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DUSA Pharmaceuticals Reports Second Quarter 2010 Corporate Highlights and Financial Results

August 3, 2010

WILMINGTON, Mass., Aug. 3 /PRNewswire-FirstCall/ — 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.

    Conference Call Details and Dial-in Information:

       In conjunction with this announcement, DUSA will host a conference call
                                        today:
                          Tuesday, August 3rd - 8:30 am EDT
          If calling from North America use the following toll-free number:
                                    800-647-4314
                             International callers use:
                                    502-719-4466
                                   Password - DUSA

      A recorded replay of the call will be available approximately 15 minutes
                                 following the call.
                             North American 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 www.dusapharma.com.

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

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


                                              Three-months ended
                                                   June 30,
                                                ------------------
                                                2010              2009
                                         (Unaudited)       (Unaudited)
                                         -----------       -----------
    PDT Drug & Device Product
     Revenues
      Kerastick(R) Product Revenues:
       United States                      $7,568,000        $5,621,000
       Canada                                169,000           108,000
       Korea                                 104,000           126,000
       Other                                 132,000            84,000
                                             -------            ------
         Subtotal Kerastick(R) Product
          Revenues                         7,973,000         5,939,000
      BLU-U(R) Product Revenues:
       United States                         438,000           479,000
       Canada                                      -                 -
                                                 ---               ---
         Subtotal BLU-U(R) Product
          Revenues                           438,000           479,000
                                             -------           -------
    Total PDT Drug & Device Product
     Revenues                              8,411,000         6,418,000
                                           ---------         ---------
    Total Non-PDT Product Revenues           290,000           548,000
                                             -------           -------
           TOTAL PRODUCT REVENUES         $8,701,000        $6,966,000
                                          ==========        ==========


                                               Six-months ended
                                                   June 30,
                                                  ----------------
                                                2010              2009
                                         (Unaudited)       (Unaudited)
                                         -----------       -----------
    PDT Drug & Device Product
     Revenues
      Kerastick(R) Product Revenues:
       United States                     $15,117,000       $11,306,000
       Canada                                225,000           243,000
       Korea                                 213,000           296,000
       Other                                 219,000           171,000
                                             -------           -------
         Subtotal Kerastick(R) Product
          Revenues                        15,774,000        12,016,000
      BLU-U(R) Product Revenues:
       United States                         928,000         1,121,000
       Canada                                  5,000                 -
                                               -----               ---
         Subtotal BLU-U(R) Product
          Revenues                           933,000         1,121,000
                                             -------         ---------
    Total PDT Drug & Device Product
     Revenues                             16,707,000        13,137,000
                                          ----------        ----------
    Total Non-PDT Product Revenues           708,000           967,000
                                             -------           -------
           TOTAL PRODUCT REVENUES        $17,415,000       $14,104,000
                                         ===========       ===========

DUSA Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets


                                                  June 30,     December 31,
                                                  --------     ------------
                                                        2010            2009
                                                         ---            ----
                                                (Unaudited)
                                                -----------
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents                   $5,669,331      $7,613,378
          Marketable securities                   11,865,113       9,055,959
      Accounts receivable, net                     1,926,810       2,629,189
      Inventory                                    2,264,421       2,170,275
      Prepaid and other current assets             1,160,700       1,561,467
                                                   ---------       ---------
           TOTAL CURRENT ASSETS                   22,886,375      23,030,268
    Restricted cash                                  174,473         174,255
    Property, plant and equipment, net             1,548,934       1,660,755
    Deferred charges and other assets                 68,099          68,099
                                                      ------          ------
         TOTAL ASSETS                            $24,677,881     $24,933,377
                                                 ===========     ===========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Accounts payable                              $963,140        $630,144
      Accrued compensation                           754,595       1,260,609
      Other accrued expenses                       2,261,243       2,456,612
      Deferred revenue                               644,243         902,597
                                                     -------         -------
         TOTAL CURRENT LIABILITIES                 4,623,221       5,249,962
    Deferred revenues                              2,794,179       2,906,020
    Warrant liability                              1,169,195         812,905
    Other liabilities                                 94,349         123,016
                                                      ------         -------
         TOTAL LIABILITIES                         8,680,944       9,091,903

    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:
     24,207,965 and 24,108,908 shares of
     common stock, no par, at June 30, 2010
     and December 31, 2009, respectively

                                                 151,785,950     151,683,399
    Additional paid-in capital                     8,656,438       8,291,805
    Accumulated deficit                         (144,595,506)   (144,359,217)
    Accumulated other comprehensive loss             150,055         225,487
                                                     -------         -------
         TOTAL SHAREHOLDERS' EQUITY               15,996,937      15,841,474

    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                      $24,677,881     $24,933,377
                                                 ===========     ===========

Consolidated Statement of Operations


                                               Three-months ended
                                                    June 30,
                                                 ------------------
                                                2010              2009
                                         (Unaudited)       (Unaudited)
                                         -----------       -----------
    Product revenues                      $8,700,937        $6,965,541
    Cost of product revenues and
     royalties                             1,782,108         1,440,864
                                           ---------         ---------
        Gross margin                       6,918,829         5,524,677
    Operating costs:
      Research and development             1,250,411         1,076,709
      Marketing and sales                  3,137,985         3,037,311
      General and administrative           2,247,066         2,340,947
        Settlements, net                           -            75,000
                                                 ---            ------
    Total operating costs                  6,635,462         6,529,967
                                           ---------         ---------
    Income/(loss) from operations            283,367        (1,005,290)
                                             -------        ----------
    Other income:
      Gain/(loss) on change in fair
       value of warrants                    (157,015)           73,183
      Other income, net                       61,842            79,398
                                              ------            ------
    Net income/(loss)                       $188,194         $(852,709)
                                            ========         =========
    Basic and diluted net income/
     (loss) per common share                   $0.01            $(0.04)
    Weighted average number of basic
     common shares                        24,187,569        24,100,874
                                          ==========        ==========
    Weighted average number of diluted
     common shares                        24,566,476        24,100,874
                                          ==========        ==========


                                             Six-months ended June
                                                        30,
                                              ----------------------
                                                 2010              2009
                                          (Unaudited)       (Unaudited)
                                          -----------       -----------
    Product revenues                      $17,414,817       $14,103,810
    Cost of product revenues and
     royalties                              3,600,293         3,379,090
                                            ---------         ---------
        Gross margin                       13,814,524        10,724,720
    Operating costs:
      Research and development              2,360,078         2,261,804
      Marketing and sales                   6,751,784         6,447,415
      General and administrative            4,710,230         4,482,397
        Settlements, net                            -            75,000
                                                  ---            ------
    Total operating costs                  13,822,092        13,266,616
                                           ----------        ----------
    Income/(loss) from operations              (7,568)       (2,541,896)
                                               ------        ----------
    Other income:
      Gain/(loss) on change in fair
       value of warrants                     (356,290)          (61,730)
      Other income, net                       127,569           143,986
                                              -------           -------
    Net income/(loss)                       $(236,289)      $(2,459,640)
                                            =========       ===========
    Basic and diluted net income/
     (loss) per common share                   $(0.01)           $(0.10)
    Weighted average number of basic
     common shares                         24,155,194        24,095,149
                                           ==========        ==========
    Weighted average number of diluted
     common shares                         24,155,194        24,095,149
                                           ==========        ==========

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
                                                  June 30,
                                              2010              2009
                                       (Unaudited)       (Unaudited)
                                       -----------       -----------
    GAAP net income/(loss)                $188,194         $(852,709)
    Stock-based compensation (a)           276,255           225,466
    Consideration to former Sirius
     shareholders (b)                        4,500           305,000
    Change in fair value of warrants
     (c)                                   157,015           (73,183)
                                           -------           -------
    Non-GAAP adjusted net income/
     (loss)                               $625,964         $(395,426)
                                          ========         =========
    Non-GAAP basic and diluted net
     income/(loss) per common share          $0.03            $(0.02)
    Weighted average number of basic
     common shares                      24,187,569        24,100,874
                                        ==========        ==========
    Weighted average number of
     diluted common shares              24,566,476        24,100,874


                                           Six-months ended June
                                                      30,
                                               2010              2009
                                        (Unaudited)       (Unaudited)
                                        -----------       -----------
    GAAP net income/(loss)                $(236,289)      $(2,459,640)
    Stock-based compensation (a)            488,033           424,593
    Consideration to former Sirius
     shareholders (b)                         9,000           305,000
    Change in fair value of warrants
     (c)                                    356,290            61,730
                                            -------            ------
    Non-GAAP adjusted net income/
     (loss)                                $617,034       $(1,668,317)
                                           ========       ===========
    Non-GAAP basic and diluted net
     income/(loss) per common share           $0.03            $(0.07)
    Weighted average number of basic
     common shares                       24,155,194        24,095,149
                                         ==========        ==========
    Weighted average number of
     diluted common shares               24,155,194        24,095,149
    -------------------------------------------------
    (a) Stock-based compensation expense resulting from the application
    of SFAS 123(R).
    (b) Payment of $100,000 and accrual of $205,000 related to the
    release, consent and the third amendment to the merger agreement
    between DUSA and the former Sirius shareholders.
    (c) Non-cash gain/loss on change in fair value of warrants

About DUSA Pharmaceuticals

DUSA Pharmaceuticals, Inc. is an integrated dermatology pharmaceutical company focused primarily on the development and marketing of its Levulan® Photodynamic Therapy (PDT) technology platform, and complementary dermatology products. Levulan® PDT is currently approved for the treatment of minimally to moderately thick actinic keratoses (AKs) of the face or 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. 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 the 2010 financial goals of positive cash flow and profitability, 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, marketing of competitive products, actions by health regulatory authorities, changing economic conditions, the status of our patent portfolio, reliance on third parties, including sole source vendors, sufficient funding, and other risks and uncertainties identified in DUSA’s Form 10-K for the year ended December 31, 2009.

SOURCE DUSA Pharmaceuticals, Inc.


Source: newswire



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