Anika Therapeutics (ANIK)

Ortho Neutrogena, our development partner for our cosmetic tissue augmentation or CTA product, is covering most of the costs associated with the CTA development including the ongoing clinical trial. Total contract revenue recognized from Ortho Neutrogena for CTA development expenses totaled $1.4 million for the year.

Fourth-quarter SG&A expenses were up 48% to $1.9 million. This is primarily due to increases in professional service fees including costs associated with Sarbanes-Oxley compliance work. For the full year SG&A rose 44% to $6 million. Interest income for the full year was approximately $389,000. We recorded a provision for income taxes in the fourth quarter of $785,000. The provision for income taxes for the full year was $2.6 million, making the overall effective tax rate for 2004 approximately 39%.

Full year results included a previously disclosed one time deferred income tax benefit recorded in the first quarter of $7 million equal to $0.52 per diluted share. Net income for 2004 fourth quarter equaled $1.8 million or $0.15 per diluted share compared with $801,000 or $0.07 per diluted share in the fourth-quarter of 2003. Net income for the year was $11.2 million or $0.98 per diluted share. Excluding the income tax benefit of $0.62 per share, net income per diluted share for 2004 was $0.36 per share. This compares with 2003 net income of $827,000 or $0.08 per diluted share.