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What changed in Anika Therapeutics, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Anika Therapeutics, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+371 added−383 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-15)

Top changes in Anika Therapeutics, Inc.'s 2024 10-K

371 paragraphs added · 383 removed · 262 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

109 edited+47 added−66 removed8 unchanged
Biggest changeNone of our products are currently approved under an NDA. 13 The steps for obtaining FDA approval of an NDA to market a drug in the United States include: ● completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s Good Laboratory Practices regulations; ● submission to the FDA of an Investigational New Drug Application, or IND, for human clinical testing, which must become effective before human clinical trials may begin and Institutional Review Board, or IRB, approval at each clinical site before the trials may be initiated; ● performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; ● submission to the FDA of a user fee (unless a fee waiver applies) and an NDA, which contains detailed information about the Chemistry, Manufacturing and Control, or CMC, for the product, reports of the outcomes and full data sets of the preclinical testing and clinical trials, and proposed labeling and packaging for the product; ● satisfactory review of the contents of the NDA by the FDA, including the satisfactory resolution of any questions raised during the review; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good Manufacturing Practices, or cGMP, regulations, to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and ● FDA approval of the NDA including agreement on post-marketing commitments, if applicable.
Biggest changeThe steps for obtaining FDA approval of an NDA include: ● Completion of preclinical laboratory tests, animal studies, and formulation studies under the FDA’s Good Laboratory Practices regulations; ● Submission of an Investigational New Drug Application (“IND”) for human clinical testing, which must become effective before trials begin and require Institutional Review Board (“IRB”) approval at each clinical site; ● Performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the product’s safety and efficacy; ● Submission of a user fee (unless waived) and an NDA, containing detailed information about the product’s Chemistry, Manufacturing, and Control (“CMC”), preclinical and clinical trial outcomes, and proposed labeling and packaging; ● Satisfactory review of the NDA by the FDA, including resolution of any questions raised during the review; ● Completion of an FDA advisory committee review, if applicable; ● Completion of an FDA inspection of the manufacturing facilities to assess compliance with current Good Manufacturing Practices (“cGMP”) regulations; and ● FDA approval of the NDA, including agreement on post-marketing commitments, if applicable.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and other information, including amendments and exhibits to such reports, filed or furnished pursuant to the Securities Exchange Act of 1934 are available free of charge in the “SEC Filings” section of our website located at http://www.anika.com, as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and other information, including amendments and exhibits to such reports, filed or furnished pursuant to the Securities Exchange Act of 1934, are available free of charge in the “SEC Filings” section of our website at http://www.anika.com, as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC.
The EU regulatory framework on medical devices continues to apply in Northern Ireland under the Northern Ireland Protocol and medical devices in Northern Ireland may either carry an EU CE mark or a UK and Northern Ireland CE mark (“CE UKNI”), although devices bearing the CE UKNI marking will not be accepted on the EU market.
The EU regulatory framework for medical devices continues to apply in Northern Ireland under the Northern Ireland Protocol. Medical devices in Northern Ireland may carry either an EU CE mark or a UK and Northern Ireland CE mark (“CE UKNI”), although devices bearing the CE UKNI marking will not be accepted on the EU market.
Under these commercial partnerships, we sell our products directly to our partners, who perform downstream sales and marketing activities to customers and end-users. In addition to a transfer price, we may also structure our arrangements to receive a royalty on end user sales.
Under these partnerships, we sell our products directly to our partners, who perform downstream sales and marketing activities to customers and end-users. In addition to a transfer price, we may also structure our arrangements to receive a royalty on end-user sales.
The cost of ongoing compliance with such environmental regulations does not have a material effect on our operations. 18 Seasonality Our OA Pain Management and Non-Orthopedic product families are generally less seasonal in nature due to the nature of our product mix and sales channels and order strategies of our customers.
The cost of ongoing compliance with such environmental regulations does not have a material effect on our operations. 15 Seasonality Our OA Pain Management and Non-Orthopedic product families are generally less seasonal in nature due to the nature of our product mix and sales channels and order strategies of our customers.
The initial step in our ESG journey included the completion of a “materiality assessment” based on the Sustainability Accounting Standards Board, or SASB, framework. Our materiality assessment was a research-intensive and stakeholder-inclusive process and included guidance and insight from external advisors, and crucial feedback from key internal and external stakeholders, including investors, customers, suppliers, employees, and our board of directors.
The initial step in our ESG journey included the completion of a “materiality assessment” based on the Sustainability Accounting Standards Board (“SASB”) framework. Our materiality assessment was a research-intensive and stakeholder-inclusive process and included guidance and insight from external advisors, and crucial feedback from key internal and external stakeholders, including investors, customers, suppliers, employees, and our board of directors.
As we move forward, we plan to continue to invest in novel and meaningful new products for our target markets based on our core capabilities, including further expanding our regenerative HA technology platform.
As we move forward, we plan to continue investing in novel and meaningful new products for our target markets based on our core capabilities, including further expanding our regenerative HA technology platform.
Environmental, Social and Governance In 2021, we began a process to develop a foundational Environmental, Social and Governance, or ESG, framework for our organization. This framework integrates our six key corporate values: People, Quality, Integrity, Accountability, Innovation and Teamwork.
Environmental, Social and Governance In 2021, we began a process to develop a foundational Environmental, Social and Governance (“ESG”) framework for our organization. This framework integrates our six key corporate values: People, Quality, Integrity, Accountability, Innovation and Teamwork.
Data Privacy and Security Laws We are also subject to various laws and regulations concerning data privacy in the United States, Europe, and elsewhere, including the General Data Protection Regulation, or GDPR, in the European Union and the United Kingdom.
Data Privacy and Security Laws We are also subject to various laws and regulations concerning data privacy in the United States, Europe, and elsewhere, including the General Data Protection Regulation (“GDPR”), in the European Union and the United Kingdom.
Tactoset and Integrity are commercialized principally in the United States, whereas Hyalofast is currently available outside the United States in over 30 countries within Europe, South America, Asia, and certain other international markets. In the United States, Hyalofast is a pipeline product under a pivotal Investigational Device Exemption, or IDE, clinical trial and is not available for commercial sale.
While Tactoset and Integrity are commercialized principally in the United States, Hyalofast is currently available outside the United States in over 30 countries within Europe, South America, Asia, and certain other international markets. In the United States, Hyalofast is a pipeline product under a pivotal Investigational Device Exemption (“IDE”) clinical trial and is not available for commercial sale.
Our relationships with these partners are generally structured such that we sell our products to these partners directly while they, with global support from our team, perform the in-country sales and marketing activities to drive growth and adoption of our products locally.
Our relationships with these partners are generally structured such that we sell our products to them directly, while they, with global support from our team, perform in-country sales and marketing activities to drive local growth and adoption of our products.
Our development focus for OA Pain Management will continue to be on bringing Cingal, our next-generation, non-opioid, single-injection HA-based OA pain product combined with a fast-acting steroid, to the U.S. market. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint. We have been actively engaging with the U.S.
Our development focus for OA Pain Management will continue to be on bringing Cingal, our next-generation, non-opioid, single-injection OA pain product combined with a fast-acting steroid, to the U.S. market. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint.
The information on our website is not part of this Annual Report on Form 10-K. 21
The information on our website is not part of this Annual Report on Form 10-K. 17
Manufacturers and other entities involved in the manufacture and distribution of cleared or approved devices or drugs are required to register their establishments and list their products with the FDA and certain state agencies. Manufacturers are subject to periodic announced and unannounced inspections by the FDA and certain state agencies for compliance with regulatory requirements.
Manufacturers and other entities involved in the manufacture and distribution of cleared or approved devices or drugs must register their establishments and list their products with the FDA and certain state agencies. These manufacturers are subject to periodic announced and unannounced inspections by the FDA and state agencies to ensure compliance with regulatory requirements.
Class I and II devices are subject to the 510(k) premarket notification process in order to be commercially distributed, unless exempt Class III devices must obtain FDA approval of their premarket approval applications, or PMAs, in order to be commercially distributed. Some of our current products are subject to premarket notification and clearance under section 510(k) of the FDCA.
Class I and II devices are subject to the 510(k) premarket notification process unless exempt. Class III devices must obtain FDA approval of their PMAs to be commercially distributed. Some of our current products require premarket notification and clearance under section 510(k) of the FDCA.
U.S. laws and regulations are imposed primarily in connection with government-funded health care programs, such as Medicare and Medicaid, as well as the government’s interest in regulating the quality and cost of health care. Other governments also impose regulations in connection with their health care reimbursement programs and the delivery of health care items and services.
U.S. laws and regulations are primarily imposed in connection with government-funded healthcare programs, such as Medicare and Medicaid, and the government's interest in regulating healthcare quality and cost. Other governments also impose regulations on their healthcare reimbursement programs and the delivery of healthcare items and services.
As a result of these distinctions, we employ multiple sales models in the United States to ensure that we are meeting the needs of our customers and other healthcare system stakeholders. For many years, we have maintained a mutually beneficial commercial partnership with Mitek, which sells Monovisc and Orthovisc in the United States.
As a result of these distinctions, we employ multiple sales models in the United States to ensure that we meet the needs of our customers and other healthcare system stakeholders. For many years, we have maintained a mutually beneficial commercial partnership with J&J MedTech, which sells Monovisc and Orthovisc in the United States.
All employees globally are eligible to participate in the annual incentive cash bonus plan or a sales incentive plan which are aligned to both corporate and individual performance. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility.
All employees globally are eligible to participate in the annual incentive cash bonus plan or a sales incentive plan aligned with corporate and individual performance. Bonus opportunities and equity compensation increase as a percentage of total compensation based on responsibility level.
For this arrangement with Mitek, we sell the Monovisc and Orthovisc products that we manufacture to Mitek, and we also receive from Mitek a royalty on their end user sales of these products in the United States. We have U.S. commercial partnerships for other products in our OA Pain Management and Non-Orthopedic product families.
In this arrangement, we sell the Monovisc and Orthovisc products that we manufacture to J&J MedTech, and we also receive a royalty from J&J MedTech on their end-user sales of these products in the United States. We have U.S. commercial partnerships for other products in our Non-Orthopedic product families.
We have established safety policies and protocols, and we regularly update our employees with respect to any changes. We also have adjusted attendance policies to encourage those who may be ill to stay home. To further protect our on-site employees, we have provided personal protective equipment and cleaning supplies.
We have established safety policies and protocols and regularly update employees on any changes. We have adjusted attendance policies to encourage those who may be ill to stay home. To further protect on-site employees, we provide personal protective equipment and cleaning supplies.
Competitive Pay and Benefits To attract and retain qualified employees and key talent, we offer our employees total rewards packages consisting of base salary, a cash bonus, and a comprehensive benefit package. We also provide equity compensation for certain employees based on various criteria, including their level within our company.
Competitive Pay and Benefits To attract and retain qualified employees and key talent, we offer total rewards packages consisting of base salary, cash bonuses, and comprehensive benefits. We also provide equity compensation for certain employees based on various criteria, including their level within the company.
The EU MDR will generally require increased levels of clinical data as compared to MDD requirements, and all product technical data must comply to the latest standards regardless of when the product was initially developed.
The EU MDR generally requires increased levels of clinical data compared to MDD requirements, and all product technical data must comply with the latest standards regardless of when the product was initially developed.
These products include: Hyvisc, our high molecular weight injectable HA veterinary product for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA; Hyalobarrier, an anti-adhesion barrier indicated for use after abdominal-pelvic surgeries; Hyalomatrix, used for the treatment of complex wounds such as burns and ulcers, as well as products used in connection with the treatment of ears, nose and throat disorders, and ophthalmic products, including injectable, high molecular weight HA products such as Anikavisc and Nuvisc, used as viscoelastic agents in ophthalmic surgical procedures such as cataract extraction and intraocular lens implantation.
These products include: Hyvisc, our high molecular weight injectable HA veterinary product for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA; Hyalobarrier, an anti-adhesion barrier indicated for use after abdominal-pelvic surgeries; and ophthalmic products, including injectable, high molecular weight HA products such as Anikavisc and Nuvisc, used as viscoelastic agents in ophthalmic surgical procedures such as cataract extraction and intraocular lens implantation.
Other Health Care Laws The delivery of our products is subject to regulation by the U.S. Department of Health and Human services and other state and non-U.S. government agencies responsible for reimbursement and regulation of health care items and services.
Other Health Care Laws The delivery of our products is regulated by the U.S. Department of Health and Human Services and other state and non-U.S. government agencies responsible for healthcare reimbursement and regulation.
After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and has an acceptable purity profile. A drug-drug combination product must meet the FDA’s fixed combination rule and thus demonstrate the contribution of each component to the therapeutic effect.
After the NDA submission is accepted, the FDA reviews it to determine whether the proposed product is safe and effective for its intended use and has an acceptable purity profile. A drug-drug combination product must meet the FDA’s fixed combination rule, demonstrating the contribution of each component to the therapeutic effect.
In addition, to assess employee perceptions in areas such as inclusion, professional development/training, reward/recognition, equity, engagement and overall organizational satisfaction, we conduct company-wide employee engagement surveys using an external survey platform. Our management team evaluates and measures the results with prior periods and peer data and identifies potential opportunities for improvement.
Additionally, we conduct company-wide employee engagement surveys using an external platform to assess perceptions in areas such as inclusion, professional development, reward/recognition, equity, engagement, and overall satisfaction. Our management team evaluates the results, compares them with prior periods and peer data, and identifies potential improvement opportunities.
We are subject to various U.S. federal and state laws pertaining to health care fraud and abuse, including anti-kickback, false claims, self-referrals, and other health care fraud. In addition, we are subject to U.S. federal and state transparency laws, such as the U.S.
We are subject to various U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims, self-referrals, and other healthcare fraud. Additionally, we are subject to U.S. federal and state transparency laws, such as the U.S.
Our Joint Preservation and Restoration business can be impacted by periodic restrictions on the performance of elective surgical procedures throughout the U.S. and global markets, the unavailability of physicians and/or changes to their treatment prioritizations, reductions in the levels of healthcare facility staffing and, in certain instances, and the willingness or ability of patients to seek treatment.
Our Regenerative Solutions business can be impacted by periodic restrictions on the performance of elective surgical procedures throughout the United States and global markets, the unavailability of physicians and/or changes to their treatment prioritizations, reductions in the levels of healthcare facility staffing and, in certain instances, and the willingness or ability of patients to seek treatment.
Our culture is centered around our fundamental values of: ● People : We engage and invest in each other in a community that values diversity and inclusion. ● Innovation : We are agile and entrepreneurial in developing and delivering meaningful solutions to our healthcare stakeholders within our target markets. ● Quality : We strive for the highest quality and compliance in everything we do. ● Teamwork : We operate with mutual respect and trust and are collaborative as we grow together. ● Integrity : We live up to our promises and do the right thing, every day. ● Accountability : We are empowered and accountable to deliver results and value to all of our stakeholders. 19 Talent Acquisition and Management Our industry requires complex processes for product development and commercialization, each of which requires deep expertise and experience across a broad array of disciplines.
Our culture is centered around our fundamental values of: ● People : We engage and invest in each other in a community that values diversity and inclusion. ● Innovation : We are agile and entrepreneurial in developing and delivering meaningful solutions to our healthcare stakeholders within our target markets. ● Quality : We strive for the highest quality and compliance in everything we do. ● Teamwork : We operate with mutual respect and trust and are collaborative as we grow together. ● Integrity : We live up to our promises and do the right thing, every day. ● Accountability : We are empowered and accountable to deliver results and value to all of our stakeholders.
For instance, our OA Pain Management product family and certain products in our Non-Orthopedic category are almost entirely utilized in an office-based setting while our Joint Preservation and Restoration and certain of our Non-Orthopedic products are almost exclusively consumed in hospital operating rooms or ASCs.
For instance, our OA Pain Management product family and certain products in our Non-Orthopedic category are almost entirely utilized in an office-based setting, while our Regenerative Solutions and certain other products in our Non-Orthopedic category are almost exclusively used in hospital operating rooms or ASCs.
The FDA and other agencies actively enforce the laws prohibiting the marketing and promotion of off-label uses, and a company that is found to have improperly marketed or promoted off-label use may be subject to significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from participation in federal healthcare programs, and mandatory compliance programs.
The FDA and other agencies actively enforce laws prohibiting off-label marketing and promotion. Companies found to have improperly marketed or promoted off-label uses may face significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from federal healthcare programs, and mandatory compliance programs.
In Joint Preservation and Restoration, procedure volumes are normally higher in the fourth quarter due to several factors including the satisfaction by patients of insurance deductible limits and the time of year patients prefer to have elective procedures.
With our Regenerative Solutions product portfolio, procedure volumes are normally higher in the fourth quarter due to several factors including the satisfaction by patients of insurance deductible limits and the time of year patients prefer to have elective procedures.
We have also conducted employee surveys and employee focus groups to discuss diversity and inclusion. We will continue to enhance the diversity of our workforce through focused talent acquisition goals and development plans. Employee Development The ongoing development of our employees continues to be a catalyst for our growth and success as a company.
We have also conducted employee surveys and focus groups to discuss diversity and inclusion. We will continue to enhance workforce diversity through focused talent acquisition goals and development plans. Employee Development The ongoing development of our employees is a catalyst for our growth and success. Many of our employees have advanced degrees in their professions.
To obtain 510(k) clearance, a company must submit to the FDA a premarket notification, or 510(k), demonstrating that the proposed device is “substantially equivalent” to a legally marketed device, known as a “predicate device.” A device is substantially equivalent if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics, or (ii) different technological characteristics, but the information provided in the 510(k) submission demonstrates that the device does not raise new questions of safety and effectiveness and is at least as safe and effective as the predicate device.
To obtain 510(k) clearance, a company must submit a premarket notification demonstrating that the proposed device is “substantially equivalent” to a legally marketed device, known as a “predicate device.” A device is substantially equivalent if it has the same intended use and either the same technological characteristics or different technological characteristics that do not raise new questions of safety and effectiveness.
Many of our employees have obtained advanced degrees in their professions. We support our employees’ further development with individualized development plans, mentoring, coaching, group training, conference attendance. We also provide financial support, including tuition reimbursement for qualified programs, as well as access to a broad-based learning management platform for self-directed learning and improvement.
We support further development with individualized development plans, mentoring, coaching, group training, and conference attendance. We also provide financial support, including tuition reimbursement for qualified programs, and access to a broad-based learning management platform for self-directed learning and improvement.
The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws as well as Medicare provisions aimed at decreasing costs, comparative effectiveness research, an independent payment advisory board and pilot programs to evaluate alternative payment methodologies.
The ACA included provisions governing enrollment in federal healthcare programs, reimbursement adjustments, changes to fraud and abuse laws, and Medicare provisions aimed at reducing costs. It also introduced comparative effectiveness research, an independent payment advisory board, and pilot programs to evaluate alternative payment methodologies.
The discovery of violative conditions, including failure to conform to the QSR and cGMP regulations, could result in enforcement actions. Products may be promoted only for the cleared or approved indications and in accordance with the provisions of the label.
Discovery of violative conditions, including failure to conform to QSR and cGMP regulations, could result in enforcement actions. Products may only be promoted for the cleared or approved indications and in accordance with the label provisions. While the FDA does not regulate physicians' treatment choices, it restricts communications about off-label use of products.
In order to better inform and target our research and development investment, we routinely interact with key external stakeholders, including clinicians, to encompass customer and patient insights in our development process that help ensure we bring needed solutions to the market.
To better inform and target our research and development investments, we routinely interact with key external stakeholders, including clinicians, to incorporate customer and patient insights into our development process. This approach helps ensure we bring needed solutions to the market.
CE marks issued by EU notified bodies to place medical devices on the market in the EU will remain valid in the UK up until June 30, 2028 (for CE marks issued under the EU MDD) or June 30, 2030 (for CE marks issued under the EU MDR), following which a UK Conformity Assessed (“UKCA”) mark will be required to place a device on the Great Britain market.
CE marks issued by EU notified bodies to place medical devices on the EU market will remain valid in the UK until June 30, 2028 (for CE marks issued under the EU MDD) or June 30, 2030 (for CE marks issued under the EU MDR).
Diversity, Equity and Inclusion We are committed to a diverse, equitable and inclusive workplace where all employees, regardless of their gender, race, ethnicity, national origin, age, sexual orientation or identity, education or disability are valued, respected and supported.
Diversity, Equity and Inclusion We are committed to a diverse, equitable, and inclusive workplace where all employees, regardless of gender, race, ethnicity, national origin, age, sexual orientation or identity, education, or disability, are valued, respected, and supported. Beginning in 2021, we committed to key elements of the MassBio CEO Pledge for a More Equitable and Inclusive Life Science Industry.
The FDA aims to review and issue a determination on a 510(k) submission within 90 calendar days. As a practical matter, 510(k) clearance often takes longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence.
The FDA aims to review and issue a determination on a 510(k) submission within 90 calendar days, though it often takes longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. If the FDA agrees that the device is substantially equivalent, it will grant 510(k) clearance to market the device.
The FDA also may require post-marketing testing and surveillance to monitor the effects of a marketed product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, restrictions on a product, and judicial or administrative enforcement. The FDA has broad regulatory compliance and enforcement powers.
The FDA may also require post-marketing testing and surveillance to monitor a marketed product's effects. Discovery of previously unknown problems or non-compliance with FDA requirements can lead to adverse publicity, product restrictions, and judicial or administrative enforcement.
It is impossible to determine whether similar taxes could be instated in the future or how future healthcare reform measures or other efforts, if any, to challenge repeal or replace the ACA, will impact our business.
It is impossible to determine how future healthcare reform measures or efforts to challenge, repeal, or replace the ACA will impact our business.
Many of our competitors also compete against us in securing relationships with collaborators for their research and development and commercialization programs. We compete with other market participants primarily on the efficacy of our products, our products’ reputation for safety, and the breadth of our overall product portfolio.
Additionally, many of our competitors compete with us for collaborations in research and development, clinical trial, and commercialization programs. 10 We primarily compete with other market participants on the efficacy and safety reputation of our products, as well as the breadth of our overall product portfolio.
In December 2011, we entered into a fifteen-year licensing agreement with Mitek to exclusively market Monovisc in the United States through December 2026. In December 2003, we entered into a ten-year licensing agreement to exclusively market Orthovisc in the United States. Mitek extended this agreement for additional five-year terms in 2007, 2012, 2017 and most recently in August 2022.
In December 2003, we entered into a ten-year licensing agreement to exclusively market Orthovisc in the United States. J&J MedTech extended this agreement for additional five-year terms in 2007, 2012, 2017, and most recently in August 2022. The current agreement expires in December 2028 unless extended at the option of J&J MedTech.
We have also provided general information updates and support for our employees to ensure that they have resources and information to protect their health and that of those around them, including their families and co-workers.
We also provide general information updates and support to ensure employees have the resources and information to protect their health and that of their families and co-workers.
Physician Payments Sunshine Act, which require us to annually disclose certain payments and other transfers of value we make to U.S.-licensed health care practitioners (like physicians, nurse practitioners, advanced practice registered nurses, and others) and others. Similar laws and regulations pertaining to sales, marketing and advertising practices exist in the other geographic areas where we operate.
Physician Payments Sunshine Act, which requires us to annually disclose certain payments and other transfers of value made to U.S.-licensed healthcare practitioners (e.g., physicians, nurse practitioners, advanced practice registered nurses) and teaching hospitals. Similar laws and regulations regarding sales, marketing, and advertising practices exist in other regions where we operate.
Many of the larger companies have substantially greater financial resources, larger research and development staffs, more extensive marketing and manufacturing organizations, and more experience in regulatory processes than we have. We also compete with academic institutions, government agencies, and other research organizations that may be involved in the research and development and commercialization of products.
Many of these larger companies have significantly greater financial resources, larger research and development teams, more extensive marketing and manufacturing capabilities, and more experience with regulatory processes than we do. We also face competition from academic institutions, government agencies, and other research organizations involved in product research, development, and commercialization.
Regulation of Medical Devices Medical devices intended for human use are classified into three categories (Class I, II or III) based on the controls deemed reasonably necessary by the FDA to assure their safety and effectiveness.
The classification standards for our products may change over time due to new regulations or updated interpretations of existing regulations. Regulation of Medical Devices Medical devices intended for human use are classified into three categories (Class I, II, or III) based on the controls deemed necessary by the FDA to ensure their safety and effectiveness.
These include enhancements to existing regenerative solutions such as our fast-growing Tactoset Injectable Bone Substitute, which received an additional 510(k) clearance in 2021 for hardware augmentation, along with new soft tissue fixation and extremities products like our X-Twist Fixation System that received 510(k) clearance from the FDA in 2022 and our RevoMotion reverse shoulder arthroplasty system, which received 510(k) clearance in 2021, as well as our Integrity Implant System, a regenerative HA-based patch product targeted at rotator cuff repair that received 510(k) clearance in August 2023 and is now in limited market release.
These include enhancements to existing regenerative solutions such as our Tactoset Injectable Bone Substitute, which received an additional premarket notification (510(k)) clearance in 2021 for hardware augmentation, and our Integrity Implant System, a regenerative HA-based patch product targeted at rotator cuff repair that received 510(k) clearance in August 2023 and is now in full market release.
Drug approval in the European Union follows one of several possible processes: (i) a centralized procedure involving members of the European Medicines Agency’s Committee for Medicinal Products for Human Use; (ii) a “mutual recognition procedure” in which an individual country's regulatory agency approves the product followed by “mutual recognition” of this approval by regulatory agencies of other countries; (iii) a decentralized procedure in which the approval is sought through the regulatory agencies of multiple countries at the same time; or (iv) a national procedure in which the approval is sought through the regulatory agency of one country.
Drug approval in the European Union follows one of several processes: (i) a centralized procedure involving the European Medicines Agency’s Committee for Medicinal Products for Human Use; (ii) a mutual recognition procedure, where an individual country's regulatory agency approves the product, followed by mutual recognition by other countries' regulatory agencies; (iii) a decentralized procedure, where approval is sought simultaneously through multiple countries' regulatory agencies; or (iv) a national procedure, where approval is sought through a single country's regulatory agency. 13 UK Regulation The UK formally left the EU on January 31, 2020.
Internationally, we market our OA Pain Management products directly through a worldwide network of commercial distributors. ● Cingal, our novel, next-generation, non-opioid, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid, designed to provide both short- and long-term pain relief.
Cingal is our novel, next-generation, non-opioid, single-injection OA Pain Management product, consisting of our proprietary cross-linked HA material combined with a fast-acting steroid, designed to provide both short- and long-term pain relief. Cingal is CE marked and has been sold outside the United States for several years, directly in over 35 countries through our network of distributors.
Other factors that impact competition in our industry are the timing and scope of regulatory approvals, the availability of manufacturing supplies, raw materials and finished product supply, marketing and sales capability, reimbursement coverage, product pricing, and patent protection.
Other competitive factors include the timing and scope of regulatory approvals, availability of manufacturing supplies and raw materials, marketing and sales capabilities, reimbursement coverage, product pricing, and patent protection.
These Non-Orthopedic products are sold through commercial sales and marketing partners around the world. Sales Channels A majority of our products are used by clinicians and surgeons in one of three environments: office-based procedures usually focused on injections, hospital operating rooms and ASCs, which are clinics outside of a normal hospital setting that are often at least partially physician-owned.
These Non-Orthopedic products are sold through commercial sales and marketing partners around the world. Sales Channels A majority of our products are used by clinicians and surgeons in one of three environments: office-based procedures, hospital operating rooms, and ambulatory surgery centers (“ASCs”).
Manufacturing We manufacture all of our HA-based products, including all our OA Pain Management products and certain additional products, at our facility in Bedford, Massachusetts, where we have developed significant manufacturing expertise around procedures such as homogenized mixing and filling of highly viscous liquids and manipulation of solid HA into scaffolds or other presentations.
Here, we have developed significant manufacturing expertise in procedures such as homogenized mixing and filling of highly viscous liquids and creation and manipulation of solid HA into scaffolds or other fiber-based presentations. To support higher expected output of OA Pain Management and Regenerative Solutions products, we are investing in our Bedford manufacturing facility.
We are aware of several companies that are developing and/or marketing competitive products. In some cases, competitors have already obtained product approvals, submitted applications for approval, or commenced human clinical studies, either in the United States or in certain foreign countries. All our products face substantial competition.
We are aware of several companies developing and marketing competitive products. Some competitors have already obtained product approvals, submitted applications for approval, or commenced clinical studies in the U.S. or abroad. All our products face substantial competition, and there is a risk that we may not compete effectively against current or future competitors.
Non-Orthopedic Our Non-Orthopedic product family consists of legacy HA-based products that are marketed principally for non-orthopedic applications.
Listed below are the key product drivers to our business 8 ● Non-Orthopedic Products : Hyvisc, Hyalobarrier, Anikavisc, Nuvisc Our Non-Orthopedic product family consists of legacy HA-based products that are marketed principally for non-orthopedic applications.
However, we rely on a small number of suppliers for certain key raw materials and other components, parts and disposables required for the manufacturing and delivery of these products, Any prolonged interruption of operations or significant reduction in the capacity or performance capability of any of our manufacturing facilities, or with any of our key suppliers, could have a material adverse effect on our operations.
However, we rely on a small number of suppliers for certain key raw materials and other components, parts, and disposables required for the manufacturing and delivery of these products.
Some of the principal factors that may affect our ability to compete in our target markets include: ● The quality and breadth of our continued development of our product portfolio; ● Our ability to complete successful clinical studies and obtain FDA marketing and foreign regulatory clearances/approvals; ● Our ability to successfully source raw materials and components from suppliers at price points that are in-line with our financial objectives, as well as deliver them on schedule to meet the needs of our operational and commercial organizations; ● Our ability to continue to strengthen our commercial infrastructure, integrate our sales channels and execute our sales strategies; ● The execution by our key partners of their commercial strategies for our products and our ability to manage our relationships with those key partners; ● Our ability to recruit and retain skilled employees; and ● The availability of capital resources to fund strategic activities related to the significant expansion of our business or product portfolio, including through acquisitions of third parties or certain assets.
Key factors that may affect our competitive position include: ● The quality and breadth of our product portfolio development; ● Our ability to complete successful clinical studies and obtain FDA and foreign regulatory approvals; ● Our ability to source raw materials and components at competitive prices and deliver them on schedule; ● Our ability to strengthen our commercial infrastructure, integrate sales channels, and execute sales strategies; ● The execution of commercial strategies by our key partners and our management of these relationships; ● Our ability to recruit and retain skilled employees; and ● The availability of capital resources to fund strategic activities, including acquisitions.
However, the FDA may review such letters to file to evaluate the regulatory status of the modified device at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. Some of our devices are Class III devices that require PMA approval before they can be marketed.
Many minor modifications are documented by a “letter to file,” but the FDA may review these letters and require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. 11 Some of our devices are Class III devices requiring PMA approval before marketing.
The FDA can also require us to repair, replace, or refund the cost of devices that we manufactured or distributed. Outside the United States, regulatory agencies may exert a range of similar powers. EU Regulation In the European Union, medical devices must be CE marked in order to be marketed.
Outside the United States, regulatory agencies may exert similar powers. EU Regulation In the European Union, medical devices must be CE marked to be marketed.
Research and Development Our research and development efforts consist of the development of new medical applications that address true unmet needs that leverage our technology platforms, including new implant designs, the development of intellectual property with respect to our technology platforms and new products, the management of clinical trials for certain product candidates, the preparation and processing of applications for regulatory clearances and approvals, and process development and scale-up manufacturing activities for our existing and new product development initiatives.
This includes new implant designs, developing intellectual property related to our technology platforms and new products, managing clinical trials for certain product candidates, preparing and processing applications for regulatory clearances and approvals, and conducting process development and scale-up manufacturing activities for our existing and new product development initiatives.
CE marking a device involves working with a notified body (or in some cases, for the lowest risk class devices, the manufacturer can self-certify) to demonstrate that the device meets all applicable general safety and performance requirements of the EU medical devices legislation, including that the manufacturer’s Quality Management System is compliant with such requirements.
CE marking involves working with a notified body (or self-certifying for low-risk devices) to demonstrate that the device meets all applicable general safety and performance requirements of EU medical devices legislation, including compliance with the manufacturer’s Quality Management System. The EU’s Medical Devices Directive (“MDD”) has been replaced by the EU Medical Devices Regulation (“EU MDR”), effective May 26, 2021.
Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. These third-party payers are increasingly reducing reimbursements for medical products and related procedures.
Coverage and Reimbursement Sales of medical products depend partly on coverage by third-party payers, such as government healthcare programs, commercial insurance, and managed healthcare organizations, and the level of reimbursement provided. Coverage and reimbursement decisions are made on a plan-by-plan basis, and third-party payers are increasingly reducing reimbursements for medical products and procedures.
Typically, if a product is intended to treat a chronic disease, safety and efficacy data must be gathered over an extended period, which can range from six months to three years or more. During all phases of clinical development, the FDA requires extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators.
For chronic diseases, safety and efficacy data must be gathered over extended periods, ranging from six months to three years or more. During all phases, the FDA requires extensive monitoring and auditing of clinical activities, data, and investigators. Annual progress reports and serious adverse event reports must be submitted to the FDA.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval.
After receiving 510(k) clearance, any modification that could significantly affect the device’s safety or effectiveness, or constitute a major change in its intended use, requires a new 510(k) clearance or PMA approval. The determination of whether a modification could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance.
We will continue to focus on expanding our own commercial capabilities, including with respect to market access, innovative sales and delivery models, and improved logistics management.
We will continue to focus on expanding our commercial capabilities, including market access, innovative sales and delivery models, and improved logistics management. This strategy is expected to enhance our ability to deliver value to our shareholders and meet the needs of our diverse customer base.
If a complete response letter is issued, the applicant may either resubmit the NDA to address all deficiencies identified in the letter, withdraw the application, or request a hearing. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the NDA does not satisfy the regulatory criteria for approval.
If the FDA finds the application, manufacturing process, or facilities unacceptable, it will either not approve the NDA or issue a complete response letter outlining the deficiencies. The applicant may resubmit the NDA, withdraw the application, or request a hearing. Despite additional information, the FDA may ultimately decide the NDA does not meet regulatory criteria for approval.
We also launched our X-Twist Biocomposite, the bioabsorbable version of the X-Twist Fixation System, in early 2024. In addition, we made significant progress in 2023 on our clinical trial to support approval in the United States for Hyalofast, our single stage, off the shelf, cartilage repair therapy, currently sold only outside the United States.
In addition, we have made significant progress on a full regenerative pipeline, leveraging the commercial success of Integrity, as well as progress on our clinical trial to support approval in the United States for Hyalofast, our single-stage, off-the-shelf cartilage repair therapy, currently sold only outside the United States. We have fully enrolled the 200 patients targeted in the Hyalofast trial.
Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on short notice, and we believe that changes in these rules and regulations are likely. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products.
Rules and regulations regarding reimbursement change frequently, often on short notice. The U.S. government, state legislatures, and foreign governments continue to implement cost-containment programs, including price controls, coverage and reimbursement restrictions, and generic substitution requirements. Adoption of such measures could limit product sales.
Post-Approval Requirements Products manufactured or distributed pursuant to FDA clearances or approvals are subject to continuing regulation by the FDA, including, among other things, requirements relating to monitoring, record-keeping, advertising and promotion, reporting of adverse experiences, and limitations on industry-sponsored scientific and educational activities. 15 FDA regulations require that PMA and NDA approved products be manufactured in specific facilities and all devices and drugs must be manufactured in accordance with the QSR and cGMP regulations, respectively.
Post-Approval Requirements Products manufactured or distributed pursuant to FDA clearances or approvals are subject to ongoing regulation by the FDA. This includes requirements for monitoring, record-keeping, advertising and promotion, reporting adverse experiences, and limitations on industry-sponsored scientific and educational activities.
Outside of the United States, we market and sell our products using a worldwide network of commercial partners to provide a solid foundation for future revenue growth and territorial expansion.
This approach has proven effective, as evidenced by the strong performance of products like the Integrity Implant System, which has seen significant adoption and growth. Outside of the United States, we market and sell our products using a worldwide network of commercial distributors, providing a solid foundation for future revenue growth and territorial expansion.
The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued but does not provide for wholesale mutual recognition of UK and EU pharmaceutical regulations.
The EU and the UK concluded a Trade and Cooperation Agreement (“TCA”), provisionally applicable since January 1, 2021, and formally applicable since May 1, 2021. The TCA includes specific provisions concerning pharmaceuticals, such as the mutual recognition of GMP inspections and GMP documents but does not provide for wholesale mutual recognition of UK and EU pharmaceutical regulations.
Clinical Trials Clinical trials are typically required to support a PMA and an NDA and are sometimes required to support a 510(k) submission. All clinical trials must be approved by and conducted under the oversight of an IRB for each clinical site. Clinical investigators must obtain informed consent from all study subjects.
All trials must be approved by and conducted under the oversight of an IRB for each site. Clinical investigators must obtain informed consent from all study subjects. Trials can be suspended or terminated by us, the FDA, or the IRB for various reasons, including risks outweighing benefits.
These include all-employee town hall meetings led by senior management, hosted monthly information sessions known as Knowledge Boosters, regular email and intranet updates from our chief executive officer and other key members of the executive team.
To communicate these important topics engagingly, we utilize various channels, including all-employee town hall meetings led by senior management, company-wide information sessions known as Knowledge Boosters, and regular email and intranet updates from our CEO and other key executives.
The increase in 2023 was primarily due to costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development in our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
This pipeline is led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
Human Capital Management We believe that creating a diverse, talented, and inclusive workplace is a central aspect to our culture, employee recruitment, retention and engagement, innovation, operational excellence and overall performance. In turn, this culture and drive for performance is an important factor in our ability to attract and retain key talent.
We will continue to assess and update our ESG initiatives as our business grows and as we implement processes and improvements over time. Human Capital Management We believe that creating a diverse, talented, and inclusive workplace is central to our culture, employee recruitment, retention, engagement, innovation, operational excellence, and overall performance.
The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).
The FDA will approve the device for commercial distribution if the data and information in the PMA constitute valid scientific evidence and provide reasonable assurance of the device’s safety and effectiveness. Certain changes to an approved device that affect its safety or effectiveness require submission of a PMA supplement or a new PMA.
At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU regulatory framework continues to apply in Northern Ireland).
Currently, the UK has implemented EU legislation on the marketing, promotion, and sale of medicinal products through the Human Medicines Regulations 2012 (as amended), with the Medicines and Healthcare products Regulatory Agency (“MHRA”) responsible for authorizing all medicinal products.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Investors and others should note that we announce material information to our investors using our investor relations website (https://ir.anika.com/), SEC filings, press releases, public conference calls and webcasts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we devote resources to protect our information systems, we realize that cyberattacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result in business, legal, financial or reputational harm to us, or would have a material adverse effect on our business, financial condition, results of operations and prospects.
Biggest changeIf such an event were to occur, it could result in the theft or destruction of intellectual property, data or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and result in a material disruption of our development programs and our business operations. 23 Although we devote resources to protect our information systems, we realize that cyberattacks, cyber intrusions and other disruptions are a threat, and there can be no assurance that our efforts will prevent information security incidents or breaches that would result in business, legal, financial or reputational harm to us, or would have a material adverse effect on our business, financial condition, results of operations and prospects.
Failure by us or our and third-party providers to comply with data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties and orders preventing us from processing personal data), private litigation and result in significant fines and penalties against us.
Failure by us or our third-party providers to comply with data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties and orders preventing us from processing personal data), private litigation and result in significant fines and penalties against us.
For example, devices cleared under section 510(k) cannot be marketed for any intended use that is outside of the FDA’s substantial equivalence determination for such devices. Physicians nevertheless may use our products on their patients in a manner that is inconsistent with the intended use cleared by the FDA.
For example, devices cleared under section 510(k) of the FDCA cannot be marketed for any intended use that is outside of the FDA’s substantial equivalence determination for such devices. Physicians nevertheless may use our products on their patients in a manner that is inconsistent with the intended use cleared by the FDA.
The lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of European personal data and our privacy and data security compliance and could require us to amend our processes and procedures to implement different compliance measures for the UK and the EEA. 24 In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws and federal and state consumer protection laws that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators and third-party providers.
The lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of European personal data and our privacy and data security compliance and could require us to amend our processes and procedures to implement different compliance measures for the UK and the EEA. 21 In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws and federal and state consumer protection laws that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators and third-party providers.
If we are unable to prevent or mitigate the impact of such security or data privacy breaches, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.
If we are unable to prevent or mitigate the impact of such data security incidents or data privacy breaches, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.
Those provisions could have the effect of discouraging a third party from pursuing a non-negotiated takeover of our company at a price considered attractive by many stockholders and could have the effect of preventing or delaying a potential acquirer from acquiring control of our company. 36 If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.
Those provisions could have the effect of discouraging a third party from pursuing a non-negotiated takeover of our company at a price considered attractive by many stockholders and could have the effect of preventing or delaying a potential acquirer from acquiring control of our company. 34 If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.
There can be no assurance that we will be able to compete against current or future competitors or that competition will not have a material adverse effect on our business, financial condition, and results of operations. 22 Our business may be adversely affected if consolidation in the healthcare industry leads to demand for price concessions or if we are excluded from being a supplier by a group purchasing organization or similar entity.
There can be no assurance that we will be able to compete against current or future competitors or that competition will not have a material adverse effect on our business, financial condition, and results of operations. 18 Our business may be adversely affected if consolidation in the healthcare industry leads to demand for price concessions or if we are excluded from being a supplier by a group purchasing organization or similar entity.
Specifically, the EU MDR requires (i) changes in the clinical evidence required for medical devices, (ii) post-market clinical follow-up evidence, (iii) annual reporting of safety information for Class III and Class IIb products, and reporting every two years for Class IIa products, (iv) Unique Device Identification, or UDI, for all products and submission of core data elements to an EU UDI database prior to placement of a device on the market, (v) reclassification of some medical devices, and (vi) multiple other labeling changes.
Specifically, the EU MDR requires (i) changes in the clinical evidence required for medical devices, (ii) post-market clinical follow-up evidence, (iii) annual reporting of safety information for Class III and Class IIb products, and reporting every two years for Class IIa products, (iv) Unique Device Identification (“UDI”) for all products and submission of core data elements to an EU UDI database prior to placement of a device on the market, (v) reclassification of some medical devices, and (vi) multiple other labeling changes.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements. 25 Compliance with data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements. 22 Compliance with data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
Compliance with this and any other requirements is time consuming and costly, and our failure to comply may subject us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations. 32 Notices of inspectional observations or deficiencies from the FDA or other regulatory bodies require us to undertake corrective and preventive actions or other actions to address the FDA ’ s or other regulatory bodies' concerns.
Compliance with this and any other requirements is time consuming and costly, and our failure to comply may subject us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations. 30 Notices of inspectional observations or deficiencies from the FDA or other regulatory bodies require us to undertake corrective and preventive actions or other actions to address the FDA ’ s or other regulatory bodies' concerns.
A failure to maintain relationships with our commercial partners on terms satisfactory to us, or at all, could result in a material adverse effect on our operating results. 29 We continue to seek to establish long-term partnerships in regions and countries not covered by existing agreements, and we may need to obtain the assistance of additional marketing partners to bring new and existing products to market and to replace certain marketing partners.
A failure to maintain relationships with our commercial partners on terms satisfactory to us, or at all, could result in a material adverse effect on our operating results. 27 We continue to seek to establish long-term partnerships in regions and countries not covered by existing agreements, and we may need to obtain the assistance of additional marketing partners to bring new and existing products to market and to replace certain marketing partners.
We may not succeed in our integration and buildout of our direct sales channel in the United States, and our failure to do so could negatively impact our business and financial results.
We may not succeed in our buildout of our direct sales channel in the United States, and our failure to do so could negatively impact our business and financial results.
Any of these factors could significantly impact our competitive position in relation to such products and could have a negative impact on the sales of such products. 31 Once obtained, we cannot guarantee that the FDA or international product clearances or approvals will not be withdrawn or that relevant agencies will not require other corrective action, and any withdrawal or corrective action could materially affect our business and financial results.
Any of these factors could significantly impact our competitive position in relation to such products and could have a negative impact on the sales of such products. 29 Once obtained, we cannot guarantee that the FDA or international product clearances or approvals will not be withdrawn or that relevant agencies will not require other corrective action, and any withdrawal or corrective action could materially affect our business and financial results.
There can be no assurance that, even if substantial growth in product sales and the demand for our products is achieved, we will be able to: ● Gain acceptance of our broadened portfolio of existing products, as well as future products, by the medical community, hospitals, physicians, other health care providers, third-party payers, and end-users, which acceptance may depend upon the extent to which the medical community and end-users perceive our products as safer, more effective or more cost-competitive than other similar products. ● Maintain, manage, and develop the necessary manufacturing capabilities and inventory management practices; ● Develop, implement, and integrate the mix of appropriate sales channels needed to generate increased sales across our expanded product platform and to develop marketing partners and viable commercial strategies for the distribution of our expanded mix of products; ● Attract, retain, and integrate required key personnel; and ● Implement the financial, accounting, and management systems needed to manage our expanded business and growing demand for our products.
There can be no assurance that, even if substantial growth in product sales and the demand for our products is achieved, we will be able to: ● Gain acceptance of our expanding portfolio of existing products, as well as future products, by the medical community, hospitals, physicians, other health care providers, third-party payers, and end-users, which acceptance may depend upon the extent to which the medical community and end-users perceive our products as safer, more effective or more cost-competitive than other similar products. ● Maintain, manage, and develop the necessary manufacturing capabilities and inventory management practices; ● Develop, implement, and integrate the mix of appropriate sales channels needed to generate increased sales across our product platform and to develop marketing partners and viable commercial strategies for the distribution of our growing mix of products; ● Attract and retain required key personnel; and ● Maintain the financial, accounting, and management systems needed to manage our growing business and the associated demand for our products.
If we or our third-party providers fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting and controlling such cyberattacks and any such attacks could result in losses described above as well as disputes with physicians, participants and our partners, regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows.
If we or our third-party providers fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting and controlling such data security incidents, breaches or other cyberattacks and any such attacks could result in losses described above as well as disputes with physicians, participants and our partners, regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows.
We may not be able to find sufficient alternative suppliers in a reasonable time period, or on commercially reasonable terms, if at all, and our ability to produce and supply our products could be impaired. 23 Our manufacturing processes involve inherent risks, and disruption could materially adversely affect our business, financial condition, and results of operations.
We may not be able to find sufficient alternative suppliers in a reasonable time period, or on commercially reasonable terms, if at all, and our ability to produce and supply our products could be impaired. 19 Our manufacturing processes involve inherent risks, and disruption could materially adversely affect our business, financial condition, and results of operations.
Lack of adequate coverage and reimbursement provided by governments and other third-party payers for our products and services, including continuing coverage for Monovisc and Orthovisc in the United States, and any change of classification by the Centers for Medicare and Medicaid Services for reimbursement of Orthovisc and Monovisc, could have a material adverse effect on our business, financial condition, and results of operations. 30 Risks Related to Our Product Development and Regulatory Compliance We are facing a longer than expected pathway to commercialize our Cingal product in the United States, and we may face other unforeseen difficulties in achieving regulatory approval for Cingal, which could affect our business and financial results.
Lack of adequate coverage and reimbursement provided by governments and other third-party payers for our products and services, including continuing coverage for Monovisc and Orthovisc in the United States, and any change of classification by the Centers for Medicare and Medicaid Services for reimbursement of Orthovisc and Monovisc, could have a material adverse effect on our business, financial condition, and results of operations. 28 Risks Related to Our Product Development and Regulatory Compliance We are facing a longer than expected pathway to commercialize our Cingal product in the United States, and we may face other unforeseen difficulties in achieving regulatory approval for Cingal and Hyalofast, which could affect our business and financial results.
No assurance can be given that any additional financing will be made available to us or will be available on acceptable terms should such a need arise. 27 If we succeed in raising additional funds through the issuance of equity or convertible securities, then the issuance could result in substantial dilution to existing stockholders.
No assurance can be given that any additional financing will be made available to us or will be available on acceptable terms should such a need arise. 25 If we succeed in raising additional funds through the issuance of equity or convertible securities, then the issuance could result in substantial dilution to existing stockholders.
Our license and distribution agreements with Mitek related to Monovisc and Orthovisc provide Mitek with, among other things, the exclusive right to market and sell Monovisc and Orthovisc in the United States, unilateral decision-making authority over the sale, price, and promotion of Monovisc and Orthovisc in the United States, substantial control over the future development of Monovisc and Orthovisc related to the treatment of pain associated with osteoarthritis, a license to manufacture and have manufactured such products in the event that we are unable to supply Mitek with Monovisc or Orthovisc in accordance with the terms of the relevant agreement, and certain rights of first refusal with respect to future products we develop for the treatment of pain associated with osteoarthritis.
Our license and distribution agreements with J&J MedTech related to Monovisc and Orthovisc provide J&J MedTech with, among other things, the exclusive right to market and sell Monovisc and Orthovisc in the United States, unilateral decision-making authority over the sale, price, and promotion of Monovisc and Orthovisc in the United States, substantial control over the future development of Monovisc and Orthovisc related to the treatment of pain associated with osteoarthritis, a license to manufacture and have manufactured such products in the event that we are unable to supply J&J MedTech with Monovisc or Orthovisc in accordance with the terms of the relevant agreement, and certain rights of first refusal with respect to future products we develop for the treatment of pain associated with osteoarthritis.
Additionally, the implementation of the new EU MDR which was put into effect in 2021, has changed several aspects of the medical device regulatory framework in the EU.
Additionally, the implementation of the EU MDR which was put into effect in 2021, has changed several aspects of the medical device regulatory framework in the EU.
If Caligan solicits proxies for its candidates or proceeds with other similar types of actions, our business could be adversely affected. Responding to such actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our board of directors.
If Caligan, or another activist stockholder, solicits proxies for its candidates or proceeds with other similar types of actions, our business could be adversely affected. Responding to such actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our board of directors.
The protections afforded by patents will depend upon their scope and validity, and others may be able to design around our patents. 35 We also rely upon trade secrets and proprietary know-how for certain non-patented aspects of our technology.
The protections afforded by patents will depend upon their scope and validity, and others may be able to design around our patents. 33 We also rely upon trade secrets and proprietary know-how for certain non-patented aspects of our technology.
As we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may impact our effective tax rate, result in higher tax payments and harm our business, financial condition, cash flows and results of operations.
As we expand the scale of our business activities, any changes in the United States and non-U.S. taxation of such activities may impact our effective tax rate, result in higher tax payments and harm our business, financial condition, cash flows and results of operations.
Any failure to comply with these laws could subject us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations. 33 We are subject to environmental regulations and any failure to comply with applicable laws could subject us to significant liabilities and harm our business.
Any failure to comply with these laws could subject us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations. 31 We are subject to environmental regulations and any failure to comply with applicable laws could subject us to significant liabilities and harm our business.
To manage our growth effectively, we must continue to expand our management team, attract, motivate and retain employees, and improve our operating and financial systems. There can be no assurance that our current management systems will be adequate or that we will be able to manage our recent or future growth successfully.
To manage our growth effectively, we must continue to manage, attract, motivate and retain employees, and improve our operating and financial systems. There can be no assurance that our current management systems will be adequate or that we will be able to manage our recent or future growth successfully.
We are increasingly dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from data breaches, our business could be adversely affected. We are increasingly dependent on sophisticated information technology for our products and infrastructure.
We are increasingly dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from data security incidents or breaches, our business could be adversely affected. We are increasingly dependent on sophisticated information technology for our products and infrastructure.
In addition, given their size and complexity, these systems could be vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party suppliers and/or business partners, or from cyber-attacks by malicious third parties attempting to gain unauthorized access to our products, systems or Confidential Information.
In addition, given their size and complexity, these systems could be vulnerable to service interruptions or to data security incidents, breaches, other interruptions from inadvertent or intentional actions by our employees, third-party suppliers and/or business partners, or from cyber-attacks by malicious third parties attempting to gain unauthorized access to our products, systems or Confidential Information.
Therefore, we are subject to fluctuations in our customers’ sales patterns and corresponding ordering patterns, including Mitek. These quarterly fluctuations create uncertainty as to the volume of sales that we may achieve in a given period. As a result, comparing our operating results on a period-to-period basis might not be meaningful.
Therefore, we are subject to fluctuations in our customers’ sales patterns and corresponding ordering patterns, including J&J MedTech. These quarterly fluctuations create uncertainty as to the volume of sales that we may achieve in a given period. As a result, comparing our operating results on a period-to-period basis might not be meaningful.
For example, California enacted the California Consumer Privacy Act, or the CCPA. This law, which became effective on January 1, 2020 gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
For example, California enacted the California Consumer Privacy Act (“CCPA”). This law, which became effective on January 1, 2020 gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
We experience quarterly fluctuations in our product sales as a result of multiple factors, many of which are outside of our control including our arrangements with Mitek which performs most of the downstream sales and marketing activities to customers and end-users for Monovisc and Orthovisc in the United States.
We experience quarterly fluctuations in our product sales as a result of multiple factors, many of which are outside of our control including our arrangements with J&J MedTech which performs most of the downstream sales and marketing activities to customers and end-users for Monovisc and Orthovisc in the United States.
The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a data security incident, breach or other disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
Any breach in our or our third-party providers’ information technology systems could lead to the unauthorized access, disclosure and use of non-public information, including protected health information and other personally identifiable information which is protected by HIPAA, and other laws.
Any data security incident or breach in our or our third-party providers’ information technology systems could lead to the unauthorized access, disclosure and use of non-public information, including protected health information and other personally identifiable information which is protected by HIPAA, and other laws.
As Mitek accounts for a large percentage of our revenue and has unilateral decision-making authority over in-market activities, including end-user pricing and discounts, reimbursement strategy, and overall promotion strategy, actions taken by Mitek could impact our ability to predict and generate revenue and have a material impact on our business, financial condition, and results of operations.
As J&J MedTech accounts for a large percentage of our revenue and has unilateral decision-making authority over in-market activities, including end-user pricing and discounts, reimbursement strategy, and overall promotion strategy, actions taken by J&J MedTech impact our ability to predict and generate revenue and have a material impact on our business, financial condition, and results of operations.
As a result of our activities, we have experienced substantial growth in the number of our employees, the scope of our product portfolio and pipeline, the size of our operating and financial systems, and the geographic area of our operations. This growth has resulted in increased responsibilities for our management.
As a result of our activities, we have experienced growth in the number of our employees, the scope of our product portfolio and pipeline, the size of our operating and financial systems, and the geographic area of our operations in recent years. This growth has resulted in increased responsibilities for our management.
Whether or not completed, transactions may result in diversion of management resources otherwise available for ongoing development of our business and significant expenditures. 34 Customer and employee uncertainty about the effects of any acquisitions could harm us.
Whether or not completed, transactions may result in diversion of management resources otherwise available for ongoing development of our business and significant expenditures. 32 Customer and employee uncertainty about the effects of any acquisitions or divestitures could harm us.
The original expiry date of May 26, 2024 has been extended to December 2027 or December 2028 for certain devices, depending on the risk class of the device, in response to concerns raised about notified body capacity and the ability for devices to be re-certified within the original time period.
The original expiry date of May 26, 2024 has been extended to May 26, 2026 or December 31, 2027 or December 31, 2028 for certain devices, depending on the risk classification of the device, in response to concerns raised about notified body capacity and the ability for devices to be re-certified within the original time period.
In February 2023, Caligan Partners LP, or Caligan, indicated that it intended to consider all available options, including nominating a slate of directors for election to the board of directors at our 2023 annual meeting of stockholders. In April 2023, we entered into a Cooperation Agreement (the “Cooperation Agreement”) with Caligan.
In February 2023, Caligan Partners LP (“Caligan”) indicated that it intended to consider all available options, including nominating a slate of directors for election to the board of directors at our 2023 annual meeting of stockholders. In April 2023, we entered into a Cooperation Agreement (the “2023 Cooperation Agreement”) with Caligan.
Pursuant to the Cooperation Agreement, we agreed to increase the size of our board of directors to eight directors and appointed Mr. Gary Fischetti as an independent Class III director. On March 6, 2024, Caligan nominated two directors for election to our board of directors at our 2024 annual meeting of stockholders.
Pursuant to the 2023 Cooperation Agreement, we agreed to increase the size of our board of directors to eight directors and appointed Mr. Gary Fischetti as an independent Class III director, among other things. On March 6, 2024, Caligan nominated two directors for election to our board of directors at our 2024 annual meeting of stockholders.
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is possible that over time the UK GDPR could become less aligned with the EU GDPR, particularly with the UK plans to reform the country’s data protection legal framework in its Data Reform Bill introduced into the UK legislative process.
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is possible that over time the UK GDPR could become less aligned with the EU GDPR, particularly with the UK plans to reform the country’s data protection legal framework in the new Data (Use and Access) Bill introduced into the UK legislative process.
In exchange, Mitek pays us a transfer price calculated with reference to historical end-user prices in the market and a fixed royalty rate per product on their net product sales.
In exchange, J&J MedTech pays us a transfer price calculated with reference to historical end-user prices in the market and a fixed royalty rate per product on their net product sales.
Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data security, confidentiality, integrity and availability.
Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, ransomware, denial-of-service, social engineering fraud (including phishing attacks) or other means to threaten data security, confidentiality, integrity and availability.
We cannot give any assurance that such capital will be available at all or on terms acceptable to us, and if it is available, additional capital raised by us could dilute your ownership interest or the value of your shares.
We may require additional capital in the future. We cannot give any assurance that such capital will be available at all or on terms acceptable to us, and if it is available, additional capital raised by us could dilute your ownership interest or the value of your shares.
We cannot assure you that our commercial partners, including Mitek, will not seek to renegotiate their current agreements on terms less favorable to us or terminate such agreements.
We cannot assure you that our commercial partners, including J&J MedTech, will not seek to renegotiate their current agreements on terms less favorable to us or terminate such agreements.
This includes the European Union, or EU, GDPR, and the United Kingdom, or UK, equivalent of the same (the UK GDPR, together with the EU GDPR, referred to as the GDPR), as well as other national data protection legislation in force in relevant European Economic Area, or EEA, Member States and the UK (including the UK Data Protection Act 2018), which governs the collection, use, storage, disclosure, transfer, or other processing of personal data (including health data processed in the context of clinical trials): (i) regarding individuals in the EEA and UK; and/or (ii) carried out in the context of the activities of our establishment in any EEA Member State or the UK.
This includes the European Union (“EU”), GDPR, and the United Kingdom (“UK”) equivalent of the same (the “UK GDPR” together with the EU GDPR, the “GDPR”), as well as other national data protection legislation in force in relevant European Economic Area (“EEA”) Member States and the UK (including the UK Data Protection Act 2018), which governs the collection, use, storage, disclosure, transfer, or other processing of personal data (including health data processed in the context of clinical trials): (i) regarding individuals in the EEA and UK; and/or (ii) carried out in the context of the activities of our establishment in any EEA Member State or the UK.
These laws include the False Claims Act, the Anti-Kickback Statute, the Stark law, the Physician Payments Sunshine Act, the FDCA, and similar laws and regulations in the U.S. and around the world. These laws and regulations are broad in scope and are subject to evolving interpretation.
These laws include the False Claims Act, the Anti-Kickback Statute, the Stark law, the Physician Payments Sunshine Act, the FDCA, and similar laws and regulations in the United States and around the world. These laws and regulations are broad in scope and are subject to evolving interpretation.
Any failure to do so could have a material adverse effect on our business, operating results and financial condition. We may not generate the expected benefits of our acquisitions, and the ongoing integration of those acquisitions could disrupt our ongoing business, distract our management and increase our expenses.
Any failure to do so could have a material adverse effect on our business, operating results and financial condition. We may not generate the expected benefits of our acquisitions, and the actions associated with the divestiture of those acquisitions could disrupt our ongoing business, distract our management and increase our expenses.
We are required to apply GDPR standards to any clinical trials that our EEA and UK established businesses carry out anywhere in the world. Significantly, the GDPR impose strict rules on the transfer of personal data out of the EEA or the UK to the U.S. or other regions that have not been deemed to offer “adequate” privacy protections.
We are required to apply GDPR standards to any clinical trials that our EEA and UK established businesses carry out anywhere in the world. 20 Significantly, the GDPR imposes strict rules on the transfer of personal data out of the EEA or the UK to the United States or other regions that have not been deemed to offer “adequate” privacy protections.
While we have started to diversify our sales channels, including through the implementation of a direct commercial model in the United States for our Joint Preservation and Restoration products, we expect to continue to be dependent on a small number of large customers for a substantial portion of our business.
While we have started to diversify our sales channels, including through the implementation of a direct commercial model in the United States for our Regenerative Solutions products, we expect to continue to be dependent on a small number of large customers for a substantial portion of our business.
If the fair value of any of our long-lived assets, including those that we acquired in the acquisitions of Arthrosurface and Parcus Medical, decrease as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our stock price, financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.
If the fair value of any of our long-lived assets decrease as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our stock price, financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.
Risks Related to Our Business and Industry Our financial performance depends on sales growth and increasing demand for our legacy and acquired product portfolios, and we may not be able to successfully manage the recent, and future, expansion of our operations.
Risks Related to Our Business and Industry Our financial performance depends on sales growth and increasing demand for our product portfolios, and we may not be able to successfully manage the current, and future, expansion of our operations. Our future success depends on growth in sales of our products.
The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of health and other sensitive data, requiring that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, requiring data protection impact assessments for high risk processing and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors.
The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of special categories of personal data (such as health and data), relying on a legal basis or condition for processing personal data, where required, requiring that consent of individuals to whom the personal data relates, requiring information disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, requiring data protection impact assessments for high risk processing and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors.
Because the results of any additional clinical trials, or other unforeseen future developments, could have a substantial negative impact on the timeline for and the cost associated with a potential Cingal regulatory approval, our overall business condition, financial results, and competitive position could be affected.
Any unforeseen developments or delays could have a substantial negative impact on the timeline for and the cost associated with a potential Hyalofast regulatory approval, and our overall business condition, financial results, and competitive position could be affected.
We are targeting to file the first module as part of a modular PMA in 2024 which is the first step in seeking FDA approval for Hyalofast in the U.S. The final module of the PMA will be filed in 2025 once the clinical data becomes available to be submitted to the FDA.
We have filed the first two modules as part of a modular PMA which is the first step in seeking FDA approval for Hyalofast in the United States. The final module of the PMA will be filed in 2025 once the clinical data becomes available to be submitted to the FDA.
These could include, but may not be limited to, the following: ● Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in the company’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; ● Potential or actual breach of contractual obligations that require the Company to maintain letters of credit or other credit support arrangements; ● Potential or actual breach of financial covenants in our credit agreements or credit arrangements; ● Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or ● Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements. 28 Risks Related to Our Commercialization Activities Our license agreements with Mitek provide substantial control of Monovisc and Orthovisc in the United States to Mitek, and Mitek ’ s actions could have a material impact on our business, financial condition and results of operations.
These could include, but may not be limited to, the following: ● Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in the company’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; ● Potential or actual breach of contractual obligations that require the Company to maintain letters of credit or other credit support arrangements; ● Potential or actual breach of financial covenants in our credit agreements or credit arrangements; ● Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or ● Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
In addition, the California Privacy Rights Act, or CPRA, which became effective on January 1, 2023, imposes additional obligations on companies covered by the legislation and significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
In addition, the California Privacy Rights Act (“CPRA”) which became effective on January 1, 2023, imposes additional obligations on companies covered by the legislation and significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information. The CPRA also created a new state agency that was vested with authority to implement and enforce the CCPA.
Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business. New consumer privacy laws similar to the CCPA have been passed in a number of states and many other states have proposed new privacy laws.
That the CCPA marked the beginning of a trend toward more stringent privacy legislation in the United States, which has increased our potential liability and may adversely affect our business. New consumer privacy laws similar to the CCPA have been passed and proposed in numerous other states.
Likewise, we rely on third parties for various operations, including the manufacture of our products and to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. We rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches.
Likewise, we rely on third parties for various operations, including the manufacture of our products and to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business.
Any compromise to our information security or that of our third-party service providers or contractors could result in an interruption in our operations, the unauthorized publication of our confidential business or proprietary information, the unauthorized release, use, disclosure and/or dissemination of customer, vendor, or employee data, the violation of privacy and/or data protection laws, including under the GDPR, in the European Union or the United Kingdom, or other laws and exposure to litigation, any of which could harm our business and operating results. 26 We may face circumstances in the future that will result in impairment charges, including, but not limited to, goodwill impairment, intangible assets impairment and in-process research and development charges.
Any compromise to our information security or that of our third-party service providers or contractors could result in an interruption in our operations, the unauthorized publication of our confidential business or proprietary information, the unauthorized release, use, disclosure and/or dissemination of customer, vendor, or employee data, the violation of privacy and/or data protection laws, including under the GDPR, in the European Union or the UK, or other laws and exposure to litigation, any of which could harm our business and operating results.
Many of these customers are significantly larger companies than us. In 2023, Mitek, accounted for 45% of our revenue.
Many of these customers are significantly larger companies than us. In 2024, J&J MedTech accounted for 57% of our revenue.
Any diversion of the attention of management created by the integration process, any disruptions or other difficulties encountered in the integration process, and unforeseen liabilities or unanticipated problems with the acquired businesses could have a material adverse effect on our business, operating results and financial condition.
There may be increased risk with the divestitures of these businesses due to diversion of the attention of management created by the divestiture process, disruptions or other difficulties encountered in the divestiture process, and unforeseen liabilities or unanticipated problems with the businesses being sold, which could have a material adverse effect on our business, operating results and financial condition.
Together with previous clinical studies, Cingal has demonstrated superiority over each of its active ingredients and placebo over 26 weeks for long-acting pain relief. We have been engaging with the FDA on next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets.
Together with previous clinical studies, Cingal has demonstrated superiority over each of its active ingredients and placebo over 26 weeks for long-acting pain relief. We have been engaging with the FDA on next steps for U.S. regulatory approval. We acquired the Aristospan NDA s in September 2024 to assist with our Cingal regulatory filing with the FDA.
We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business There can be no assurance that third-party coverage will be available or that reimbursement will be adequate for any products or services developed by us or procedures using our products or services.
We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business.
Such occurrences could have a material adverse effect on our business, financial condition, and results of operations during the period of such operational difficulties and beyond. We could become subject to product liability claims, which, if successful, could materially adversely affect our business, financial condition, and results of operations.
Such occurrences could have a material adverse effect on our business, financial condition, and results of operations during the period of such operational difficulties and beyond.
Since we manufacture our products for sale worldwide, our business is subject to risks associated with doing business internationally. During 2023, 2022, and 2021, 26%, 24%, and 23%, respectively, of our product sales were to international customers. We continue to be subject to a variety of risks, which could cause fluctuations in the results of our international and domestic operations.
During 2024, 2023, and 2022, 31%, 28%, and 26%, respectively, of our product sales were to international customers. We continue to be subject to a variety of risks, which could cause fluctuations in the results of our international and domestic operations.
We continue to engage with our employees on a regular basis to limit voluntary employee turnover. We face significant competition for such personnel from competitive companies, research and academic institutions, government entities, and other organizations. There can be no assurance that we will be successful in hiring or retaining the personnel we require.
We face significant competition for such personnel from competitive companies, research and academic institutions, government entities, and other organizations. There can be no assurance that we will be successful in hiring or retaining the personnel we require. The failure to hire and retain such personnel could have a material adverse effect on our business, financial condition, and results of operations.
We have reviewed our products that are sold in the EU market and have completed the product rationalization exercise to identify the products that we will continue to market in the EU.
We have reviewed our products that are sold in the EU market and have completed the product rationalization exercise to identify the products that we will continue to market in the EU. Products we intend to continue marketing require substantial submissions to be made to the notified bodies for a conformity assessment under the EU MDR.
The acquisition of these two companies and the related investment in the business have contributed to our net loss in recent years.
We are working diligently to complete divestiture associated activities to minimize employee, supplier, distributor, and customer disruptions. The acquisition of these two companies and the related investment in the business have contributed to our net loss in recent years.
Through our acquisitions of Parcus Medical and Arthrosurface, we expanded our product portfolio and pipeline, diversified our business, expanded our commercial infrastructure, entered new markets, and increased the scope of our operations and the number of our employees. The continued successful integration of these other companies into our operations is critical to our future financial performance.
In early 2020, we completed the acquisitions of Parcus Medical and Arthrosurface Incorporated, in which we expanded our product portfolio and pipeline, diversified our business, expanded our commercial infrastructure, entered new markets, and increased the scope of our operations and the number of our employees.
This has resulted, and may continue to result, in the loss of valuable employees, additional expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the acquisitions.
The integration of the two acquired companies into our operations required more effort and expense than was originally planned. This resulted in additional expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, which adversely affected our ability to achieve the anticipated benefits of the acquisitions.
Beginning in 2019, and with our expanded commercial infrastructure, as a result of the Parcus Medical and Arthrosurface acquisitions, we sold and marketed our Joint Preservation and Restoration family of products directly to customers, including hospitals and ASCs, through our direct Anika sales team and large network of independent third-party distributors.
Beginning in 2019, we started selling and marketing many of our products directly to customers, including hospitals and ASCs, through our direct Anika sales team and large network of independent third-party distributors.
Our business is dependent upon hiring and retaining qualified management, operations and technical personnel. We are highly dependent on the members of our management, operations and technical staff, the loss of one or more of whom could have a material adverse effect on us.
We are highly dependent on the members of our management, operations and technical staff, the loss of one or more of whom could have a material adverse effect on us. We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business.
Customers of any companies we acquire may, in response to the consummation of the acquisitions, delay or defer purchasing decisions, which could adversely affect the success of our acquired businesses.
Customers of any companies we acquire or divest may, in response to the consummation of the acquisitions, delay or defer purchasing decisions, which could adversely affect the success of our business. Similarly, our employees may experience uncertainty about their future roles, which may adversely affect our ability to attract and retain key management, sales, marketing, and technical personnel.
Any supply interruption could harm our ability to manufacture our products until a new source of supply is identified and qualified.
We also have to enter into longer term purchase commitments with these key suppliers that could lead impacts on cost and volatility of supply. Any supply interruption could harm our ability to manufacture our products until a new source of supply is identified and qualified.
Currently, we rely mainly on Standard Contractual Clauses approved by the European Commission, or SCCs, to legitimize transfers of personal data out of the EEA and International Transfer Agreements approved the UK for transfers of personal data out of the UK, however, there continue to be concerns about whether the SCCs and other international transfer mechanisms will face additional legal challenges.
Currently, we rely mainly on Standard Contractual Clauses approved by the European Commission (“SCCs”) to legitimize transfers of personal data out of the EEA.
We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business. We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel.
We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel. We continue to engage with our employees on a regular basis to limit voluntary employee turnover.
In addition to these comprehensive laws and proposals, several other states have passed or proposed more limited privacy laws focused on particular privacy issues. In addition, many jurisdictions around the world have adopted legislation that regulates how businesses operate online and enforces information security, including measures relating to privacy, data security and data breaches.
State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted. In addition, many jurisdictions around the world have adopted legislation that regulates how businesses operate online and enforces information security, including measures relating to privacy, data security and data breaches.
Substantial competition could materially affect our financial performance. We compete with many companies, including large pharmaceutical companies and large and specialized medical devices companies, across all our product lines.
Substantial competition could materially affect our financial performance. We compete with numerous companies, including large pharmaceutical firms and specialized medical device companies, across our product lines. For our OA Pain Management products, our main competitors include Sanofi Genzyme, Zimmer Biomet, Inc., Bioventus Inc., Avanos Medical, Inc., Pacira BioSciences, Conmed Corporation and Ferring Pharmaceuticals, among others.
Impairment charges could have a negative impact on our results of operations and financial position, as well as on the market price of our common stock. During the year ended December 31, 2023, we recorded an impairment charge of $62.2 million on intangible assets related to the acquisitions of Arthrosurface and Parcus Medical.
Impairment charges could have a negative impact on our results of operations and financial position, as well as on the market price of our common stock. Our business is dependent upon hiring and retaining qualified management, operations and technical personnel.
Outside the United States, the success of our products is also dependent in part upon the availability of reimbursement and health care payment systems. Domestic and international reimbursement laws and regulations may change from time to time.
There can be no assurance that third-party coverage will be available or that reimbursement will be adequate for any products or services developed by us or procedures using our products or services. Outside the United States, the success of our products is also dependent in part upon the availability of reimbursement and health care payment systems.
The GDPR also provide individuals with various rights in respect of their personal data. The GDPR defines personal data to include pseudonymized or coded data and requires different informed consent practices and more detailed notices for clinical trial participants and investigators than applies to clinical trials conducted in the United States.
The GDPR also provide individuals with various rights in respect of their personal data. The definition of personal data under GDPR is defined broadly and includes pseudonymized or coded data; GDPR will, therefore, apply in the context of data collected and processed about clinical trial participants and investigators in the EU and UK.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur approach is informed by recognized industry standards and frameworks, and incorporates elements of the same, including elements of the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF, and the Center for Internet Security, or CIS, critical security controls.
Biggest changeOur approach is informed by recognized industry standards and frameworks, and incorporates elements of the same, including elements of the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”) and the Center for Internet Security (“CIS”) critical security controls.
To manage cybersecurity incidents, our global security operations team maintains a cybersecurity incident response plan, conducts readiness exercises, and takes steps to improve the program, as appropriate, to manage the changing threats faced in our industry. 37 As part of our cybersecurity risk management program, we take a risk-based approach to the evaluation of third-party vendors.
To manage cybersecurity incidents, our global security operations team maintains a cybersecurity incident response plan, conducts readiness exercises, and takes steps to improve the program, as appropriate, to manage the changing threats faced in our industry. 35 As part of our cybersecurity risk management program, we take a risk-based approach to the evaluation of third -party vendors.
Our VP of IT is supported by a third-party virtual chief information security officer, or vCISO, who also has over twenty-five years of cybersecurity experience. Our VP of IT, supported by our vCISO, assesses our cybersecurity risks through regular meetings with our IT team, and escalates cybersecurity matters as needed to management.
Our VP of IT is supported by a third-party virtual chief information security officer (“vCISO”) who also has over twenty-five years of cybersecurity experience. Our VP of IT, supported by our vCISO, assesses our cybersecurity risks through regular meetings with our IT team, and escalates cybersecurity matters as needed to management.
For additional information, please see the section captioned “Part I. Item 1A. Risk Factors” in this Annual Report on Form 10-K. Governance Related to Cybersecurity Risks Our Vice President of Information Technology, or VP of IT, is responsible for the direction of our information technology organization. Our VP of IT has over twenty-five years of cybersecurity and incident management experience.
For additional information, please see the section captioned “Part I. Item 1A. Risk Factors” in this Annual Report on Form 10-K. Governance Related to Cybersecurity Risks Our Vice President of Information Technology (“VP of IT”) is responsible for the direction of our information technology organization. Our VP of IT has over twenty-five years of cybersecurity and incident management experience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur other lease locations are in Franklin, Massachusetts, Sarasota, Florida, Warsaw, Indiana and Padova, Italy. These additional facilities provide us with an aggregate of over 80,000 square feet of additional space and have terms expiring between 2022 and 2032, subject to certain renewal provisions contained within the lease agreements.
Biggest changeOur other lease locations are in Warsaw, Indiana and Padova, Italy. These additional facilities provide us with an aggregate of over 80,000 square feet of additional space and have terms expiring between 2025 and 2032, subject to certain renewal provisions contained within the lease agreements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 38 PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 36 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . ITEM 6. [RESERVED]
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee stock-based compensation plans, see Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . ITEM 6. [RESERVED]
Performance Graph Set forth below is a graph comparing the total returns of our company, the NASDAQ Composite Index, and the NASDAQ Biotechnology Index. The graph assumes $100 is invested on December 31, 2018, in our common stock and each of the indices. Past performance is not indicative of future results.
Performance Graph Set forth below is a graph comparing the total returns of our company, the NASDAQ Composite Index, and the NASDAQ Biotechnology Index. The graph assumes $100 is invested on December 31, 2019, in our common stock and each of the indices. Past performance is not indicative of future results.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Information Our common stock has traded on the NASDAQ Global Select Market since November 25, 1997, under the symbol “ANIK.” At December 31, 2023, the closing price per share of our common stock was $22.66 as reported on the NASDAQ Global Select Market, and there were 110 holders of record.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Information Our common stock has traded on the NASDAQ Global Select Market since November 25, 1997, under the symbol “ANIK.” At December 31, 2024, the closing price per share of our common stock was $16.46 as reported on the NASDAQ Global Select Market, and there were 101 holders of record.
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Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Anika Therapeutics, Inc. $ 100.00 $ 154.27 $ 134.66 $ 106.61 $ 88.07 $ 67.42 NASDAQ Composite Index $ 100.00 $ 135.23 $ 194.24 $ 235.78 $ 157.74 $ 226.24 NASDAQ Biotechnology Index $ 100.00 $ 124.41 $ 156.36 $ 155.37 $ 138.42 $ 143.60 39 Issuer Purchases of Equity Securities In April 2023, we agreed to establish a share repurchase program for an aggregate purchase price of $20.0 million.
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Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Anika Therapeutics, Inc. $ 100.00 $ 87.29 $ 69.10 $ 57.09 $ 43.70 $ 31.75 NASDAQ Composite Index $ 100.00 $ 143.64 $ 174.36 $ 116.65 $ 167.30 $ 215.22 NASDAQ Biotechnology Index $ 100.00 $ 125.69 $ 124.89 $ 111.27 $ 115.42 $ 113.84 37 Issuer Purchases of Equity Securities The following is a summary of stock repurchases for the three-month period ended December 31, 2024 (in thousands, except share and per share data): Period (a) Total number of shares purchased (1) (b) Average Price per Share (c) Total number of shares purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs October 1 to 31, 2024 60,571 $ 24.37 60,571 $ 33,186 November 1 to 30, 2024 116,635 $ 17.14 116,635 $ 31,189 December 1 to 31, 2024 123,293 $ 17.03 123,293 $ 29,092 Total 300,499 300,499 (1) In May 2024, we agreed to implement a share repurchase program for an aggregate purchase price of $40.0 million to occur as follows: (i) first $15.0 million was to be effected through a Rule 10b5-1 plan initiated prior to June 1, 2024 and to be effective through June 30, 2025, and (ii) the remaining amount to be purchased in the open market (the “ 2024 Share Repurchase Program ”).
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Of the $20.0 million, the first $5.0 million was to be effected through an accelerated stock repurchase program, the second $5.0 million was to be purchased in the open market and the remaining $10.0 million was to be purchased in the open market subject to positive cash flow.
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In the event of positive “free cash flow” as defined in the 2024 Cooperation Agreement dated May 28, 2024, with Caligan Partners LP, Caligan Partners Master Fund LP and David Johnson, for the period from July 1, 2024 through June 30, 2025, the amount under the share repurchase program shall be increased by 50% of such positive amount and in no event would we be required to make any purchases in the event that our cash would be less than $45.0 million after taking into account the share repurchase and reasonably anticipated capital expenditures and restructuring costs.
Removed
On May 12, 2023, we entered into an accelerated share repurchase agreement with Bank of America, N.A., or Bank of America, pursuant to a Fixed Dollar Accelerated Share Repurchase Transaction, or ASR Agreement, to purchase $5.0 million of shares of its common stock.
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On May 28, 2024, the Company entered into a share repurchase agreement under a Rule 10b5-1 with Bank of America. As of December 31, 2024, the Company had repurchased 505,903 shares at an average cost of $21.57 per share, representing 27% of the then estimated total number of shares expected to be repurchased under the 2024 Share Repurchase Program.
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During the second quarter of 2023, 158,983 shares were delivered to us, constituting the initial delivery of shares and representing 80% of the then estimated total number of shares expected to be repurchased under the ASR Agreement.
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In July 2023, we received the remaining 29,046 additional shares at a final settlement price based on the average purchase price of $26.59 per share. Securities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee stock-based compensation plans, see Part III. Item 12.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+13 added−32 removed55 unchanged
Biggest changeThe decrease in adjusted net loss and adjusted diluted loss per share for the period was primarily due to higher revenues and improved operating performance during the year. 47 Results of Operations Year ended December 31, 2022 compared to year ended December 31, 2021 Statement of Operations Detail Year Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Revenue $ 156,236 $ 147,794 $ 8,442 6 % Cost of revenue 62,660 64,851 (2,191 ) (3 %) Gross profit 93,576 82,943 10,633 13 % Gross margin 60 % 56 % Operating expenses: Research & development 28,182 27,327 855 3 % Selling, general & administrative 84,794 74,096 10,698 14 % Change in fair value of contingent consideration - (21,095 ) 21,095 (100 %) Total operating expenses 112,976 80,328 32,648 41 % (Loss) income from operations (19,400 ) 2,615 (22,015 ) (842 %) Interest and other expense, net 654 (188 ) 842 (448 %) (Loss) income before income taxes (18,746 ) 2,427 (21,173 ) (872 %) Benefit from income taxes (3,887 ) (1,707 ) (2,180 ) 128 % Net (loss) income $ (14,859 ) $ 4,134 $ (18,993 ) (459 %) Revenue The following table presents product revenue by product family for fiscal years 2022 and 2021 (dollars in thousands): Years Ended December 31, 2022 2021 $ Change % Change OA Pain Management $ 91,984 $ 85,084 $ 6,900 8 % Joint Preservation and Restoration 50,402 48,588 1,814 4 % Non-Orthopedic 13,850 14,122 (272 ) (2 %) $ 156,236 $ 147,794 $ 8,442 6 % Revenue for the year ended December 31, 2022 was $156.2 million, an increase of $8.4 million, or 6%, compared to the prior year.
Biggest changeThe decrease in adjusted net income from continuing operations and adjusted diluted income from continuing operations per share for the period was primarily due to higher manufacturing expenses and research and development costs during the year. 45 Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 Statement of Operations Detail Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue $ 120,792 $ 113,827 $ 6,965 6 % Cost of revenue 38,260 40,607 (2,347 ) (6 %) Gross profit 82,532 73,220 9,312 13 % Gross margin 68 % 64 % Operating expenses: Research & development 21,763 18,321 3,442 19 % Selling, general & administrative 59,925 51,229 8,696 17 % Total operating expenses 81,688 69,550 12,138 17 % Income (loss) from operations 844 3,670 (2,826 ) (77 %) Interest and other expense, net 2,312 654 1,658 254 % Income before income taxes 3,156 4,324 (1,168 ) (27 %) Provision for income taxes 6,595 2,124 4,471 210 % (Loss) income from continuing operations (3,439 ) 2,200 (5,639 ) (256 %) Loss from discontinued operations (79,228 ) (17,059 ) (62,169 ) 364 % Net loss $ (82,667 ) $ (14,859 ) $ (67,808 ) 456 % Revenue The following table presents revenue by product family for fiscal years 2023 and 2022 (dollars in thousands): Years Ended December 31, 2023 2022 $ Change % Change OEM Channel $ 84,645 $ 81,675 $ 2,970 4 % Commercial Channel 36,147 32,152 3,995 12 % $ 120,792 $ 113,827 $ 6,965 6 % Revenue for the year ended December 31, 2023 was $120.8 million, an increase of $7.0 million, or 6%, compared to the prior year.
We used the quantitative method in 2023, we considered several factors, including the following: ● the amount by which the fair value of the reporting unit exceeded its carrying value as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which the reporting unit operates for there to be potential impairment; ● the carrying value of the reporting unit as of the assessment date compared to their previously calculated fair value as of the date of the most recent quantitative impairment analysis; ● the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; ● public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; ● changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting unit; ● whether there had been any significant increases in the weighted-average cost of capital rates for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. 53 Significant assumptions utilized in the impairment analysis included valuation multiple with respect to revenue and weighted-average cost of capital.
We used the quantitative method in 2024, we considered several factors, including the following: ● the amount by which the fair value of the reporting unit exceeded its carrying value as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which the reporting unit operates for there to be potential impairment; ● the carrying value of the reporting unit as of the assessment date compared to their previously calculated fair value as of the date of the most recent quantitative impairment analysis; ● the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; ● public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; ● changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting unit; ● whether there had been any significant increases in the weighted-average cost of capital rates for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. 51 Significant assumptions utilized in the impairment analysis included valuation multiple with respect to revenue and weighted-average cost of capital.
During 2023, the consideration allocated to material rights was not significant. We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements.
During 2024, the consideration allocated to material rights was not significant. We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements.
We recognize the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that we otherwise would have recognized is one year or less in accordance with the practical expedient in paragraph ASC 340-40-25-4. These costs are included in selling, general and administrative expenses.
We recognize the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that we otherwise would have recognized is one year or less in accordance with the practical expedient in paragraph Code 340-40-25-4. These costs are included in selling, general and administrative expenses.
Our intangible assets are comprised of purchased developed technologies, patents, trade names, customer relationships and distributor relationships. These intangible assets are carried at cost, net of accumulated amortization. Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately five to sixteen years.
Our intangible assets are comprised of purchased developed technologies, patents, trade names, customer relationships and distributor relationships. These intangible assets are carried at cost, net of accumulated amortization. Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately three to sixteen years.
Accordingly, we determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2023. Long-Lived Assets Long-lived assets primarily include property and equipment and intangible assets with finite lives.
Accordingly, we determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2024. Long-Lived Assets Long-lived assets primarily include property and equipment and intangible assets with finite lives.
Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million. As of December 31, 2023, and 2022, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.
Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million. As of December 31, 2024, and 2023, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.
Based on sensitivity analysis performed on key assumptions at November 30, 2023, a 10% decrease in valuation multiples or a 10% increase in the weighted average cost of capital assumption would not have resulted in a fair value below the reporting unit’s carrying value.
Based on sensitivity analysis performed on key assumptions at November 30, 2024, a 10% decrease in valuation multiples or a 10% increase in the weighted average cost of capital assumption would not have resulted in a fair value below the reporting unit’s carrying value.
Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. 51 We have identified the policies below as critical to our business operations and the understanding of our results of operations.
Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. 49 We have identified the policies below as critical to our business operations and the understanding of our results of operations.
Contractual Obligations and Other Commercial Commitments The table below summarizes our non-cancelable operating leases, purchase commitments, and contractual obligations related to future periods which are not reflected in our consolidated balance sheet at December 31, 2023.
Contractual Obligations and Other Commercial Commitments The table below summarizes our non-cancelable operating leases, purchase commitments, and contractual obligations related to future periods which are not reflected in our consolidated balance sheet at December 31, 2024.
We define adjusted net loss as our net loss excluding amortization and depreciation of acquired assets, the impact of inventory fair-value step up on cost of revenue, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.
We define adjusted net loss from continuing operations as our net loss from continuing operations excluding amortization and depreciation of acquired assets, the impact of inventory fair-value step up on cost of revenue, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.
Some of these limitations are: 45 • adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA; • we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our employee compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary and bonus expense included in operating expenses likely would be higher, which would affect our cash position; • we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of goods sold; • we exclude certain impairment charges, including impairment related to intangible assets, certain product rationalization charges; • we exclude goodwill impairment charges and changes in the fair value of contingent consideration;’ • we exclude certain other non-recurring costs, such as the arbitration settlement with Parcus Medical, costs associated with shareholder activism, and discontinuation of a software project; • the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results; • adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; • adjusted EBITDA does not reflect provision for (benefit from) income taxes or the cash requirements to pay taxes; and • adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.
Some of these limitations are: 43 • adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA; • we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our employee compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary and bonus expense included in operating expenses likely would be higher, which would affect our cash position; • we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of goods sold; • we exclude certain impairment charges, including impairment related to intangible assets, certain product rationalization charges; • we exclude goodwill impairment charges and changes in the fair value of contingent consideration; • we exclude certain other non-recurring costs, such as costs associated with shareholder activism; • the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results; • adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; • adjusted EBITDA does not reflect provision for (benefit from) income taxes or the cash requirements to pay taxes; and • adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.
While we believe that our expanded commercial infrastructure has been and will continue to diversify our revenue base, we expect to continue to be dependent on a small number of large customers, especially Mitek, for a sizeable portion of our revenues in the near-term future.
While we believe that our expanded commercial infrastructure has been and will continue to diversify our revenue base, we expect to continue to be dependent on a small number of large customers, especially J&J MedTech, for a sizeable portion of our revenues in the near-term future.
For a discussion of our liquidity and capital resources as of December 31, 2022, and our cash flow activities for the fiscal year ended December 31, 2022, see “Part II, Item 7.
For a discussion of our liquidity and capital resources as of December 31, 2023, and our cash flow activities for the fiscal year ended December 31, 2023, see “Part II, Item 7.
The remaining goodwill as of December 31, 2023 pertains to the legacy Anika reporting unit, as the goodwill with respect to the Parcus Medical and Arthrosurface reporting unit was fully impaired in 2020.
The remaining goodwill as of December 31, 2024 pertains to the legacy Anika reporting unit, as the goodwill with respect to the Parcus Medical and Arthrosurface reporting unit was fully impaired in 2020.
For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition – General Pursuant to ASC 606, we recognize revenue when a customer obtains control of promised goods or services.
For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition – General Pursuant to Accounting Standards Codification (“ASC”) 606, we recognize revenue when a customer obtains control of promised goods or services.
For sales to hospitals and ASCs, which generally pairs in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures. No revenue is recognized upon the placement of inventory into consignment, as we retain the ability to control the inventory.
For sales to hospitals and ambulatory service centers, which generally pairs in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures. No revenue is recognized upon the placement of inventory into consignment, as we retain the ability to control the inventory.
We generate sales principally through three types of customers: (i) commercial partnerships (ii) hospitals and ASCs, and (iii) distributors, referred to as distribution model. For commercial partnership sales, we sell our products directly to these partners, who perform most of the downstream sales and marketing activities to customers and end-users.
We generate sales principally through three types of customers: (i) commercial partnerships (ii) hospitals and ambulatory service centers, and (iii) distributors, referred to as distribution model. For commercial partnership sales, we sell our products directly to these partners, who perform most of the downstream sales and marketing activities to customers and end-users.
For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials to support our growth strategy. These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.
For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials related to our HA-based technology to support our growth strategy. These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023, which is incorporated by reference in this Report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 15, 2024, which is incorporated by reference in this Report.
Research and Development Research and development expenses for the year ended December 31, 2023 were $32.7 million, an increase of $4.5 million, or 16%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development associated with our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
Research and Development Research and development expenses for the year ended December 31, 2023 were $21.8 million, an increase of $3.5 million, or 19%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development associated with our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
GAAP diluted earnings per share excluding the above adjustments to net loss used in calculating adjusted net loss, each on a per share and tax effected basis.
GAAP diluted earnings per share from continuing operations excluding the above adjustments to net loss from continuing operations used in calculating adjusted net loss from continuing operations, each on a per share and tax effected basis.
Amounts are recorded as accounts receivable when our right to consideration is unconditional. There was no deferred revenue as of December 31, 2023 and 2022, respectively. 52 Generally, customer contracts contain Free on Board, or FOB, or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs.
Amounts are recorded as accounts receivable when our right to consideration is unconditional. There was no deferred revenue as of December 31, 2024 and 2023, respectively. 50 Generally, customer contracts contain Free on Board (“FOB”) or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs.
The increase in revenue was driven by growing global commercial adoption of our products as well as our introduction of new products in recent years.
The increase in revenue was driven by growing global commercial adoption of our OA Pain Management products as well as our introduction of new products in recent years.
These arrangements may include the grant of certain licenses, performance of development services, and the supply of product. Our largest such customer, Mitek, represented 45% of total revenues for the year ended December 31, 2023. We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer.
These arrangements may include the grant of certain licenses, performance of development services, and the supply of product. Our largest such customer, J&J MedTech, represented 57% of total revenues for the year ended December 31, 2024. We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer.
During the year ended December 31, 2023, the Company determined that certain of its intangible assets related to its Arthrosurface and Parcus reporting unit were impaired mainly due to slower than expected revenue growth from product sales that have impacted cash flows with this reporting unit.
During the years ended December 31, 2024 and 2023, we determined that certain of our intangible assets related to our Arthrosurface and Parcus reporting unit were impaired mainly due to slower than expected revenue growth from product sales that have impacted cash flows with this reporting unit.
These assets include the estimated fair value of certain identified assets acquired in acquisitions, including in-process research and development, or IPR&D, developed technology, customer relationships and acquired trade names. We define adjusted EPS as U.S.
These assets include the estimated fair value of certain identified assets acquired in acquisitions, including in-process research and development (“IPR&D”), developed technology, customer relationships and acquired trade names. We define adjusted EPS from continuing operations as U.S.
Summary of Cash Flows (in thousands): Years Ended December 31, 2023 2022 2021 Cash provided by (used in) Operating activities $ (1,788 ) $ 4,409 $ 8,397 Investing activities (5,427 ) (7,486 ) (3,118 ) Financing activities (6,324 ) (4,852 ) (6,779 ) Effect of exchange rate changes on cash 79 (130 ) 69 Net decrease in cash and cash equivalents $ (13,460 ) $ (8,059 ) $ (1,431 ) 50 The following changes contributed to the net change in cash and cash equivalents from 2022 to 2023.
Summary of Cash Flows (in thousands): Years Ended December 31, 2024 2023 2022 Cash provided by (used in) Operating activities $ 5,403 $ (1,788 ) $ 4,409 Investing activities (8,334 ) (5,427 ) (7,486 ) Financing activities (12,729 ) (6,324 ) (4,852 ) Effect of exchange rate changes on cash (48 ) 79 (130 ) Net decrease in cash and cash equivalents $ (15,708 ) $ (13,460 ) $ (8,059 ) 48 The following changes contributed to the net change in cash and cash equivalents from 2023 to 2024.
Purchase commitments relate primarily to non-cancellable inventory commitments and capital expenditures entered in the normal course of business: Payments due by period (in thousands) Less than More than Total 1 year 1 - 3 years 3 - 5 years 5 years Operating Leases $ 36,983 $ 3,131 $ 5,979 $ 4,972 $ 22,901 Year Ended December 31, 2023 $ 36,983 $ 3,131 $ 5,979 $ 4,972 $ 22,901 We also have purchase orders and commitments for materials and other day-to-day business requirements in which there are no material commitments greater than one year.
Purchase commitments relate primarily to non-cancellable inventory commitments and capital expenditures entered in the normal course of business: Payments due by period (in thousands) Less than More than Total 1 year 1 - 3 years 3 - 5 years 5 years Operating Leases $ 32,810 $ 2,783 $ 4,797 $ 4,658 $ 20,572 Year Ended December 31, 2024 $ 32,810 $ 2,783 $ 4,797 $ 4,658 $ 20,572 We also have purchase orders and commitments for materials and other day-to-day business requirements in which there are no material commitments greater than one year.
Cingal is currently not approved for commercial use in the United States. We have been actively engaging with the U.S. Food and Drug Administration, or the FDA, on next steps for U.S. regulatory approval.
Cingal is currently not approved for commercial use in the United States. We have been actively engaging with the U.S. Food and Drug Administration (“FDA”) on next steps for U.S. regulatory approval. We acquired the Aristospan New Drug Application (“NDA”) regulatory approval in the United States in September 2024 to assist with our Cingal regulatory filing with the FDA.
These acquisitions augmented our HA-based OA pain management and regenerative products with a broad suite of products and capabilities focused on early intervention joint preservation primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist. As we look towards the future, our business is positioned to capture value within our target market of joint preservation.
These acquisitions augmented our HA-based OA Pain Management and regenerative products with a broad suite of products and capabilities focused on early intervention joint preservation primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist. In October 2024, we announced a strategic shift to concentrate on OA Pain Management and our Regenerative Solutions products.
Financing Activities Cash used in financing activities was $6.3 million, $4.9 million and $6.8 million for 2023, 2022 and 2021, respectively. The change in 2023 was primarily due to $5.0 million used to fund an accelerated stock repurchase program completed during 2023.
Financing Activities Cash used in financing activities was $12.7 million, $6.3 million and $4.9 million for 2024, 2023 and 2022, respectively. The change in 2024 was primarily due to $10.9 million used to fund the stock repurchase program we started in May 2024.
As a result, we recorded a $62.2 million charge to intangible assets related to its Arthrosurface and Parcus reporting units during the year ended December 31, 2023.
As a result, we recorded $1.5 million and $62.2 million in impairment charges to intangible assets related to our Arthrosurface and Parcus reporting units during the years ended December 31, 2024 and 2023, respectively in discontinued operations.
Concentration of Risk We have historically derived the majority of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us. For the year ended December 31, 2023, Mitek accounted for 45% of revenue, as compared to 43% in prior year.
The increase in our effective rate for the year ended December 31, 2023 as compared to the year ended December 31, 2022 is primarily due to a higher valuation allowance being recorded on U.S. deferred tax assets in 2023. 47 Concentration of Risk We have historically derived the majority of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us.
Cash, cash equivalents, and investments aggregated $72.9 million and $86.3 million, and working capital totaled $132.2 million and $141.6 million, at December 31, 2023 and 2022, respectively.
Cash, cash equivalents, and investments aggregated $55.6 million and $68.7 million, and working capital totaled $90.3 million and $132.3 million, at December 31, 2024 and 2023, respectively.
The benefit from income taxes was $3.9 million for the year ended December 31, 2022, resulting in an effective tax rate of 20.7%.
Income Taxes The provision for income taxes was $6.6 million for the year ended December 31, 2023, resulting in an effective tax rate of 209.0%. The provision from income taxes was $2.1 million for the year ended December 31, 2022, resulting in an effective tax rate of 49.1%.
We are committed to leading in high opportunity spaces within orthopedics, including OA pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions. We have thirty years of global expertise developing, manufacturing and commercializing products based on our HA technology platform.
We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis (“OA”) Pain Management and Regenerative Solutions. We have thirty years of global expertise developing, manufacturing and commercializing products based on our hyaluronic (“HA”) technology platform. HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function.
Revenue from our OA Pain Management product family increased 11% for the year ended December 31, 2023, as compared to prior year, due to a global sales growth of our Monovisc single injection pain product and favorable ordering patterns, as well as continued double-digit international growth of our Cingal next generation non-opioid single injection pain product.
Revenue from our OEM channel product family increased 4% for the year ended December 31, 2023, as compared to prior year, due to domestic sales growth of our Monovisc single injection pain product and favorable ordering patterns from J&J MedTech.
We believe our success will be driven by our: ● Decades of experience in HA-based regenerative solutions and early intervention orthopedics combined under new seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; ● Utilizing HA-based technology and manufacturing expertise to provide new and differentiated solutions for the growing joint preservation and regenerative medicine markets; 40 ● Introducing key HA-based products into the US market upon FDA approval/clearance, such as Cingal, Hyalofast and the Integrity Implant System, our arthroscopic patch system for rotator cuff repair; ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Prioritized investment in differentiated pipeline of regenerative solutions, bone preserving implants and sports medicine products; ● Global commercial expertise which we will leverage to drive growth across our product portfolio, including an intentional site of care focus on ambulatory surgical centers in the United States and continued international expansion; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; ● Pursuit of strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions and technology licensing, by leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture.
Integrity Implant System and Hyalofast) markets; ● Launching the Integrity Implant System, our arthroscopic patch system for rotator cuff repair, in 2024; ● Targeting to introduce key HA-based products into the US market upon FDA approval/clearance, such as Cingal and Hyalofast, and developing additional products that leverage our proprietary Hyaff regenerative platform; ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Global commercial expertise which we will leverage to drive growth across our product portfolio, including continued international expansion; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture.
Income Taxes The benefit from income taxes was $3.9 million for the year ended December 31, 2022, resulting in an effective tax rate of 20.7%. The benefit from income taxes was $1.7 million for the year ended December 31, 2021, resulting in an effective tax rate of (70.4%).
Income Taxes The provision for income taxes was $6.1 million for the year ended December 31, 2024, resulting in an effective tax rate of (219.4%). The provision from income taxes was $6.6 million for the year ended December 31, 2023, resulting in an effective tax rate of 209.0%.
Research and Development Research and development expenses for the year ended December 31, 2022 were $28.2 million, an increase of $0.9 million, or 3%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally as well as new product development associated with our research and development pipeline.
Research and Development Research and development expenses for the year ended December 31, 2024 were $25.5 million, an increase of $3.7 million, or 17%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as regulatory, clinical and product development costs associated with our research and development pipeline, led by Hyalofast, in which we submitted the first part of our modular PMA application with the FDA in October 2024.
Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.
Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA Pain Management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio. 38 In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, a sports medicine and instrumentation solutions provider, and Arthrosurface Incorporated, a company specializing in bone preserving partial and total joint replacement solutions.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2023 were $95.9 million, an increase of $11.0 million, or 13%, as compared to the prior year.
Selling, General and Administrative Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2023 were $59.9 million, an increase of $8.7 million, or 17%, as compared to the prior year. The increase in SG&A expenses for the year ended December 31, 2023 was primarily due to shareholder activism and related corporate costs during the year.
For additional information regarding our business, please refer to “Item 1. Business” of this Annual Report on Form 10-K.
For additional information regarding our business, please refer to “Item 1.
The $67.8 million increase in the net loss was due to the $62.2 million pre-tax impairment charge on intangible assets recorded in the fourth quarter of 2023 and $13.0 million in pre-tax expenses associated with other non-recurring costs earlier in 2023. 44 Non-GAAP Financial Measures We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share, or EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.
The decrease in our effective rate for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is primarily due to a lower valuation allowance being recorded on U.S. deferred tax assets in 2024. 42 Non-GAAP Financial Measures We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share (“EPS”), which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States (“GAAP”), and is not necessarily comparable to similarly titled measures presented by other companies.
There was no change in adjusted gross margin for the year ended December 31, 2023 as compared to 2022, as the benefits of higher revenue and related production volumes were offset by increased supply chain costs due to inflationary pressures and a higher proportion of international sales in which product margins are generally lower.
Adjusted gross profit for the year ended December 31, 2023 was $83.3 million, or 69% of revenue. The decrease in adjusted gross profit for the year ended December 31, 2024 as compared to 2023, primarily resulted from slower manufacturing production, higher supply chain costs, and a higher proportion of international sales in which product margins are generally lower.
Operating Activities Cash (used in) provided by operating activities was $(1.8) million, $4.4 million and $8.4 million for 2023, 2022 and 2021, respectively.
Operating Activities Cash provided by (used in) operating activities was $5.4 million, $(1.8) million and $4.4 million for 2024, 2023 and 2022, respectively. The change in 2024 was primarily attributable to a lower net loss in 2024, compared to the same period in 2023.
Revenue from our OA Pain Management product family increased 8% for the year ended December 31, 2022, as compared to prior year, due primarily to higher international sales on recovery from the initial impact of the COVID-19 pandemic, favorable ordering patterns and growth in adoption of our products globally.
Revenue from our Commercial Channel product family increased 17% for the year ended December 31, 2024, as compared to prior year, due to an international sales growth on all our main OA Pain Management products (Monovisc, Cingal and Orthovisc).
Joint Preservation and Restoration Our Joint Preservation and Restoration product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our new arthroscopic regenerative patch system for rotator cuff repair and other tendon procedures, Tactoset products, and Hyalofast outside of the United States in over 30 countries; (b) our line of sports medicine solutions used to repair and reconstruct damaged ligaments and tendons due to sports injuries, trauma and disease; and (c) our Arthrosurface portfolio of bone preserving joint technologies, including partial joint replacement, joint resurfacing, and minimally invasive and bone sparing implants, designed to treat upper and lower extremity orthopedic conditions caused by trauma, injury and arthritic disease.
Regenerative Solutions Our Regenerative Solutions product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our new arthroscopic patch system for rotator cuff repair and other tendon procedures, Tactoset to facilitate bone regeneration, and Hyalofast, sold outside of the United States in over 30 countries, for cartilage repair.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2022 were $84.8 million, an increase of $10.7 million, or 14%, as compared to the prior year.
Selling, General and Administrative Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2024 were $55.6 million, a decrease of $4.4 million, or 7%, as compared to the prior year. The decrease in SG&A expenses for the year ended December 31, 2023 was primarily due to lower headcount and reduced shareholder activism costs.
The following is a reconciliation of adjusted gross profit to gross profit for the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, 2023 2022 Gross profit $ 103,088 $ 93,576 Product rationalization charges 748 3,199 Acquisition related intangible asset amortization 6,244 6,240 Adjusted gross profit $ 110,080 $ 103,015 Adjusted gross margin 66 % 66 % Adjusted gross profit for the year ended December 31, 2023 increased $7.1 million to $110.1 million representing 66% of revenue.
The following is a reconciliation of adjusted gross profit to gross profit for the years ended December 31, 2024 and 2023, respectively: Years Ended December 31, 2024 2023 Gross profit $ 75,998 $ 82,532 Product rationalization charges 606 748 Adjusted gross profit $ 76,604 $ 83,280 Adjusted gross margin 64 % 69 % Adjusted gross profit for the year ended December 31, 2024 decreased $6.7 million to $76.6 million representing 64% of revenue.
The following is a reconciliation of adjusted net income to net loss for the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, 2023 2022 Net loss $ (82,667 ) $ (14,859 ) Product rationalization charges, tax effected 725 2,410 Arbitration settlement, tax effected 3,148 - Acquisition related intangible asset amortization, tax effected 6,926 5,386 Impairment of intangible assets, tax effected 60,250 - Discontinuation of software development project, tax effected 4,333 - Costs of shareholder activism, tax effected 2,938 - Adjusted net loss $ (4,347 ) $ (7,063 ) The following is a reconciliation of adjusted diluted loss per share to diluted loss per share for the years ended December 31, 2023 and 2022, respectively (in thousands, expect per share data): Years Ended December 31, 2023 2022 Diluted loss per share $ (5.64 ) $ (1.02 ) Product rationalization charges, tax effected 0.05 0.17 Arbitration settlement, tax effected 0.21 - Acquisition related intangible asset amortization, tax effected 0.47 0.36 Impairment of intangible assets, tax effected 4.11 - Discontinuation of software development project, tax effected 0.30 - Costs of shareholder activism, tax effected 0.20 - Adjusted diluted loss per share $ (0.30 ) $ (0.49 ) Adjusted net loss in 2023 was $4.3 million, a decrease of $2.7 million as compared to 2022.
The following is a reconciliation of adjusted net income from continuing operations to net loss from continuing operations for the years ended December 31, 2024 and 2023, respectively: Years Ended December 31, 2024 2023 Net loss from continuing operations $ (8,828 ) $ (3,439 ) Product rationalization charges, tax effected 457 725 Share-based compensation, tax effected 9,167 13,114 Costs of shareholder activism, tax effected 1,647 2,938 Adjusted net income from continuing operations $ 2,443 $ 13,338 The following is a reconciliation of adjusted diluted income from continuing operations per share to diluted loss from continuing operations per share for the years ended December 31, 2024 and 2023, respectively (in thousands, expect per share data): Years Ended December 31, 2024 2023 Diluted loss from continuing operations per share $ (0.60 ) $ (0.23 ) Product rationalization charges, tax effected 0.03 0.05 Share-based compensation, tax effected 0.62 0.89 Costs of shareholder activism, tax effected 0.11 0.20 Adjusted diluted income from continuing operations per share $ 0.16 $ 0.91 Adjusted net income from continuing operations in 2024 was $2.4 million, a decrease of $10.9 million as compared to 2023.
The following is a reconciliation of adjusted EBITDA to net loss for the years ended December 31, 2023 and 2022 respectively: Years Ended December 31, 2023 2022 Net loss $ (82,667 ) $ (14,859 ) Interest and other expense, net (2,312 ) (654 ) Benefit from income taxes (2,660 ) (3,887 ) Depreciation and amortization 7,069 7,340 Stock-based compensation 15,243 14,315 Product rationalization charges 748 3,199 Arbitration settlement 3,250 - Acquisition related intangible asset amortization 7,148 7,147 Impairment of intangible assets 62,190 - Discontinuation of software development project 4,473 - Costs of shareholder activism 3,033 - Adjusted EBITDA $ 15,515 $ 12,601 Adjusted EBITDA for year ended December 31, 2023 was $15.5 million, an increase of $2.9 million as compared to 2022.
The following is a reconciliation of adjusted EBITDA to net loss from operations for the years ended December 31, 2024 and 2023 respectively: Years Ended December 31, 2024 2023 Net loss from continuing operations $ (8,828 ) $ (3,439 ) Interest and other expense, net (2,337 ) (2,312 ) Provision for income taxes 6,064 6,595 Depreciation and amortization 5,688 5,506 Stock-based compensation 12,158 13,537 Product rationalization charges 606 748 Costs of shareholder activism 2,185 3,033 Adjusted EBITDA $ 15,536 $ 23,668 Adjusted EBITDA for year ended December 31, 2024 was $15.5 million, a decrease of $8.2 million as compared to 2023.
Adjusted Gross Profit and Adjusted Gross Margin We define adjusted gross profit as our gross profit excluding amortization of certain acquired intangible assets, the impact of inventory fair-value step up associated with our recent acquisitions and certain product rationalization charges.
Adjusted Gross Profit and Adjusted Gross Margin We define adjusted gross profit as our gross profit excluding certain product rationalization charges. We define adjusted gross margin as adjusted gross profit divided by total revenue.
Gross Profit and Margin Gross profit for the year ended December 31, 2023 was $103.1 million, or gross margin of 62%, as compared with $93.6 million, or gross margin of 60%, for the year ended December 31, 2022.
We also launched a full market release of Integrity in the U.S. in 2024. 41 Gross Profit and Margin Gross profit for the year ended December 31, 2024 was $76.0 million, or gross margin of 63%, as compared with $82.5 million, or gross margin of 68%, for the year ended December 31, 2023.
Investing Activities Cash used in investing activities was $5.4 million, $7.5 million and $3.1 million for 2023, 2022 and 2021, respectively. Most of the spend on investing activities was for capital investments in manufacturing operations to support growing product demand and instruments to support clinical cases. The change in 2023 was due to lower spending on software implementation.
Investing Activities Cash used in investing activities was $8.3 million, $5.4 million and $7.5 million for 2024, 2023 and 2022, respectively. The change was primarily due to an increase in capital expenditures in 2024 to support the expansion of manufacturing capacity at our Bedford facility and a purchase of developed technology for $0.6 million.
The increase in adjusted EBITDA was primarily due to an increase in revenue and adjusted gross profit as well as a slower ramp up of commercial spending in 2023 and overall spending control. 46 Adjusted Net Loss and Adjusted EPS We present information below with respect to adjusted net loss and adjusted EPS.
The decrease in adjusted EBITDA was primarily due to lower adjusted gross profit and higher research and development spending in 2024 on product development and clinical activity, primarily with Integrity, Hyalofast and Cingal. 44 Adjusted Net Loss and Adjusted EPS from Continuing Operations We present information below with respect to adjusted net loss and adjusted EPS from continuing operations.
The increase in gross profit for the year ended December 31, 2022, primarily resulted from higher revenue growth and the conclusion of the amortization of inventory step-up costs related to the 2020 Arthrosurface and Parcus Medical acquisitions. This increase was partially offset by higher product rationalization charges, as well as higher manufacturing-related costs.
The decrease in gross profit for the year ended December 31, 2024, primarily resulted from lower revenue, primarily related to OA Pain Management products in the U.S., product channel mix and higher inventory product rationalization charges.
Net Loss For the year ended December 31, 2023, the net loss was $82.7 million, or $5.64 per basic and diluted loss per share, compared to a net loss of $14.9 million, or $1.02 per basic and diluted share, for the prior year.
Income (Loss) from Operations For the year ended December 31, 2024, the loss from operations was $5.1 million, compared to income from operations of $0.8 million for the prior year. The $5.9 million decrease in income from operations was due to lower gross profit and higher research and development costs.
Adjusted gross profit for the year ended December 31, 2022 was $103.0 million, or 66% of revenue. The increase in adjusted gross profit for the year ended December 31, 2023 as compared to 2022, primarily resulted from the growth of revenue.
Income from Operations For the year ended December 31, 2023, the loss from operations was $0.8 million, compared to income from operations of $3.7 million for the prior year. The $2.8 million decrease in income from operations was due higher operating expenses.
Revenue from our Joint Preservation and Restoration product family increased 4% for the year ended December 31, 2022, as compared to prior year, due to improving elective procedure volumes and rapidly growing commercial adoption of our newest products. 48 Revenue from our Non-Orthopedic product family decreased 2% for the year ended December 31, 2022, as compared to prior year, primarily due to timing of distributor sales as well as last-time purchases of legacy products during 2021.
Revenue from our OEM Channel product family decreased 8% for the year ended December 31, 2024, as compared to prior year, due to lower J&J MedTech revenue, mostly related to Orthovisc and the discontinuation of certain non-orthopedic products.
Removed
HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function.
Added
This strategic decision involved the sale of Arthrosurface Incorporated in October 2024 and the divestiture of Parcus Medical, LLC, in March 2025. As we look towards the future, our business is positioned to capture value within our target market of OA Pain Management and Regenerative Solutions product portfolios.
Removed
In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, a sports medicine and instrumentation solutions provider, and Arthrosurface, Inc., a company specializing in bone preserving partial and total joint replacement solutions.
Added
We believe our success will be driven by our: ● Over 30 years of experience in HA and HA-based regenerative solutions and early intervention orthopedics combined with seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; ● Utilizing proprietary HA-based technology and manufacturing expertise to provide new and differentiated solutions in next generation OA Pain Management (eg.
Removed
Key Developments during the Year Ended December 31, 2023 ● Strengthening Leadership Position in OA Pain Management o Achieved record annual revenues of $101.9 million in OA Pain Management with single-injection Monovisc, multi-injection Orthovisc and Cingal outside the U.S.; Increasing leading U.S. market share position. o Cingal, Anika’s next generation non-opioid single-injection HA-based osteoarthritis pain product, continued strong double-digit growth outside the U.S. o Awaiting FDA feedback on proposed non-clinical next steps regarding Cingal U.S. regulatory approval following a Type C meeting with the FDA in early 2023 and success in meeting its latest Phase III Pivotal primary endpoint in 2022. ● Advancing a Highly Differentiated Portfolio of HA-Based Regenerative Solutions o Successfully completed over 100 cases with the Integrity Implant System, Anika’s HA-based regenerative rotator cuff patch system, following the limited market release in late November 2023; on-track for full market release in mid-2024. o Fully enrolled Hyalofast , Anika’s HA off-the-shelf single-stage cartilage repair product, Phase III clinical trial; modular PMA submission with break-through device designation commencing in 2024; final PMA module filing expected in 2025 with product launching by 2026. ● Launched Key Products in Sports Medicine and Arthrosurface Joint Solutions o X-Twist Biocomposite Fixation System launched in the first quarter of 2024, compliments the PEEK version launched in early 2023. o RevoMotion Reverse Shoulder Arthroplasty System full market release in September 2023. 41 Products OA Pain Management Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA Pain Management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid.
Added
Business” of this Annual Report on Form 10-K. 39 Products OA Pain Management Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA Pain Management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid.
Removed
Non-Orthopedic Our Non-Orthopedic product family consists of legacy HA-based products that are marketed principally for non-orthopedic applications, including our adhesion barrier product, advanced wound care products, our ear, nose and throat products, and our ophthalmic products.
Added
Business” of this Annual Report on Form 10-K. 40 Results of Operations Year ended December 31, 2024 compared to year ended December 31, 2023 Statement of Operations Detail Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Revenue $ 119,907 $ 120,792 $ (885 ) (1 %) Cost of revenue 43,909 38,260 5,649 15 % Gross profit 75,998 82,532 (6,534 ) (8 %) Gross margin 63 % 68 % Operating expenses: Research & development 25,544 21,763 3,781 17 % Selling, general & administrative 55,555 59,925 (4,370 ) (7 %) Total operating expenses 81,099 81,688 (589 ) (1 %) (Loss) income from operations (5,101 ) 844 (5,945 ) (704 %) Interest and other expense, net 2,337 2,312 25 1 % (Loss) income before income taxes (2,764 ) 3,156 (5,920 ) (188 %) Provision for (benefit from) income taxes 6,064 6,595 (531 ) (8 %) Loss from continuing operations (8,828 ) (3,439 ) (5,389 ) 157 % Loss from discontinued operations, net of tax (47,557 ) (79,228 ) 31,671 (40 %) Net loss $ (56,385 ) $ (82,667 ) $ 26,282 (32 %) Revenue During the year ended December 31, 2024, we changed our classification of revenue.
Removed
Non-Orthopedic also includes Hyvisc, our high molecular weight injectable HA veterinary product approved for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA. Hyvisc was previously reported in the OA Pain Management product family but has been reclassified to the Non-Orthopedic product family beginning in 2023.
Added
We previously disclosed revenue in three categories: OA Pain Management, Joint Preservation and Restoration and Non-Orthopedic. As a result of a change in strategic focus announced by us in 2024, revenue classification was delineated to provide the investment community a clear view to our value drivers.
Removed
Business” of this Annual Report on Form 10-K. 42 Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 Statement of Operations Detail Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue $ 166,662 $ 156,236 $ 10,426 7 % Cost of revenue 63,574 62,660 914 1 % Gross profit 103,088 93,576 9,512 10 % Gross margin 62 % 60 % Operating expenses: Research & development 32,690 28,182 4,508 16 % Selling, general & administrative 95,847 84,794 11,053 13 % Impairment of intangible assets 62,190 - 62,190 - Total operating expenses 190,727 112,976 77,751 69 % Loss from operations (87,639 ) (19,400 ) (68,239 ) 352 % Interest and other expense, net 2,312 654 1,658 254 % Loss before income taxes (85,327 ) (18,746 ) (66,581 ) 355 % Benefit from income taxes (2,660 ) (3,887 ) 1,227 (32 %) Net loss $ (82,667 ) $ (14,859 ) $ (67,808 ) 456 % Revenue The following table presents revenue by product family for fiscal years 2023 and 2022 (dollars in thousands): Years Ended December 31, 2023 2022 $ Change % Change OA Pain Management $ 101,927 $ 91,984 $ 9,943 11 % Joint Preservation and Restoration 54,879 50,402 4,477 9 % Non-Orthopedic 9,856 13,850 (3,994 ) (29 %) $ 166,662 $ 156,236 $ 10,426 7 % Revenue for the year ended December 31, 2023 was $166.7 million, an increase of $10.5 million, or 7%, compared to the prior year.
Added
Revenue has been split between the Commercial Channel and the Original Equipment Manufacturer (“OEM”) Channel. In the Commercial Channel, we have full responsibility for sales, marketing, and pricing of products through our commercial leaders, direct sales representatives, and independent distributors. Revenue from our Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel.
Removed
Revenue from our Joint Preservation and Restoration product family increased 9% for the year ended December 31, 2023, as compared to prior year, due to commercial adoption of our newest products, such as X-Twist, and higher international sales. 43 Revenue from our Non-Orthopedic product family decreased 29% for the year ended December 31, 2023, as compared to prior year, primarily due to lower sales to veterinary customers due to timing of ordering patterns and lower sales following last-time-buys in 2022 associated with termination of certain legacy distributor contracts.
Added
In the OEM Channel, we are responsible for development and manufacturing of products sold to our OEM partners governed by long-term agreements, but we do not control sales, marketing, or pricing with end users. Revenue from our U.S. OA Pain Management business and the Non-Orthopedic business is now included in the OEM Channel.
Removed
Effective January 1, 2023, we began to report revenue from product sales to veterinary customers within the Non-Orthopedic product family whereas such revenue had historically been reported within the OA Pain Management revenue product family for the prior period year ended December 31, 2022.
Added
All other revenue is reported in the Commercial Channel.
Removed
Revenue from product sales to veterinary customers amounted to $4.2 million and $5.9 million for 2023 and 2022, respectively, with the 2022 revenue reclassified to Non-Orthopedic to conform to current presentation.
Added
The following table presents revenue by product family for fiscal years 2024 and 2023 (dollars in thousands): Years Ended December 31, 2024 2023 $ Change % Change OEM Channel $ 77,770 $ 84,645 $ (6,875 ) (8 %) Commercial Channel 42,137 36,147 5,990 17 % $ 119,907 $ 120,792 $ (885 ) (1 %) Revenue for the year ended December 31, 2024 was $119.9 million, a decrease of $0.9 million, or 1%, compared to the prior year.
Removed
The increase in SG&A expenses for the year ended December 31, 2023 was primarily due to $13.0 million of non-recurring costs related to the Parcus Medical unitholder arbitration settlement, shareholder activism, discontinuation of a software development project and other non-recurring corporate costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed5 unchanged
Biggest changeUnfavorable fluctuations in exchange rates would have a negative impact on our financial statements. The impact of currency exchange rate fluctuations related to our international subsidiaries on our financial statements were insignificant in 2023. We recognize foreign currency gains or losses arising from our operations in the period incurred. 54
Biggest changeUnfavorable fluctuations in exchange rates would have a negative impact on our financial statements. The impact of currency exchange rate fluctuations related to our international subsidiaries on our financial statements were insignificant in 2024. We recognize foreign currency gains or losses arising from our operations in the period incurred. 52
Approximately $12.8 million of our revenue was denominated in foreign currencies (primarily the Euro and UK pound sterling) for the year ended December 31, 2023.
Approximately $24.8 million of our revenue was denominated in foreign currencies (primarily the Euro and UK pound sterling) for the year ended December 31, 2024.

Other ANIK 10-K year-over-year comparisons