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<SEC-DOCUMENT>0000912057-01-528770.txt : 20010816
<SEC-HEADER>0000912057-01-528770.hdr.sgml : 20010816
ACCESSION NUMBER:		0000912057-01-528770
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ANIKA THERAPEUTICS INC
		CENTRAL INDEX KEY:			0000898437
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				043145961
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14027
		FILM NUMBER:		1714282

	BUSINESS ADDRESS:	
		STREET 1:		236 WEST CUMMINGS PARK
		CITY:			WOBURN
		STATE:			MA
		ZIP:			01801
		BUSINESS PHONE:		6179326616

	MAIL ADDRESS:	
		STREET 1:		236 WEST CUMMINGS PARK
		CITY:			WOBURN
		STATE:			MA
		ZIP:			01801

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ANIKA RESEARCH INC
		DATE OF NAME CHANGE:	19930309
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2057054z10-q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<Page>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-Q

<Table>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

<Table>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER 000-21326

                            ------------------------

                            ANIKA THERAPEUTICS, INC.

             (Exact Name of Registrant as Specified in Its Charter)

<Table>
<S>                                            <C>
                MASSACHUSETTS                                   04-3145961
       (State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
       Incorporation or Organization)

           236 WEST CUMMINGS PARK,                                 01801
            WOBURN, MASSACHUSETTS                               (Zip Code)
  (Address of Principal Executive Offices)
</Table>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (781) 932-6616

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

                            ------------------------

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. Yes /X/  No / /

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.

    At August 6, 2001 there were issued and outstanding 9,934,280 shares of
Common Stock, par value $.01 per share.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<Page>
PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

                   ANIKA THERAPEUTICS, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                  (UNAUDITED)

<Table>
<Caption>
                                                                JUNE 30,     DECEMBER 31,
                                                                  2001           2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $  8,263,944   $ 8,265,936
  Marketable securities.....................................     7,421,823    10,039,849
  Accounts receivable, net of allowance for doubtful
    accounts of $124,000....................................     1,206,148     1,692,457
  Inventories...............................................     4,624,673     4,737,645
  Prepaid expenses and other current assets.................       475,067       612,890
                                                              ------------   -----------
    Total current assets....................................    21,991,655    25,348,777

  Property and equipment, at cost...........................     9,247,934     8,621,579
  Less: accumulated depreciation............................    (5,969,815)   (5,498,455)
                                                              ------------   -----------
                                                                 3,278,119     3,123,124
  Long term deposits........................................       118,660       124,600
  Notes receivable from officers............................       253,000       382,000
                                                              ------------   -----------
  Total assets..............................................  $ 25,641,434   $28,978,501
                                                              ============   ===========

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  1,651,609   $   870,502
  Accrued expenses..........................................     1,881,041     1,395,677
  Deferred revenue..........................................       237,657            --
                                                              ------------   -----------
    Total current liabilities...............................     3,770,307     2,266,179
                                                              ------------   -----------

Commitments and contingencies (Note 9)

Stockholders' equity:
  Redeemable convertible preferred stock, $.01 par value
    authorized 750,000 shares, no shares issued and
    outstanding.............................................            --            --
  Undesignated preferred stock, $.01 par value authorized
    1,250,000 shares, no shares issued and outstanding......            --            --
  Common stock, $.01 par value: authorized 30,000,000
    shares; Issued 9,991,943 shares in 2001 and 2000........        99,919        99,919
  Additional paid-in capital................................    31,640,232    31,735,660
  Treasury stock (at cost, 57,663 shares)...................      (279,756)     (279,756)
  Deferred compensation.....................................       (21,477)     (244,549)
  Accumulated deficit.......................................    (9,567,791)   (4,598,952)
                                                              ------------   -----------
    Total stockholders' equity..............................    21,871,127    26,712,322
                                                              ------------   -----------
Total liabilities and stockholder's equity..................  $ 25,641,434   $28,978,501
                                                              ============   ===========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       2
<Page>
                   ANIKA THERAPEUTICS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (UNAUDITED)

<Table>
<Caption>
                                                  THREE MONTHS ENDED          SIX MONTHS ENDED
                                                       JUNE 30,                   JUNE 30,
                                               ------------------------   ------------------------
                                                  2001          2000         2001          2000
                                               -----------   ----------   -----------   ----------
<S>                                            <C>           <C>          <C>           <C>
Product revenue..............................  $ 2,919,034   $3,668,765   $ 5,097,652   $6,289,598
Licensing revenue............................           --      100,000            --      200,000
                                               -----------   ----------   -----------   ----------
  Total revenue..............................    2,919,034    3,768,765     5,097,652    6,489,598
Cost of product revenue......................    2,109,049    2,422,617     4,077,997    3,655,585
                                               -----------   ----------   -----------   ----------
    Gross profit.............................      809,985    1,346,148     1,019,655    2,834,013
Operating expenses:
  Research & development.....................      921,325      907,227     2,269,195    2,220,964
  Selling, general & administrative..........    1,858,790      987,151     3,247,364    1,986,613
  Litigation settlement costs................      886,480           --       950,716           --
                                               -----------   ----------   -----------   ----------
Total operating expenses.....................    3,666,595    1,894,378     6,467,275    4,207,577

Loss from operations.........................   (2,856,610)    (548,230)   (5,447,620)  (1,373,564)
  Interest income............................      206,202      329,741       478,781      590,989
                                               -----------   ----------   -----------   ----------
  Net loss...................................  $(2,650,408)  $ (218,489)  $(4,968,839)  $ (782,575)
                                               ===========   ==========   ===========   ==========

Basic and diluted net loss per common
  share......................................  $     (0.27)  $    (0.02)  $     (0.50)  $    (0.08)
                                               ===========   ==========   ===========   ==========

Shares used for computing basic and diluted
  net loss per common share..................    9,934,280    9,918,842     9,934,280    9,847,476
                                               ===========   ==========   ===========   ==========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       3
<Page>
                   ANIKA THERAPEUTICS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                       FOR THE SIX MONTHS ENDED JUNE 30,

                                  (UNAUDITED)

<Table>
<Caption>
                                                                 2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
Cash flows from operating activities:
Net loss....................................................  $(4,968,839)  $  (782,575)
Adjustments to reconcile net loss to net cash used for
  operating activities:
  Depreciation and amortization.............................      471,360       444,945
  Amortization of deferred compensation.....................      127,645       193,039
  Forgiveness of debt on officer loans......................      129,000            --
  Changes in operating assets and liabilities:
    Accounts receivable.....................................      486,309        (9,177)
    Inventories.............................................      112,972    (1,740,712)
    Prepaid expenses and other current assets...............      137,823       235,312
    Accounts payable........................................      781,107       680,302
    Accrued expenses........................................      485,363      (136,048)
    Deferred revenue........................................      237,657       (32,537)
                                                              -----------   -----------
Net cash used for operating activities......................   (1,999,603)   (1,147,451)
                                                              -----------   -----------

Cash flows from investing activities:
  Proceeds from sale of held-to-maturity marketable
    securities..............................................   12,001,865            --
  Purchase of held-to-maturity marketable securities........   (9,383,839)       61,070
  Purchase of property and equipment........................     (626,355)     (380,296)
  Decrease in long term deposits............................        5,940            --
                                                              -----------   -----------
Net cash provided by (used for) investing activities........    1,997,611      (319,226)
                                                              -----------   -----------

Cash flows from financing activities:
  Proceeds from exercise of stock options and warrants......           --       495,402
                                                              -----------   -----------
Net cash provided by financing activities...................           --       495,402
                                                              -----------   -----------
Decrease in cash and cash equivalents.......................       (1,992)     (971,275)
Cash and cash equivalents at beginning of period............    8,265,936     6,440,705
                                                              -----------   -----------
Cash and cash equivalents at end of period..................  $ 8,263,944   $ 5,469,430
                                                              ===========   ===========
</Table>

    The accompanying notes are an integral part of these consolidated financial
statements.

                                       4
<Page>
                            ANIKA THERAPEUTICS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)

1. NATURE OF BUSINESS

    Anika Therapeutics, Inc. ("Anika" or the "Company") develops, manufactures
and commercializes therapeutic products and devices intended to promote the
protection and healing of bone, cartilage and soft tissue. 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. The Company's currently marketed products consist
of ORTHOVISC(R), which is an HA product used in the treatment of some forms of
osteoarthritis in humans, and HYVISC(R), which is an HA product used in the
treatment of equine osteoarthritis. ORTHOVISC(R) is currently approved for sale
and is being marketed in Canada, parts of Europe, Turkey, and Israel. In the
U.S., ORTHOVISC(R) is currently limited to investigational use. The Company
manufactures AMVISC(R) and AMVISC(R) Plus for Bausch & Lomb Surgical, which are
HA products used as viscoelastic supplements in ophthalmic surgery.
STAARVISC(R)II, an injectable ophthalmic viscoelastic, is produced for STAAR
Surgical Company.

2. BASIS OF PRESENTATION

    The accompanying consolidated financial statements have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, these consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of June 30, 2001, the results of operations for the three and six
months ended June 30, 2001 and 2000 and the cash flows for the six months ended
June 30, 2001 and 2000.

    The accompanying consolidated financial statements and related notes should
be read in conjunction with the Company's annual financial statements filed with
the Annual Report on Form 10-K for the year ended December 31, 2000, as the same
will be amended to reflect the restatement referred to in Note 10 herein. The
results of operations for the three and six months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2001. (See "Risk Factors and Certain Factors Affecting Future
Operating Results".)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

    The accompanying consolidated financial statements include the accounts of
Anika Therapeutics, Inc. and its wholly owned subsidiaries, Anika Securities
Corporation and Anika Therapeutics UK, Ltd. All intercompany transactions have
been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consists of cash and investments with original
maturities of 90 days or less.

                                       5
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MARKETABLE SECURITIES

    The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. Marketable securities consist of commercial paper with
maturities within twelve months of the balance sheet date. The Company
classifies these marketable securities as held to maturity, and accordingly they
are carried at amortized costs. Aggregate fair value, amortized cost and average
maturity for marketable securities held at June 30, 2001 and December 31, 2000
are as follows:

<Table>
<Caption>
                                                      JUNE 30, 2001
                                         ----------------------------------------
                                                          GROSS
                                          AMORTIZED     UNREALIZED
                                            COST       HOLDING GAIN   FAIR VALUE
                                         -----------   ------------   -----------
<S>                                      <C>           <C>            <C>
Commercial Paper (weighted average
  maturity of 2.1 months)..............  $ 7,421,823     $114,099     $ 7,535,922
                                         ===========     ========     ===========
</Table>

<Table>
<Caption>
                                                    DECEMBER 31, 2000
                                         ----------------------------------------
                                                          GROSS
                                          AMORTIZED     UNREALIZED
                                            COST       HOLDING GAIN   FAIR VALUE
                                         -----------   ------------   -----------
<S>                                      <C>           <C>            <C>
Commercial Paper (weighted average
  maturity of 3.4 months)..............  $10,039,849     $ 82,384     $10,122,233
                                         ===========     ========     ===========
</Table>

    During the six months ending June 30, 2001, securities classified as held to
maturity with an amortized cost aggregating $12,001,865, including interest and
realized gains of $310,020 matured.

FINANCIAL INSTRUMENTS

    SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS,
requires disclosure about fair value of financial instruments. Financial
instruments consist of cash equivalents, marketable securities, accounts
receivable, notes receivable from officers and accounts payable. The estimated
fair values of the Company's other financial instruments approximate their
carrying values.

REVENUE RECOGNITION

    Product revenue is derived from the sales of AMVISC(R) products, HYVISC(R)
and ORTHOVISC(R). ORTHOVISC(R) is sold through several distribution arrangements
as well as two outsource order processing arrangements ("logistic agents").
Product revenue is recognized upon shipment to the customer as long as there is
persuasive evidence of an arrangement, the sales price is fixed or determinable
and collection of the related receivable is probable. Amounts billed or
collected prior to recognition of revenue is classified as deferred revenue.
Sales of product through third party logistics agents in certain markets are
recognized in revenue upon shipment by the logistics agent to the customer.

                                       6
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

    Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated useful lives of the respective assets,
as follows:

<Table>
<S>                                       <C>
Machinery and equipment.................  3-10 years
Furniture and fixtures..................  3-5 years
                                          Shorter of estimated useful life or life
Leasehold improvements..................  of lease
</Table>

IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF

    The Company follows the provisions of SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
During the six months ended June 30, 2001, the Company did not identify any
impairments.

RESEARCH AND DEVELOPMENT

    Research and development costs are expensed as incurred.

INCOME TAXES

    The Company provides for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of temporary
differences between the financial reporting and tax bases of assets and
liabilities.

REPORTING COMPREHENSIVE INCOME

    SFAS No. 130, REPORTING COMPREHENSIVE INCOME establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. Comprehensive income is the total of net income and all
other non-owner changes in equity including such items as unrealized holding
gains/losses on securities, foreign currency translation adjustments and minimum
pension liability adjustments. The Company had no other items of comprehensive
income for the three and six months ended June 30, 2001 and 2000 except for its
reported net loss.

DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

    Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision-makers, in making decisions regarding how
to allocate resources and assess performance. The Company's chief
decision-making group consists of two individuals: the chief executive officer
and chief financial officer, and the president and chief operating officer.
Based on the criteria established by SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION, the Company has one reportable operating
segment, the results of which are disclosed in the accompanying financial

                                       7
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
statements. Substantially all of the operations and assets of the Company have
been derived from and are located in the United States.

    Revenues by geographic location in total and as a percentage of total
revenues are as follows for the three and six months ended June 30, 2001 and
2000, respectively:

<Table>
<Caption>
                                  THREE MONTHS ENDED JUNE 30,                              SIX MONTHS ENDED JUNE 30,
                       -------------------------------------------------       -------------------------------------------------
                                2001                      2000                          2001                      2000
                       -----------------------   -----------------------       -----------------------   -----------------------
                                    PERCENT OF                PERCENT OF                    PERCENT OF                PERCENT OF
GEOGRAPHIC LOCATION:    REVENUE      REVENUE      REVENUE      REVENUE          REVENUE      REVENUE      REVENUE      REVENUE
- --------------------   ----------   ----------   ----------   ----------       ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>              <C>          <C>          <C>          <C>
United States........  $1,955,793      67.00%    $2,531,665      67.17%        $3,396,275      66.62%    $4,732,998      72.93%
Middle East..........          --       0.00%       995,000      26.40%            11,950       0.23%     1,512,500      23.31%
Other/Europe.........     963,241      33.00%       242,100       6.42%         1,689,427      33.14%       244,100       3.76%
                       ----------     ------     ----------     ------         ----------     ------     ----------     ------
  Total..............  $2,919,034     100.00%    $3,768,765     100.00%        $5,097,652     100.00%    $6,489,598     100.00%
                       ==========     ======     ==========     ======         ==========     ======     ==========     ======
</Table>

    Since early 2001, sales of product for the Turkish market have been made to
a European-based entity and have accordingly been classified in the
"Other/Europe" category since that time.

<Table>
<Caption>
                                           PERCENT OF PRODUCT REVENUE    PERCENT OF PRODUCT REVENUE
                                           THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                           ---------------------------   ---------------------------
                                               2001           2000           2001           2000
                                           ------------   ------------   ------------   ------------
<S>                                        <C>            <C>            <C>            <C>
AMVISC(R):
Bausch & Lomb............................      50.9%          50.8%          56.9%          59.5%
ORTHOVISC(R):
Pharmaren AG (Biomeks in Year 2000)......      23.7%          27.1%          22.1%          21.6%
Zimmer...................................       0.0%          12.1%           0.0%           8.5%
Other....................................       9.0%           0.0%          11.5%           0.0%
                                               ----           ----           ----           ----
                                               83.6%          90.0%          90.5%          89.6%
                                               ====           ====           ====           ====
</Table>

4. EARNINGS PER SHARE

    The Company reports earnings per share in accordance with SFAS No. 128,
EARNINGS PER SHARE, which establishes standards for computing and presenting
earnings (loss) per share.

    Basic earnings per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income (loss) by the weighted
average number of common shares and dilutive potential common shares outstanding
during the period. Under the treasury stock method, the dilutive unexercised
options are assumed to be exercised at the beginning of the period or at
issuance, if later. The assumed proceeds are then used to purchase common shares
at the average market price during the period. For periods where the Company has
incurred a loss, dilutive net loss per share is equal to basic net loss per
share. Accordingly, the dilutive effect of outstanding options totaling 416,500
and 1,255,809, respectively at June 30, 2001 and 2000, are excluded from the
calculation of diluted weighted average shares outstanding because to include
them would have been antidilutive for the periods presented.

                                       8
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

5. INVENTORIES

    Inventories consist of the following:

<Table>
<Caption>
                                                       JUNE 30,    DECEMBER 31,
                                                         2001          2000
                                                      ----------   ------------
<S>                                                   <C>          <C>
Raw materials.......................................  $1,322,072    $1,386,504
Work in-process                                        2,822,997     3,169,358
Finished goods......................................     479,604       181,783
                                                      ----------    ----------
Total...............................................  $4,624,673    $4,737,645
                                                      ==========    ==========
</Table>

    Inventories are stated at the lower of cost or market, with cost being
determined using the first-in, first-out (FIFO) method. Work-in-process and
finished goods inventories include materials, labor, and manufacturing overhead.

6. PROPERTY & EQUIPMENT

    Property and equipment is stated at cost and consists of the following:

<Table>
<Caption>
                                                      JUNE 30,     DECEMBER 31,
                                                        2001           2000
                                                     -----------   ------------
<S>                                                  <C>           <C>
Machinery and equipment............................  $ 5,723,630   $ 6,071,812
Furniture and fixtures.............................      695,300       670,923
Leasehold improvements.............................    2,829,004     1,878,844
                                                     -----------   -----------
                                                       9,247,934     8,621,579
                                                     -----------   -----------
Less accumulated depreciation......................   (5,969,815)   (5,498,455)
                                                     -----------   -----------
Total..............................................  $ 3,278,119   $ 3,123,124
                                                     ===========   ===========
</Table>

    Costs of $835,000 for a clean room under construction had previously been
included in machinery and equipment. This amount was reclassified to leasehold
improvements upon its completion in the first quarter of Q1 2001.

7. NOTES RECEIVABLE FROM OFFICERS

    Notes receivable from officers of $253,000 consists of loans made to one
officer and two former officers. The loan amounts are generally due at the
earlier of the end of five years from the date of the note or at the termination
of the officers' employment. The notes receivable from the former officers are
secured by mortgages on their primary residences. Interest accrues at annual
rates between 5.54% to 6.22% and is payable monthly over the term of the loans.
In connection with the departure of two former officers in June 2001, notes
totaling $129,000 were forgiven. In addition, the maturity of a note in the
amount of $75,000 to the Company's former chief executive officer, which is
secured by a mortgage on his primary residence, was extended to the earlier of
the sale of such residence or March 31, 2002.

                                       9
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

8. LICENSING AND DISTRIBUTION AGREEMENT

    In July 2000, the Company entered into a seven-year supply agreement (the
"BLS Agreement") with Bausch & Lomb Surgical, a unit of Bausch & Lomb. Under the
terms of the BLS Agreement, effective January 1, 2001, the Company became
Bausch & Lomb's exclusive provider of AMVISC(R) and AMVISC(R) Plus, ophthalmic
viscoelastic products, in the U.S. and international markets. The BLS Agreement
expires December 31, 2007, superceding an existing supply contract with
Bausch & Lomb Surgical that was set to expire December 31, 2001. The BLS
Agreement is subject to early termination and/or reversion to a non-exclusive
basis under certain circumstances. The BLS Agreement lifts contractual
restrictions on the Company's sales of certain ophthalmic products to other
companies, subject to payment of royalties to Bausch & Lomb by the Company. In
exchange, the Company agreed to a reduction in unit selling prices effective
April 1, 2000, and the elimination of minimum unit purchase obligations by BLS.
Under the terms of the agreement, the price for units sold in a calendar year is
dependent on total unit volume of sales of certain ophthalmic products during
the year. Accordingly, unit prices for sales occurring in the six months ended
June 30, 2001 are subject to possible retroactive price adjustments when the
annual unit volume becomes known. In accordance with the Company's revenue
recognition policy, any amounts received in excess of revenue recognized is
recorded as deferred revenue. At June 30, 2001, the deferred revenue amounted to
$237,657.

9. LEGAL MATTERS

    SECURITIES AND EXCHANGE COMMISSION INVESTIGATION.  The SEC has issued a
formal order of investigation and has required the Company to provide
information in connection with certain revenue recognition matters. The Company
has been cooperating fully. These matters, relating to the Company's historical
accounting for and disclosures concerning sales of ORTHOVISC(R) under a
long-term supply and distribution agreement with Zimmer, were also the subject
of the Company's March 15, 2000 disclosure concerning an informal SEC inquiry
and the restatement of results for 1998 and the first three quarters of 1999. On
August 14, 2001, as a result of the SEC's on-going investigation, the Company,
in conjunction with its independent auditors, determined to again restate its
financial results for the fourth quarter of 1998 and the first quarter of 1999
(as discussed in Note 10 herein). The Company is not in a position to predict
the probable outcome of this matter or its potential impact on the Company's
business or operations.

    PUTATIVE CLASS ACTION COMPLAINTS.  Three putative class action complaints
have been filed against the Company, J. Melville Engle, the Company's former
chief executive officer, and Sean Moran, the Company's former chief financial
officer, in the United States District Court for the District of Massachusetts
(the "Court") on behalf of all purchasers of the Company's shares between
April 15, 1998 and May 30, 2000 (the "Class"). The first, filed on or about
June 8, 2000, is captioned CASAZZA, ET AL. V. ANIKA THERAPEUTICS, INC., J.
MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11127-WGY. The second, filed
on or about June 26, 2000, is captioned NEMETH-COSLETT, ET AL. V. ANIKA
THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action
No. 00-11257-WGY. The third, filed on or about August 2, 2000, is captioned
ROCKEFELLER, ET AL. V. ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN
MORAN, Civil Action No. 00-11540-WGY. Each of these putative class action
complaints encompasses the same class period and covers almost identical
allegations. On or about August 7, 2000, David and Vivian West, alleged members
of the Class, filed a motion to appoint themselves lead plaintiffs, and their
law firm, lead counsel; as well as a motion for consolidation of the above
cases. On or about September 13, 2000, the Court granted David and Vivian West's
motions, consolidated the cases and recaptioned the

                                       10
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

9. LEGAL MATTERS (CONTINUED)
case IN RE ANIKA THERAPEUTICS, INC. SECURITIES LITIGATION, Civil Action
No. 00-11127-WGY. On or about October 30, 2000, lead plaintiffs filed a
consolidated amended complaint. The complaint alleges that the Company and the
individual defendants violated the federal securities laws by, INTER ALIA,
making material misrepresentations and omissions in certain public disclosures
during the period between April 15, 1998 and May 30, 2000. The alleged
misrepresentations and omissions relate to the Company's historical revenue
recognition policies and its restatement of revenues for 1998 and the first
three quarters of 1999. The complaint seeks an unspecified amount of monetary
damages, costs and expenses, and equitable and/or injunctive relief to restrict
the defendants from disposing of various assets in order to assure adequate
funds are available for the claimed damages. On December 14, 2000, the Company,
Mr. Engle and Mr. Moran each filed motions to dismiss the consolidated amended
complaint. On January 29, 2001, plaintiffs' counsel filed oppositions to
defendants' motions to dismiss. The Defendants filed reply briefs on
February 12, 2001.

    Before the Court decided the motions to dismiss, the parties reached
agreement on the terms of a potential settlement of the action. Accordingly, the
parties negotiated and entered into a Memorandum of Understanding dated
March 8, 2001 and the parties negotiated and entered into a Stipulation and
Agreement of Settlement, Compromise and Release ("Stipulation") dated May 25,
2001, which contains the terms of a settlement of the action, subject to
approval by the Court.

    The Stipulation was submitted to the Court and, on May 31, 2001, the Court
entered an Order of Preliminary Approval in connection with the settlement
proceedings. After preliminary approval, plaintiff's counsel sent notice of the
proposed settlement to the Class, and the Company paid $1.25 million into a
settlement fund that may, among other things, be used to pay authorized members
of the Class. The Company entered into an agreement with its directors and
officers liability insurer, under which the insurer paid the Company $400,000 in
exchange for a release of the insurer's obligations under the policy, which
policy's term was from December 1, 1999 to November 30, 2000 and which time
period covers the allegations made in the securities class action litigation as
well as the SEC investigation. The Company applied the $400,000 to the
settlement amount in the shareholder class action lawsuit.

    In the Stipulation, the parties requested that the Court have a Final
Settlement Hearing at which, among other things, (i) the Court would certify,
for purposes of settlement, the Class, and certify, for purposes of settlement,
the Action as a class action; (ii) the Court would finally approve the
settlement as provided for in the Stipulation, including the release of all
claims by Class members against the Defendants; and (iii) the Court would enter
final judgment dismissing with prejudice all claims of the plaintiffs and the
Class against the Defendants. The Court originally scheduled the Final
Settlement Hearing for August 8, 2001. Pursuant to the joint request of counsel
for the plaintiffs and counsel for the Company, the hearing was extended because
of the restatement of financial results for certain prior periods as discussed
in Note 10 herein. The Final Settlement Hearing has not yet been rescheduled.
The Court has not yet finally approved the Settlement. The Company is not able
to provide any assurances that: (i) the proposed settlement will be finally
approved by the Court; or (ii) the terms of any final settlement approved by the
Court will not differ from the terms of the Stipulation.

                                       11
<Page>
                            ANIKA THERAPEUTICS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

10. RESTATEMENT

    On August 14, 2001, as a result of the SEC's ongoing investigation, the
Company announced the restatement of its financial results for the fourth
quarter of 1998 and the first quarter of 1999. This restatement involves the
timing of recognition of revenues for the sale of ORTHOVISC(R) to Zimmer,
formerly an ORTHOVISC(R) distributor. The Company and its independent auditors
determined that certain revenue previously recognized in the fourth quarter of
1998 should have been recognized in the first quarter of 1999. Accordingly,
revenue for the fourth quarter of 1998 is reduced by $343,000 to $3,060,000 and
revenue for the first quarter of 1999 is increased by the same amount to
$3,679,000. The impact on earnings in the fourth quarter of 1998 is a reduction
of $119,000, or $.01 per share, to income of $489,000. The impact on earnings in
the first quarter of 1999 is an increase of $119,000, or $.01 per share, to a
loss of $3,050,000. The restated revenue for the years ended December 31, 1998
and 1999 is $12,930,000 and $13,826,000, respectively. The restated results for
the years ended December 31, 1998 and 1999 include, respectively, net income of
$3,633,000, or $.33 per share, and a net loss of $2,377,000, or $.23 per share.
The Company expects to file an amended Form 10-K for the year ended
December 31, 2000.

                                       12
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF ANIKA THERAPEUTICS, INC. AND THE NOTES THERETO AS WELL
AS THE "RISK FACTORS AND CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS"
HEREIN.

    The Company derives a substantial portion of its revenue from the sale of
AMVISC(R) and AMVISC(R)Plus to Bausch & Lomb Surgical. For the three months
ended June 30, 2001 and 2000, AMVISC sales accounted for 50.9% and 50.8% of
product revenue, respectively. For the six months ended June 30, 2001 and 2000,
AMVISC sales accounted for 56.9% and 59.5% of product revenue, respectively.

RESULTS OF OPERATIONS

    PRODUCT REVENUE.  Product revenue for the three months ended June 30, 2001
was $2,919,034, a decrease of $749,731, or 20%, from $3,668,765 recorded in the
corresponding quarter of 2000. Product revenue associated with ORTHOVISC(R)
decreased by $716,317 in the second quarter of 2001 compared to the second
quarter of 2000. Product revenue for the six months ended June 30, 2001 was
$5,097,652, a decrease of $1,191,946, or 19%, over the $6,289,598 recorded in
the comparable period of the prior year. The decrease was primarily attributable
to lower ORTHOVISC(R) sales of $589,006 and lower AMVISC(R) product sales of
$749,443. The Company believes that lower ORTHOVISC(R) sales are attributable to
reduced sales in Europe and Canada as a result of the termination of the
ORTHOVISC(R) distribution agreement with Zimmer, as well as reduced selling
prices to another customer. The reduced selling price was negotiated to meet
competitive market conditions and is not expected to result in increased volume
to offset the price reduction in future periods. AMVISC(R) product sales were
lower compared with 2000 as a result of lower unit prices under the BLS
Agreement, effective April 1, 2000, partially offset by higher unit volumes.

    LICENSING REVENUE.  There was no licensing revenue for the three and six
months ended June 30, 2001 due to the termination of the ORTHOVISC distribution
agreement on November 10, 2000. For the three and six months ended June 30,
2000, licensing revenues of $100,000 and $200,000, respectively, represented the
annual amortization of certain milestone payments received in 1997 and 1998 in
connection with terminated ORTHOVISC(R) agreement with Zimmer.

    GROSS PROFIT.  Gross profit for the three months ended June 30, 2001 was
$809,985, a decrease of $536,163, or 40%, from $1,346,148 recorded in the prior
year corresponding quarter. Gross profit for the six months ended June 30, 2001
was $1,019,655 compared with $2,834,013 for the first six months of 2000, a
decrease of 36%. These decreases reflect lower sales, as well as lower prices
for ORTHOVISC(R) sales to the Company's distributor for the Turkish market, as
well as the absence of amortized license fee revenue included in the prior year
period. In addition, the first quarter of 2001 reflects lower unit prices for
the Company's sales to Bausch and Lomb. Further, costs of sales for the three
and six months ending June 30, 2001 includes approximately $500,000 and
$1,200,000, respectively, attributable to underutilization of manufacturing
capacity resulting from the Company's efforts to reduce work-in-process and
other inventory. The Company expects to continue to experience the impacts of
this underutilization through 2001.

    RESEARCH & DEVELOPMENT.  Research and development expenses for the three
months ended June 30, 2001 increased by $14,098 to $921,325 from $907,227
recorded in the corresponding quarter of the prior year. Research and
development expenses for the six months ended June 30, 2001 increased $48,231,
or 2%, compared to the same period in 2000. Research and development was
$426,545 lower in the second quarter of 2001 compared with the first quarter of
2001. The first quarter included approximately $700,000 in startup costs
associated with the new ORTHOVISC(R) Phase III clinical

                                       13
<Page>
trial and development costs for INCERT(R). Enrollment of patients in the
ORTHOVISC(R) clinical trial has been slower than the Company had anticipated and
this will delay completion of the trial. Costs for INCERT(R) in the second
quarter were substantially lower than in the first quarter as the Company is
evaluating various development options for this product and its underlying
technology, including reconsideration of the Company's previous plans to launch
a clinical trial in 2001.

    SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses for the three months ended June 30, 2001 increased by $871,639, or 88%,
to $1,858,790 from $987,151 in the corresponding quarter of the prior year. For
the six months ended June 30, 2001, selling, general and administrative expenses
increased $1,260,751 or 63% compared to the same period in the prior year. The
increase was largely attributable to accrued separation costs of $515,000
related to management changes implemented in June 2001. Costs of the management
separation include the forgiveness of officer loans totaling $129,000. For the
six-month period, professional fees represent approximately $138,000 of the
increase in 2001 as compared with 2000.

    LITIGATION SETTLEMENT COSTS.  Litigation settlement costs for the three and
six months ended June 30, 2001 includes a charge of $850,000, which is the
amount of the $1.25 million settlement amount contributed by the Company, in
settlement fees, and $36,480 in professional fees related to the putative class
action suit. For the six months ended June 30, 2001, professional fees related
to the putative class action suit were $100,716. The settlement is subject to
final court approval. See Note 9.

    NET INTEREST INCOME.  The Company's net interest income decreased by
$123,539 to $206,202 for the three months ended June 2001 from $329,741 in the
corresponding quarter of the prior year. Net interest income for the six months
ended June 30, 2001 was $478,781 compared with $590,989 for the same period in
2000. The decrease is attributable to reduced average cash balances and lower
interest rates during the first six months of 2001.

LIQUIDITY AND CAPITAL RESOURCES

    At June 30, 2001, the Company had cash, cash equivalents and short term
investments of $15.7 million and working capital of $18.2 million versus cash,
cash equivalents and short term investments of $18.3 million and working capital
of $23.1 million at December 31, 2000. Investments at June 30, 2001 consist of
commercial paper of various maturities of less than one year.

    During the first half of 2001, the Company utilized $1,999,603 of cash in
operations, primarily related to the net loss, including the payment of $850,000
to the settlement fund in connection with the pending shareholder litigation
settlement, and partially offset by the decrease in accounts receivable, and an
increase in accounts payable and accrued expenses.

    Capital expenditures were $626,355 during the six month period ended
June 30, 2001. Approximately $340,000 of these expenditures was used for the
construction of certain pilot laboratory projects, as previously disclosed.
Aggregate capital investments for 2001 are expected to be approximately
$1 million.

    As described in financial statement Note 10--"Legal Matters", three putative
class action lawsuits have been filed against the Company and former officers of
the Company. These lawsuits have been consolidated. The parties negotiated and
entered into a Memorandum of Understanding dated March 8, 2001, and the parties
negotiated and entered into a Stipulation and Agreement of Settlement,
Compromise and Release ("Stipulation") dated May 25, 2001, which contains the
terms of a settlement of the action, subject to approval by the Court.

    The Stipulation was submitted to the Court and, on May 31, 2001, the Court
entered an Order of Preliminary Approval in connection with the settlement
proceedings. After preliminary approval, plaintiff's counsel sent notice of the
proposed settlement to the Class, and the Company paid

                                       14
<Page>
$1.25 million into a settlement fund that may, among other things, be used to
pay authorized members of the Class. The Company entered into an agreement with
its directors and officers liability insurer, under which the insurer paid the
Company $400,000 in exchange for a release of the insurer's obligations under
the policy, which policy's term was from December 1, 1999 to November 30, 2000
and which time period covers the allegations made in the securities class action
litigation as well as the SEC investigation. The Company applied the $400,000 to
the settlement amount in the shareholder class action lawsuit.

    In the Stipulation, the parties requested that the Court have a Final
Settlement Hearing at which, among other things, (i) the Court would certify,
for purposes of settlement, the Class, and certify, for purposes of settlement,
the Action as a class action; (ii) the Court would finally approve the
settlement as provided for in the Stipulation, including the release of all
claims by Class members against the Defendants; and (iii) the Court would enter
final judgment dismissing with prejudice all claims of the plaintiffs and the
Class against the Defendants. The Court originally scheduled the Final
Settlement Hearing for August 8, 2001. Pursuant to the joint request of counsel
for the plaintiffs and counsel for the Company, the hearing was extended because
of the restatement of financial results for certain prior periods as discussed
in Note 10 herein. The Final Settlement Hearing has not yet been rescheduled.
The Court has not yet finally approved the Settlement. The Company is not able
to provide any assurances that: (i) the proposed settlement will be finally
approved by the Court; or (ii) the terms of any final settlement approved by the
Court will not differ from the terms of the Stipulation.

    The Company's future capital requirements and the adequacy of available
funds will depend on numerous factors, including: market acceptance of its
existing and future products; the successful commercialization of products in
development; progress in its product development efforts; the magnitude and
scope of such efforts; progress with preclinical studies; clinical trials and
product clearances by the FDA and other agencies; the cost, and timing
requirements of its efforts to expand its manufacturing capabilities; the cost
of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights; defending, negotiating, and settling legal
matters; competing technological and market developments; and the development of
strategic alliances for the marketing of certain of its products. There can be
no assurance that the Company will record profits in future periods. See "Risk
Factors and Certain Other Factors Affecting Future Operating Results--History of
Losses; Uncertainty of Future Profitability" for other factors which could
affect the Company's future capital requirements and the adequacy of available
funds.

                                       15
<Page>
RISK FACTORS AND CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

    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. THE WORDS "BELIEVE," "EXPECT,"
"ANTICIPATE," "INTEND," "WILL", "DEVELOP", "WOULD", FUTURE", "CAN", "MAY",
"COULD" AND OTHER EXPRESSIONS, WHICH ARE PREDICTIONS OF, OR INDICATE FUTURE
EVENTS AND TRENDS AND WHICH DO NOT RELATE TO HISTORICAL MATTERS, IDENTIFY
FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS, INCLUDING BUT NOT LIMITED TO STATEMENTS
REGARDING: FUTURE SALES AND PRODUCT REVENUES, NEGOTIATIONS WITH POTENTIAL AND
EXISTING CUSTOMERS, POSSIBLE DEVELOPMENT OF NEW PRODUCTS, POSSIBLE STRATEGIC
INVESTMENTS, POSSIBLE REGULATORY APPROVAL OF NEW OR POTENTIAL PRODUCTS, THE
IMPACT OF THE TERMINATION OF THE ORTHOVISC(R) DISTRIBUTION AGREEMENT WITH
ZIMMER, ACQUISITION OF NEW DISTRIBUTION AND COLLABORATION PARTNERS, PERFORMANCE
UNDER THE BLS AGREEMENT AND THE OUTCOME, AND IMPACT OF THE SEC INVESTIGATION AND
PAYMENT OF EXPENSES CONCERNING THE PUTATIVE CLASS ACTION COMPLAINT. THE
COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENT COULD DIFFER MATERIALLY
FROM ANTICIPATED RESULTS, PERFORMANCE OR ACHIEVEMENT, EXPRESSED OR IMPLIED IN
SUCH FORWARD-LOOKING STATEMENTS. IN PARTICULAR, THERE CAN BE NO ASSURANCE THAT
THE COMPANY WILL: (I) BEGIN CLINICAL TRIALS OF INCERT(R)-S; (II) SUCCESSFULLY
COMPLETE CLINICAL TRIALS OF ORTHOVISC(R) OR INCERT(R)-S; (III) OBTAIN CLINICAL
DATA TO SUPPORT A PRE-MARKET APPROVAL APPLICATION AND/OR FDA APPROVAL OF
ORTHOVISC(R) OR INCERT(R)-S; (IV) RECEIVE FDA OR OTHER REGULATORY APPROVALS OF
ORTHOVISC(R) OR INCERT(R)-S OR THAT SUCH APPROVALS WILL BE OBTAINED IN A TIMELY
MANNER OR WITHOUT THE NEED FOR ADDITIONAL CLINICAL TRIALS. THERE CAN BE NO
ASSURANCE THAT THE TERMINATION OF THE DISTRIBUTION AGREEMENT WITH ZIMMER WILL
NOT CONTINUE TO HAVE A MATERIAL ADVERSE IMPACT ON SALES OR DISTRIBUTION OF
ORTHOVISC(R) OR THAT THE COMPANY WILL BE ABLE TO IDENTIFY OR ENGAGE APPROPRIATE
DISTRIBUTION OR COLLABORATION PARTNERS FOR SALES OF ORTHOVISC(R) OR INCERT(R)-S
OR EFFECTIVELY TRANSITION THE DISTRIBUTION OF ORTHOVISC(R) OR INCERT(R)-S TO
SUCH DISTRIBUTORS, IF ENGAGED. IN ADDITION, THERE CAN BE NO ASSURANCE THAT ANY
DELAY IN RECEIVING ANY SUCH APPROVALS WILL NOT ADVERSELY EFFECT THE COMPANY'S
COMPETITIVE POSITION OR, IF COMPLETED, MEANINGFUL SALES OF THE PRODUCTS WILL BE
ACHIEVED. THERE CAN BE NO ASSURANCE THAT THE COMPANY'S INVENTORY REDUCTION OR
OTHER EFFORTS WILL RESULT IN IMPROVED GROSS MARGINS DURING 2001 OR EVER. THERE
CAN BE NO ASSURANCES THAT: (I) THE COMPANY WILL ACHIEVE INCREMENTAL SALES OF ITS
OPHTHALMIC PRODUCTS TO BAUSCH & LOMB SURGICAL AND/OR OTHER COMPANIES SUFFICIENT
TO OFFSET THE EFFECTS OF THE PRICE REDUCTION AND ROYALTIES TO BE PAID TO
BAUSCH & LOMB SURGICAL OR (II) BAUSCH & LOMB SURGICAL WILL MAKE PURCHASES IN
ACCORDANCE WITH ITS FORECASTS. FURTHERMORE, THE COMPANY CANNOT MAKE ANY
ASSURANCE THAT THE CURRENT LEVELS OF SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES WILL NOT CONTINUE. ADDITIONAL FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE ARE SET FORTH HEREIN AND IN THE "MANAGEMENT'S DISCUSSIONS AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" BEGINNING ON PAGE 11
OF THIS QUARTERLY REPORT ON FORM 10-Q AS WELL AS THOSE DESCRIBED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, AS IT WILL BE AMENDED, ITS QUARTERLY
REPORT ON FORM 10-Q, AND THE COMPANY'S PRESS RELEASES AND OTHER FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OF OTHERWISE.

    COMPREHENSIVE GOVERNMENT REGULATION; NO ASSURANCE OF FDA APPROVAL.  The
Company's products, product development activities, manufacturing processes, and
current and future sales and marketing are subject to extensive and rigorous
regulation by the Food & Drug Administration (FDA) and comparable agencies in
foreign countries. In the United States, the FDA regulates the marketing,
advertising, promotion, and distribution of medical devices, drugs, and
biologics, as well as testing, safety, effectiveness, clearance, approval,
manufacturing, labeling, packing, storage, record keeping, and reporting
activities for such products.

    Medical products regulated by the FDA are generally classified as medical
devices and/or drugs and/or biologics. Product development and approval within
the FDA framework takes a number of years and involves the expenditure of
substantial resources. There can be no assurance that the FDA will grant
approval for the Company's new products on a timely basis if at all, or that FDA
review will

                                       16
<Page>
not involve delays that will adversely affect the Company's ability to
commercialize additional products or expand permitted uses of existing products,
or that the regulatory framework will not change, or that additional regulation
will not arise at any stage of the Company's product development process which
may adversely affect approval of or delay an application or require additional
expenditures by the Company. In the event the Company's future products are
regulated as human drugs or biologics, the FDA's review process of such products
typically would be substantially longer and more expensive than the review
process to which they are currently subject as devices.

    The Company's ORTHOVISC(R) product will have to meet regulatory requirements
for a Class III device as determined by the FDA. Class III devices are those
that generally must receive pre-market approval (PMA) by the FDA (e.g.
life-sustaining, life-supporting and implantable or new devices which have not
been found to be substantially equivalent to legally marketed devices) and
require clinical testing to ensure safety and effectiveness and FDA approval
prior to marketing and distribution. In order for the Company to commercially
distribute ORTHOVISC(R) in the U.S., it must obtain a PMA. The PMA process can
be expensive, uncertain and lengthy. A number of devices for which PMAs have
been sought have never been approved for marketing. The review of an application
often occurs over a protracted time period, potentially taking two years or more
from the filing date to complete. The Company submitted a PMA application for
ORTHOVISC(R) in December 1997. In October 1998, the Company was notified by the
FDA that the Company's PMA application for ORTHOVISC(R) was not approvable and
that additional clinical data would be required to demonstrate the effectiveness
of ORTHOVISC(R). The Company submitted an Investigational Device Exemption (IDE)
to the FDA in February 1999 and received approval in late March 1999 to commence
a second Phase III clinical study. The Company received initial results from the
Phase III clinical trial in late May 2000 that the Company determined did not
show sufficient efficacy to support the filing of a PMA application. The Company
has evaluated available information and announced its intention to pursue
further clinical trials. In February 2001, the Company commenced another Phase
III clinical trial of ORTHOVISC(R). The trial is being conducted in up to 20
centers in the U.S. and Canada, with 360 patients expected to be enrolled, and
with evaluation over a six-month period following treatment. To date, enrollment
of patients in the clinical trial has been slower than the Company had
anticipated which will delay completion of the trial. There can be no assurance
that: (i) any additional clinical data will support the efficacy of
ORTHOVISC(R); (ii) the Company will complete any additional clinical trials of
ORTHOVISC(R); (iii) the Company will be able to successfully complete the FDA
approval process; or (iv) additional clinical trials will support a PMA
application and/or FDA approval in a timely manner or at all. There also can be
no assurance that any delay in receiving FDA approvals will not continue to
adversely affect the Company's competitive position. (See "Competition")
Furthermore, even if the Company were to receive a PMA approval: (i) the
approval may include significant limitations on the indications and other claims
sought for use for which the product may be marketed; (ii) the approval may
include other significant conditions to approval such as post-market testing,
tracking, or surveillance requirements; and (iii) the Company may not be able to
achieve meaningful sales of ORTHOVISC(R) in the U.S.

    The Company's HA product under development, INCERT(R)-S, has not obtained
regulatory approval in the U.S. for commercial marketing and sale. The Company
believes that INCERT(R)-S will be regulated as a Class III medical device and
will require a PMA prior to marketing. The Company has received IDE approval
from the FDA and is evaluating product development activities, including the
prospects for conducting clinical trials for INCERT(R)-S. There can be no
assurance that: (i) the Company will begin or successfully complete clinical
trials of INCERT(R)-S; (ii) the clinical data will support the efficacy of
INCERT(R)-S; (iii) it will be able to successfully complete the FDA approval
process; or (iv) additional clinical trials will support a PMA application
and/or FDA approval in a timely manner or at all. There also can be no assurance
that any delay in receiving FDA approvals will not adversely affect the
Company's competitive position. Furthermore, even if the Company does receive
FDA approval: (i) the approval may include significant limitations on the
indications and other

                                       17
<Page>
claims sought for use for which the product may be marketed; (ii) the approval
may include other significant conditions of approval such as post-market
testing, tracking, or surveillance requirements; and /or (iii) meaningful sales
of INCERT(R)-S may never be achieved.

    Orquest has not received regulatory approval in the U.S. for the commercial
marketing and sale of OSSIGEL(R). The Company believes that OSSIGEL(R) will be
regulated as a Class III medical device with the FDA's Center of Biologics
Research and Review as the lead review center and will require a PMA prior to
marketing. There can be no assurance that clinical trials of OSSIGEL(R) will
demonstrate that OSSIGEL(R) is safe and effective or otherwise satisfies FDA
requirements.

    Once obtained, marketing approval can be withdrawn by the FDA for a number
of reasons, including, among other things, the failure to comply with regulatory
standards, or the occurrence of unforeseen problems following initial approval.
The Company may be required to make further filings with the FDA under certain
circumstances. The FDA's regulations require a PMA supplement for certain
changes if they affect the safety and effectiveness of an approved device,
including, but not limited to, new indications for use, labeling changes, the
use of a different facility to manufacture, process or package the device, and
changes in performance or design specifications. Changes in manufacturing that
effect safety and effectiveness may be deemed approved after a 30-day notice
unless the FDA requests a supplement. Failure by the Company to receive approval
of a PMA supplement regarding the use of a different manufacturing facility or
any other change affecting the safety or effectiveness of an approved device on
a timely basis, or at all, may have a material adverse effect on the Company's
business, financial condition, and results of operations. The FDA could also
limit or prevent the manufacture or distribution of the Company's products and
has the power to require the recall of such products. Significant delay or cost
in obtaining, or failure to obtain FDA approval to market products, any FDA
limitations on the use of the Company's products, or any withdrawal or
suspension of approval or rescission of approval by the FDA could have a
material adverse effect on the Company's business, financial condition, and
results of operations.

    In addition, all FDA approved or cleared products manufactured by the
Company must be manufactured in compliance with FDA's Good Manufacturing
Practices (GMP) regulations and, for medical devices, FDA's Good Manufacturing
Practices/Quality System Regulations (GMP/QSR). Ongoing compliance with GMP/QSR
and other applicable regulatory requirements is enforced through periodic
inspection by state and federal agencies, including the FDA. The FDA may inspect
the Company and its facilities from time to time to determine whether the
Company is in compliance with regulations relating to medical device and
manufacturing companies, including regulations concerning manufacturing,
testing, quality control and product labeling practices. There can be no
assurance that the Company will be able to comply with current or future FDA
requirements applicable to the manufacture of products.

    FDA regulations depend heavily on administrative interpretation and there
can be no assurance that the future interpretations made by the FDA or other
regulatory bodies, with possible retroactive effect, will not adversely affect
the Company. In addition, changes in the existing regulations or adoption of new
governmental regulations or policies could prevent or delay regulatory approval
of the Company's products.

    Failure to comply with applicable regulatory requirements could result in,
among other things, warning letters, fines, injunctions, civil penalties, recall
or seizure of products, total or partial suspension of production, refusal of
the FDA to grant pre-market clearance or pre-market approval for devices,
withdrawal of approvals and criminal prosecution.

    In addition to regulations enforced by the FDA, the Company is subject to
other existing and potential future federal, state, local and foreign
regulations. International regulatory bodies often establish regulations
governing product standards, packing requirements, labeling requirements, import
restrictions, tariff regulations, duties and tax requirements. To enable the
Company to market

                                       18
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ORTHOVISC(R) in Europe, the Company was required to receive a "CE" marking
certification, an international symbol of quality and compliance with the
applicable European medical device directive. In October 1996, the Company
received an EC Design Examination and an EC Quality System Certificate from a
European Notified Body, which entitled the Company to affix a CE marking for
ORTHOVISC(R) as a viscoelastic supplement or a replacement for synovial fluid in
human joints. There can be no assurance that the Company will be able to achieve
and/or maintain compliance required for CE marking or other foreign regulatory
approvals for any or all of its products or that it will be able to produce its
products in a timely and profitable manner while complying with applicable
requirements. Federal, state, local and foreign regulations regarding the
manufacture and sale of medical products are subject to change. The Company
cannot predict what impact, if any, such changes might have on its business. The
requirements relating to the conduct of clinical trials, product licensing,
pricing and reimbursement also vary widely from country to country.

    The process of obtaining approvals from the FDA and other regulatory
authorities can be costly, time consuming, and subject to unanticipated delays.
There can be no assurance that approvals or clearances of the Company's products
will be granted or that the Company will have the necessary funds to develop
certain of its products. Any failure to obtain, or delay in obtaining such
approvals or clearances, could adversely affect the ability of the Company to
market its products.

    HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY.  From its inception,
up until December 31, 1996 and in 1999 and 2000, the Company had incurred annual
operating losses. As of June 30, 2001, the Company had an accumulated deficit of
approximately $9,568,000. The continued development of the Company's products
will require the commitment of substantial resources to conduct research and
preclinical and clinical development programs, and to establish sales and
marketing capabilities or distribution arrangements. The ability of the Company
to reach profitability is highly uncertain. To achieve profitability, the
Company must, among other things, successfully complete development of certain
of its products, obtain regulatory approvals and establish sales and marketing
capabilities or distribution arrangements for certain of its products.

    COMPETITION.  The Company competes with many companies, including, among
others, large pharmaceutical companies and specialized medical products
companies. Many of these companies have substantially greater financial and
other resources, larger research and development staffs, more extensive
marketing and manufacturing organizations and more experience in the regulatory
process than the Company. The Company also competes with academic institutions,
governmental agencies and other research organizations that may be involved in
research, development and commercialization of products. Because a number of
companies are developing HA products for similar applications, the successful
commercialization of a particular product will depend in part upon the ability
of the Company to complete clinical studies and obtain FDA marketing and foreign
regulatory approvals prior to its competitors, or, if regulatory approval is not
obtained prior to competitors, the markets for these products will be sufficient
to permit meaningful sales of the Company's products. There can be no assurance
that the Company will be able to compete against current or future competitors
or that competition will not have a material adverse effect on the Company's
business, financial condition and results of operations. The Company is
currently experiencing pricing pressures in the Turkish market from increased
competition which may or may continue to hinder its ability to effectively
compete in that market. As a result, prices to our Turkish distributor have
decreased.

    UNCERTAINTY REGARDING SUCCESS OF CLINICAL TRIALS.  Several of the Company's
products, including ORTHOVISC(R), as well as the potential product of the
Company's collaborative partner such as OSSIGEL(R), will require clinical trials
to determine their safety and efficacy for U.S. and international marketing
approval by regulatory bodies, including the FDA. In late May 2000, the
Company's initial analysis of the results of its second Phase III clinical trial
of ORTHOVISC(R) did not show sufficient efficacy to support the filing of a PMA
application to obtain FDA approval. The

                                       19
<Page>
Company has evaluated available information and announced the commencement of
further clinical trials. The Company has received Investigational Device
Exemption (IDE) approval from the FDA. There can be no assurance that (i) any
additional clinical data will support the efficacy of ORTHOVISC(R), (ii) the
Company will begin clinical trials of INCERT(R)-S or complete any additional
clinical trials of ORTHOVISC(R) or INCERT(R)-S, (iii) it will be able to
successfully complete the FDA approval process for either ORTHOVISC(R) or
INCERT(R)-S, or (iv) additional ORTHOVISC(R) or INCERT(R)-S clinical trials will
support a PMA application and/or FDA approval in a timely manner or at all.
There can be no assurance that the Company or its collaborative partner will not
encounter additional problems that will cause it to delay, suspend or terminate
clinical trials. In addition, the Company cannot provide any assurance that such
clinical trials, if completed, will ultimately demonstrate these products to be
safe and efficacious.

    DEPENDENCE UPON MARKETING AND DISTRIBUTION PARTNERS.  The Company's success
will be dependent, in part, upon the efforts of its marketing partners and the
terms and conditions of the Company's relationships with such marketing
partners.

    In addition, there can be no assurances that such marketing partners will
not seek to renegotiate their current agreements on terms less favorable to the
Company. Under the terms of the BLS Agreement, effective January 1, 2001, the
Company became Bausch & Lomb Surgical's exclusive provider of AMVISC(R) and
AMVISC(R) Plus, ophthalmic viscoelastic products, in the U.S. and international
markets. The BLS Agreement expires December 31, 2007, superseding an existing
supply contract with Bausch & Lomb Surgical that was set to expire December 31,
2001. The BLS Agreement is subject to early termination and/or reversion to a
non-exclusive basis under certain circumstances. The BLS Agreement lifts
contractual restrictions on the Company's sales of certain ophthalmic products
to other companies, subject to payment of royalties by the Company. In exchange,
the Company agreed to a reduction in unit selling prices retroactively effective
to April 1, 2000 and the elimination of minimum unit purchase obligations by
BLS.

    The Company has not achieved incremental sales of its ophthalmic products to
Bausch & Lomb Surgical and/or other companies sufficient to offset the effects
of the price reduction and royalties to Bausch & Lomb Surgical and there can be
no assurances that the Company will be able to do so in the future. The Company
expects that, at least through 2001, the reduction in unit prices will result in
a decrease in the Company's revenue and gross margin from Bausch & Lomb
Surgical. In addition, under certain circumstances, (i) Bausch & Lomb Surgical
has the right to terminate the agreement and/or (ii) the agreement may revert to
a non-exclusive basis; in each case, the Company cannot make any assurances that
such circumstances will not occur. For the three months ended June 30, 2001 and
2000, sales of AMVISC(R) products to Bausch & Lomb Surgical accounted for 50.9%
and 50.8% of product revenues, respectively. For the six months ended June 30,
2001 and 2000, sales of AMVISC(R) products to Bausch & Lomb Surgical accounted
for 56.9% and 59.5% of product revenues, respectively. Although the Company
intends to continue to seek new opthalmic product customers, there can be no
assurances that the Company will be successful in obtaining new customers or to
achieve meaningful sales to such new customers.

    The ORTHOVISC(R) Distribution Agreement with Zimmer provided Zimmer with
exclusive marketing and distribution rights to ORTHOVISC(R) in the United
States, Canada, Latin America, Asia and most of Europe. On November 10, 2000,
the Company reached an agreement with Zimmer for an early termination of its
marketing and distribution agreement for ORTHOVISC(R). The termination may
continue to have a material adverse effect on the Company's ability to market
ORTHOVISC(R), which is likely to have a material adverse effect on the Company's
future operating results. The Company has relationships with logistics agents
(outsource order processing providers) to distribute ORTHOVISC(R) to customers
in Canada and European countries previously served by Zimmer. The Company is
seeking to establish long-term relationships with new distribution partners in
those countries where Zimmer previously sold the product. There can be no
assurance that the

                                       20
<Page>
Company will be able to identify or engage appropriate distribution or
collaboration partners or effectively transition to any such partners. There can
be no assurance that the Company will obtain European or other reimbursement
approvals or, if such approvals are obtained, they will be obtained on a timely
basis or at a satisfactory level of reimbursement.

    The Company will need to obtain the assistance of additional marketing
partners to bring new and existing products to market and to replace certain
marketing partners, such as Zimmer. There can be no assurance that such
additional partners will be available or that such partners will agree to market
the Company's products on acceptable terms. The failure to establish strategic
partnerships for the marketing and distribution of the Company's products on
acceptable terms will have a material adverse effect on the Company's business,
financial condition, and results of operations.

    UNCERTAINTY OF MARKET ACCEPTANCE OF FUTURE PRODUCTS.  The Company's success
will depend in part upon the acceptance of the Company's future products by the
medical community, hospitals and physicians and other health care providers, and
third-party payors. Such acceptance may depend upon the extent to which the
medical community perceives the Company's products as safer, more effective or
cost-competitive than other similar products. Ultimately, for the Company's new
products to gain general market acceptance, it will also be necessary for the
Company to develop marketing partners for the distribution of its products.
There can be no assurance that the Company's new products will achieve
significant market acceptance on a timely basis, or at all. Failure of some or
all of the Company's future products to achieve significant market acceptance
could have a material adverse effect on the Company's business, financial
condition and results of operations.

    DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY.  The Company's success
will depend, in part, on its ability to obtain and enforce patents, protect
trade secrets, obtain licenses to technology owned by third parties when
necessary, and conduct its business without infringing on the proprietary rights
of others. The patent positions of pharmaceutical, medical products and
biotechnology firms, including the Company, can be uncertain and involve complex
legal and factual questions. There can be no assurance that any patent
applications will result in the issuance of patents or, if any patents are
issued, whether they will provide significant proprietary protection or
commercial advantage, or will not be circumvented by others. In the event a
third party has also filed one or more patent applications for any of its
inventions, the Company may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office ("PTO") to determine priority
of invention (see below), which could result in failure to obtain or the loss of
patent protection for the inventions and the loss of any right to use the
inventions. Even if the eventual outcome is favorable to the Company, such
interference proceedings could result in substantial cost to the Company. Filing
and prosecution of patent applications, litigation to establish the validity and
scope of patents, assertion of patent infringement claims against others and the
defense of patent infringement claims by others can be expensive and time
consuming. There can be no assurance that in the event that any claims with
respect to any of the Company's patents, if issued, are challenged by one or
more third parties, that any court or patent authority ruling on such challenge
will determine that such patent claims are valid and enforceable. An adverse
outcome in such litigation could cause the Company to lose exclusivity covered
by the disputed rights. If a third party is found to have rights covering
products or processes used by the Company, the Company could be forced to cease
using the technologies or marketing the products covered by such rights, could
be subject to significant liabilities to such third party, and could be required
to license technologies from such third party. Furthermore, even if the
Company's patents are determined to be valid, enforceable, and broad in scope,
there can be no assurance that competitors will not be able to design around
such patents and compete with the Company using the resulting alternative
technology.

    The Company has a policy of seeking patent protection for patentable aspects
of its proprietary technology. It filed five (5) patent applications in the
first quarter of 2001. The Company co-owns certain United States patents with
claims relating to the chemical modification of HA and certain adhesion
prevention and drug delivery uses of HA. Two patents in this portfolio were
issued in the year

                                       21
<Page>
2000. The Company also solely owns patents directed to certain manufacturing
processes. The Company holds an exclusive license from Tufts University to use
technologies claimed in a United States patent application which has been
granted a Notice of Allowance from the U.S. Patent Office for the
anti-metastasis applications of HA oligosaccharides. The Company's patents
expire between 2007 and 2015 and the license expires upon expiration of all
related patents. The Company intends to seek patent protection with respect to
products and processes developed in the course of its activities when it
believes such protection is in its best interest and when the cost of seeking
such protection is appropriate. However, no assurance can be given that any
patent application will be filed, that any filed applications will result in
issued patents or that any issued patents will provide the Company with a
competitive advantage or will not be successfully challenged by third parties.
The protections afforded by patents will depend upon their scope and validity,
and others may be able to design around the Company's patents. The Company's
issued patents and any licensed patents would provide competitive protection, if
at all, only in the United States. The Company has not, to date, pursued foreign
patents equivalent to those issued or applied for in the United States.

    Other entities have filed patent applications for or have been issued
patents concerning various aspects of HA-related products or processes. There
can be no assurance that the products or processes developed by the Company will
not infringe on the patent rights of others in the future. Any such infringement
may have a material adverse effect on the Company's business, financial
condition, and results of operations. In particular, the Company received notice
from the PTO in 1995 that a third party was attempting to provoke a patent
interference with respect to one of the Company's co-owned patents covering the
use of INCERT(R) for post-surgical adhesion prevention. It is unclear whether an
interference will be declared. If an interference is declared, it is not
possible at this time to determine the merits of the interference or the effect,
if any, the interference will have on the Company's marketing of INCERT(R) for
this use. The existence of the interference proceeding may have a negative
impact on the marketing of the INCERT(R) product, and no assurance can be given
that the Company would be successful in any such interference proceeding. If the
third-party interference were to be decided adversely to the Company, involved
claims of the Company's patent would be cancelled, the Company's marketing of
the INCERT(R) product may be materially and adversely affected and the third
party may enforce patent rights against the Company which could prohibit the
sale and use of INCERT(R) products, which could have a material adverse effect
on the Company's future operating results.

    The Company also relies upon trade secrets and proprietary know-how for
certain non-patented aspects of its technology. To protect such information, the
Company requires all employees, consultants and licensees to enter into
confidentiality agreements limiting the disclosure and use of such information.
There can be no assurance that these agreements provide meaningful protection or
that they will not be breached, that the Company would have adequate remedies
for any such breach, or that the Company's trade secrets, proprietary know-how,
and technological advances will not otherwise become known to others. In
addition, there can be no assurance that, despite precautions taken by the
Company, others have not and will not obtain access to the Company's proprietary
technology. Further, there can be no assurance that third parties will not
independently develop substantially equivalent or better technology.

    Pursuant to the BLS Agreement, the Company has agreed to transfer to
Bausch & Lomb Surgical, upon expiration of the term of the agreement on
December 31, 2007, or in connection with earlier termination in certain
circumstances, the Company's manufacturing process, know-how and technical
information which relate to AMVISC(R) products. Upon expiration of the BLS
Agreement, there can be no assurance that Bausch & Lomb Surgical will continue
to use the Company to manufacture AMVISC(R) and AMVISC(R) Plus. If Bausch & Lomb
Surgical discontinues the use of the Company as a manufacturer after such time,
the Company's business, financial condition, and results of operations would
likely be materially and adversely affected.

                                       22
<Page>
    RISKS ASSOCIATED WITH MANUFACTURING.  The Company's results of operations
are dependent upon the continued operation of its manufacturing facility in
Woburn, Massachusetts. The operation of biomedical manufacturing plants involves
many risks, including the breakdown, failure or substandard performance of
equipment, natural and other disasters, and the need to comply with the
requirements of directives of government agencies, including the FDA. In
addition, the Company relies on a single supplier for syringes and a small
number of suppliers for a number of other materials required for the
manufacturing and delivery of its HA products. Furthermore, manufacturing
processes and research and development efforts of the Company involve animals
and products derived from animals. The utilization of animals in research and
development and product commercialization is subject to increasing focus by
animal rights activists. The activities of animal rights groups and other
organizations that have protested animal based research and development programs
or boycotted the products resulting from such programs could cause an
interruption in the Company's manufacturing processes and research and
development efforts. The occurrence of material operational problems, including
but not limited to the events described above, could have a material adverse
effect on the Company's business, financial condition and results of operations
during the period of such operational difficulties.

    NO ASSURANCE OF GROWTH OR ABILITY TO MANAGE GROWTH.  The Company's future
success depends on substantial growth in product sales. There can be no
assurance that such growth can be achieved or, if achieved, can be sustained.
There can be no assurance that even if substantial growth in product sales and
the demand for the Company's products is achieved, the Company will be able to
(i) develop the necessary manufacturing capabilities; (ii) obtain the assistance
of additional marketing partners; (iii) attract, retain and integrate the
required key personnel; or (iv) implement the financial, accounting and
management systems needed to manage growing demand for its products, should it
occur. Failure of the Company to successfully manage future growth could have a
material adverse effect on the Company's business, financial condition and
results of operations.

    THIRD PARTY REIMBURSEMENT AND HEALTH CARE COST CONTAINMENT INITIATIVES.  In
the U.S. and other markets, health care providers, such as hospitals and
physicians, that purchase health care products, such as the Company's products,
generally rely on third party payors, including Medicare, Medicaid and other
health insurance and managed care plans, to reimburse all or part of the cost of
the health care product. The Company depends upon the distributors for its
products to secure reimbursement. Reimbursement by a third party payor may
depend on a number of factors, including the payor's determination that the use
of the Company's products are clinically useful and cost-effective, medically
necessary and not experimental or investigational. Since reimbursement approval
is required from each payor individually, seeking such approvals can be a time
consuming and costly process which, in the future, could require the Company or
its marketing partners to provide supporting scientific, clinical and
cost-effectiveness data for the use of the Company's products to each payor
separately. Significant uncertainty exists as to the reimbursement status of
newly approved health care products, and third party payors are increasingly
attempting to contain the costs of health care products and services by limiting
both coverage and the level of reimbursement for new therapeutic products and by
refusing in some cases to provide coverage for uses of approved products for
disease indications for which the FDA has not granted marketing approval. In
addition, Congress and certain state legislatures have considered reforms that
may affect current reimbursement practices, including controls on health care
spending through limitations on the growth of Medicare and Medicaid spending.
There can be no assurance that third party reimbursement coverage will be
available or adequate for any products or services developed by the Company.
Outside the U.S., the success of the Company's products is also dependent in
part upon the availability of reimbursement and health care payment systems.
Lack of adequate coverage and reimbursement provided by governments and other
third party payors for the Company' products and services could have a material
adverse effect on the Company's business, financial condition and results of
operations.

                                       23
<Page>
    NEED FOR ADDITIONAL FUNDS; LIQUIDITY.  The Company had cash, cash
equivalents and short-term marketable securities of $15.7 million as of
June 30, 2001. The Company's future capital requirements and the adequacy of
available funds will depend, however, on numerous factors, including: market
acceptance of its existing and future products; the successful commercialization
of products in development; progress in its product development efforts; the
magnitude and scope of such efforts, progress with preclinical studies, clinical
trials and product clearances by the FDA and other agencies; the cost and timing
of its efforts to expand its manufacturing capabilities; the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights; competing technological and market developments; and the
development of strategic alliances for the marketing of certain of its products.
To the extent that funds generated from the Company's operations, together with
the Company's existing capital resources and are insufficient to meet future
requirements, the Company will be required to obtain additional funds through
equity or debt financings, strategic alliances with corporate partners and
others, or through other sources. The terms of any future equity financings may
be dilutive to the Company's stockholders and the terms of any debt financings
may contain restrictive covenants, which limit the Company's ability to pursue
certain courses of action. The ability of the Company to obtain financing is
dependent on the status of the Company's future business prospects as well as
conditions prevailing in the relevant capital markets. No assurance can be given
that any additional financing will be made available to the Company or will be
available on acceptable terms should such a need arise.

    EXPOSURE TO PRODUCT LIABILITY CLAIMS.  The testing, marketing and sale of
human health care products entail an inherent risk of allegations of product
liability, and there can be no assurance that substantial product liability
claims will not be asserted against the Company. Although the Company has not
received any material product liability claims to date and has an insurance
policy of $5,000,000 per occurrence and $5,000,000 in the aggregate to cover
such claims should they arise, there can be no assurance that material claims
will not arise in the future or that the Company's insurance will be adequate to
cover all situations. Moreover, there can be no assurance that such insurance,
or additional insurance, if required, will be available in the future or, if
available, will be available on commercially reasonable terms. Any product
liability claim, if successful, could have a material adverse effect on the
Company's business, financial condition and results of operations.

    DEPENDENCE UPON KEY PERSONNEL.  The Company is highly dependent on the
members of its management and scientific staff, the loss of one or more of whom
could have a material adverse effect on the Company. In June 2001, Mr. Engle,
the former Chief Executive Officer and Chairman of the Board of Directors, and
Mr. Slater, the former Vice President of Operations, ceased to be employees of
the Company. There can be no assurances that such departures will not adversely
affect the Company's business. In addition, the Company believes that its future
success will depend in large part upon its ability to attract and retain highly
skilled, scientific, managerial and manufacturing personnel. The Company faces
significant competition for such personnel from other companies, research and
academic institutions, government entities and other organizations. There can be
no assurance that the Company will be successful in hiring or retaining the
personnel it requires. The failure to hire and retain such personnel could have
a material adverse effect on the Company's business, financial condition and
results of operations.

    ENVIRONMENTAL REGULATION.  The Company is subject to a variety of local,
state and federal government regulations relating to the storage, discharge,
handling, emission, generation, manufacture and disposal of toxic or other
hazardous substances used in the manufacture of the Company's products. Any
failure by the Company to control the use, disposal, removal or storage of
hazardous chemicals or toxic substances could subject the Company to significant
liabilities, which could have a material adverse effect on the Company's
business, financial condition and results of operations.

                                       24
<Page>
    RISKS RELATING TO INTERNATIONAL SALES.  During the three months ended
June 30, 2001 and 2000, approximately, 33% and 32.8%, respectively, of the
Company's product sales were sold to international markets. During the six
months ended June 30, 2001 and 2000, approximately, 33.3% and 27%, respectively,
of the Company's product sales were sold to international markets. The Company's
representatives, agents and distributors who sell products in international
markets are subject to the laws and regulations of the foreign jurisdictions in
which they operate and in which the Company's products are sold. A number of
risks are inherent in international sales and operations. For example, the
volume of international sales may be limited by the imposition of government
controls, export license requirements, political and/or economic instability,
trade restrictions, changes in tariffs, difficulties in managing international
operations, import restrictions and fluctuations in foreign currency exchange
rates. The Company sells its ORTHOVISC(R) product to a European sales and
marketing company for supply of the Turkish market. The Turkish economic
situation has been volatile and the impacts of this volatility on future sales
of ORTHOVISC(R) are uncertain. Such changes in the volume of sales may have an
adverse effect on the Company's business, financial condition, and results of
operations.

    POTENTIAL VOLATILITY OF STOCK PRICE; NO CONTROL OVER MARKET MAKING.  The
market price of shares of the Company's common stock may be highly volatile.
Factors such as announcements of new commercial products or technological
innovations by the Company or its competitors, disclosure of results of clinical
testing or regulatory proceedings, governmental regulation and approvals,
developments in patent or other proprietary rights, public concern as to the
safety of products developed by the Company and general market conditions may
have a significant effect on the market price of the Company's common stock. In
particular, the Company's stock price declined significantly in October 1998
following the Company's announcement that the FDA had notified the Company that
its PMA for ORTHOVISC(R) was not approvable and that additional clinical data
would be required to demonstrate the effectiveness of ORTHOVISC(R). The stock
price declined again in May 2000 following the Company's announcements that
initial analysis of results from the Phase III clinical trial of ORTHOVISC(R)
did not show sufficient efficacy to support the filing of a PMA application to
obtain FDA approval, and that the SEC had issued a formal order of investigation
and required the Company to provide information in connection with certain
revenue recognition matters. The trading price of the Company's common stock
could be subject to wide fluctuations in response to quarter-to-quarter
variations in the Company's operating results, material announcements by the
Company or its competitors, governmental regulatory action, conditions in the
health care industry generally or in the medical products industry specifically,
or other events or factors, many of which are beyond the Company's control. In
addition, the stock market has experienced extreme price and volume fluctuations
which have particularly affected the market prices of many medical products
companies and which often have been unrelated to the operating performance of
such companies. The Company's operating results in future quarters may be below
the expectations of equity research analysts and investors. In such event, the
price of the common stock would likely decline, perhaps substantially.

    No person is under any obligation to make a market in the common stock or to
publish research reports on the Company, and any person making a market in the
common stock or publishing research reports on the Company may discontinue
market making or publishing such reports at any time without notice. There can
be no assurance that an active public market in the common stock will be
sustained.

    POSSIBLE ADVERSE EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS.  Certain
provisions of the Company's Restated Articles of Organization and Amended and
Restated By-laws could have the effect of discouraging a third party from
pursuing a non-negotiated takeover of the Company and preventing certain changes
in control. These provisions include a classified Board of Directors, advance
notice to the Board of Directors of stockholder proposals, limitations on the
ability of stockholders to remove directors and to call stockholder meetings,
the provision that vacancies on the Board of Directors be

                                       25
<Page>
filled by a majority of the remaining directors. In addition, the Board of
Directors adopted a Shareholders Rights Plan in April 1998. The Company also is
subject to Chapter 110F of the Massachusetts General Laws which, subject to
certain exceptions, prohibits a Massachusetts corporation from engaging in any
of a broad range of business combinations with any "interested stockholder" for
a period of three years following the date that such stockholder became an
interested stockholder. These provisions could discourage a third party from
pursuing a takeover of the Company at a price considered attractive by many
stockholders, since such provisions could have the effect of preventing or
delaying a potential acquirer from acquiring control of the Company and its
Board of Directors.

    SEC INVESTIGATION AND SECURITIES CLASS ACTION LITIGATION.  The SEC has
issued a formal order of investigation and has required the Company to provide
information in connection with certain revenue recognition matters. The Company
has been cooperating fully. These matters, relating to the Company's historical
accounting for and disclosures concerning sales of ORTHOVISC(R) under a
long-term supply and distribution agreement with Zimmer were also the subject of
the Company's March 15, 2000 disclosure concerning an informal SEC inquiry and
the restatement of results for 1998 and the first three quarters of 1999. On
August 14, 2001, as a result of the SEC's ongoing investigation, the Company, in
conjunction with its independent auditors, determined to again restate its
financial results for the fourth quarter of 1998 and the first quarter of 1999
as discussed in Note 10 in the consolidated financial statements. The Company is
not in a position to predict the probable outcome of this matter or its
potential impact on the Company's business or operations.

    Three putative class action lawsuits were filed against the Company and
former officers of the Company. These lawsuits have been consolidated. The
parties negotiated and entered into a Memorandum of Understanding dated
March 8, 2001, and the parties negotiated and entered into a Stipulation and
Agreement of Settlement, Compromise and Release ("Stipulation") dated May 25,
2001, which contains the terms of a settlement of the action, subject to
approval by the Court.

    The Stipulation was submitted to the Court and, on May 31, 2001, the Court
entered an Order of Preliminary Approval in connection with the settlement
proceedings. After preliminary approval, plaintiff's counsel sent notice of the
proposed settlement to the Class, and the Company paid $1.25 million into a
settlement fund that may, among other things, be used to pay authorized members
of the Class. The Company entered into an agreement with its directors and
officers liability insurer, under which the insurer paid the Company $400,000 in
exchange for a release of the insurer's obligations under the policy, which
policy's term was from December 1, 1999 to November 30, 2000 and which time
period covers the allegations made in the securities class action litigation as
well as the SEC investigation. The Company applied the $400,000 to the
settlement amount in the shareholder class action lawsuit.

    In the Stipulation, the parties requested that the Court have a Final
Settlement Hearing at which, among other things, (i) the Court would certify,
for purposes of settlement, the Class, and certify, for purposes of settlement,
the Action as a class action; (ii) the Court would finally approve the
settlement as provided for in the Stipulation, including the release of all
claims by Class members against the Defendants; and (iii) the Court would enter
final judgment dismissing with prejudice all claims of the plaintiffs and the
Class against the Defendants. The Court originally scheduled the Final
Settlement Hearing for August 8, 2001. Pursuant to the joint request of counsel
for the plaintiffs and counsel for the Company, the hearing was extended because
of the restatement of financial results for certain prior periods as discussed
in Note 10 herein. The Final Settlement Hearing has not yet been rescheduled.
The Court has not yet finally approved the Settlement. The Company is not able
to provide any assurances that: (i) the proposed settlement will be finally
approved by the Court; or (ii) the terms of any final settlement approved by the
Court will not differ from the terms of the Stipulation.

    RELIANCE ON A SMALL NUMBER OF CUSTOMERS.  The Company has historically
derived the majority of its revenues from a small number of customers, most of
whom resell its products to end users and most

                                       26
<Page>
of whom are significantly larger companies. The Company's failure to generate as
much revenue as expected from these customers or the failure of these customers
to purchase the Company's products would seriously harm the Company's business.
For the three months ended June 30, 2001, Bausch & Lomb Surgical accounted for
50.9% of product revenues and 69.6% of the accounts receivable balance and
Pharmaren (an affiliate of Biomeks), the Company's distributor in Turkey,
accounted for 23.7% of product revenues and none of the accounts receivable
balance. Accordingly, if present and future customers terminate their purchasing
arrangements with the Company, significantly reduce or delay their orders or
seek to renegotiate their agreements on terms less favorable to the Company, the
Company's business, financial condition, and results of operations will be
adversely affected. If the Company accepts terms less favorable than the terms
of the current agreement, such renegotiations may have a material adverse affect
on the Company's business, financial condition, and/or results of operations.
Furthermore, the Company may be subject to the perceived or actual leverage the
customers may have given their relative size and importance to the Company in
any future negotiations. Any termination, change, reduction or delay in orders
could seriously harm the Company's business, financial condition, and results of
operations. Accordingly, unless and until the Company diversifies and expands
its customer base, the Company's future success will significantly depend upon
the timing and size of future purchases by its largest customers and the
financial and operational success of these customers. Product revenue in the
future may continue to be impacted by economic uncertainties associated with the
Turkish market. Furthermore, sales in 2001 to our Turkish distributor are at
lowered prices and negotiations are ongoing to establish a new long-term
distribution agreement for this territory.

    The loss of any one of the Company's major customers or the delay of
significant orders from such customers, even if only temporary, could reduce or
delay the Company's recognition of revenues, harm its reputation in the
industry, and reduce its ability to accurately predict cash flow, and, as a
consequence, could seriously harm the Company's business, financial condition,
and results of operations.

    The Company, through its distributors, distributes ORTHOVISC(R) in
territories such as Spain, Portugal, Turkey, and Israel. Due to the result of
the unfavorable results of the U.S. ORTHOVISC(R) Phase III clinical trial
announced on May 31, 2000, marketing efforts in these countries have been and
may continue to be negatively affected. There can be no assurance that past
ORTHOVISC(R) sales levels will be maintained or that sales will occur at all in
these countries.

                                       27
<Page>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    As of June 30, 2001, the Company did not participate in any derivative
financial instruments or other financial and commodity instruments for which
fair value disclosure would be required under SFAS No. 107. All of the Company's
investments consist of money market funds and commercial paper that are carried
on the Company's books at amortized cost, which approximates fair market value.
Accordingly, the Company has no quantitative information concerning the market
risk of participating in such investments.

PRIMARY MARKET RISK EXPOSURES

    The Company's primary market risk exposures are in the areas of interest
rate risk and foreign currency exchange rate risk. The Company's investment
portfolio of cash equivalent and short-term investments is subject to interest
rate fluctuations, but the Company believes this risk is immaterial due to the
short-term nature of these investments. The Company's exposure to currency
exchange rate fluctuations is specific to certain sales to a foreign customer
and is expected to continue to be modest. The impact of currency exchange rate
movements on sales to this foreign customer was immaterial for the quarter ended
June 30, 2001. Currently, the Company does not engage in foreign currency
hedging activities.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    See Note 9, "Legal Matters" of the consolidated financial statements. The
description of such matters is incorporated herein by reference to such
financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    On June 6, 2001, the Company held its 2001 Annual Meeting of Stockholders
(the "Annual Meeting"). At the Annual Meeting, Stockholders of the Company were
asked to consider a proposal to elect two Class II Directors of the Company to
serve until the 2004 annual meeting of stockholders and until their successors
are duly elected and qualified (the "Election Proposal").

    With respect to the Election Proposal, Samuel F. McKay and Harvey S. Sadow,
Ph.D. were nominated as Class II Directors of the Company. Mr. McKay received
8,162,415 shares voted in favor of his election and 125,883 votes were withheld.
Dr. Sadow received 8,155,970 shares voted in favor of his election and 132,328
votes were withheld. Mr. McKay and Dr. Sadow were therefore elected as Class II
Directors. Joseph L. Bower and Eugene A. Davidson, Ph.D. (Class I Directors),
and J. Melville Engle and Steven E. Wheeler (Class III Directors) continued to
serve their respective terms after the Annual Meeting. Subsequently, as
announced on June 13, 2001, in conjunction with J. Melville Engle's departure
from the Company on that date, Mr. Engle also left the Board of Directors.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

<Table>
<Caption>
(A) EXHIBIT NO.         DESCRIPTION
- ---------------         -----------
<C>                     <S>
        (3)             Articles of Incorporation and Bylaws:

         3.1            The Amended and Restated Articles of Organization of the
                        Company, incorporated herein by reference to Exhibit 3.1 to
                        the Company's Registration Statement on Form 10 (File
                        no. 000-21326), filed with the Securities and Exchange
                        Commission on March 5, 1993.
</Table>

                                       28
<Page>

<Table>
<Caption>
(A) EXHIBIT NO.         DESCRIPTION
- ---------------         -----------
<C>                     <S>
         3.2            Certificate of Vote of Directors Establishing a Series of
                        Convertible Preferred Stock, incorporated herein by
                        reference to Exhibits to the Company's Registration
                        Statement on Form 10 (File no. 000-21326), filed with the
                        Securities and Exchange Commission on March 5, 1993.

         3.3            Amendment to the Amended and Restated Articles of
                        Organization of the Company, incorporated herein by
                        reference to Exhibit 3.1 to the Company's quarterly report
                        on Form 10-QSB for the period ended November 30, 1996, (File
                        no. 000-21326), filed with the Securities and Exchange
                        Commission on January 14, 1997.

         3.4            Certificate of Vote of Directors Establishing a Series of a
                        Class of Stock, incorporated herein by reference to
                        Exhibit 3.1 of the Company's Registration Statement on
                        Form 8-AB12 (File no. 001-14027), filed with the Securities
                        and Exchange Commission on April 7, 1998.

         3.5            Amendment to the Amended and Restated Articles of
                        Organization of the Company, incorporated herein by
                        reference to the Company's quarterly report on Form 10-QSB
                        for the quarterly period ending June 30, 1998 (File
                        no. 001-14027), filed with the Securities and Exchange
                        Commission on August 14, 1998.

         3.6            The Amended and Restated Bylaws of the Company, incorporated
                        herein by reference to Exhibit 3.4 to the Company's
                        quarterly report on Form 10-QSB for the period ended
                        November 30, 1996 (File no. 000-21326), filed with the
                        Securities and Exchange Commission on January 14, 1997.

        (4)             Instruments Defining the Rights of Security Holders

         4.1            Shareholder Rights Agreement dated as of April 6, 1998
                        between the Company and Firstar Trust Company, incorporated
                        herein by reference to Exhibit 4.1 to the Company's
                        Registration Statement on Form 8-A12B (File no. 001-14027),
                        filed with the Securities and Exchange Commission on
                        April 7, 1998.

       (10)             Material Contracts

       *10.1            Separation Agreement between J. Melville Engle and the
                        Company dated June 13, 2001.

       *10.2            Stipulation and Agreement of Compromise, Settlement and
                        Release dated May 25, 2001 in connection with In Re Anika
                        Therapeutics, Inc. Securities Litigation.

       (11)             Statement Regarding the Computation of Per Share Earnings

        11.1            See Note 4 to the Financial Statements included herewith.
</Table>

*   Filed herewith

(b) Reports on Form 8-K:    None

                                       29
<Page>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in Woburn,
Massachusetts on August 14, 2001.

<Table>
<S>                                                    <C>  <C>
                                                       ANIKA THERAPEUTICS, INC.

                                                       By:            /s/ DOUGLAS R. POTTER
                                                            -----------------------------------------
                                                                        Douglas R. Potter
                                                                CHIEF EXECUTIVE OFFICER AND CHIEF
                                                              FINANCIAL OFFICER (PRINCIPAL FINANCIAL
August 14, 2001                                                  OFFICER AND AUTHORIZED OFFICER)
</Table>

                                       30

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>a2057054zex-10_1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>

                                                                   Exhibit 10.1



                                 June 15, 2001


PERSONAL & CONFIDENTIAL

Mr. J. Melville Engle
12 Deergrass Lane
Acton, MA  01720

Dear Mel:

         This letter agreement (the "Agreement") confirms the agreement that we
have reached regarding your resignation from your regular, full-time employment
and all offices you hold with Anika Therapeutics, Inc. (the "Company").

         The purpose of this Agreement is to establish an amicable arrangement
for ending your employment relationship with the Company, to release the Company
and related persons or entities from any claims and to permit you to receive
fair and reasonable separation pay and related benefits. Nothing in this
Agreement is intended to condition your entitlement to pay or benefits earned
based on your employment to and including the date of termination of your
employment on your agreement to this Agreement. Specifically, the Company has
provided or shall provide the pay referred to in Section 1 below and the right
to elect COBRA coverage, regardless of whether you agree to this Agreement.

         If you agree to the terms of this Agreement, you acknowledge that you
are entering into this Agreement voluntarily. It is customary in employment
separation agreements that provide for severance pay for the departing employee
to release the employer from any possible claims, even if the employer believes,
as is the case here, that no such claims exist. You understand that you are
giving up your right to bring any and all possible legal claims against the
Company. Neither the Company nor you want your employment relationship to end
with a legal dispute. By entering into this Agreement, you understand that the
Company is not admitting in any way that it violated any legal obligation that
it owed to you. To the contrary, the Company's willingness to enter into this
Agreement, which provides for compensation beyond what you are contractually
entitled to, demonstrates that it is continuing to deal with you fairly and in
good faith.



<PAGE>

Mr. J. Melville Engle
June 15, 2001
Page 2


         With those understandings, you and the Company agree as follows:

         1.       RESIGNATION

         Effective June 12, 2001 (the "Resignation Date"), you resigned from
your offices as Chairman of the Board, President and Chief Executive Officer,
and Director on the Company's Board of Directors, trustee of the Company's
Employee Savings and Retirement Plan and from any and all employment or offices
you hold with the Company, its subsidiaries and/or its affiliates. The Company
shall pay you your current base salary through June 12, 2001. In addition, the
Company will pay you for all accrued but unused vacation time through the
Resignation Date, which will be based on 173.85 hours of accrued but unused
vacation time. All payments to be made are subject to the provisions of Section
5 hereof.

         2.       SEVERANCE PAY

         Beginning no later than the Company's second regular payroll date after
the Effective Date, as it is defined in Section 14, the Company shall provide
severance pay ("Severance Pay") to you consisting of the continuation of your
current base salary rate of $251,472.00 per year for a forty-one and one-half
(41 1/2) week period beginning June 13, 2001 (the "Salary Continuation Period")
such that you shall receive total Severance Pay of $200,736.00, payable on the
Company's regular bi-weekly payroll dates. The Company will suspend the payment
of Severance Pay until such time as the Agreement becomes effective in
accordance with Section 14. If the Agreement becomes effective, the Company will
reinstate you to the payroll and shall provide any suspended payroll payments to
you no later than the second payroll date after this Agreement becomes
effective. All payments to be made are subject to the provisions of Section 5
hereof.

         3.       BENEFITS

                  a.       MEDICAL AND DENTAL BENEFITS

         By agreeing to this Agreement, you elect to continue your medical and
dental insurance coverage under COBRA. Your COBRA period commenced on June 13,
2001. Provided that you remain eligible for COBRA continuation coverage, the
Company shall continue to pay the premiums for your group medical and dental
insurance coverage on the same basis as if you continued to be employed through
December 12, 2001. Thereafter, you may continue coverage at your own expense for
the remainder of the COBRA period to the extent you remain eligible.

                  b.       SPOT/STAY BONUS

         The Company also will provide you with the payment of $37,500,
constituting your 2001 "Spot/Stay Bonus" payment, which will be sent to you by
mail on the date on which the


<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 3



Company regularly  distributes the "Spot/Stay Bonus" to its eligible  employees.
All payments to be made are subject to the provisions of Section 5 hereof.

                  c.       STOCK AND STOCK OPTION PLANS

         You currently hold stock options to purchase common stock under the
Company's Stock Option Plan dated March 3, 1993, as amended (the "Plan"), as set
forth below:

         o    250,000 shares at $5.25 per share on October 4, 1996 (the "October
              4, 1996 Stock Grant");

         o    100,000 shares at $7.625 per share on October 28, 1997 (the
              "October 28, 1997 Stock Grant");

         o    85,000 shares at $4.75 per share on December 21, 1998 (the
              "December 21, 1998 Stock Grant");

         o    40,000 shares at $6.938 per share on January 11, 2000 (the
              "January 11, 2000 Stock Grant") ; and

         o    60,000 shares at $1.75 per share on September 11, 2000 (the
              "September 11, 2000 Stock Grant").

         All of your vested and unvested stock options under each of the October
4, 1996 Stock Grant, October 28, 1997 Stock Grant, December 21, 1998 Stock Grant
and January 11, 2000 Stock Grant are hereby terminated as of the Resignation
Date. With respect to those shares subject to the terms of the September 11,
2000 Stock Grant, the terms of the September 11, 2000 Stock Grant are hereby
amended such that all 60,000 shares will vest as of the Resignation Date at the
option exercise price specified in the September 11, 2000 Stock Grant and shall
remain fully exercisable under the terms of the Plan until December 12, 2001.
Thereafter, the September 11, 2000 Stock Grant, or portion thereof that is
unexercised, shall terminate.

                  d.       OUTPLACEMENT

         The Company shall pay up to a maximum of $20,000 to a mutually
agreeable outplacement advisor to assist you in your efforts to obtain new
employment, provided that such outplacement services are provided on or prior to
June 12, 2002.

                  e.       OTHER BENEFITS

         Your eligibility to participate in any other employee benefit plans and
programs sponsored by or made available to employees of the Company or its
affiliated or related entities ceases effective on or after your Resignation
Date in accordance with applicable benefit plan terms and benefit practices.
Your rights to benefits, if any, are governed by the terms of those benefit
plans and programs.

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 4

         4.       TREATMENT OF EXISTING PROMISSORY NOTES TO THE COMPANY

                  a.       $75, 000 PROMISSORY NOTE DATED MARCH 17, 1997

         You acknowledge that on or about March 17, 1997, you entered into a
Promissory Note (the "March 17, 1997 Promissory Note") with the Company pursuant
to which you borrowed the principal sum of seventy-five thousand dollars
($75,000.00), together with interest, which is payable upon the end of the
severance continuation period which is 41 1/2 weeks after the employee's
termination date or when the primary residence is paid, whichever is sooner. The
March 17, 1997 Promissory Note is secured, in part, by a second mortgage on your
primary residence located at 12 Deergrass Lane, Acton, Massachusetts (the
"Primary Residence"). You and the Company hereby agree that the terms of the
Promissory Note are hereby amended such that the Note, together with interest,
shall be payable upon the end of the severance continuation period which is 41
1/2 weeks after the employee's termination date or when the primary residence is
paid, whichever is sooner. You further covenant to give prior notice to the
Company of any impending sale of your Primary Residence.

                  b.       $59,000 PROMISSORY NOTE DATED JULY 10, 1998

         You acknowledge that on or about July 10, 1998, you entered into a
Demand Promissory Note (the "July 10, 1998 Note") with the Company pursuant to
which you borrowed the principal sum of fifty-nine thousand dollars
($59,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the July 10, 1998 Note. You acknowledge
and agree that you are solely responsible for any tax consequences resulting
from the Company's forgiveness of the July 10, 1998 Note.

                  c.       $41,000 PROMISSORY NOTE DATED DECEMBER 20, 1999

         You acknowledge that on or about December 20, 1999, you entered into a
Demand Promissory Note (the "December 20, 1999 Note") with the Company pursuant
to which you borrowed the principal sum of forty-one thousand dollars
($41,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the December 20, 1999 Note. You
acknowledge and agree that you are solely responsible for any tax consequences
resulting from the Company's forgiveness of the December 20, 1999 Note.

                  d.       $20,000 PROMISSORY NOTE DATED AUGUST 26, 1999

         You acknowledge that on or about August 26, 1999, you entered into a
Promissory Note (the "August 26, 1999 Promissory Note") with the Anika
Therapeutics, Inc. 401(k) Profit

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 5


Sharing Plan (the "401(k) Plan"). The Terms of the August 26, 1999 Promissory
Note are unaffected by this Agreement and continue to be governed by the terms
of the 401(k) Plan.

                  e.       PAYMENT TO OFFSET TAX LIABILITY

         To offset tax liability you may incur as a result of the Company's
forgiveness of your payment obligations pursuant to the July 10, 1998 Note and
the December 20, 1999 Note, on or before December 31, 2001, the Company will
make a payment to you of $72,414.00. All payments to be made are subject to the
provisions of Section 5 hereof.

         5.       TAX TREATMENT

         The Company shall undertake to make deductions, withholdings and tax
reports with respect to payments and benefits under this Agreement to the extent
that it reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall be
in amounts net of any such deductions or withholdings. Except as expressly
provided in Section 4, nothing in this Agreement shall be construed to require
the Company to make any payments to compensate you for any adverse tax effect
associated with any payments or benefits or for any deduction or withholding
from any payment or benefit.

         6.       RELEASE OF CLAIMS

         In consideration for, among other terms, the payments and benefits
described in Sections 2, 3 and 4, to which you otherwise would not be entitled,
you voluntarily release and forever discharge the Company, its affiliated and
related entities, its and their respective predecessors, successors and assigns,
and each of their current and former officers, directors, shareholders,
employees, attorneys, accountants and agents in their official and personal
capacities (collectively referred to as the "Releasees") generally from all
claims, demands, debts, damages and liabilities of every name and nature, known
or unknown, that, as of the date that you sign this Agreement, you now have,
ever had, now claim to have or ever claimed to have had against any or all of
the Releasees ("Claims"). This release includes, without limitation, all Claims
relating to your employment by and termination of employment with the Company;
all Claims of wrongful discharge; all Claims of breach of contract; all Claims
of retaliation or discrimination under federal, state or local law (including,
without limitation, Claims of age discrimination under the Age Discrimination in
Employment Act); all Claims of defamation or other torts; all Claims of
violation of public policy; all Claims for wages, bonuses, incentive
compensation, vacation pay or any other compensation or benefits; and all Claims
for damages of any sort, including, without limitation, compensatory damages,
punitive damages and attorneys fees; provided, however, that this release shall
not affect your right to enforce this Agreement.

<PAGE>

Mr. J. Melville Engle
June 15, 2001
Page 6

         You agree that you shall not seek or accept reinstatement with any
Releasees. You also agree that you shall not seek damages of any nature,
equitable or legal remedies, attorney's fees, or costs from any of the Releasees
with respect to any Claim. As a material inducement to the Company to enter into
this Agreement, you hereby represent that you have not heretofore assigned to
any third party and you have not heretofore filed with any agency or court any
Claim released by this Agreement.

         7.       RETURN OF PROPERTY

         You will return all Company property that is in your possession,
custody or control, including, without limitation, computer equipment, software,
cellular telephones, keys and access cards, credit cards, files and any other
documents (including computerized data and any copies made of any computerized
data or software) containing information concerning the Company, its business or
customer relationships (in the latter two cases, actual or prospective), no
later than the date when this Agreement becomes effective.

         8.       COOPERATION

         You agree that, at any time in the future, you shall cooperate fully
with the Company as reasonably requested in all regulatory matters and in the
defense or prosecution of any legal claims or actions that already have been
brought or that may be brought in the future against or on behalf of the Company
that relate to events or occurrences that transpired during your employment with
the Company. Your full cooperation in connection with such regulatory matters,
claims, actions or disputes shall include, without limitation, being available
to meet with representatives of the Company to prepare for regulatory processes
and counsel to prepare for discovery or trial and to testify truthfully as a
witness when reasonably requested by the Company. The Company will reimburse you
for any reasonable out-of-pocket expenses [(which shall not be construed to
include your personal attorney's fees)] that you incur in connection with such
cooperation, provided that you provide the Company reasonable documentation of
such out-of-pocket expenses, and receive advanced written approval of any such
expenditure or group of related expenditures in excess of $250.

         9.       CONFIDENTIALITY OF AGREEMENT

         You agree to keep the existence and terms of this Agreement and all
matters leading up to your resignation, including the rationale or reasons
therefor, in the strictest confidence and to not reveal, unless legally
compelled to do so, the existence or terms of this Agreement to any persons
except your attorney and your financial advisors, provided that they also agree
to keep such information confidential. You shall be considered to have breached
this Agreement if any of those individuals fails to keep such information
completely confidential. Nothing in this Section 9 shall be construed to prevent
you from disclosing such matters to the extent required by a lawfully issued
subpoena or duly issued court order; PROVIDED that you provide the Company

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 7


with advance written notice as soon as is practicable and a reasonable
opportunity to contest such subpoena or court order. Nothing contained herein
shall be deemed to limit your rights under applicable law, including 29 U.S.C.
ss. 626(f)(4).


         10.      VALIDITY OF NON-DISCLOSURE AND NON-COMPETITION AGREEMENT


         You acknowledge and agree that you remain bound by the terms of the
Company's Non-Disclosure and Non-Competition Agreement that was executed by you
on or about August 20, 1998, in accordance with its terms after the date hereof.

         11.      NON-DISPARAGEMENT

         You will refrain from making any disparaging statements, taking any
actions, or conducting yourself in any way that adversely affects the reputation
or goodwill of the Company and/or its affiliated entities and the current and
former officers, directors, shareholders, employees and agents of any of them.
These non-disparagement obligations shall not in any way affect your obligation
to testify truthfully in any legal proceeding. You further agree to refrain from
communicating with any third parties, including, without limitation,
shareholders of the Company, regarding the Company, its business, prospects or
strategies.

         12.      CONSIDERATION OF THE AGREEMENT

         This Agreement is a legally binding document. Provided that you do not
revoke this Agreement in accordance with Section 14 below, your signature will
commit you to the terms of this Agreement. You acknowledge that you have been
advised to discuss all aspects of this Agreement with your attorney, that you
have carefully read and fully understand all of the provisions of this Agreement
and that you are voluntarily entering into this Agreement.

         13.      CONSENT TO JURISDICTION

         You and the Company hereby consent to the jurisdiction of the Superior
Court of the Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts with respect to any claim of violation of this
Agreement. With respect to any such court action you (a) submit to the
jurisdiction of such courts, (b) consent to service of process, and (c) waive
any other requirement (whether imposed by statute, rule of court or otherwise)
with respect to personal jurisdiction or venue.

         14.      OTHER PROVISIONS

         You acknowledge that you have been given the opportunity to consider
this Agreement for twenty-one (21) days before signing it. If you sign this
Agreement within less than twenty-

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 8


one (21) days of the date of its delivery to you, you acknowledge that such
decision was entirely voluntary and that you had the opportunity to consider
this Agreement for the entire twenty-one (21) day period. To accept this
Agreement, you must provide the fully signed Agreement to the undersigned by the
end of the twenty-one (21) day period. For a period of seven (7) days from the
date you sign this Agreement, you have the right to revoke this Agreement by
written notice to the undersigned. If you do not revoke this Agreement, it shall
become effective on the eighth (8th) day after you sign it. This Agreement shall
not become effective or enforceable until the expiration of the seven (7) day
revocation period (the "Effective Date").

         You acknowledge that you are aware that under Federal and state
securities laws, certain restrictions may apply to actions and communications by
you, as well as to trading in the Company's securities.

         This Agreement constitutes the entire agreement regarding the
termination of your employment with the Company. This Agreement supersedes any
previous agreements or understandings between us (including, without limitation,
that certain letter dated September 24, 1996), except as described in Sections
3, 4 and 10. In signing this Agreement, you are not relying upon any oral
promises or representations made by anyone at or on behalf of the Company.

         This Agreement will be interpreted and enforced under the laws of the
Commonwealth of Massachusetts, without regard to conflict of law principles. In
the event of any dispute, this Agreement will be construed as a whole, will be
interpreted in accordance with its fair meaning, and will not be construed
strictly for or against either you or the Company. This Agreement is executed
under seal.


<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 9


         Please indicate your agreement to the terms of this Agreement by
signing and returning to me a copy of this letter. You are advised to consult
with an attorney before signing this Agreement.

                                                Sincerely,

                                                ANIKA THERAPEUTICS, INC.

                                                By: /s/ DOUGLAS R. POTTER
                                                   ----------------------------
Accepted and agreed to:                             Douglas R. Potter
                                                    Chief Executive Officer and
                                                    Chief Financial Officer

/s/ J. MELVILLE ENGLE
- ---------------------
J. Melville Engle
Date:  June 15, 2001





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>a2057054zex-10_2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<PAGE>


                                                                 Exhibit 10.2


                          UNITED STATES DISTRICT COURT
                            DISTRICT OF MASSACHUSETTS

- -------------------------------------------------------------------------------

IN RE ANIKA THERAPEUTICS, INC.                    CIVIL ACTION NO. 00-11127-WGY
SECURITIES LITIGATION                             (All Actions)
- -------------------------------------------------------------------------------

                    STIPULATION AND AGREEMENT OF COMPROMISE,
                             SETTLEMENT AND RELEASE

         Plaintiffs in the above-captioned matters, on behalf of themselves, the
Class and all Class Members (as defined below); and defendant Anika
Therapeutics, Inc. ("Anika") and individual defendants J. Melville Engle and
Sean Moran ("Individual Defendants"), by and through their attorneys, hereby
enter into this Stipulation and Agreement of Compromise, Settlement and Release
(the "Stipulation"), as of May 25, 2001, subject to the approval of the Court
pursuant to Rule 23 of the Federal Rules of Civil Procedure and the Private
Securities Litigation Reform Act of 1995. For purposes of this Stipulation,
Anika and the Individual Defendants shall be collectively referred to as
"Defendants."

         WHEREAS:

         1. Wherever used in this Stipulation, the following terms have the
meanings set forth below:

             a. "Action" means the above-captioned consolidated action pending
in the United States District Court for the District of Massachusetts.

             b. "Authorized Claimant" means a Claimant who submits a Proof of
Claim in accordance with the criteria in paragraph 12, and whose Proof of Claim
is not rejected.

             c. "Claimant" means a Class Member who submits a Proof of Claim to
the Claims Administrator.

<PAGE>

             d. "Claims Administrator" means the firm of Strategic Claims
Services, Inc., the claims administrator selected by Plaintiffs' Lead Counsel to
assist in the administration of the Settlement.

             e. "Class" means, for purposes of this Settlement only, a plaintiff
class pursuant to Rule 23 of the Federal Rules of Civil Procedure, comprising
all Persons who purchased or otherwise acquired Anika common stock during the
period beginning and including April 15, 1998 through and including May 30,
2000, together with the successors in interest and transferees, immediate and
remote, of each of them. Excluded from the Class are the Defendants, the
officers and directors of Anika during the Class Period, members of their
immediate families (i.e., spouses, parents, siblings and children), any Person
in which any Defendant has a controlling interest, and the legal
representatives, heirs, successors in interest, and/or assigns of any such
excluded party. Also excluded from the Class are any Persons who exclude
themselves by filing a request for exclusion in accordance with the requirements
set forth in the Notice.

             f. "Class Member" means any Person included in the Class.

             g. "Class Period" means the period beginning and including April
15, 1998 through and including May 30, 2000.

             h. "Complaint" means the Consolidated Amended Class Action
Complaint filed in this Court on or about October 30, 2000.

             i. "Court" means the United States District Court for the District
of Massachusetts.

             j. "Defendants' Counsel" means the law firm of Goodwin Procter LLP.


                                       2
<PAGE>

             k. "Effective Date of Settlement" or "Effective Date" means the
date upon which the Settlement contemplated by this Stipulation shall become
effective, as set forth in paragraph 21 below.

             l. "Final Judgment" means an Order And Final Judgment to be entered
by the Court substantially in the form attached hereto as Exhibit B.

             m. "Lead Plaintiffs" means David West and Vivian West.

             n. "Notice" means the Notice of Pendency of Class Action, Proposed
Settlement Thereof, Settlement Hearing and Right to Share in the Settlement
Fund, which is to be sent to Class Members substantially in the form attached
hereto as Exhibit 1 to Exhibit A.

             o. "Notice and Administration Costs" means the notice and
administrative costs described in paragraph 6 below.

             p. "Person" means an individual, corporation, general or limited
partnership, joint stock company, joint venture, limited liability company,
estate, legal representative, trust, unincorporated association, and any other
business or legal entity and its heirs, successors, or assigns.

             q. "Plaintiffs' Lead Counsel" means the law firm of Berman,
DeValerio & Pease LLP.

             r. "Plan of Allocation" means the Plan of Allocation prepared by
Plaintiffs' Lead Counsel or such other Plan of Allocation as may be approved by
the Court.

             s. "Preliminary Approval Order" means an Order of Preliminary
Approval in Connection with Settlement Procedures to be entered by the Court
substantially in the form attached hereto as Exhibit A.


                                       3
<PAGE>

             t. "Proof of Claim" means the Proof of Claim and Release in the
form attached hereto as Exhibit 3 to Exhibit A.

             u. "Publication Notice" means the Publication Notice of Pendency of
Class Action, Proposed Settlement and Settlement Hearing in the form attached as
Exhibit 2 to Exhibit A.

             v. "Released Parties" means any and all of the Defendants and their
past or present subsidiaries, parents, predecessors, officers, directors,
shareholders, agents, employees, attorneys, advisers, investment advisers,
financial advisers, underwriters, auditors, accountants, insurers, lenders,
investment bankers, affiliates, associates, general and limited partners and
partnerships, family members, legal representatives, heirs, executors,
administrators, successors in interest or assigns, and any person, firm, trust,
corporation, officer, director or other individual or entity in which any
Defendant has a controlling interest or which is related to or affiliated with
any of the Defendants.

             w. "Settled Claims" means any and all actions, suits, claims,
demands, rights, liabilities and causes of action, of every nature and
description whatsoever, whether known or unknown, accrued or unaccrued, whether
based on federal, state, local, statutory or common law or any other law, rule
or regulation, including without limitation Unknown Claims as herein defined,
whether or not concealed or hidden, that were asserted or that could have been
asserted or could be asserted in any forum, whether brought directly, indirectly
or derivatively (including but not limited to claims for negligence, gross
negligence, breach of duty of care and/or breach of duty of loyalty, fraud,
breach of fiduciary duty, or violations of any statutes, rules, duties or
regulations), that the Lead Plaintiffs, the Class, the Class Members or any of
them, or any of their heirs, executors, administrators, representatives,
attorneys, successors, assigns, agents,


                                       4
<PAGE>

affiliates and partners, and any Persons they represent, in the past had, now
have, or might in the future have against the Released Parties or any of them,
which regard, concern, relate to, refer to, arise out of, or are based upon, in
any way: (a) the allegations, transactions, facts, matters, occurrences,
representations, omissions, disclosures, statements, failure to disclose or
failure to act involved, set forth, referred to or that were, could be, or could
have been asserted in the Action, whether known or unknown, including without
limitation Unknown Claims as herein defined, and whether or not concealed or
hidden; (b) the purchase or acquisition of shares of Anika stock during the
Class Period; (c) the Defendants' defense of or settlement of the Action; and
(d) the administration of the settlement or the distribution of funds from the
Settlement Fund. Provided, however, that the definition of Settled Claims shall
not in any way impair or restrict the rights of the settling parties to enforce
the settlement set forth in this Stipulation. As used herein, "Unknown Claims"
shall mean any and all actions, suits, claims, demands, rights, liabilities and
causes of action that the Lead Plaintiffs, the Class, or any of the Class
Members do not know of or suspect to exist in their favor at the time of the
release of the Released Parties, including but not limited to those that, if
known by them, might have affected their agreement to the Settlement. With
respect to Unknown Claims, the Lead Plaintiffs, the Class, and each of the Class
Members hereby expressly waive and relinquish, to the fullest extent permitted
by law, the benefits of Section 1542 of the California Civil Code, which states:

         A general release does not extend to claims which the creditor does not
         know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor;

and any and all provisions, rights, and benefits of any similar state or federal
or other law.

             x. "Settlement" means the settlement contemplated by this
Stipulation.


                                       5
<PAGE>

             y. "Settlement Fund" means the $1,250,000 payment to be made by
Defendants within ten (10) business days after the Court executes the
Preliminary Approval Order, together with all interest accrued and paid therein.

             z. "Settlement Hearing" means the final settlement hearing,
required by the Court, to determine, among other things, the fairness,
reasonableness, and adequacy of the Settlement.

             aa. "Stipulation" means this Stipulation and Agreement of
Compromise, Settlement and Release.

         2. The first of the putative class action complaints filed against the
Defendants and consolidated in this Action was filed in this Court on or about
June 8, 2000, and captioned CASAZZA, ET AL. V. ANIKA THERAPEUTICS, INC., J.
MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11127-WGY.

         3. Thereafter, additional complaints were filed against the Defendants,
also in this Court, and consolidated in this action. The second, filed on or
about June 26, 2000, was captioned NEMETH-COSLETT, ET AL. V. ANIKA THERAPEUTICS,
INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11257-WGY. The
third, filed on or about August 2, 2000, was captioned ROCKEFELLER, ET AL. V.
ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No.
00-11540-WGY. Each of these putative class action complaints encompassed the
same class period and covered substantively identical allegations.

         4. On or about August 7, 2000, David and Vivian West, alleged members
of the Class, filed a motion to have the Court appoint them to be Lead
Plaintiffs, to appoint Berman, DeValerio & Pease LLP as Plaintiffs' Lead
Counsel, as well as a motion for consolidation of the above cases. On or about
September 13, 2000, this Court granted David and Vivian West's


                                       6
<PAGE>

motions, consolidated the cases referred to in paragraphs 2 and 3, above, and
recaptioned the consolidated Action IN RE ANIKA THERAPEUTICS, INC. SECURITIES
LITIGATION, Civil Action No. 00-11127-WGY.

         5. On or about October 30, 2000, Lead Plaintiffs filed a Consolidated
Amended Class Action Complaint in the Action. The Complaint alleges that the
Defendants violated the federal securities laws by, INTER ALIA, making material
misrepresentations and omissions in certain public disclosures during the period
between April 15, 1998 and May 30, 2000. The alleged misrepresentations and
omissions relate to the Company's historical revenue recognition policies and
its restatement of revenues for fiscal year 1998 and the first three quarters of
1999.

         6. Following negotiations, the parties reached an agreement in
principle on the terms of a settlement of the Action. Accordingly, the parties
entered into a Memorandum of Understanding ("MOU") dated March 8, 2001. The MOU
provides that the effectuation of the settlement contemplated thereunder is
subject to, among other things, (i) the parties' execution of an appropriate
Stipulation; (ii) certification of the Class for purposes of the Settlement;
(iii) Court approval of the Settlement; (iv) confirmatory discovery and (v)
dismissal of the Action with prejudice and with each party bearing his/its own
costs except as otherwise provided for herein.

         7. Solely for purposes of settlement and for carrying out the terms of
this Stipulation, the parties have agreed to this Court's certification of the
Class pursuant to Rule 23 of the Federal Rules of Civil Procedure.

         8. Defendants deny all liability with respect to the Action, deny that
they have engaged in any wrongdoing, deny the allegations in the Complaint filed
in the Action, deny that they committed any violation of law, deny that they
acted improperly in any way, and deny


                                       7
<PAGE>

liability of any kind to the plaintiffs named in the initial complaints, the
Lead Plaintiffs, the Class, or the Class Members, but have agreed to the
settlement and dismissal of the Action with prejudice in order to: (i) avoid the
substantial expense, inconvenience and distraction of protracted litigation; and
(ii) finally put to rest and terminate the Action and any and all Settled
Claims.

         9. Plaintiffs' Lead Counsel has conducted discussions and arms' length
negotiations with Defendants' Counsel with respect to a compromise and
settlement of the Action with a view to settling the issues in dispute and
achieving the best relief possible consistent with the interests of the Lead
Plaintiffs, the Class, and all Class Members.

         10. Plaintiffs' Lead Counsel has concluded that the terms and
conditions of this Stipulation are fair, reasonable, and in the best interests
of the Lead Plaintiffs, the Class, and all Class Members; have agreed that the
Released Parties should be released from the Settled Claims pursuant to the
terms and provisions of this Stipulation; and have agreed to the dismissal of
the Action with prejudice, after considering the substantial benefits that the
Lead Plaintiffs, the Class, and all Class Members will receive from settlement
of the Action, the risks of litigation, and the desirability of permitting the
Settlement to be consummated as provided by the terms of this Stipulation.

         NOW, THEREFORE, it is hereby STIPULATED AND AGREED, by and among the
parties to this Stipulation, through their respective attorneys, subject to the
approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil
Procedure and the Private Securities Litigation Reform Act of 1995, in
consideration of the benefits flowing to the parties hereto from the Settlement,
that the Settled Claims as against the Released Parties shall be compromised,

                                       8
<PAGE>

settled, forever released, barred, and dismissed with prejudice, upon and
subject to the following terms and conditions:

                      RELEASE; SCOPE AND EFFECT OF RELEASE

         1. The obligations incurred pursuant to this Stipulation shall be in
full and final disposition of the Action with prejudice and of any and all
Settled Claims as against all Released Parties.

         2. On the Effective Date, the Lead Plaintiffs, the Class, and the Class
Members, on behalf of themselves, their heirs, executors, administrators,
representatives, attorneys, successors, assigns, agents, affiliates and
partners, and any Persons they represent ("Releasing Parties"), shall be deemed
to have, and by operation of the Final Judgment shall have, fully, finally and
forever released, relinquished, and discharged the Released Parties of and from
any and all of the Settled Claims, and the Releasing Parties shall forever be
barred and enjoined from bringing or prosecuting any Settled Claim against any
of the Released Parties.

                            SETTLEMENT CONSIDERATION

         3. Within ten (10) business days after the Court executes the
Preliminary Approval Order, Defendants shall pay or cause to be paid
$1,250,000.00 ("the Settlement Fund") into an interest bearing escrow account to
be established by Plaintiffs' Lead Counsel. Plaintiffs' Lead Counsel shall
administer the Settlement Fund. The Settlement Fund, less any amounts reasonably
incurred for notice, administration, and/or taxes pursuant to the Stipulation,
shall revert to the Defendant(s) making the payment of the settlement amount if
the Settlement does not become effective.

         4. (a) The Settlement Fund, net of any taxes on the income thereof,
shall be used to pay (i) the reasonable Notice and Administration Costs referred
to in paragraph 6 hereof, and


                                       9
<PAGE>

(ii) the award of attorneys' fees and reimbursement of expenses referred to in
paragraph 7 hereof. The balance of the Settlement Fund after the above payments
shall be distributed to the Authorized Claimants in this Action as provided in
paragraphs 8-16 hereof. All funds held by Plaintiffs' Lead Counsel in the
Settlement Fund shall be deemed to be IN CUSTODIA LEGIS and shall remain subject
to the jurisdiction of the Court until such time as the funds shall be
distributed or returned to Defendants pursuant to this Stipulation and/or
further order of the Court. Plaintiffs' Lead Counsel shall invest any funds in
excess of $50,000 in United States Government obligations with a maturity of 180
days or less, and shall collect and reinvest in the Settlement Fund all interest
accrued thereon. Any funds held in escrow in an amount of less than $50,000 may
be held in an interest bearing bank account insured by the Federal Deposit
Insurance Corporation (FDIC).

             (b) The parties hereto agree that the Settlement Fund is intended
to be a Qualified Settlement Fund within the meaning of Income Tax Regulation
ss. 1.468B-1 and that the Claims Administrator, as administrator of the
Settlement Fund within the meaning of Income Tax Regulation ss. l.468B-2(k)(3),
shall be responsible for filing tax returns for the Settlement Fund and paying
from the Settlement Fund any taxes owed with respect to the Settlement Fund.
Defendants' Counsel agree to provide promptly to Plaintiffs' Lead Counsel the
statement described in Income Tax Regulation ss. 1.468B-3(e).

(i) ADMINISTRATION.

         5. The Claims Administrator shall administer the Settlement under
Plaintiffs' Lead Counsel's supervision and subject to the jurisdiction of this
Court. The allocation of the Settlement Fund among the Class Members shall be
subject to a plan of allocation to be proposed by Plaintiffs' Lead Counsel and
approved by the Court. Except as stated in the last sentence of


                                       10
<PAGE>

this paragraph, Defendants shall have no responsibility for the administration
of the Settlement, the maintenance or investments of the Settlement Fund, or
distribution of the Settlement Fund, and shall have no liability to the Lead
Plaintiffs, the Class, or any Class Member in connection with such
administration or distribution or the maintenance or investment of the
Settlement Fund. Defendants agree to provide Plaintiffs' Lead Counsel, within
ten (10) business days after signing this Stipulation, such information from
Defendants' stock transfer records concerning the identity of Class Members as
made available by Defendants' stock transfer agent following request by
Defendants as appropriate for providing Notice to the Class.

         6. Prior to the Effective Date, Plaintiffs' Lead Counsel may expend
from the Settlement Fund, without further approval from the Defendants or the
Court, up to the sum of $50,000.00 to pay the reasonable costs and expenses
actually incurred in the administration of the Settlement, including without
limitation the costs of identifying members of the Class, mailing the Notice,
and publishing the Publication Notice. Such amounts shall include, without
limitation, the reasonable actual costs of publication, printing and mailing the
Notice, reasonable reimbursements to nominee owners for forwarding notice to
their beneficial owners, and the reasonable administrative expenses incurred and
fees charged by the Claims Administrator in connection with providing notice and
processing the claims filed. All such amounts are the "Notice and Administration
Costs." All Notice and Administration Costs shall be paid solely from the
Settlement Fund, and none of the Defendants shall be required to pay any portion
of the Notice and Administration Costs.

(ii) ATTORNEYS' FEES AND EXPENSES.

         7. Plaintiffs' Lead Counsel will apply to the Court for an award from
the Settlement Fund of attorneys' fees and reimbursement of out-of-pocket
expenses on behalf of plaintiffs'


                                       11
<PAGE>

counsel. Defendants agree that they will take no position with regard to
Plaintiffs' Lead Counsel's application for an award of attorneys' fees and
reimbursement of expenses. Such attorneys' fees and reimbursement of expenses as
are awarded by the Court shall be paid from the Settlement Fund to Plaintiffs'
Lead Counsel immediately upon entry by the Court of an order awarding them,
notwithstanding the existence of any timely-filed objections thereto or
potential for appeal therefrom, or collateral attack on the Settlement, subject
to the joint and several obligation of all Plaintiffs' counsel to make
appropriate refunds or repayments to the Settlement Fund plus accrued interest
at the rate paid on the Settlement Fund by the financial institution holding it,
if and when, as a result of any appeal and/or further proceedings on remand, or
a successful collateral attack, the award is reduced or reversed or does not
become final. All such attorneys' fees and reimbursement of expenses shall be
paid solely from the Settlement Fund, and none of the Defendants shall be
required to pay any portion of such attorneys' fees and reimbursement of
expenses.

(iii) CLASS DISTRIBUTION.


         8. The Claims Administrator shall determine for each Authorized
Claimant the appropriate PRO RATA share of the Settlement Fund, based upon each
Authorized Claimant's Recognized Loss (as defined in the Plan of Allocation).

         9. Each Authorized Claimant shall be allocated a PRO RATA share of the
Settlement Fund based on his or her Recognized Loss compared to the total
Recognized Losses of all accepted claimants. In no case, however, shall an
Authorized Claimant's PRO RATA share of the Settlement Fund be greater than such
Authorized Claimant's Recognized Loss. The Claims Administrator shall pay each
Authorized Claimant the appropriate distribution amount from the Settlement
Fund, net of attorneys' fees, expenses, and other costs described above. If any
funds remain in the Settlement Fund after all Authorized Claimants have been
paid, then such funds shall be donated to charity.


                                       12
<PAGE>

                        ADMINISTRATION OF THE SETTLEMENT

         10. Any Class Member who does not submit a Proof of Claim is not
eligible to receive any portion of the Settlement Fund, but otherwise shall be
bound by all of the terms of this Stipulation and the Settlement, including the
terms of the Order and Final Judgment to be entered in the Action and the
releases provided for herein, and will be barred and enjoined from bringing or
prosecuting any action against the Released Parties concerning the Settled
Claims.

         11. Plaintiffs' Lead Counsel shall be responsible for supervising the
administration of the Settlement and disbursement of the Settlement Fund by the
Claims Administrator. Defendants shall have no responsibility for the
administration of the Settlement or distribution of the Settlement Fund and
shall have no liability to the Lead Plaintiffs, the Class, or any Class Member
in connection with such administration or distribution. Plaintiffs' Lead Counsel
shall have the right, but not the obligation, to waive what they deem to be
formal or technical defects in any submitted Proof of Claim in the interests of
achieving substantial justice.

         12. For purposes of determining the extent, if any, to which a Class
Member shall be entitled to be treated as an "Authorized Claimant," the
following conditions shall apply:

             (a) Each Class Member shall be required to submit a complete and
executed Proof of Claim (see attached Exhibit 3 to Exhibit A), supported by such
documents as are designated therein, including proof of the Class Member's loss,
or such other documents or proof as Plaintiffs' Lead Counsel, in their
discretion, may deem acceptable;

             (b) All Proofs of Claim must be submitted by the date specified in
the Notice unless such period is extended by Order of the Court. Any Class
Member who fails to submit a Proof


                                       13
<PAGE>

of Claim by such date shall be forever barred from receiving any payment
pursuant to this Stipulation (unless, by Order of the Court, a later-submitted
Proof of Claim by such Class Member is approved), but otherwise shall be bound
by all of the terms of this Stipulation and Settlement, including the terms of
the Final Judgment to be entered in the Action and the releases provided for
herein, and will be barred and enjoined from bringing or prosecuting any action
against the Released Parties concerning the Settled Claims. A Proof of Claim
shall be deemed to have been submitted when postmarked, if received with a
postmark indicated on the envelope and if mailed first class, and addressed in
accordance with the instructions thereon. In all other cases, the Proof of Claim
shall be deemed to have been submitted when actually received by the Claims
Administrator;

             (c) Each Proof of Claim shall be submitted to the Claims
Administrator and shall be reviewed by the Claims Administrator under the
supervision of Plaintiffs' Lead Counsel, who shall determine in accordance with
this Stipulation the extent, if any, to which each claim shall be allowed,
subject to review by the Court pursuant to subparagraph (e) below;

             (d) Proofs of Claim that do not meet the submission requirements
may be rejected. Prior to rejection of a Proof of Claim, the Claims
Administrator shall communicate with the Class Member submitting the Proof of
Claim ("the Claimant") in order to remedy any curable deficiencies in the Proof
of Claim submitted. The Claims Administrator, under supervision of Plaintiffs'
Lead Counsel, shall notify, in a timely fashion and in writing, all Claimants
whose Proofs of Claim it proposes to reject in whole or in part, setting forth
the reasons therefore, and shall indicate in such notice that the Claimant whose
claim is to be rejected has the right to a review by the Court if the Claimant
so desires and complies with the requirements of subparagraph (e) below; and


                                       14
<PAGE>

             (e) If any Claimant whose claim has been rejected in whole or in
part desires to contest such rejection, the Claimant must, within twenty (20)
days after the date of mailing of the notice required in subparagraph (d) above,
serve upon the Claims Administrator a notice and statement of reasons indicating
the Claimant's grounds for contesting the rejection, along with any supporting
documentation, and requesting a review thereof by the Court. If a dispute
concerning a claim cannot be otherwise resolved, Plaintiffs' Lead Counsel shall
thereafter present the notice and statement of reasons to the Court for its
review.

         13. Each Claimant shall be deemed to have submitted to the jurisdiction
of the Court with respect to the Claimant's Proof of Claim, and the Proof of
Claim will be subject to investigation and discovery under the Federal Rules of
Civil Procedure, provided that such investigation and discovery shall be limited
to that Claimant's status as a Class Member and the validity and amount of the
Claimant's Proof of Claim. No discovery shall be allowed on the merits of the
Action or the Settlement.

         14. Payment pursuant to this Stipulation shall be deemed final and
conclusive against all Class Members. Any Class Member whose claim is rejected
shall be barred from participating in distributions from the Settlement Fund,
but otherwise shall be bound by all of the terms of this Stipulation and the
Settlement, including the terms of the Final Judgment to be entered in the
Action and the releases provided for herein, and will be barred and enjoined
from bringing or prosecuting any action against the Released Parties concerning
the Settled Claims.

         15. All proceedings with respect to the administration, processing, and
determination of Claims described by paragraphs 8-16 of this Stipulation and the
determination of all controversies relating thereto, including disputed
questions of law and fact with respect to the validity of any Proof of Claim,
shall be subject to the jurisdiction of the Court.


                                       15
<PAGE>

         16. The Settlement Fund shall be distributed to Authorized Claimants by
the Claims Administrator only after the Effective Date and after: (i) all Claims
have been processed, and all Claimants whose Proofs of Claim have been rejected
or disallowed, in whole or in part, have been notified and provided the
opportunity to be heard, pursuant to this Stipulation and the Preliminary
Approval Order, concerning such rejection or disallowance; (ii) all objections
with respect to all rejected or disallowed Proofs of Claim have been resolved by
the Court, and all appeals from such rulings by the Court have been resolved or
the time for such appeal has expired; (iii) all matters with respect to
attorneys' fees and reimbursement of expenses have been resolved by the Court,
and all appeals from such rulings by the Court have been resolved or the time
for such appeals has expired; and (iv) all costs of administration pursuant to
the Stipulation have been paid.

                    RIGHT TO REQUEST EXCLUSION FROM THE CLASS

         17. Class Members shall have the right to request exclusion from the
Class by submitting a written request for exclusion to Plaintiffs' Lead Counsel
and Defendants' Counsel in accordance with procedures to be approved by the
Court. Any Class Member who properly and timely requests exclusion from the
Class shall not be bound by the Final Judgment and shall have no right to
participate in any distribution from the Settlement Fund. In order to be
effective, a request for exclusion ("Request for Exclusion") must be postmarked
by the date set forth in the Preliminary Approval Order, must set forth the
information required by the Preliminary Approval Order and must be signed by the
Class Member seeking exclusion.


                                       16
<PAGE>

                      TERMS OF ORDER FOR NOTICE AND HEARING

         18. Concurrently with their filing of this Stipulation, Plaintiffs'
Lead Counsel and Defendants' Counsel shall jointly apply to the Court for
preliminary Court approval of the Settlement contemplated by this Stipulation
and entry of a Preliminary Approval Order, substantially in the form appended
hereto as Exhibit A.

                        TERMS OF ORDER AND FINAL JUDGMENT

         19. If the Settlement contemplated by this Stipulation is approved by
the Court, counsel for the parties shall request that the Court enter Final
Judgment substantially in the form appended hereto as Exhibit B.

                               OPTION TO WITHDRAW

         20. Defendants shall have the option to withdraw from this Stipulation
without prejudice if holders of a certain number of shares of Anika
publicly-traded common stock as set forth in a letter agreement among counsel
for the parties, purchased during the Class Period by members of the Class
(which purchasers would otherwise be entitled to participate as members of the
Class), timely and validly request exclusion from the Class pursuant to the
Preliminary Approval Order. The procedure for making such an election is as
follows:

         (a) Plaintiffs' Lead Counsel and/or the Claims Administrator will
inform Defendants' Counsel no later than fourteen (14) days before the
Settlement Hearing of the number of Class Members who requested exclusion from
the Class and the number of shares purchased by each such Class Member during
the Class Period.

         (b) Such option to withdraw shall be exercised by serving written
notice, signed by Defendants' Counsel, upon Plaintiffs' Lead Counsel, but not
fewer than four (4) business days before the Settlement Hearing.


                                       17
<PAGE>

         (c) If Defendants exercise their option to withdraw from the Settlement
as provided herein, this Stipulation will be null and void and of no further
force and effect, except that the provisions of paragraphs 23 and 24 will
survive and apply.

               EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

         21. The Effective Date of Settlement shall be the date when all the
following shall have occurred:

             (a) entry of the Preliminary Approval Order in all material
respects in the form appended hereto as Exhibit A;

             (b) approval by the Court of the Settlement, following notice to
the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil
Procedure; and

             (c) entry by the Court of Final Judgment, in all material respects
in the form appended hereto as Exhibit B, and the expiration of any time for
appeal or review of such Final Judgment, or, if any appeal is filed and not
dismissed, after such Final Judgment is upheld on appeal in all material
respects and is no longer subject to review upon appeal or review by writ of
certiorari, or, in the event that the Court enters an order and final judgment
in a form other than that provided above ("Alternative Judgment") and none of
the parties hereto elects to terminate this Settlement, the date that such
Alternative Judgment becomes final and no longer subject to appeal or review by
writ of certiorari.

         22. Defendants' Counsel or Plaintiffs' Lead Counsel shall have the
right to terminate the Settlement and this Stipulation by providing written
notice of their election to do so ("Termination Notice") to all other parties
hereto within thirty days of (a) the Court's declining to enter the Preliminary
Approval Order or modification of that Preliminary Approval Order in any
material respect; (b) the Court's declining to approve the Settlement embodied
in this


                                       18
<PAGE>

Stipulation, or any material part of it; (c) the Court's declining to enter the
Final Judgment or modification of the Final Judgment in any material respect;
(d) the date upon which the Final Judgment is modified, reversed, or vacated in
any material respect by the Court, the Court of Appeals or the United States
Supreme Court; or (e) the date upon which an Alternative Judgment is modified,
reversed, or vacated in any material respect by the Court, the Court of Appeals
or by the United States Supreme Court.

         23. Except as otherwise provided herein, in the event the Settlement is
terminated or modified in any material respect or fails to become effective for
any reason, then the Settlement shall be without prejudice and none of its terms
shall be effective or enforceable; the parties to this Stipulation shall be
deemed to have reverted to their respective status in the Action as of the date
and time immediately prior to the execution of this Stipulation; except as
otherwise expressly provided, the parties shall proceed in all respects as if
this Stipulation and any related orders had not been entered; and any portion of
the Settlement Fund previously paid by Defendants, together with any interest
earned thereon, less any taxes due with respect to such income and less Notice
and Administration Costs actually incurred and paid or payable from the
Settlement Fund pursuant to this Stipulation, shall be returned to such
Defendant(s) as paid the settlement amount into the Settlement Fund. In the
event the Settlement is terminated or modified in any material respect, the
Defendants shall be deemed to have retained all rights to object to the
maintenance of the Action as a class action or the appropriateness of the Lead
Plaintiffs as class representatives pursuant to Rule 23 of the Federal Rules of
Civil Procedure and shall further be deemed not to have waived, modified, or be
estopped from asserting any additional defenses available to them.


                                       19
<PAGE>

                           NO ADMISSION OF WRONGDOING

         24. This Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:

             (a) shall not be offered or received against the Defendants as
evidence of, or construed as or deemed to be evidence of, any presumption,
concession, or admission by any of the Defendants of the truth of any fact
alleged by the Plaintiffs or the validity of any claim that had been or could
have been asserted in the Action or in any litigation, whether directly or
derivatively, or the deficiency of any defense that has been or could have been
asserted in the Action, or of any liability, negligence, fault, or wrongdoing of
the Defendants;

             (b) shall not be offered or received against the Defendants as
evidence of a presumption, concession, or admission of any fault,
misrepresentation, or omission with respect to any statement or written document
approved or made by any Defendant, or against the Plaintiffs and the Class as
evidence of any infirmity in the claims of the Plaintiffs and the Class;

             (c) shall not be offered or received against the Defendants as
evidence of a presumption, concession, or admission of any liability,
negligence, fault or wrongdoing, or in any way referred to for any other reason
as against any of the parties to this Stipulation, in any other civil, criminal,
or administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of this Stipulation; provided, however,
that if this Stipulation is approved by the Court, Defendants may refer to it
and rely upon it to effectuate the liability protection granted them hereunder;
and

             (d) shall not be construed against the Defendants or the Plaintiffs
and the Class as an admission or concession that the consideration to be given
hereunder represents the amount that could be or would have been recovered after
trial.


                                       20
<PAGE>

                            MISCELLANEOUS PROVISIONS

         25. All of the exhibits attached hereto are hereby incorporated by
reference as though fully set forth herein.

         26. The parties to this Stipulation intend the Settlement to be a final
and complete resolution of all disputes asserted or that could be or could have
been asserted by the Lead Plaintiffs, the Class, and/or any of the Class Members
against the Released Parties with respect to the Settled Claims. Accordingly,
the Defendants agree not to assert that the litigation was brought in bad faith
or without a reasonable basis. The parties agree that the amount paid and the
other terms of the Settlement were negotiated at arms' length in good faith by
the parties, and reflect a settlement that was reached voluntarily by the
parties after consultation with their respective experienced legal counsel. The
parties will propose to the Court an agreed upon Final Judgment, which will
contain a finding that, at all times during the litigation, all parties hereto
and their counsel complied with Fed. R. Civ. P. 11.

         27. This Stipulation may not be modified or amended, nor may any of its
provisions be waived except by a writing signed by all parties hereto or their
successors-in-interest.

         28. The headings herein are used for the purpose of convenience only
and are not intended to have legal effect.

         29. The administration and consummation of the Settlement as embodied
in this Stipulation shall be under the authority of the Court, and the Court
shall retain jurisdiction for the purpose of entering orders providing for
awards of attorneys' fees and reimbursement of expenses to Plaintiffs' counsel
and enforcing the terms of this Stipulation.

         30. The waiver by one party of any breach of this Stipulation by any
other party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.


                                       21
<PAGE>

         31. This Stipulation and its exhibits constitute the entire agreement
among the parties hereto concerning the Settlement of the Action, and no
representations, warranties, or inducements have been made by any party hereto
other than those contained and memorialized in such documents.

         32. This Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the same
instrument provided that counsel for the parties to this Stipulation shall
exchange among themselves original signed counterparts.

         33. This Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.

         34. The construction, interpretation, operation, effect and validity of
this Stipulation, and all documents necessary to effectuate it, shall be
governed by the internal laws of the Commonwealth of Massachusetts without
regard to conflicts of laws, except to the extent that preemption by federal law
requires that federal law govern.

         35. This Stipulation shall not be construed more strictly against one
party than another merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties, it being recognized by the
parties that this Stipulation is the result of arms' length negotiations between
the parties and that all parties have contributed substantially and materially
to the preparation of this Stipulation.

         36. All counsel and any other person executing this Stipulation and any
of the exhibits hereto, or any related settlement documents, warrant and
represent that they have the full authority to do so and that they have the
authority to take appropriate action required or permitted to be taken pursuant
to the Stipulation to effectuate its terms.


                                       22
<PAGE>

         37. Plaintiffs' Lead Counsel and Defendants' Counsel agree to cooperate
fully with one another in seeking Court approval of the Preliminary Order in
Connection with the Settlement Proceedings, the Stipulation and Agreement of
Settlement, and to promptly agree upon and execute all such other documentation
as may be reasonably required to obtain final approval by the Court of the
Settlement.

Dated:  May 25, 2001

                                     BERMAN, DEVALERIO & PEASE LLP



                                     By: /s/ KATHLEEN M. DONOVAN-MAHER
                                         -----------------------------
                                         Glen DeValerio, BBO #122010
                                         Kathleen M. Donovan-Maher, BBO #558947
                                         One Liberty Square
                                         Boston, MA  02109
                                         (617) 542-8300

                                     PLAINTIFFS' LEAD COUNSEL


LAW OFFICES OF CHARLES J. PIVEN
Charles J. Piven
The World Trade Center, Suite 2525
401 E. Pratt Street
Baltimore, MD 21202
(410) 332-0030

LAW OFFICES OF LEO W. DESMOND
Leo W. Desmond
2161 Palm Beach Lake Blvd., Suite 204
W. Palm Beach, FL 33409
(561) 712-8000



                                       23
<PAGE>


RABIN & PECKEL LLP
Brian Murray
275 Madison Avenue
New York, NY 10016
(212) 682-1818

WOLF HALDENSTEIN ADLER FREEMAN & HERZ
Peter C. Harrar
270 Madison Avenue
New York, NY 10016
(212) 545-4600

ADDITIONAL PLAINTIFFS' COUNSEL


                                          GOODWIN PROCTER LLP


                                          By: /s/ GUS P. COLDEBELLA
                                              ---------------------
                                              Stephen D. Poss, P.C. BBO #551760
                                              Gus P. Coldebella BBO #566918
                                              Exchange Place
                                              Boston, MA  02109
                                              (617) 570-1000

                                          COUNSEL FOR DEFENDANTS ANIKA
                                          THERAPEUTICS, INC., J. MELVILLE ENGLE
                                          AND SEAN MORAN

                                       24

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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