Anika Therapeutics: Keep an Eye on the Chart

by Andrew Vaino


There’s pretty much no way I can top the performance of my pick Halozyme (HTI, up > 130% since first mention) last week, so I’ll just mention that I think the same magnitude jump will occur with Novadel (NVD, up ~30% since mention) within a year.

(Novadel is a BioHealth Investor Stock Pick)



Anika Therapeutics (ANIK) is a company that sells the biopolymer hyaluronic acid. In some ways, it could be considered the opposite of Halozyme---whose main focus is enzymes to degrade hyaluronic acid. If the idea of hedging existed in chemistry, this would be it. Anika recently took a 25% flyer on news their application to sell a “treatment” for wrinkles had been given conditional approval by the FDA. Anika expects to have the product on the market by mid-2007. The product is pretty cool. It’s an injectable form of hyaluronic acid that essentially fills in the tissue underneath the wrinkle leading to a smoother appearance.

Now, this isn’t a Dexy’s Midnight Runners type of company, though I’m certain Dexy’s is set for a new hit any day now. Anika sells a variety of other forms of hyaluronic acid, for example, Othovisc for treatment of knee pain in osteoarthritis patients, and Hyvisc for treatment of joint dysfunction. They also sell ophthalmic products based on hyaluronic acid. Sales for these products aren’t stellar, but the company is profitable.

In a demographically aging society that worships youth, being able to actually “treat” wrinkles is a fantastic market. Once Anika starts selling their “wrinkle cure”, earnings, the stock price, will jump. Other possible applications include enhancing lip size.

One of the major competitors of Anika’s product will be botox. Recall, there were some recent toxicity problems in certain Botox products: it’s worth bearing in mind that the “tox” of botox stands for “toxin”. Chemically, hyaluronic acid is a carbohydrate polymer. That is, it’s (literally!) sugar. I believe most people would rather inject sugar to get rid of their wrinkles than, well…poison!

Now, the day of the conditional approval announcement (November 28th) the stock jumped from $11.62 to above $15. The stock is now trading at just under $13. Technical traders won’t like this stock at all. Right now the stock is stochastically oversold. Short term MACD is bullish, and a couple of days of price increase will turn long term MACD bullish. To be fair, neither, MFI, OBV, or RSI look appealing right now, and, given the disparity in the volume on the stock’s rise compared to its recent decline, there will be substantial resistance around $14.50--15; this still leaves some comfortable profit, however.

So, while I don’t think ANIK is necessarily a great buy right now, I would definitely keep an eye on the chart.

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