DUSA Pharmaceuticals Reports Third Quarter 2009 Corporate Highlights and Financial Results

Q3 Domestic PDT revenues up 32% year over year; Q3 Non-GAAP loss improves 86% year over year to ($0.2) million


WILMINGTON, Mass., Nov. 6  /PRNewswire-FirstCall/ -- DUSA Pharmaceuticals, Inc.® (Nasdaq GM: DUSA), a dermatology company that is developing and marketing Levulan® Photodynamic Therapy (PDT) and other products focused on patients with common skin conditions, reported today its corporate highlights and financial results for the third quarter ended September 30, 2009.

  Third quarter and year-to-date financial highlights include:

  --  Domestic PDT revenues totaled $6.2 million for the third quarter of
      2009, representing a $1.5 million, or 32%, improvement as compared to
      the third quarter of 2008.  Year-to-date 2009 domestic PDT revenues
      totaled $18.7 million, representing a $3.8 million, or 25%,
      improvement year over year.
  --  Domestic Kerastick® revenues totaled $5.8 million for the third
      quarter of 2009, representing a $1.4 million, or 32%, improvement as
      compared to the third quarter of 2008. Year-to-date 2009 domestic
      Kerastick® revenues totaled $17.1 million, representing a $3.4
      million, or 25%, improvement year over year.
  --  Domestic BLU-U® revenues totaled $0.5 million for the third quarter of
      2009, representing a $0.1 million, or 22%, improvement as compared to
      the third quarter of 2008.  Year-to-date 2009 domestic BLU-U® revenues
      totaled $1.6 million, representing a $0.4 million, or 32%, improvement
      year over year.
  --  Kerastick® gross margins for the third quarter of 2009 reached a
      record high of 86%.

  --  Non-GAAP loss for the third quarter of 2009 improved 86% year over
      year, and narrowed to $0.2 million.


  Management Comments:



"We are excited to report the improvement in many of our key financial indicators this quarter," stated Robert Doman, President and CEO.  "The combination of strong top line PDT revenue growth, the achievement of record Kerastick margins, and reductions in our overall spending drove our non-GAAP loss to a record low point."

"We experienced significant growth in Kerastick revenue during the third quarter.  This is due in part to solid execution by the sales and marketing team and a 33% increase in BLU-U volume year-to-date.  This represents the 16th consecutive quarter of year over year domestic Kerastick growth."

"In October, we announced an important milestone in the Company's history, having surpassed cumulative Kerastick sales of one million units.  The achievement of this milestone demonstrates the relevance that PDT is gaining in the medical dermatology community," continued Doman.

"For the remainder of the year, we will focus our efforts on further capitalizing on the significant growth potential that exists for Levulan PDT in the treatment of actinic keratoses (AKs)," concluded Doman.

Third Quarter 2009 Financial Results:

Total product revenues were $6.9 million in the third quarter of 2009, up 21% from $5.7 million in the third quarter of 2008.  PDT revenues totaled $6.7 million, up $1.5 million, or 30%, from $5.2 million for the comparable 2008 period.  The increase in PDT revenues was attributable to a 32% increase in Kerastick® revenues and a 7% increase in BLU-U® revenues.  The Kerastick® revenue improvement was driven by a 20% increase in our domestic Kerastick® volume and an overall 10% increase in our average selling price.  Kerastick® sales volumes increased to 53,622 in the third quarter of 2009 from 44,668 units sold in the third quarter of 2008.  Domestic Kerastick® sales volumes increased by 7,938 units, or 20%, and were supplemented by a 1,016 unit increase in our international sales volumes.  The BLU-U® revenue increase was driven by a 4% increase in sales volume.  There were 59 units sold during the quarter, as compared to the prior year quarterly total of 57 units.  Non-PDT revenues totaled $0.2 million versus $0.6 million for the comparable 2008 period.  Non-PDT revenues were adversely impacted by the absence of Nicomide® royalty revenues in 2009.  DUSA has not received the installment payments due under its exclusive Nicomide® patent license agreement with River's Edge since June 2009.  The Company is currently evaluating its options to collect the amounts due from River's Edge.

DUSA's net loss on a GAAP basis for the third quarter of 2009 was ($0.4) million, or ($0.02) per common share, compared to a net loss of ($2.8) million, or ($0.12) per common share, in the third quarter of 2008.

DUSA's non-GAAP net loss for the third quarter of 2009, after adjustments for stock-based compensation expense, consideration provided to the former Sirius shareholders, and the non-cash change in fair value of warrants, was ($0.2) million, or ($0.01) per common share, compared to a net loss of ($1.6) million, or ($0.07) per common share, in the prior year period.  The decrease in the Company's net loss was primarily the result of the year over year increase in our PDT revenues and lower operating costs due to the absence of spending on our Phase IIb acne clinical trial which concluded in 2008.

Please refer to the section entitled "Use of Non-GAAP Financial Measures" and the accompanying financial table included at the end of this release for a reconciliation of GAAP to non-GAAP results for the three and nine month periods ending September 30, 2008 and 2009, respectively.

Year-to-Date 2009 Financial Results:

Total product revenues for the nine month period ended September 30, 2009 were $21.0 million, down 3% from $21.8 million in comparable prior year period.  PDT revenues totaled $19.8 million, up $3.4 million, or 21% from $16.4 million for the comparable 2008 period.  The increase in PDT revenues was attributable to a 20% increase in Kerastick® revenues and a 26% increase in BLU-U® revenues.  The Kerastick® revenue improvement was driven by a 13% increase in our domestic Kerastick® volume and an overall 13% increase in our average selling price.  Kerastick® sales volumes increased to 155,384 in 2009 from 145,256 units sold in 2008.  Domestic Kerastick® sales volumes increased by 15,966 units, or 13%, and were partially offset by a 5,838 unit decrease in our international sales volumes.  The BLU-U® revenue increase was driven by a 29% increase in sales volume.  There were 198 units sold during in 2009, representing a 44 unit increase over the prior year total of 154 units.  Non-PDT revenues totaled $1.2 million versus $5.4 million for the comparable 2008 period.  Non-PDT revenues were adversely impacted by the absence of Nicomide® sales in 2009.  In response to discussions with the Food and Drug Administration (FDA) regarding our marketing of certain products considered by the FDA to be marketed unapproved drugs, the Company stopped shipping Nicomide® into the wholesale channel in June of 2008.

DUSA's net loss on a GAAP basis for the nine months ended September 30, 2009 was ($2.9) million or ($0.12) per common share, compared to a net loss of ($4.3) million or ($0.18) per common share in 2008.

DUSA's non-GAAP net loss, after adjustments for stock-based compensation expense, a milestone payment made related to the Sirius acquisition, consideration provided to the former Sirius shareholders, and the non-cash change in fair value of warrants, for the nine months ending September 30, 2009 was ($1.9) million, or ($0.08) per common share, in 2009, compared to ($2.5) million, or ($0.10) per common share, in 2008.  The decrease in our net loss was primarily the result of the year over year decrease in our operating costs due mainly to the absence of spending on our Phase IIb acne clinical trial which concluded in 2008, and a Prescription Drug User Fee Act (PDUFA) charge accrued in the prior year period.

As of September 30, 2009, total cash, cash equivalents, and marketable securities were $15.0 million, compared to $18.9 million at December 31, 2008.

  Other Updates:

  --  Solid Organ Transplant Recipients Clinical Development.
      --  In May 2009, the Company announced the initiation of its Phase II
          clinical trial that is examining the safety and efficacy of PDT
          for the treatment of broad area AKs and the prevention of squamous
          cell carcinomas in high risk chronically immunosuppressed solid
          organ transplant recipients.  All seven clinical sites have been
          initiated and trial enrollment is currently underway.

      --  In May 2008, DUSA filed an Orphan Drug Designation application
          with the FDA with respect to the prevention of cancer occurrence
          in these patients. The Company received initial correspondence
          that the application was not granted on the basis that the agency
          believes that the prevalence of the target population with the
          disease state is greater than 200,000, which is the maximum number
          of patients allowed under the Orphan Drug legislation. During the
          third quarter of 2009, DUSA met with the FDA to clarify and
          explain in more detail our rationale for the application and,
          based on that meeting, the agency has invited us to submit an
          amendment to our application for further evaluation. DUSA is in
          the process of drafting the amendment and expects to submit it to
          the FDA later this month.

  --  BLU-U® Claims Expansion.

      --  In May 2009, the Company filed a 510(k) application with the FDA
          to expand the allowed claims on BLU-U® to include severe acne. The
          filing was based on the results of our Phase IIb clinical trial.
          We received a response to our application from the FDA in June
          2009.  The agency requested additional information in order to
          complete its review of our application, including supplementary
          clinical data in support of our claims. Based on the FDA's
          requests and the anticipated costs of additional clinical trials,
          the Company has decided not to pursue the 510(k) application for
          an expansion of the BLU-U® claims at this time.



Revenues Table, Condensed Consolidated Balance Sheets, Condensed Consolidated Statement of Operations and GAAP to Non-GAAP reconciliation follow:

Revenues for the three month and nine month periods were comprised of the following:

                                Three-months ended      Nine-months ended
                                  September 30,            September 30,
                                 2009       2008        2009         2008
                             (Unaudited) (Unaudited) (Unaudited) (Unaudited)

  PDT Drug & Device Product Revenues
   Kerastick(R) Product Revenues:
    United States             $5,790,000 $4,374,000 $17,096,000 $13,720,000
    Canada                       162,000     72,000     404,000     449,000
    Korea                        201,000    186,000     498,000     710,000
    Other                         91,000     99,000     261,000     289,000
     Subtotal Kerastick(R)
      Product Revenues         6,244,000  4,731,000  18,259,000  15,168,000
   BLU-U(R) Product Revenues:
    United States                456,000    376,000   1,577,000   1,198,000
    Korea                              -     50,000           -      50,000
     Subtotal BLU-U(R)
      Product Revenues           456,000    426,000   1,577,000   1,248,000
  Total PDT Drug & Device
   Product Revenues            6,700,000  5,157,000  19,836,000  16,416,000
  Total Non-PDT Product
   Revenues                      230,000    569,000   1,198,000   5,352,000
    TOTAL PRODUCT REVENUES    $6,930,000 $5,726,000 $21,034,000 $21,768,000



  DUSA Pharmaceuticals, Inc.
  Condensed Consolidated Balance Sheets

                                           September 30,  December 31,
                                               2009           2008
                                           (Unaudited)
                                           --------------------------
  ASSETS
  CURRENT ASSETS
    Cash and cash equivalents              $5,016,994     $3,880,673
    Marketable securities                  10,012,948     15,002,830
    Accounts receivable, net                2,519,214      2,367,803
    Inventory                               2,336,167      2,812,825
    Prepaid and other current assets        1,647,408      1,873,801
                                            ---------      ---------
         TOTAL CURRENT ASSETS              21,532,731     25,937,932
  Restricted cash                             174,170        173,844
  Property, plant and equipment, net        1,721,488      1,937,978
  Deferred charges and other assets            68,099        160,700
                                               ------        -------
       TOTAL ASSETS                       $23,496,488    $28,210,454
                                          ===========    ===========

  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES
    Accounts payable                         $188,417       $305,734
    Accrued compensation                      889,230      1,515,912
    Other accrued expenses                  2,343,822      3,226,571
    Deferred revenue                        1,045,505        611,602
                                            ---------        -------
       TOTAL CURRENT LIABILITIES            4,466,974      5,659,819
  Deferred revenues                         3,061,700      4,157,305
  Warrant liability                           474,137        436,458
  Other liabilities                           133,544        244,673
                                              -------        -------
       TOTAL LIABILITIES                    8,136,355     10,498,255

  SHAREHOLDERS' EQUITY
  Capital stock
  Authorized: 100,000,000 shares;
   40,000,000 shares designated as
   common stock, no par, and
   60,000,000 shares issuable in
   series or classes; and 40,000
   junior Series A preferred shares.
   Issued and outstanding: 24,108,908
   and 24,089,452 shares of common
   stock, no par, at September 30,
   2009 and December 31, 2008,
   respectively                           151,683,399    151,663,943
  Additional paid-in capital                8,122,801      7,514,900
  Accumulated deficit                    (144,725,805)  (141,850,925)
  Accumulated other comprehensive loss        279,738        384,281
       TOTAL SHAREHOLDERS' EQUITY          15,360,133     17,712,199
                                           ----------     ----------

  TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY                                 $23,496,488    $28,210,454
                                          ===========    ===========



  DUSA Pharmaceuticals, Inc.
  Consolidated Statement of Operations

                              Three-months ended        Nine-months ended
                                  September 30,            September 30,
                                 2009       2008        2009         2008
                             (Unaudited) (Unaudited) (Unaudited) (Unaudited)

  Product revenues        $6,930,110   $5,726,071  $21,033,920  $21,767,810
  Cost of product revenues
   and royalties           1,594,692    1,462,028    4,973,782    4,950,039
    Gross margin           5,335,418    4,264,043   16,060,138   16,817,771
  Operating costs:
    Research and development 963,245    1,487,816    3,225,049    5,049,327
    Marketing and sales    3,013,351    2,967,431    9,460,766    9,520,865
    General and
     administrative        1,877,928    1,911,028    6,360,325    6,603,989
    Impairment charge for
     contingent
     consideration                 -    1,500,000            -    1,500,000
      Settlements, net             -          650       75,000     (282,775)
  Total operating costs    5,854,524    7,866,925   19,121,140   22,391,406
  Loss from operations      (519,106)  (3,602,882)  (3,061,002)  (5,573,635)
  Other income:
    Other income, net         79,815      114,260      223,801      538,212
    Gain/(loss) on change in
     fair value of warrants   24,051      651,767      (37,679)     775,636
  Net loss                 $(415,240) $(2,836,855) $(2,874,880) $(4,259,787)
  Basic and diluted net
   loss per common share      $(0.02)      $(0.12)      $(0.12)      $(0.18)
  Weighted average number
   of common shares       24,108,908   24,078,610   24,099,786   24,078,546

  Use of Non-GAAP Financial Measures



In addition to reporting financial results in accordance with GAAP, DUSA has provided in the table below non-GAAP financial measures adjusted to exclude stock-based compensation expense, consideration provided to the former Sirius shareholders, and the non-cash change in fair value of warrants.  The Company believes that this presentation is useful to help investors better understand DUSA's financial performance, competitive position and prospects for the future.  Management believes that these non-GAAP financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends, and in allowing for a more comparable presentation of results.  Management uses these measures along with their corresponding GAAP financial measures to help manage the Company's business and to help evaluate DUSA's performance compared to the marketplace.  However, the presentation of non-GAAP financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP.  The non-GAAP financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies.

Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP results, contained in the table below.

                              Three-months ended        Nine-months ended
                                  September 30,            September 30,
                                 2009       2008        2009         2008
                             (Unaudited) (Unaudited) (Unaudited) (Unaudited)


  GAAP net loss         $(415,240)  $(2,836,855)  $(2,874,880) $(4,259,787)
  Stock-based
   compensation (a)       207,178       353,262       631,770    1,042,812
  Payment on
   acquisition (b)              -     1,500,000            -     1,500,000
  Consideration to former
   Sirius shareholders (c)  5,000             -      310,000             -
  Change in fair value
   of warrants (d)        (24,051)     (651,767)      37,679      (775,636)
  Non-GAAP adjusted
   net loss             $(227,113)  $(1,635,360) $(1,895,431)  $(2,492,611)
  Non-GAAP basic and
   diluted net loss
   per common share        $(0.01)       $(0.07)      $(0.08)       $(0.10)
  Weighted average
   number of common
   shares              24,108,908    24,078,610   24,099,786    24,078,546

  (a) Stock-based compensation expense resulting from the application
      of SFAS 123(R).
  (b) Milestone payment related to Sirius Laboratories acquisition.
  (c) Payment of $100,000 and accrual of $210,000 related to the release,
      consent and the third amendment to the merger agreement between DUSA
      and the former Sirius shareholders.
  (d) Non-cash gain/loss on change in fair value of warrants.

  Conference Call Details and Dial-in Information

  In conjunction with this announcement, DUSA will host a conference call
  today:


                    Friday, November 6th - 8:30 a.m. Eastern
     If calling from the U.S. or Canada use the following toll-free number:
                             800.647.4314
                            Password - DUSA
                 For international callers use 502.498.8422
                            Password - DUSA
     A recorded replay of the call will be available approximately 15
                       minutes following the call
                 U.S. or Canada callers use 877.863.0350
                  International callers use 858.244.1268



The call will be accessible on our web site approximately six hours following the call at http://www.dusapharma.com/.

About DUSA Pharmaceuticals

DUSA Pharmaceuticals, Inc. is an integrated dermatology pharmaceutical company focused primarily on the development and marketing of its Levulan® PDT technology platform, and complementary dermatology products.  Levulan® PDT is currently approved for the treatment of Grade 1 and 2 actinic keratoses of the face and scalp.  DUSA also markets other dermatology products, including ClindaReach®.  DUSA is researching the use of broad area Levulan® PDT to treat AKs and prevent squamous cell carcinomas in immunosuppressed solid organ transplant recipients and is supporting research related to oral leukoplakia in collaboration with the National Institutes of Health.  DUSA is based in Wilmington, Mass.  Please visit our web site at http://www.dusapharma.com/.

Except for historical information, this news release contains certain forward-looking statements that represent our current expectations and beliefs concerning future events, and involve certain known and unknown risk and uncertainties.  These forward-looking statements relate to Levulan's growth potential, expectations for filing an amendment to a regulatory application, and management's beliefs concerning non-GAAP financial measures.  These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from future results, performance or achievements expressed or implied by those in the forward-looking statements made in this release.  These factors include, without limitation, actions by health regulatory authorities, changing economic conditions, launch of competitive products, the status of our patent portfolio, reliance on third parties, sufficient funding, and other risks and uncertainties identified in DUSA's Form 10-K for the year ended December 31, 2008. 

DATASOURCE: DUSA Pharmaceuticals, Inc.



CONTACT:  Robert F. Doman, President & CEO, [phone], or Richard

Christopher, VP Finance & CFO, [phone], or Chad Rubin, Investor

Relations, The Trout Group LLC, [phone]



Web Site:  http://www.dusapharma.com/ 

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