ) has the exclusive right to distribute Monovisc and Orthovisc in the U.S.
"Johnson & Johnson is investing in the U.S. trial for using Monovisc in the hip," said Sherwood. "We’re right at the beginning of that trial."
On the earnings call, Sherwood mentioned two new areas of exploration and development that would be further out. First, it wants to expand the use of hyaluronic injectables in the U.S. for use in rotator cuffs (shoulders), elbows (tennis elbow) and Achilles tendons. And it is also investigating developing "synthetic bone graft" therapies for ankles, knees and feet.
He also said Anika is actively looking for acquisitions.
"There are interesting targets out there, and we’re actively looking for the right fit," Sherwood said.