March 14, 2005 08:03 ET

DUSA Pharmaceuticals Reports Fourth Quarter And Full Year 2004 Financial Results And Corporate Highlights; And Subsequent Events




MARCH 14, 2005 - 08:03 ET

DUSA Pharmaceuticals Reports Fourth Quarter And Full
Year 2004 Financial Results And Corporate Highlights;
And Subsequent Events

WILMINGTON, MASSACHUSETTS--(CCNMatthews - March 14, 2005) - DUSA
Pharmaceuticals, Inc. (NASDAQ:DUSA) announced today its fourth quarter
and full year 2004 financial results and corporate highlights. During
the fourth quarter, the Company's revenues from product sales were
$2,545,000, compared to $516,000 in 2003. Other highlights of the
quarter included the initiation of a Phase II study using Levulan® PDT
in the treatment of moderate to severe acne; the announcement of a
clinical trial agreement with the National Cancer Institute (NCI)
Division of Cancer Prevention (DCP), covering Levulan PDT development
for the treatment of oral cavity dysplasia; and bringing the majority of
Kerastick® distribution in-house.

For the fourth quarter of 2004, end-user Kerastick sales to physicians
totaled 26,322, consisting of 22,944 sold in the United States (US), and
3,378 sold by Coherent-AMT, our Canadian marketing and distribution
partner. During the fourth quarter of 2003, US Kerastick sales totaled
5,478, with no sales in Canada at that time. For full-year 2004, 76,482
Kerastick units were sold, including 69,870 in the US and 6,612 in
Canada, versus a total of 11,172 sold during 2003, all in the US.

The net number of BLU-U® units placed in doctors' offices during the
fourth quarter was 44, consisting of 29 in the US and 15 in Canada. For
the full year 2004, 508 BLU-U units (net) were placed and a total of 914
units were in doctor's offices by the end of 2004, consisting of 813 in
the US and 101 in Canada, versus 406 at the end of 2003, all of which
were installed in the US.

For the full year, product sales increased to $7,988,000, from $970,000
in 2003, reflecting a major increase in awareness of, and demand for,
our therapy among dermatologists. Other highlights for the year included
expansion of our sales force over the course of the year from 8 to 22;
initiation of a Phase II study using Levulan® PDT for the treatment of
photo-damaged skin; a greatly increased presence at dermatology
educational meetings and conferences; publication of numerous scientific
papers highlighting the use of our products in dermatology; commencement
of commercial Kerastick production at our Wilmington manufacturing
facility; a financing that raised over $28 million; and the signing of
our first clinical trial agreement with the NCI DCP, covering Levulan
PDT in the treatment of high-grade dysplasia in patients with Barrett's

Subsequent to year-end, we announced the hiring of Bob Doman as
President and Chief Operating Officer and Gary Talarico as Vice
President of Sales, and the promotion of Rich Christopher to Vice
President, Finance and Chief Financial Officer; we participated
successfully at a number of important meetings, including the South
Beach Dermatology Symposium February 10-13 and the annual meeting of the
American Academy of Dermatology (AAD) February 18-22. We also received
our new supplies of BLU-U units in time for these two meetings and were
pleased to see increased reimbursement, effective January 1st, 2005, for
Levulan PDT for actinic keratosis.

Based on the increasing demand for our products, we decided in January
2005 to increase the sales force from 22 to 34, including sales
representatives, regional managers and the Vice President. Most of the
new reps are already in place and we expect them to help deliver a
significant increase in sales as the year progresses. With the
development of this strong, specialized field force, we have also
decided to place an increased emphasis on developing and/or licensing
additional dermatology products for the sales force to sell.

Our Levulan PDT dermatology development program also continues on track,
with all patient treatments in our Phase II photo-damage and
moderate-to-severe acne trials expected to be completed this year. As
each of these indications represents major market opportunities for
DUSA, we remain committed to moving these trials along as quickly as
possible. Our cooperative agreements with the NCI are also progressing,
with trials in both Barrett's esophagus and oral cavity dysplasia
currently expected to get underway later this year.

We continue to await the Court's decision in the Australian litigation
with PhotoCure and Galderma. Simultaneously, we are continuing with
settlement discussions. Late in 2004 and early 2005, DUSA also
instituted legal action against 2 compounding pharmacies alleging that
they have violated U.S. patent law. One of them, the Cosmetic Pharmacy,
was also allegedly involved in the recent incidents involving the use of
non-FDA approved botulinum toxin, causing that company to be restrained
from committing violations of the Food Drug and Cosmetic Act by the
United States District Court in the Southern District of Florida. DUSA
has reported the actions of these pharmacies with respect to ALA to the
FDA, and is pursuing legal action in order to protect our IP.

Financial Highlights:

For the three months ended December 31, 2004, DUSA's net loss was
($4,056,000), or ($0.24) per common share, compared to a loss of
($3,770,000), or ($0.27) per common share for 2003. For the twelve
months ended December 31, 2004, the Company incurred a net loss of
($15,629,000), or ($0.96) per common share, as compared to a net loss
for 2003 of ($14,827,000), or ($1.06) per common share. The decrease in
net loss per share in 2004 as compared to 2003 is primarily due to an
increase in the number of weighted average of common shares outstanding
during 2004 as a result of our private placement earlier in 2004. As
discussed below, the increase in total net loss in 2004 is due to the
increase in operating costs offset, in part, by an increase in revenues.

Revenues for the three months ended December 31, 2004 increased to
$2,545,000, compared to $516,000 in 2003, due primarily to the
significantly higher Kerastick end-user sales. Revenues for the twelve
months ended December 31, 2004 were comprised of $7,988,000 in product
sales, as compared to product sales of $970,000 in 2003. With respect to
U.S. Kerastick sales, we have increased our direct selling and
distribution efforts, while maintaining the services of one external
distributor in the United States. We increased our internal distribution
capabilities in order to increase our net profit per unit and gross
revenue per unit, although our costs to support this function have also
increased. During the second quarter of 2004, DUSA also commenced
selling the BLU-U and Kerastick in Canada through an exclusive marketing
and distribution agreement with Coherent-AMT Inc., a leading Canadian
medical device and laser distribution company. A breakdown of revenues
for the current quarter and 2004 as compared to the prior year were as

Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- --------------------
2004 2003 2004 2003
---------- ---------- ----------- --------
Kerastick® product

United States $1,937,000 $447,000 $5,450,000 $901,000
Canada 217,000 - 402,000 -
---------- ---------- ---------- ---------
Total $2,154,000 $447,000 $5,852,000 $901,000

BLU-U® product sales

United States $314,000 $69,000 $1,795,000 $69,000
Canada 77,000 - 341,000 -
---------- ---------- ---------- ---------
Total $391,000 $69,000 $2,136,000 $69,000

---------- ---------- ---------- ---------
Total product sales $2,545,000 $516,000 $7,988,000 $970,000
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------

Total product sales for the fourth quarter of 2004 reflect the highest
level of product sales to date. However, Kerastick sales must continue
to increase significantly in order for DUSA to become a profitable
operating company.

Total operating costs for the three months ended December 31, 2004 were
$7,056,000, compared to $4,711,000 in 2003. For the twelve months ended
December 31, 2004, total operating costs were $25,196,000 compared to
$17,723,000 in 2003. These increases were primarily due to significantly
higher marketing and sales costs related to our expanding sales force
and related marketing and sales activities, and higher research and
development costs in support of our various research projects discussed
above. We expect such costs to continue to increase as we continue to
expand our sales force and invest in our clinical programs. The full
year operating costs also include a higher level of general and
administrative costs due to an increase in audit and consulting fees
primarily related to Sarbanes Oxley compliance work, higher personnel
related costs, and an increase in general corporate expenses. Included
in general and administrative expenses are patent defense of $2,150,000
in 2004 as compared to $2,447,000 in 2003. We expect these patent
defense costs to decrease in 2005 even with the current legal disputes
in which we are engaged.

As of December 31, 2004, total cash, cash equivalents, and United States
government securities, including long-term instruments, were
$49,292,000, compared to $37,969,000 at the end of 2003. This increase
is primarily due to $28,463,000 of gross proceeds raised from the
private placement earlier in March and April 2004, net of operating cash
expended during 2004 and the repayment of long-term debt in June 2004.


December 31,
2004 2003
----------- -----------


Current Assets
Cash and cash equivalents $2,928,143 $4,294,482
Marketable securities 46,222,969 30,284,841
Accounts receivable 711,016 229,483
Inventory 1,417,160 712,831
Other current assets 1,472,692 1,534,209
----------- -----------
Total current assets 52,751,980 37,055,846
Restricted cash 140,764 139,213
Restricted marketable securities - 3,250,940
Property and equipment, net 3,481,888 4,251,489
Deferred charges and other assets 276,256 -
----------- -----------
TOTAL ASSETS $56,650,888 $44,697,488
----------- -----------
----------- -----------


Current Liabilities
Accounts payable and accrued
expenses $3,722,716 $2,818,039
Current maturities of
long-term debt - 270,000
Deferred revenue 230,715 129,900
----------- -----------
Total current liabilities 3,953,431 3,217,939
Other liabilities 190,439 -
Long-term debt, net of
current maturities - 1,247,500
----------- -----------
TOTAL LIABILITIES 4,143,870 4,465,439

TOTAL SHAREHOLDERS' EQUITY 52,507,018 40,232,049
----------- -----------
SHAREHOLDERS' EQUITY $56,650,888 $44,697,488
----------- -----------
----------- -----------


Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- --------------------------
2004 2003 2004 2003
------------- ------------ ------------- -------------
Product sales $2,545,324 $516,309 $7,987,656 $970,109

Cost of product
sales and
royalties 1,262,134 1,016,581 3,875,018 3,481,248
Research and
development 1,639,564 1,236,840 6,489,723 5,403,961
Marketing and
sales 2,720,293 895,801 7,622,106 2,494,405
General and
administrative 1,434,036 1,561,295 7,209,536 6,343,680
------------ ------------ ------------- -------------
COSTS 7,056,027 4,710,517 25,196,383 17,723,294
------------ ------------ ------------- -------------
OPERATIONS (4,510,703) (4,194,208) (17,208,727) (16,753,185)
NET 454,456 424,301 1,579,747 1,926,331
------------ ------------ ------------- -------------
NET LOSS $(4,056,247) $(3,769,907) $(15,628,980) $(14,826,854)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
COMMON SHARE $ (.24) $ (.27) $ (0.96) $ (1.06)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
OUTSTANDING 16,871,219 13,965,540 16,317,078 13,936,482
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------

DUSA Pharmaceuticals, Inc. is a biopharmaceutical company engaged
primarily in the development of Levulan Photodynamic Therapy (PDT) and
Photodetection (PD) for multiple medical indications, with its primary
focus in dermatology. PDT and PD utilize light-activated compounds such
as Levulan to induce a therapeutic or detection effect. The Company
maintains offices in Wilmington, MA, Valhalla, NY, and Toronto, Ontario.

Except for historical information, this news release contains certain
forward-looking statements that involve known and unknown risk and
uncertainties, which may cause actual results to differ materially from
any future results, performance or achievements expressed or implied by
the statements made. These forward-looking statements relate to
management's expectations for delivery of increased sales by the new
sales representatives, for completion of Phase II photodamage and acne
clinical trials and initiation of NCI trials, for increases in marketing
and sales and research and development costs and decreases in patent
defense costs. Such risks and uncertainties include, but are not limited
to, the Company's ability to continue to penetrate the market, patient
enrollment and the clinical trial process, regulatory approvals,
uncertainties relating to litigation, maintenance of its patent
portfolio, and other risks identified in DUSA's SEC filings from time to


Contact Information

    DUSA Pharmaceuticals, Inc.
    D. Geoffrey Shulman, MD
    Chairman & CEO
    (416) 363-5059
    (416) 363-6602 (FAX)
    DUSA Pharmaceuticals, Inc.
    Shari Lovell
    Director, Shareholder Services
    (416) 363-5059
    (416) 363.6602 (FAX)