DUSA PHARMACEUTICALS, INC.
NASDAQ : DUSA

DUSA PHARMACEUTICALS, INC.

August 08, 2008 06:30 ET

DUSA Pharmaceuticals Reports Second Quarter 2008 Corporate Highlights and Financial Results

Q2 Levulan® Kerastick® Revenues up 39% year over year; Q2 Non-GAAP loss improves 88% year over year to ($0.2) million

WILMINGTON, MASSACHUSETTS--(Marketwire - Aug. 8, 2008) - DUSA Pharmaceuticals, Inc.® (NASDAQ GM:DUSA), a dermatology company that is developing and marketing Levulan® Photodynamic Therapy (PDT) and other products targeting patients with common skin conditions, reported today its corporate highlights and financial results for the second quarter ended June 30, 2008.

Second Quarter 2008 Financial Results:

Total product revenues for the quarter were $8.1 million, up 18% from $6.9 million in the second quarter of 2007. PDT revenues totaled $5.4 million, up 34% from $4.1 million for the comparable 2007 period. The increase in PDT revenues was attributable to a 39% increase in Kerastick® revenues, driven by 32% domestic revenue growth, as well as international expansion into both Latin America and Korea. Overall Kerastick® sales volumes increased 35% from 35,886 units in the second quarter of 2007 to 48,478 units in the second quarter of 2008. Non-PDT revenues totaled $2.7 million versus $2.8 million for the comparable 2007 period. Non-PDT revenues were primarily driven by the sales of Nicomide® (see "Other Updates" section below).

DUSA's net loss on a GAAP basis for the second quarter of 2008 was ($0.1) million or ($0.01) per common share, compared to a net loss of ($2.5) million or ($0.13) per common share in the second quarter of 2007.

DUSA's non-GAAP net loss for the second quarter improved 88% from ($2.0) million or ($0.10) per common share in 2007 to ($0.2) million or ($0.01) per share common in 2008. The second quarter 2008 non-GAAP net loss excludes stock-based compensation expense of $0.4 million and a non-cash gain on the change in the fair value of warrants of $0.5 million. Please refer to the "Use of Non-GAAP Financial Measures" section and the accompanying financial table included at the end of this release for a reconciliation of GAAP results to non-GAAP results for the three-month periods ending June 30, 2007 and 2008, respectively.

Year-to-Date 2008 Financial Results:

Total product revenues for the six-month period ended June 30, 2008 were $16.0 million, up 18% from $13.5 million for the six-month period ended June 30, 2007. PDT revenues totaled $11.3 million, up 31% from $8.6 million for the comparable 2007 period. The increase in PDT revenues was attributable to a 38% increase in Kerastick® revenues, driven by 30% domestic revenue growth, as well as international expansion into both Latin America and Korea. Overall Kerastick® sales volumes increased 35% from 74,256 units in the 2007 period to 100,588 units in 2008. Non-PDT revenues totaled $4.8 million versus $4.9 million in the comparable 2007 period. Non-PDT revenues were primarily driven by the sales of Nicomide® (see "Other Updates" section below).

DUSA's net loss on a GAAP basis for the six-months ending June 30, 2008 was ($1.4) million or ($0.06) per common share, compared to a net loss of ($5.8) million or ($0.30) per common share for the comparable 2007 period.

DUSA's non-GAAP net loss for the six-months ending June 30, 2008 improved 83% from ($5.1) million or ($0.26) per common share in 2007 to ($0.9) million or ($0.04) per share common in 2008. The 2008 non-GAAP net loss excludes stock-based compensation expense of $0.7 million and a non-cash gain on the change in the fair value of warrants of $0.1 million. Please refer to the "Use of Non-GAAP Financial Measures" section and the accompanying financial table included at the end of this release for a reconciliation of GAAP results to non-GAAP results for the six-month periods ending June 30, 2007 and 2008, respectively.

As of June 30, 2008, total cash, cash equivalents, and U.S. government securities were $22.7 million, compared to $23.0 million at December 31, 2007. The decrease is primarily attributable to cash expended to fund operational expenses. Net cash expenditures for the second quarter of 2008 were $0.2 million.



Other Updates:

- Phase IIb Acne Trial Update.

- At the end of Q108, patient accrual was completed in the Phase IIb
clinical trial of Levulan® PDT for the treatment of moderate to
severe acne. As of the end of Q208, all patients in the study had
completed treatment. The blinded data from the study is currently
being compiled for analysis. The Company expects to report top-line
results in the Fall of 2008.

- Nicomide®.

- On July 18, 2008, the Company announced that Nicomide®, a vitamin-
mineral product currently prescribed by dermatologists, will no
longer be manufactured and marketed as a prescription product. The
decision comes as a proactive action in response to discussions with
the Food and Drug Administration (FDA) regarding the marketing of
unapproved drugs. The Company is currently taking steps to bring the
product into compliance with DSHEA (Dietary Supplement Health and
Education Act) labeling. Nicomide® represented the substantial
majority of DUSA's Non-PDT revenues in both the three and six-month
periods ending June 30, 2008. The Company expects both the price and
volume of the Nicomide® DSHEA labeled product to be considerably
less than historical Nicomide® levels. In addition, the Company
continues to explore opportunities to license or sell the product.

- Office Closings.

- In an effort to consolidate operations, the Company plans to close
both its Valhalla, NY and Toronto, Canada offices effective October
31, 2008. The majority of the functions previously performed at
these satellite offices will be transitioned to DUSA's corporate
headquarters facility in Wilmington, MA over the next few months.


Management Comments:

"We are very pleased with our second quarter 2008 financial results," stated President and CEO Robert Doman. "Kerastick® revenues increased 39% year over year driven by a 32% increase in U.S. revenues, our quarterly non-GAAP loss improved by $1.8 million or 88%, and our quarterly cash burn was reduced to ($0.2) million. We continue to make significant progress in leveraging our Income Statement, driven by growth in Levulan®."

"We also achieved two key operational milestones during the second quarter of 2008 with the launch of our Kerastick® product in Brazil through our partner in Latin America, Stiefel Laboratories, and the completion of all patient treatment regimens in our Acne Phase IIb clinical trial. Subsequent to the end of the quarter, we announced that Nicomide® will no longer be marketed as a prescription product. We are currently executing on plans aimed at bringing the product labeling into compliance under DSHEA and maximizing the value of the Nicomide® brand," continued Doman.

"For the remainder of 2008, we will focus our efforts on the continued growth of our core PDT business. We believe that we are still in the early stages of market penetration with Levulan® and that there exists significant upside potential both in the U.S. and international markets," concluded Doman.

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

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



Three-months ended Six-months ended
June 30, June 30,
------------------------ ----------------------
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
PDT Drug & Device Product
Revenues
Kerastick® Product
Revenues:
United States $ 4,572,000 $ 3,461,000 $ 9,346,000 $ 7,185,000
Canada 218,000 192,000 377,000 393,000
Korea 159,000 - 524,000 -
Rest of World 133,000 - 190,000 -
----------- ----------- ----------- -----------
Subtotal Kerastick®
Product Revenues 5,082,000 3,653,000 10,437,000 7,578,000
BLU-U® Product Revenues:
United States 347,000 380,000 822,000 946,000
Canada - 29,000 - 94,000
----------- ----------- ----------- -----------
Subtotal BLU-U®
Product Revenues 347,000 409,000 822,000 1,040,000
Total PDT Drug & Device
Product Revenues 5,429,000 4,062,000 11,259,000 8,618,000
Total Non-PDT Product
Revenues 2,683,000 2,800,000 4,783,000 4,921,000
----------- ----------- ----------- -----------
TOTAL PRODUCT REVENUES $ 8,112,000 $ 6,862,000 $16,042,000 $13,539,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------



DUSA Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets

June 30, December 31,
2008 2007
(Unaudited)
-------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,978,722 $ 4,713,619
Marketable securities 19,721,895 18,311,650
Accrued interest receivable 175,535 97,243
Accounts receivable, net 2,205,451 2,667,178
Inventory 2,831,488 2,672,105
Prepaid and other current assets 1,669,375 1,843,873
-------------------------------------
TOTAL CURRENT ASSETS 29,582,466 30,305,668
Restricted cash 172,418 170,510
Property, plant and equipment, net 2,123,288 2,142,658
Deferred charges and other assets 215,861 273,404
-------------------------------------
TOTAL ASSETS $ 32,094,033 $ 32,892,240
-------------------------------------
-------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 104,872 $ 1,213,867
Accrued compensation 677,587 491,529
Other accrued expenses 3,343,535 3,322,642
Deferred revenue 937,269 1,256,494
-------------------------------------
TOTAL CURRENT LIABILITIES 5,063,263 6,284,532
Deferred revenues 4,241,844 2,918,850
Warrant liability 1,138,733 1,262,600
Other liabilities 285,729 319,736
-------------------------------------
TOTAL LIABILITIES 10,729,569 10,785,718
-------------------------------------

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: 24,078,610 and
24,076,110 shares of common stock,
no par, at June 30, 2008 and
December 31, 2007 respectively 151,652,943 151,648,943
Additional paid-in capital 6,574,903 5,885,353
Accumulated deficit (137,023,416) (135,600,484)
Accumulated other comprehensive loss 160,034 172,710
------------------------------------
TOTAL SHAREHOLDERS' EQUITY 21,364,464 22,106,522
------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 32,094,033 $ 32,892,240
-------------------------------------
-------------------------------------



DUSA Pharmaceuticals, Inc.
Consolidated Statement of Operations

Three-months ended Six-months ended
June 30, June 30,
---------------------- -----------------------
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ----------- ----------- -----------
Product revenues $8,112,239 $ 6,862,198 $16,041,739 $13,539,038
Cost of product revenues
and royalties 1,787,694 1,776,491 3,488,011 3,932,643
---------- ----------- ----------- -----------
Gross margin 6,324,545 5,085,707 12,553,728 9,606,395
Operating costs:
Research and development 1,375,302 1,576,909 3,561,511 3,103,013
Marketing and sales 3,496,233 3,309,583 6,553,434 6,840,290
General and
administrative 2,325,137 2,832,576 4,692,961 5,856,025
Net gain on settlement
of litigation (47,825) - (283,425) -
---------- ----------- ----------- -----------
Total operating costs 7,148,847 7,719,068 14,524,481 15,799,328
---------- ----------- ----------- -----------
Loss from operations (824,302) (2,633,361) (1,970,753) (6,192,933)
---------- ----------- ----------- -----------
Other income:
Other income, net 217,100 155,954 423,952 344,598
Gain on change in fair
value of warrants 468,411 - 123,869 -
---------- ----------- ----------- -----------
Net loss $(138,791)$(2,477,407) $(1,422,932)$(5,848,335)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Basic and diluted net
loss per common share $ (0.01)$ (0.13) $ (0.06)$ (0.30)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Weighted average number
of common shares 24,078,610 19,487,485 24,078,514 19,483,796


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 and a non-cash gain on the change in fair value of warrants. The Company believes this presentation is useful to help investors better understand DUSA's financial performance, competitive position and prospects for the future. Management believes 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 Six-months ended
June 30, June 30,
---------------------- -----------------------
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ----------- ----------- -----------
GAAP net loss $(138,791)$(2,477,407) $(1,422,932)$(5,848,335)
Stock-based compensation(a) 357,912 475,514 689,550 717,698
Gain on change in fair
value of warrants(b) (468,409) - (123,869) -
---------- ----------- ----------- -----------
Non-GAAP adjusted net loss $(249,288)$(2,001,893) $ (857,251)$(5,130,637)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Non-GAAP basic and diluted
net loss per common share $ (0.01)$ (0.10) $ (0.04)$ (0.26)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Weighted average number
of common shares 24,078,610 19,487,485 24,078,514 19,483,796


(a) Stock-based compensation expense resulting from the application of SFAS
123®.
(b) Non-cash gain 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, August 8th - 8:30 a.m. Eastern
If calling from the US or Canada use the following toll-free number:
800.647.4314
Password - DUSA

For International callers use
435.871.6103
Password - DUSA

A recorded replay of the call will be available
North American callers use 877.863.0350
International callers use 858.244.1268


The call will be accessible on our web site approximately one hour following the call at www.dusapharma.com.

About DUSA Pharmaceuticals

DUSA Pharmaceuticals, Inc. is an integrated dermatology specialty pharmaceutical company focused primarily on the development and marketing of its Levulan® Photodynamic Therapy (PDT) technology platform, and complementary products for common skin conditions. Levulan® PDT is currently approved for the treatment of Grade 1 and 2 actinic keratoses of the face and scalp, and is being developed for the treatment of acne. DUSA's other dermatology products include ClindaReach™ and Nicomide®. DUSA is also supporting development of certain internal indications of Levulan® PDT. DUSA is based in Wilmington, Mass. Please visit our Web site at 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 cessation of the manufacture and marketing of Nicomide® as a prescription product, expectations regarding the price and volumes of a Nicomide® DHSEA labeled product, expectations for receipt of top-line clinical results, plans to close two offices and transition functions to Massachusetts, expectations for continued growth of the PDT business, the launch of a DSHEA product, and management's beliefs and calculations 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, the uncertainties regarding clinical research, reliance on third party investigators, contract research organizations and others, sufficient funding, and other risks and uncertainties identified in DUSA's Form 10-K for the year ended December 31, 2007.

Contact Information

  • DUSA Pharmaceuticals, Inc.
    Robert F. Doman
    President & CEO
    (978) 909-2216
    or
    DUSA Pharmaceuticals, Inc.
    Richard Christopher
    VP Finance & CFO
    (978) 909-2211
    or
    DUSA Pharmaceuticals, Inc.
    Shari Lovell
    Director, Shareholder Services
    (978) 657-7500 ext. 1121
    Website: www.dusapharma.com
    or
    The Trout Group LLC
    Chad Rubin
    Investor Relations Contact
    (646) 378-2947