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 revenue, 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;

? The development of possible new products;

? Our ability to achieve or maintain compliance with laws and regulations;

? The timing of and/or receipt of the Food and Drug Administration, foreign or other regulatory approvals, clearances, and/or reimbursement approvals of current, new or potential products, and any limitations on such approvals;

? Our intention to seek patent protection for our products and processes, and protect our intellectual property;

? Our ability to effectively compete against current and future competitors;

? 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 non-exclusive supply agreement for AMVISC® and AMVISC® Plus ophthalmic viscoelastic products, and our expectations regarding revenue generated from ophthalmic products;

? Our ability to commercialize AnikaVisc and AnikaVisc Plus, and our expectations regarding such commercialization and the potential revenue generated thereby;

? Our expectations regarding our joint health products, including expectations regarding new products, expanded uses of existing products, new distribution and revenue growth;

? 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 next generation osteoarthritis/joint health product developments, clinical trials, regulatory approvals and commercial launches;

? Our expectations regarding revenue from sales of HYVISC®;

? Our ability to identify a new distribution partner for HYDRELLE™ in the United States and the impact this may have on future sales of this product;

? Our ability to achieve operational efficiencies from the transfer of our manufacturing capabilities to the Bedford facility;

? Our ability to license our aesthetics product to new distribution partners outside of the United States; our ability, and the ability of our distribution partners, to market our aesthetic dermatology product; and our expectations regarding the distribution and sales of our ELEVESSTM product and the timing thereof;

? Our expectations regarding development of aesthetics product line extensions;

? Our expectations regarding product gross margin;

? Our expectations regarding our U.S. MONOVISC® trials and the results of the related premarket approval ("PMA") filing with the FDA, including the escalation of the appeal process with the FDA and the FDA's review of the additional information requested in order to pass judgment on the appeal, and the likelihood of our obtaining such approval and/or the anticipated timing thereof;

? Our expectations regarding the commencement of a clinical trial for Hyalograft C Autograft and CINGAL™, including the expense associated therewith, and our ability to obtain regulatory approvals for these products;

? Our expectation for changes 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 capital expenditures spending and future amounts of interest income and expense;

? Possible negotiations or re-negotiations with existing or new distribution or collaboration partners;

? Our ability to remain in compliance with debt covenants;

? Our ability to obtain additional funds through equity or debt financings, strategic alliances with corporate partners and other sources, to the extent our current sources of funds are insufficient;

? Our abilities to successfully manage Anika S.r.l.'s operations from one with losses, into a company generating profits;

? The strength of the economies in which the Company operates or will operate, as well as the political stability of any of those geographic areas;

? Our abilities to effectively prioritize the many research and development projects underway;

? Our ability to obtain U.S. approval for the orthopedic and other product franchises of Anika S.r.l., including the timing and potential success of such efforts, and to expand sales of these products in the U.S., including the impact such efforts may have on our revenue;

? Our ability to satisfactorily resolve the potential dispute with Medtronic Xomed and Fidia Farmaceutici S.p.A; and

? Our ability to successfully defend the Company against lawsuits and claims, including the Genzyme lawsuit, and the uncertain financial impact such lawsuits and claims and related defense costs may have on the Company.

Furthermore, additional statements identified by words such as "will," "likely," "may," "believe," "expect," "anticipate," "intend," "seek," "designed," "develop," "would," "future," "can," "could," 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 for the year ended December 31, 2011. 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 Discussion 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, 2011 and in our press releases and other filings with the Securities and Exchange Commission. We undertake no obligation to publicly 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. (together with its subsidiaries, "Anika," the "Company," "we," "us," or "our") 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.

In October 2011, we received additional orders from Bausch & Lomb ("B&L") for ophthalmic products to be delivered in the first half of 2012. Effective January 1, 2012, the parties agreed to a new three year contract for Anika to continue to supply these products to B&L as a second supplier with additional committed volumes for 2012, and reduced annual commitments in 2013 and 2014. During the first half of 2012, we received all FDA approvals required to manufacture our aseptic products in our Bedford facility, including AmVisc and AmVisc Plus.

Anika S.r.l., our Italian subsidiary, has over 20 products currently commercialized, primarily in Europe. These products are all made from HA, and are based on two technologies: HYAFF, which is a solid form of HA, and ACP gel, an autocross-linked polymer of HA. Both technologies are protected by an extensive portfolio of patents. With the 2009 acquisition of Anika S.r.l., the Company is offering therapeutic products in the following areas:

                                                    Anika  Anika
                                                           S.r.l.
                Orthobiologics                        X      X
                Dermal
                  Advanced wound care                        X
                  Aesthetic dermatology               X
                Ophthalmic                            X
                Surgical
                  Anti-adhesion                       X      X
                  Ear, nose and throat care ("ENT")          X
                Veterinary                            X

During the first quarter of 2012, the Company entered into an agreement with a new distributor for Anika S.r.l.'s products in the Italian market, which consist of orthopedic and advanced wound care products. The transition to the new distributor resulted in a decline in Italian revenue during the first half of 2012 compared to the prior year. A significant portion of the Company's accounts receivable arising from product sales within Italy by Anika S.r.l. are due from public hospitals and other government-funded healthcare agencies. As of June 30, 2012, the Company's accounts receivable from all Italian customers totaled approximately $2.6 million of which public hospital and agency receivables were approximately $1.6 million.

Please see Management's Discussion and Analysis of Financial Condition and Results of Operations-Management Overview (Item 7) to the Company's Annual Report on Form 10-K for the year ended December 31, 2011, for a description of each of the above therapeutic areas, including the individual products.

Research and Development

Anika's research and development efforts primarily consist of the development of new medical applications for our HA-based technologies, the management of clinical trials and studies for certain product candidates, the preparation and processing of applications for regulatory approvals or clearances at all relevant stages of product development, and process development and scale-up manufacturing activities relative to our existing and new products. Our development focus includes products for new indications, chemically modified formulations of HA designed for longer residence time in the body, and other development activities. Our investment in R&D has been important over the years, and varies considerably depending on the number and size of clinical trials and studies underway. We anticipate that we will continue to commit significant resources to research and development, including clinical trials, in the future.

With the acquisition of Anika S.r.l., we have enhanced both our research and development capabilities and our pipeline of candidate products. Anika S.r.l. has research and development programs for new products including Hyalobone, a bone tissue filler; Hyalospine, an adhesion prevention gel for use after spinal surgery; and Hyalograft C Autograft ("HCA") for cartilage regeneration. The Company currently plans to commence a multi-country, multi-year clinical trial for HCA in September 2012.

Hyalograft C Autograft is classified as an advanced therapy medicinal product under the current European Union regulations, which require a centralized marketing authorization by the European Medicines Agency. Our first next generation osteoarthritis product is MONOVISC, a single-injection treatment product that uses a non-animal source HA. MONOVISC is also our first osteoarthritis product based on our proprietary cross-linked HA-technology. We received Conformité Européenne ("CE") Mark approval for the MONOVISC product in October 2007, and began sales in Europe during the second quarter of 2008, following a small, post-marketing clinical study. In the U.S., we filed the final module of our MONOVISC PMA containing the clinical data in December 2009. We were informed that there were deficiencies in our submissions through a deficiency/non-approvable letter, which is the FDA's mechanism for informing companies of deficiencies. We submitted additional data and analyses throughout 2010, and have been informed by the FDA that deficiencies remain. Acting on an option presented by the FDA to resolve the remaining open issues, Anika requested a review by the Orthopedic Advisory Panel. The FDA denied our request for an Orthopedic Advisory Panel review of the product, and we have now moved to the next level in the appeal process structure of the FDA. On June 12, 2012, the Company attended a supervisory appeal meeting with the Chief Scientific Officer of the Center for Devices and Radiological Health (CDRH), a branch of the FDA, to address concerns related to the non-approvable letter issued by the FDA for the Company's Monovisc PMA.The FDA requested additional information in order to pass judgement on the appeal. The Company has submitted that information, and was promised a timely review and decision by the FDA, although no specific response date was provided. We continue to believe in MONOVISC and the strength of our data, and that MONOVISC should receive FDA approval. Our second single-injection osteoarthritis product under development is CINGAL, which is based on our hyaluronic acid material with an added active therapeutic molecule to provide broad pain relief for a longer period of time. We filed a CE Mark application in the European Union for CINGAL in November 2011.

Contracts

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, Anika has been a contract manufacturer for B&L for over 20 years. Anika's Supply Agreement with B&L expired on December 31, 2010. Effective January 1, 2011, we entered into a non-exclusive, two year contract with B&L intended to transition the manufacture of AMVISC and AMVISC Plus to an alternative, formerly affiliated low-cost supplier to B&L. Effective January 1, 2012, the parties agreed to a new three year contract for Anika to continue to supply these products to B&L as a second supplier with committed annual volumes in 2012, and a lower committed volume for 2013 and 2014. B&L accounted for approximately 16%, or $9.8 million, of our product revenue for the year ended December 31, 2011, but is expected to be moderately lower in 2012 under the new contract.

Litigation and Other Legal Matters

On July 7, 2010, Genzyme Corporation ("Genzyme") filed a complaint against the Company in the United States District Court for the District of Massachusetts seeking unspecified damages and equitable relief. The Complaint alleges that the Company has infringed U.S. Patent No. 5,143,724 by manufacturing MONOVISC in the United States for sale outside the United States and will infringe U.S. Patent Nos. 5,143,724 and 5,399,351 if the Company begins manufacture and sale of MONOVISC in the United States. On August 30, 2010, the Company filed an answer denying liability. On April 26, 2011, Genzyme filed a motion to add its newly-issued U.S. Patent No. 7,931,030 to this litigation and also filed a separate new complaint in the District of Massachusetts alleging that the Company's manufacture and sale of MONOVISC in the United States will infringe that patent. On May 23, 2011, the Court entered orders permitting Genzyme to file its supplemental complaint adding its newly-issued U.S. Patent No. 7,931,030 to this litigation and requiring Genzyme to withdraw its separately filed complaint. On July 14, 2011, the Company filed an answer to the supplemental complaint, denying liability. On May 10, 2012, Genzyme dismissed its claims of infringement of U.S. Patent No. 5,399,351 and is no longer asserting that patent against the Company. The Company believes that neither MONOVISC, nor its manufacture, does or will infringe any valid and enforceable claim of the asserted patents. Management has assessed and determined that contingent losses related to this matter are not probable. Therefore, pursuant to ASC 450, Contingencies, an accrual has not been recorded for this loss contingency. Pursuant to the terms of the licensing and supply agreement entered into with Depuy Mitek, Inc. in December 2011, DePuy Mitek agreed to assume certain obligations of the Company related to this litigation. On August 3, 2012, a jury in the United States District Court for the District of Massachusetts held U.S. Patent No. 7,931,030 invalid as obvious and not infringed in litigation between Genzyme and Seikagaku Corporation, Zimmer Holdings Inc., Zimmer, Inc. and Zimmer U.S., Inc. concerning the Gel-One product.

In 2011, Merogel Injectable was withdrawn from the market due to a labeling error on the product's packaging. We are working with Medtronic to resolve a dispute related thereto. Medtronic has informed us that if we are unable to resolve this dispute, they will make claims against us. As this labeling error relates to conduct that initially occurred prior to our acquisition of Anika S.r.l. from Fidia Farmaceutici S.p.A., we have made claims against Fidia for indemnification for Anika's losses as well as any potential claims that may be brought by Medtronic. Fidia has informed us that it does not believe that it has liability for this matter, and has made claims against us for refusing to release the Anika shares that were put into escrow in connection with the original transaction. Management has assessed and determined that contingent losses related to this matter are not probable. Therefore, pursuant to ASC 450, Contingencies, an accrual has not been recorded for this loss contingency.

We are also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, we do not expect the resolution of these other legal proceedings to have a material adverse effect on our financial position, results of operations or cash flow.

Results of Operations

                                Three and Six Months Ended June 30, 2012 Compared to the Three and Six Months Ended June 30, 2011

                                                   Three Months Ended June 30,                                        Six Months Ended June 30,
                                      2012             2011          Inc/(Dec)       Inc/(Dec)          2012             2011          Inc/(Dec)       Inc/(Dec)
Product revenue                   $ 18,882,277     $ 15,414,681     $ 3,467,596            22.5 %   $ 32,495,605     $ 26,474,840     $ 6,020,765            22.7 %
Licensing, milestone and
contract revenue                       742,492          726,171          16,321             2.2 %      1,489,824        1,403,691          86,133             6.1 %
Total revenue                       19,624,769       16,140,852       3,483,917            21.6 %     33,985,429       27,878,531       6,106,898            21.9 %

Operating expenses:
Cost of product revenue              8,084,226        6,655,804       1,428,422            21.5 %     14,497,707       12,260,366       2,237,341            18.2 %
Research & development               1,298,170        1,574,155        (275,985 )         -17.5 %      2,831,273        3,106,820        (275,547 )          -8.9 %
Selling, general &
administrative                       4,108,503        4,233,316        (124,813 )          -2.9 %      7,459,519        8,277,090        (817,571 )          -9.9 %
Total operating expenses            13,490,899       12,463,275       1,027,624             8.2 %     24,788,499       23,644,276       1,144,223             4.8 %
Income from operations               6,133,870        3,677,577       2,456,293            66.8 %      9,196,930        4,234,255       4,962,675           117.2 %
Interest income (expense), net         (49,129 )        (45,281 )        (3,848 )           8.5 %       (100,332 )        (86,202 )       (14,130 )          16.4 %
Income before income taxes           6,084,741        3,632,296       2,452,445            67.5 %      9,096,598        4,148,053       4,948,545           119.3 %
Provision for income taxes           2,347,873        1,349,655         998,218            74.0 %      3,447,611        1,541,001       1,906,610           123.7 %
Net income                        $  3,736,868     $  2,282,641     $ 1,454,227            63.7 %   $  5,648,987     $  2,607,052     $ 3,041,935           116.7 %
Product gross margin                10,798,051        8,758,877       2,039,174            23.3 %     17,997,898       14,214,474       3,783,424            26.6 %
Product gross margin                        57 %             57 %                                             55 %             54 %

Product Revenue

Product revenue for the quarter ended June 30, 2012 was $18,882,277, an increase of 22%, as compared to $15,414,681 for the quarter ended June 30, 2011. Product revenue for the six months ended June 30, 2012 was $32,495,605, an increase of 23%, as compared to $26,474,840 for the six months ended June 30, 2011. The second quarter increase was primarily driven by another strong quarter for our orthobiologics franchise, as well as strong performances for the quarter in our ophthalmic and veterinary franchises.

The following table presents product revenue by group for the three and six-month periods ended June 30, 2012 and 2011:

                           Three Months Ended June 30,          Increase (Decrease)
                              2012               2011               $               %
        Orthobiologics   $    10,903,364     $  9,763,597     $    1,139,767        12 %
        Dermal                   155,735          799,605           (643,870 )     -81 %
        Ophthalmic             5,299,732        2,584,820          2,714,912       105 %
        Surgical               1,464,505        1,566,026           (101,521 )      -6 %
        Veterinary             1,058,941          700,633            358,308        51 %
                         $    18,882,277     $ 15,414,681     $    3,467,596        22 %

                            Six Months Ended June 30,           Increase (Decrease)
                                2012              2011                $             %
        Orthobiologics   $    21,020,209     $ 17,799,893     $    3,220,316        18 %
        Dermal                   657,051        1,388,759           (731,708 )     -53 %
        Ophthalmic             6,623,726        3,482,629          3,141,097        90 %
        Surgical               2,448,133        2,679,755           (231,622 )      -9 %
        Veterinary             1,746,486        1,123,804            622,682        55 %
                         $    32,495,605     $ 26,474,840     $    6,020,765        23 %

Orthobiologics

Our orthobiologics franchise consists of our joint health and orthopedic products. Overall, sales increased 12% and 18% for the three and six months ended June 30, 2012, respectively, compared to the same periods in 2011, primarily due to DePuy Mitek's continued market penetration efforts in the U.S. for ORTHOVISC, combined with strong year-over-year increases in international sales of our flagship ORTHOVISC product. The improvement in international product revenue was primarily due to increased sales in Europe and the Middle East, which was partially offset by a decrease in Anika S.r.l.'s orthopedic sales due to weakness in certain European economies, and reduced sales in Italy during our transition to a new distributor. As previously disclosed, we expect joint health product revenue to increase in 2012 as compared to 2011, both domestically and internationally.

Dermal

Our dermal franchise consist of advanced wound care products and aesthetic dermal fillers. Overall, dermal product sales decreased 81% and 53% for the three and six-month periods ended June 30, 2012, respectively, to $155,735 and $657,051, primarily due to lower sales in Italy and the U.S. for our advanced wound care products, and lower sales of our aesthetic product to our Korean distributor due to order timing. Anika's advanced wound care products treat skin wounds ranging from burns to diabetic ulcers. Leading products include Hyalograft 3D, Hyalofill and Hyalomatrix. The dermal products' market is crowded with many products, and our sales expectations in this area are modest for 2012.

Ophthalmic

Our ophthalmic franchise consists of HA viscoelastic products used in ophthalmic surgery. Ophthalmic product sales increased 105% and 90% to $5,299,732 and $6,623,726 for the three and six month-periods ended June 30, 2012, respectively, as compared to the same periods in 2011. The increases were primarily attributable to increased sales to B&L. As previously disclosed, we expect overall ophthalmic revenue to be slightly lower in 2012, compared to 2011, as B&L continues its transition to a formerly affiliated alternative supplier.

Surgical

Our surgical franchise consists of products used to prevent post-surgical adhesions in abdominal, spinal, and ear, nose and throat ("ENT") disorders. Sales of our surgical products decreased 6% and 9% to $1,464,505 and $2,448,133 for the three and six-month periods ended June 30, 2012, respectively, as compared to the same periods in 2011, due to order timing in the ENT area. Our anti-adhesion products include Hyalobarrier and INCERT. Hyalobarrier had increased sales in both Europe and Korea compared to the same periods last year. Sales of our ENT product sold through our worldwide partner, Medtronic, decreased slightly for both the three and six-month periods ended June 30, 2012, as compared to the same periods in the prior year, primarily due to order timing, which we expect to recover in future quarters.

Veterinary

Veterinary revenue from HYVISC increased 51% and 55% to $1,058,941 and $1,746,486 for the three and six-month periods ended June 30, 2012, respectively. The increases were primarily due to order timing by our distribution partner, Boehringer Ingelheim Vetmedica, and their expanded distribution into the Middle East. We expect overall HYVISC revenue for 2012 to be at a higher level compared to 2011's revenue for this product.

Licensing, milestone and contract revenue

Licensing, milestone and contract revenue for the three and six-month periods ended June 30, 2012 was $742,492 and $1,489,824, respectively, as compared to . . .