The increase in premises and equipmentexpense was also primarily related to the addition of the Grove City office.Other noninterest expense increased primarily due to professional fees andconversion costs totaling $221,000 in connection with the Bank`s previouslydisclosed proposed purchase of a branch office in Titusville, Pennsylvania andthe recognition of $180,000 of premium expense for the FDIC special assessmentas disclosed earlier this year. All of our target patientpopulation have been retreated, and we expect to complete this follow-on studyaround the end of the third quarter. “In fact, our commercialization partner, DePuyMitek, delivered a 34% year-over-year increase in unit growth to a recordquarterly level.” “During the quarter we completed the clinical segment of the U.S. pivotal trialfor MONOVISC, our single-injection osteoarthritis product,” Sherwood said.

“Weare now focused on completing the retreatment study for MONOVISC, which isdesigned to evaluate the benefit of repeat treatments. Sherwood, Ph.D., Anika`s presidentand chief executive officer. Management Commentary”We generated steady sequential and year-over-year top-line growth in the secondquarter of the year, driven by strong domestic sales of our flagship jointhealth product, ORTHOVISC,” said Charles H. The decrease in cash was due primarily tocapital expenditures on its Bedford facility, principal and interest payments onthe Company`s debt, and inventory build needed in preparation for relocatingsome of the equipment to the Bedford facility. OtherAnika`s cash and cash equivalents at June 30, 2009 were $39,550,000 comparedwith $43,194,000 at December 31, 2008. Net income for the first six months of 2009 increased 3% to$1,478,000, or $0.13 per diluted share, from $1,430,000, or $0.12 per dilutedshare, for the first six months of 2008. Net IncomeNet income for the second quarter of 2009 grew 18% to $956,000, or $0.08 perdiluted share, from $813,000, or $0.07 per diluted share, for the same periodlast year.

The decreases for both periods were primarily due to lowerpersonnel costs and marketing expenses, which more than offset the increase inoperating expenses related to the new manufacturing facility in Bedford. Selling, general and administrative expense for the second quarter of 2009decreased to $2,736,000 from $2,880,000 for the same period last year, and$5,771,000 for this year`s six month period versus $5,949,000 for the sameperiod last year. The increases forboth periods were primarily due to the higher expenses for the ongoing U.S.clinical trials for MONOVISC, the commencement of a post-marketing aestheticsdermatology study in people of color, manufacturing validation activities forour Bedford facility, as well as other continuing new product developmentprojects. Other Operating ExpensesResearch and development expense increased to $2,286,000 compared with$1,645,000 in the same period last year, and $4,481,000 for this year`s sixmonth period versus $3,153,000 for the same period last year.

The improvement inproduct gross margin was due to a combination of strong sales in the Company`sjoint health franchise as well as a favorable product mix. For the first six months of 2009, product grossmargin was 62% compared with 58% for the same period in 2008. Product Gross MarginProduct gross margin for the second quarter of 2009 increased to 62% from 57% inlast year`s second quarter. Total revenue for the second quarter of 2009 increased 5% to $9,524,000 from$9,060,000 in the second quarter of 2008. Total revenue for the first six monthsof 2009 increased 6% to $18,724,000 compared with $17,609,000 for the sameperiod in 2008. The increase in product revenue for the quarter andyear to date periods was primarily attributable to strong domestic sales of theCompany`s ORTHOVISC product line, as well as increases in MONOVISC sales.

Product revenue forthe first six months of 2009 grew 6% to $17,290,000 from $16,246,000 in thefirst six months of 2008. Key Second-Quarter HighlightsDuring the second quarter, Anika:* Completed the evaluation period of its pivotal clinical trial for MONOVISC? inthe United States; On track to complete PMA filing with FDA in 2009 * Signed distribution partner for aesthetic dermatology product in the UnitedStates * Delivered strong year-over-year and sequential sales growth in its jointhealth care franchiseRevenueAnika`s product revenue increased by 5% to $8,771,000 for the second quarter of2009, compared with $8,379,000 in the same period last year. (Nasdaq: ANIK), a leader in products for tissueprotection, healing and repair based on hyaluronic acid (“HA”) technology, todayreported financial results for the quarter ended June 30, 2009. Domestic Unit Sales of ORTHOVISC® Grow to Record Quarterly LevelJoint Health Product Revenues Climb 17%Net Income Increases 18%BEDFORD, Mass.–(Business Wire)–Anika Therapeutics, Inc. A limitation of theutility of free cash flow as a measure of financial performance is that it doesnot represent the total increase or decrease in the company`s cash balance forthe period.