DUSA Pharmaceuticals total product revenues for second-quarter 2010 increase 25% to $8.7 million

Aug 3 2010

DUSA Pharmaceuticals, Inc.® (Nasdaq: 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 second quarter ended June 30, 2010.

Financial highlights for the second quarter and first half of the year include:

• Domestic Kerastick® revenues totaled $7.6 million for the second quarter of 2010, representing a $1.9 million or 35% improvement as compared to the second quarter of 2009.  First half 2010 domestic Kerastick® revenues totaled $15.1 million, representing a $3.8 million or 34% improvement year-over-year.  
• Kerastick® gross margins for the second quarter of 2010 reached a record high of 88%.  
• The Company generated net income on both a GAAP and non-GAAP basis during the second quarter of 2010.  
  • GAAP net income for the second quarter of 2010 was $0.2 million, representing a $1.0 million improvement year-over-year.  
  • Non-GAAP net income for the second quarter of 2010 was $0.6 million, also representing a $1.0 million improvement year-over-year.
• The Company experienced significant bottom line improvement on both a GAAP and non-GAAP basis for the first half of the year.
  • GAAP net loss for the first half of 2010 was $0.2 million, representing a $2.2 million improvement year-over-year.
  • Non-GAAP net income for the first half of 2010 was $0.6 million, representing a $2.3 million year-over-year improvement.

Management Comments:

"We are pleased with the significant progress we have made on our financial results for the second quarter and first six months of 2010 versus the prior year," stated Robert Doman, President and CEO.  "Domestic Kerastick® revenue growth, along with record Kerastick® gross margins, drove the Company to profitability during the second quarter."

"We continue to be encouraged with the increased market acceptance of Levulan PDT, both by the dermatology community and their patients, for the treatment of actinic keratoses.  In addition to our strong financial performance, we were pleased to announce during the second quarter that the U.S. Patent Office confirmed the validity of one of our key Levulan PDT patents," continued Doman.  "This confirmation, combined with the previously announced patent covering Levulan PDT in conjunction with our proprietary blue light technology through June 2019, further validates and strengthens our Levulan PDT patent portfolio.  Strengthening and enhancing our intellectual property has been one of our main objectives in order to help drive long term shareholder value."

"As we evaluate our performance at the halfway point of 2010, we believe we are well positioned to achieve our goals of becoming both cash flow positive and profitable for the full year," concluded Doman.

Second Quarter 2010 Financial Results:

Total product revenues were $8.7 million in the second quarter of 2010, an increase of $1.7 million or 25% from $7.0 million in the second quarter of 2009.  PDT revenues totaled $8.4 million, an increase of $2.0 million or 31% from $6.4 million for the comparable 2009 period.  The increase in PDT revenues was attributable to a $2.0 million increase in Kerastick® revenues.  The Kerastick® revenue improvement was driven by a 24% increase in volume and an 8% increase in average selling price.  Kerastick® sales volumes increased to 61,778 in the second quarter of 2010 from 49,815 units sold in the comparable 2009 period.  Domestic Kerastick® sales volumes increased by 12,090 units or 26% and were partially offset by a 127 unit decrease in our international sales volumes.  BLU-U® revenues were relatively flat year-over-year.  There were 63 units sold during the second quarter, as compared to the 58 units sold in the comparable prior year quarter.  Non-PDT revenues totaled $0.3 million down $0.3M from the prior year period due to the absence of Nicomide® royalties from River's Edge.  

DUSA's net income on a GAAP basis for the second quarter of 2010 was $0.2 million or $0.01 per common share, compared to a net loss of $0.9 million or $0.04 per common share in the second quarter of 2009.  

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 six-month periods ended June 30, 2010 and 2009, respectively.  

DUSA's non-GAAP net income for the second quarter of 2010 was $0.6 million or $0.03 per common share, compared to a net loss of $0.4 million or $0.02 per common share in the prior year period.  The improvement in the Company's profitability was primarily the result of the year-over-year increase in our PDT revenues which was partially offset by an increase in our operating costs.

First Half 2010 Financial Results:

Total product revenues for the six-month period ended June 30, 2010 were $17.4 million, an increase of $3.3 million or 23% from $14.1 million in the comparable prior year period.  PDT revenues totaled $16.7 million, an increase of $3.6 million or 27% from $13.1 million for the comparable 2009 period.  The increase in PDT revenues was attributable to a $3.8 million increase in Kerastick® revenues which was partially offset by a $0.2 million decrease in BLU-U® revenues.  The Kerastick® revenue improvement was driven by a 21% increase in volume and an 8% increase in average selling price.  Kerastick® sales volumes increased to 123,200 units in 2010 from 101,762 units sold in 2009.  Domestic Kerastick® sales volumes increased by 24,642 units or 27% and were partially offset by a 3,204 decrease in our international sales volumes.  The BLU-U® revenue decline was as result of a 16% decrease in our average selling price. The average selling price in 2010 is reflective of lower pricing offered to customers in advance of the introduction of the upgraded BLU-U® design which became available in April 2010.  There were 140 units sold during the first half of 2010, as compared to the 139 units sold in the comparable prior year period.  Non-PDT revenues totaled $0.7 million down $0.3M from the prior year period due to the absence of Nicomide® royalties from River's Edge.  

DUSA's net loss on a GAAP basis for the six-month period ended June 30, 2010 was $0.2 million or $0.01 per common share, compared to a net loss of $2.5 million or $0.10 per common share in 2009.  

DUSA's non-GAAP net income for the six-month period ended June 30, 2010 was $0.6 million or $0.03 per common share in 2010, compared to a net loss of $1.7 million or $0.07 per common share in 2009.  The improvement in the Company's non-GAAP profitability was primarily the result of the year-over-year increase in our PDT revenues, which was partially offset by an increase in our operating costs.  

As of June 30, 2010, total cash, cash equivalents, and marketable securities were $17.5 million, compared to $16.7 million at December 31, 2009. The Company generated $1.1 million in positive cash flow from operations during the first half of 2010.  

Other Updates:

• On June 24, 2010, the Company announced that the United States Patent and Trademark Office (USPTO) had completed its re-examination of US Patent No. 5,079,262, "Method of detection and treatment of malignant and non-malignant lesions utilizing 5-aminolevulinic acid."  In its latest communication, the USPTO issued a Notice of Intent to Issue Ex Parte Re-examination Certificate which affirms the patent's original seven claims and adds eight claims.   This patent covers the use of aminolevulinic acid, the active ingredient in DUSA's Levulan® Kerastick®, for the treatment of actinic keratoses with light.  This patent will expire on September 30, 2013.  Additional patents cover DUSA's Levulan® Kerastick® formulation of aminolevulinic acid HCl in conjunction with its proprietary blue light technology until June 2019.