This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding:

† our future sales and product revenues, including geographic expansions, possible retroactive price adjustments, and expectations of unit volumes or other offsets to price reductions;

† our manufacturing capacity and efficiency gains and work-in-process manufacturing operations;

† the timing, scope and rate of patient enrollment for clinical trials;

†                      development of possible new products;



†                      our ability to achieve or maintain compliance with laws
and regulations;

† the timing of and/or receipt of FDA, foreign or other regulatory approvals and/or reimbursement approvals of current, new or potential products, and any limitations on such approvals;

† negotiations with potential and existing partners, including our performance under any of our existing and future distribution or supply agreements or our expectations with respect to sales and sales threshold milestones pursuant to such agreements;

† the level of our revenue or sales in particular geographic areas and/or for particular products, and the market share for any of our products;

† our current strategy, including our corporate objectives and research and development and collaboration opportunities;

† our and Bausch & Lomb's performance under the existing supply agreement for certain of our ophthalmic viscoelastic products, our ability to remain the exclusive global supplier for AMVISC and AMVISC Plus to Bausch & Lomb, and our expectations regarding revenue from ophthalmic products;

† our expectations regarding our joint health products, including expectations regarding new products, expanded uses of existing projects, and new distribution;

† our intention to increase market share for joint health products in international and domestic markets or otherwise penetrate growing markets for osteoarthritis of the knee and other joints;

† our expectations regarding sales to DePuy Mitek and the positive effects on domestic ORTHOVISC sales related to DePuy Mitek's sales efforts;

† our expectations regarding HYVISC sales;

† our expectations regarding ELEVESS sales;

† our expectations regarding the development and commercialization of INCERT, and the market potential for INCERT;

† our expectations regarding product gross margin;

† our expectations regarding next generation osteoarthritis/joint health product developments, clinical trials, regulatory approvals, and commercial launches;

† our expectations regarding the commencement of our clinical trial for CINGAL;

† our expectation for increases in operating expenses, including research and development and selling, general and administrative expenses;

† the rate at which we use cash, the amounts used and generated by operations, and our expectation regarding the adequacy of such cash;

† our expectation for increases in capital expenditures and decline in interest income;

† possible negotiations or re-negotiations with existing or new distribution or collaboration partners;

† our expectations regarding our existing manufacturing facility and the new Bedford, MA facility, our expectations related to costs, including financing costs, to build-out and occupy the new facility, the timing of construction, and our ability to obtain FDA licensure for the facility;

† our abilities to comply with debt covenants;

† our plans to address the FDA's Warning Letter and Form 483 Notice of Observations; and

† our abilities to successfully defend our ELEVESS trademark.

Furthermore, additional statements identified by words such as "will," "likely," "may," "believe," "expect," "anticipate," "intend," "seek," "designed," "develop," "would," "future," "can," "could," "outlook" and other expressions that are predictions of or indicate future events and trends and which do not relate to historical matters, also identify forward-looking statements. You should not rely on forward looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, including those factors described in the section titled Item 1A"Risk Factors" in the Company's Annual Report on Form 10-K. These risks, uncertainties and other factors may cause our actual results, performance or achievement to be materially different from anticipated future results, performance or achievement, expressed or implied by the forward-looking statements. These forward- looking statements are based upon the current assumptions of our management and are only expectations of future results. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences, including those factors discussed herein and in the "Management's Discussions and Analysis of Financial Condition and Results of Operations" section of this Quarterly Report on Form 10-Q, as well as the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2007 and in our press releases and other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors of new information, future events or other changes.

Management Overview

Anika Therapeutics, Inc. ("Anika," the "Company," "we," "us," or "our") was incorporated in 1992 as a Massachusetts company and commenced business as an independent company in 1993. Anika develops, manufactures and commercializes therapeutic products for tissue protection, healing and repair. These products are based on hyaluronic acid (HA), a naturally occurring, biocompatible polymer found throughout the body. Due to its unique biophysical and biochemical properties, HA plays an important role in a number of physiological functions such as the protection and lubrication of soft tissues and joints, the maintenance of the structural integrity of tissues, and the transport of molecules to and within cells. Our currently manufactured and marketed products consist of ORTHOVISC®, which is an HA product used in the treatment of some forms of osteoarthritis in humans; AMVISC®, AMVISC® Plus, STAARVISC™-II, and ShellGel™, each an injectable ophthalmic viscoelastic HA product; ELEVESS™ is designed as a family of aesthetic dermatology products for facial wrinkles, scar remediation and lip augmentation; HYVISC®, an HA product used in the treatment of equine osteoarthritis; and INCERT®, an HA based anti-adhesive for surgical applications. In the U.S., ORTHOVISC® is marketed by DePuy Mitek, Inc. ("DePuy Mitek"), a subsidiary of Johnson & Johnson (collectively, "JNJ"), under the terms of a licensing, distribution, supply and marketing agreement. Outside the U.S., ORTHOVISC® has been approved for sale since 1996 and is marketed by distributors in approximately 17 countries. ORTHOVISC® mini, a treatment for osteoarthritis targeting small joints is available in Europe. MONOVISC™, a single-injection osteoarthritis product based on our proprietary cross-linking technology is available in Europe. We developed and manufacture AMVISC® and AMVISC® Plus for Bausch & Lomb Incorporated under a multiyear supply agreement. ELEVESS™ is marketed in the U.S. by Artes Medical, Inc. HYVISC® is marketed in the U.S. through Boehringer Ingelheim Vetmedica, Inc. INCERT® is currently marketed in three countries outside of the U.S. Products in development include next generation joint health related products and ELEVESS™ line extensions.

Osteoarthritis Business

Our joint health products include ORTHOVISC, ORTHOVISC mini, and MONOVISC. ORTHOVISC is available in the U.S., Canada, and some international markets for the treatment of osteoarthritis of the knee, and in Europe for the treatment of osteoarthritis in all joints. ORTHOVISC® miniis available in Europe and is designed for the treatment of osteoarthritis in small joints. MONOVISC is our single injection osteoarthritis treatment for all joints, and is available in Europe and Turkey. ORTHOVISC mini, and MONOVISC are our two newest OA products and became available during the second quarter of 2008. Our revenue from joint health products has increased 52.5% through the first nine months of 2008. This increase in many countries is reflective of our continued focus in this therapeutic area, an area with favorable demographics of an aging population looking to remain active. Our strategy is to continue to add new products, to expand the indications for usage of the products, and to add additional countries to our distribution network. The joint health area has been the fastest growing area for the Company, growing from 39% of our product revenue in 2005 to 55% of our revenue for the first nine months of this year. We continue to seek new distribution partnerships around the world and we expect total joint health product sales to increase in 2008 compared to 2007.

Sales of HYVISC, our veterinary product for the treatment of equine osteoarthritis, contributed 8.3% and 9.8% of our product revenue for the three and nine months ended September 30, 2008, and increased 27.8% and 44.3% compared to the three and nine month periods of 2007. The increases for both periods were a combination of the increased sales people and resources by our partner, Boehringer Ingelheim Vetmedica, to maintain its leading market share position, as well as its order patterns. We expect HYVISC sales to increase in 2008 compared to 2007.

Ophthalmic Business

Our ophthalmic business includes HA viscoelastic products used in ophthalmic surgery. For the three and nine months ended September 30, 2008, sales of ophthalmic products contributed 31.7% and 33.4% of our product revenue. Ophthalmic sales decreased by 6.6% and increased by 2.7% for the three and nine months periods in 2008 compared to the same periods in 2007. The decrease in sales for the three month period and increase in sales for the nine month period were primarily due to order timing and inventory planning by our partners. Sales to Bausch & Lomb accounted for 94.0% and 93.0% of ophthalmic sales for the three and nine months ended September 30, 2008, and contributed 29.8% and 31.1% of product revenue for the same periods, respectively. For 2008, we only expect a slight increase in ophthalmic revenue compared to 2007.

Aesthetic Dermatology Business

ELEVESS is designed as a family of aesthetic dermatology products for facial wrinkles, scar remediation and lip augmentation, and is intended to supplant collagen-based products and to compete with other HA-based products currently on the market. Our aesthetic dermatology product is a dermal filler based on our proprietary chemically modified, cross-linked HA. We received European, Canadian, and United States FDA approvals for our initial commercial product in 2007. In July 2008, we entered into a distributor agreement with Artes Medical, Inc. for distribution of ELEVESS in the U.S. Shipments of commercial product and sample units commenced shortly after the signing of the distribution agreement, with product launch initiated in early August 2008. In October 2008, we entered into an exclusive agreement with Canderm Pharma, Inc., Canada's leading independent skincare company, to distribute and market ELEVESS throughout Canada. We expect shipments of commercial product and sample units to grow in the fourth quarter of 2008 and in 2009. We continue to seek international marketing and distribution partners to commercialize ELEVESS in key markets outside the United States.

Anti-adhesion Business

INCERT, approved for sale in Europe and Turkey, is designed as a family of HA based product, with chemically modified, cross-linked HA, for prevention of post-surgical adhesions. We commenced INCERT sales during the second quarter of 2006. INCERT is currently marketed in three countries. We see potential for expanded indications for the use of INCERT, but have made this a secondary goal to the successful launch and expanded distribution of our joint health and aesthetic products. There are currently no plans at this time to distribute INCERT in the U.S.

Research and Development

Products in development include next generation osteoarthritis/joint health products and line extensions for ELEVESS. Our next generation osteoarthritis products include a single-injection treatment product that uses a non-animal source HA, and is our first osteoarthritis product based on our proprietary crosslinked HA- technology. This product has been branded as MONOVISC. We received Conformité Européene (CE) Mark approval for the MONOVISC product in October 2007. We launched MONOVISC in Europe during the second quarter of 2008, following a limited clinical study. In the U.S., we filed an investigational device exemption, or an IDE application, with the FDA, and commenced patient enrollment for our U.S. clinical trial in January of 2008. We currently expect patient enrollment for our U.S. clinical trial to be completed by the end of 2008. Our second single-injection osteoarthritis

product is CINGAL™, which is based on the same technology platform used in MONOVISC, with an added active therapeutic molecule to provide broad pain relief for a long period of time. We expect to commence a clinical trial for CINGAL in 2009.

FDA Warning Letter

In July 2008, we received a Warning Letter (the "Warning Letter") from the FDA in response to an earlier FDA Form 483 Notice of Observations issued to us following an inspection at our Woburn facility. We have fully cooperated with the FDA to address the issues in the Form 483 filing and have issued a response to the FDA's Warning Letter. We have developed a corrective action plan and we will provide the FDA with progress reports as promised. On September 15, 2008, the FDA issued a letter to us indicating that the responses submitted by us were sufficient. We expect the FDA will conduct an unannounced inspection in the near future. We have no major disagreements with the FDA, and expect to have a successful re-inspection and clearance of the Warning Letter by early 2009. Product quality is the highest concern to us and we are committed to the continual improvement of our quality systems and investing to make those systems best-in-class. Failure to comply with applicable regulatory requirements and to address the issues raised by the FDA in the Warning Letter could result in regulatory action. Any such regulatory action would be expected to have a material adverse effect on our business and operations.

Summary of Critical Accounting Policies; Significant Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We monitor our estimates on an on-going basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations" where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 3 to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2008 and our Annual Report on Form 10-K for the year ended December 31, 2007.

Revenue Recognition

The Company's revenue recognition policies are in accordance with the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," as amended by SEC Staff Accounting Bulletin No. 104, "Revenue Recognition," and Emerging Issues Task Force Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables."

Reserve for Obsolete/Excess Inventory

Inventories are stated at the lower of cost or market. We regularly review our inventories and record a provision for excess and obsolete inventory based on certain factors that may impact the realizable value of our inventory including, but not limited to, technological changes, market demand, inventory cycle time, regulatory requirements and significant changes in our cost structure. If ultimate usage varies significantly from expected usage or other factors arise that are significantly different than those anticipated by management, additional inventory write-down or increases in obsolescence reserves may be required.

We generally produce finished goods based upon specific orders or in anticipation of specific orders. As a result, we generally do not establish reserves against finished goods. We evaluate the value of inventory on a quarterly basis and may, based on future changes in facts and circumstances, determine that a write-down of inventory is required in future periods.

Stock-based Compensation

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R, ("SFAS 123R") "Share-Based Payment," which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS 123R, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity

grant).

The Company estimates the fair value of stock options and stock appreciation rights using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Company's stock over the option's expected term, the risk-free interest rate over the option's expected term, and the Company's expected annual dividend yield. The Company uses historical data on exercise of stock options and other factors to estimate the expected term of share-based awards. The Company also evaluates forfeitures periodically and adjusts accordingly. The expected volatility assumption is based on the unadjusted historical volatility of the Company's common stock. The risk-free interest rate assumption is based on U.S. Treasury interest rates at the time of grants. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. For awards with a performance condition vesting feature, when achievement of the performance condition is deemed probable, the Company recognizes compensation cost on a graded-vesting basis over the awards' expected vesting periods. The Company assesses probability on a quarterly basis.

Income Taxes

Beginning January 1, 2007, the Company began accounting for uncertain income tax positions using a benefit recognition model with a two-step approach, a more-likely-than-not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement in accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("FIN 48"). If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. As a result of the adoption of FIN 48, there was no change to the tax reserve for unrecognized tax benefits. As such, there was no change to retained earnings as of January 1, 2007. It is the Company's policy to classify accrued interest and penalties as part of the accrued FIN 48 liability and record the expense in the provision for income taxes.

We record a deferred tax asset or liability based on the difference between the financial statement and tax basis of assets and liabilities, as measured by the enacted tax rates assumed to be in effect when these differences reverse. As of September 30, 2008, management determined that it is more likely than not that the deferred tax assets will be realized and, therefore, a valuation allowance has not been recorded.

Property and equipment

Property and equipment are carried at cost less accumulated depreciation, subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Costs of major additions and improvements are capitalized; maintenance and repairs that do not improve or extend the life of the respective assets are charged to operations. On disposal, the related accumulated depreciation or amortization is removed from the accounts and any resulting gain or loss is included in results of operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the useful life or the expected term of the respective lease. Machinery and equipment are depreciated from 5 to 10 years, furniture and fixtures for 5 to 7 years and computer software and hardware from 3 to 5 years. Interest costs incurred during the construction of major capital projects are capitalized in accordance with SFAS No. 34, "Capitalization of Interest Costs" ("SFAS 34"). The interest is capitalized until the underlying asset is ready for its intended use, at which point the interest cost is amortized as interest expense over the life of the underlying assets. We capitalize certain direct and incremental costs associated with the validation effort related to FDA approval of our manufacturing facility and equipment for the production of our commercial products. These costs include construction costs, equipment costs, direct labor and materials incurred in preparing the facility and equipment for their intended use. The validation costs are amortized over the life of the related facility and equipment.

Results of Operations

Three and nine months ended September 30, 2008 compared to three and nine months ended September 30, 2007.

Product revenue

Product revenue for the quarter ended September 30, 2008 was $8,523,765, an increase of $1,240,636 or 17.0%, compared to $7,283,129 for the quarter ended September 30, 2007. Product revenue for the nine months ended September 30, 2008 was $24,770,230 an increase of $5,781,097 or 30.4%, compared to $18,989,133 for the nine months ended September 30, 2007.

Three Months Ended September 30,

                                            Increase (Decrease)
                  2008          2007             $            %
Joint Health   $ 4,676,247   $ 3,596,395   $    1,079,852    30.0 %
Ophthalmic       2,703,095     2,893,906         (190,811 )  -6.6 %
Veterinary         706,553       552,773          153,780    27.8 %
Aesthetics         383,320       222,220          161,100    72.5 %
Other               54,550        17,835           36,715   205.9 %
               $ 8,523,765   $ 7,283,129   $    1,240,636    17.0 %

Nine Months Ended September 30,

                                              Increase (Decrease)
                   2008           2007             $            %
Joint Health   $ 13,563,901   $  8,894,752   $    4,669,149    52.5 %
Ophthalmic        8,283,984      8,068,611          215,373     2.7 %
Veterinary        2,427,570      1,682,870          744,700    44.3 %
Aesthetics          399,370        224,220          175,150    78.1 %

Our joint health products consist of ORTHOVISC, ORTHOVISC mini and MONOVISC, the latter two of which are currently only available outside the United States. Revenue from joint health products increased $1,079,852, or 30.0%, in the third quarter of 2008, and $4,669,149, or 52.5% for the first nine months of 2008. The improvement in joint health product revenue for the three and nine month periods ended September 30, 2008 were due to increases in both international and domestic ORTHOVISC revenue, as well as the launch of MONOVISC and ORTHOVISC miniin Europe and Turkey during the second quarter of 2008. Our U.S. joint health product revenue in the third quarter of 2008 totaled $3,113,165, compared to $2,496,393 in the same period last year, an increase of 24.7%. U.S. joint health product revenue for the nine months ended September 30, 2008 was $9,593,935, compared to $6,774,367 in the same period in 2007, a increase of 41.6%. These increases reflect DePuy Mitek's underlying sales increases to end-users of 23.9% and 30.2% for the three and nine month periods ended September 30, 2008 compared to the same periods in 2007, as well as some inventory growth by DePuy Mitek earlier in the year. International joint health product revenue in the third quarter of 2008 increased 42.1% to $1,563,082, from $1,100,002, in the third quarter last year. For the first nine months of 2008, international joint health product revenue increased 87.2% to $3,969,966 from $2,120,384 in the same period of 2007. The increase in international revenue in both periods was due to increased product shipments to Turkey, Germany, Italy, Greece, Egypt, Hungary and Austria. We expect joint health product revenue to increase in 2008 compared to 2007, both domestically and internationally.

Our sales of ophthalmic products decreased $190,811, or 6.6%, in the third quarter of 2008 as compared with the same period last year. For the nine months ended September 30, 2008, ophthalmic product sales increased by $215,373, or 2.7% from the same period in 2007. The change in ophthalmic product sales for . . .