DUSA Pharmaceuticals first-quarter total product revenues up 22%

May 11 2010

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 first quarter ended March 31, 2010.

Highlights for the first quarter include:

• Total product revenues were $8.7 million for the quarter, representing a $1.6 million or 22% year-over-year improvement.  
• Domestic PDT revenues totaled $8.0 million for the quarter, representing a $1.7 million or 27% year-over-year improvement.
• Domestic Kerastick® revenues totaled $7.5 million for the quarter, representing a $1.9 million or 33% year-over-year improvement.  
• Kerastick® gross margins for the quarter matched a record high at 86%.
• The Company experienced significant bottom line improvement on both a GAAP and non-GAAP basis for the quarter.
  • GAAP net loss for the quarter was $0.4 million, representing a $1.2 million or 74% year-over-year improvement.  
  • The Company reached break-even on a non-GAAP basis for the quarter, representing a $1.3 million year-over-year improvement.
• The Company generated $0.9 million in positive cash flow (change in cash and cash equivalents and marketable securities) during the first quarter of 2010.

Management Comments:

"We are encouraged by the solid financial results reported for the first quarter of 2010.  For the second consecutive quarter, the Company was able to generate positive cash flow, while at the same time deliver both significant top and bottom line improvement," stated Robert Doman, President and CEO.  

"Our core Domestic PDT business continues to show significant progress with Kerastick® revenues up 33% driven in part by solid execution from our sales and marketing team.  We have now experienced 18 consecutive quarters of year-over-year Kerastick® volume growth," continued Doman.  

"We are off to a strong start in 2010.  We have a large, growing market opportunity in the U.S. for Levulan PDT on our approved indication for the treatment of actinic keratoses.  For the remainder of the year, we will focus on driving the continued adoption of our therapy as we strive towards our goals of becoming both cash flow positive and profitable on an annualized basis," concluded Doman.

First Quarter 2010 Financial Results:

Total product revenues were $8.7 million in the first quarter of 2010, up 22% from $7.1 million in the first quarter of 2009.  PDT revenues totaled $8.3 million, up $1.6 million or 23% from $6.7 million for the comparable 2009 period.  The increase in PDT revenues was attributable to a 28% increase in Kerastick® revenues, which was partially offset by a 23% decrease in BLU-U® revenues.  The Kerastick® revenue increase was driven by a 27% increase in our domestic Kerastick® volume and a 5% increase in our average selling price.  Global Kerastick® sales volumes were up 18% year-over- year, there were 61,422 units sold in the first quarter of 2010 and 51,947 units sold in the first quarter of 2009.  Domestic Kerastick® sales volumes increased by 12,552 units or 27% and were partially offset by a 3,077 unit decrease in our international sales volumes.  The BLU-U® revenue decrease was driven by a 5% decrease in sales volume and an 18% decrease in our average selling price.  There were 77 units sold during the quarter, representing a 4 unit decrease over the prior year quarterly total of 81 units.  The average selling price of the unit decreased as result of incentive pricing offered to customers in an effort to sell off our existing BLU-U inventory in advance of the introduction of the upgraded design which became available in April.  Non-PDT revenues totaled $0.4 million and were flat versus prior year.  

DUSA's net loss on a GAAP basis for the first quarter of 2010 was $0.4 million or $0.02 per common share, compared to a net loss of $1.6 million or $0.07 per common share in the first quarter of 2009.  The decrease in our net loss was primarily the result of the year-over-year increase in our domestic Kerastick® revenues.  

DUSA reached breakeven on a non-GAAP basis for the first quarter of 2010, compared to a net loss of $1.3 million or $0.05 per common share in the first quarter of 2009.  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 March 31, 2009 and 2010, respectively.  

As of March 31, 2010, total cash, cash equivalents, and U.S. government securities were $17.6 million, compared to $16.7 million at December 31, 2009, an increase of $0.9 million during the quarter.

Other Updates:

• The Company was recently advised that a receiver had been appointed for the laboratory that it was using to perform analytical release testing and stability testing for its Levulan® Kerastick® product due to non-payment of its bank loan.  As a result, this laboratory is no longer able to perform these services on an on-going basis.  DUSA has engaged the services of a new laboratory and has successfully completed the transfer of the technology and analytical test methods.  On May 5, 2010, following discussions with the FDA, the Company filed a 30-day Changes Being Effected (CBE-30) supplement to validate the use of the new laboratory.  The Company has sufficient Kerastick® inventory on-hand to meet projected demand beyond June 4, 2010, the end of the 30-day review period.  If the FDA review process is delayed beyond our expectations, we would likely experience a back order on our Levulan® Kerastick® for a period of time, which would have a negative effect on our revenues.  The Company believes it is on schedule for a successful transition.
• On May 7, 2010, the Company announced that the United States Patent and Trademark Office had issued a notice of allowance for a key new patent related to its proprietary PDT light source, the BLU-U®, Blue Light Photodynamic Therapy Illuminator.  The new patent will have method of treatment claims which cover the use of DUSA's blue light technology and aminolevulinic acid HCL (Levulan®) for the treatment of actinic keratosis as well as the diagnosis and treatment of other disease states such as acne, cancer, psoriasis and photodamaged skin.  The patent also has claims that will cover DUSA's blue light technology in conjunction with its proprietary Levulan® Kerastick® formulation of aminolevulinic acid HCL.  The patent, once issued, which is scheduled to occur on May 25, 2010, will cover our approved Levulan® PDT therapy until June, 2019.  

SOURCE DUSA Pharmaceuticals, Inc.