Exhibit 99(b)
[DUSA LOGO]
INNOVATION IN PHOTODYNAMIC THERAPY
DUSA PHARMACEUTICALS, INC.
For Immediate Release
DUSA PHARMACEUTICALS REPORTS
FOURTH QUARTER AND FULL YEAR 2002 FINANCIAL RESULTS
AND CORPORATE HIGHLIGHTS
WILMINGTON, MASSACHUSETTS, MARCH 11, 2003 DUSA Pharmaceuticals, Inc. (NASDAQ
NMS: DUSA) reported today its Q4 and full year 2002 audited financial results,
and corporate highlights.
2002 CORPORATE HIGHLIGHTS
The most important event for DUSA during 2002 was the September 1st termination
of the Marketing, Development and Supply Agreement with Schering AG of Germany,
covering DUSA's Levulan(R) PDT technology for dermatology indications. As of
that date, DUSA reacquired full responsibility for all future dermatology
development and marketing activities and all other rights granted to Schering AG
under the agreement. DUSA has now begun to institute its own marketing program,
based on education of physicians, supporting efforts to improve reimbursement to
physicians for our therapy from Medicare and other third-party payers, and
development of clinical studies which, if successful, could expand our AK
market. Following the termination, the Company also decided to stop funding
certain clinical development programs and reduced headcount by approximately
20%, in order to control costs and focus the Company on meeting our core sales,
development and spending objectives. The termination also resulted in a net
profit for the year (see details below), although the Company expects to report
future net losses until such time as sales of our products increase
significantly. Net cash burn for 2002 was approximately $11.8 million, and DUSA
finished the year with approximately $52.9 million of cash and cash equivalents
and short-term investments, leaving the Company in a very solid financial
position to proceed with its current development and marketing programs.
Kerastick(R) end user sales during the fourth quarter totaled 1,722 units,
similar to average sales levels seen throughout the year. For the full year,
Kerastick(R) end user sales totaled 7,116 units, up slightly from the 2001 level
of 7,071 units. BLU-U(R) placements at year-end totaled 328 units, up from 282
at year-end 2001.
DUSA is hopeful that Kerastick(R) usage will increase during 2003, especially
later in the year as our new marketing and educational programs begin to take
effect. For the first time, DUSA will have its own booth at the upcoming meeting
of the American Academy of Dermatology, and expects to actively participate at
other educational meetings throughout the year.
The Company also continues to make progress on its Phase I/II program using
Levulan(R) PDT in the treatment of Barrett's esophagus dysplasia. Recent
follow-up data from 5 high grade dysplasia (HGD) patients showed a continued
absence of dysplasia (i.e. complete ablation), no strictures, and no signs of
mucosal overgrowth, with 12
months of follow-up in 4 patients, and 6 months follow-up in 1 patient. DUSA is
currently seeking a development and marketing partner for this indication.
In January 2003, the Company announced that it had entered into license and
development, and supply agreements for ALA fluorescence guided resection of
brain cancer, with Photonamic GmbH and Co. KG and medac GmbH of Germany. These
agreements provide for the licensing to DUSA of Photonamic's proprietary
technology related to aminolevulinic acid (ALA), the compound used in DUSA's
Levulan(R) Photodynamic Therapy (PDT) and Photodetection (PD), for brain cancer
and includes rights to use certain pre-clinical data for other indications.
FINANCIAL HIGHLIGHTS:
SCHERING AG TERMINATION ACCOUNTING:
In September 2002, and again at year-end, DUSA evaluated certain items on its
Consolidated Balance Sheet for the timing of revenue recognition and potential
impairment due to the termination of the Schering AG agreement. These items
included unamortized deferred revenue related to non-refundable milestone
payments previously received under the Schering AG agreement, the Company's
nearly completed manufacturing facility, raw material and finished goods
inventories, commercial light units in the field, and deferred charges and
royalties. As a result of this analysis, in addition to normal amortization
recorded prior to the termination of the Schering AG agreement, DUSA recorded
the following in its Condensed Consolidated Statements of Operations during the
year ended December 31, 2002:
Revenue
Recognition/
Statement of Operations Item Balance Sheet Item Asset Impairment
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Revenues:
Research grant and milestone Deferred Revenue $20,990,274
revenue -----------
Operating Costs:
Cost of product sales Deferred Charges 542,766
Inventory 1,705,364
Commercial Light Sources 389,647
Under Lease or Rental
Research and development costs Deferred Royalty 639,051
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Total Charges to Operating Costs $3,276,828
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We concluded that the carrying value of our nearly completed manufacturing
facility is more likely than not to be fully recoverable after considering the
effects of the change in business circumstances caused by the termination of the
former collaboration arrangement. Therefore, no impairment charges associated
with the facility were recorded in 2002; however, we will continue to
periodically review the carrying value of the facility.
OTHER FINANCIAL HIGHLIGHTS:
DUSA's net income for the year ended December 31, 2002 was $5,763,000, or $0.42
per share, as compared to a net loss of ($7,358,000), or ($0.53) per share for
2001. Net income for 2002 included the aforementioned one-time recognition of
approximately $17,713,000 of certain items in its Consolidated Statement of
Operations based on the termination of the Schering AG agreement. Total research
and development costs for 2002 were $12,122,000, compared to $10,790,000 in the
prior year. The increase includes a $500,000 milestone charge under the license
agreement signed on December 30, 2002 between DUSA and Photonamic GmbH & Co. KG,
and the recognition of $639,000 of previously deferred royalties associated with
payments to PARTEQ, the Company's licensor, due to the termination of the
Schering AG agreement. Lower spending on dermatological indications were offset
by higher third-party expenditures in support of our FDA mandated Phase IV
clinical study of the long-term efficacy of our marketed product, and our Phase
I/II clinical studies on the safety and efficacy of Levulan PDT treatment of
Barrett's esophagus with and without dysplasia. General and administrative
expenses increased to $5,591,000 in 2002 as compared to $3,655,000 in 2001, as
legal expenses have increased dramatically, due primarily to the challenge to
our Australian patent and related patent issues, and the termination of the
Schering AG agreement. It is expected that these costs will stay elevated as
long as the patent dispute continues.
Other income for 2002 decreased to $3,245,000, as compared to $3,845,000 in
2001, due mainly to a $1,008,000 decline in interest income attributed to lower
investable cash balances as DUSA uses its cash to support its operating
activities, and lower yields. The decline in interest income was partly offset
by a $408,000 increase in realized gains on the sale of U.S. Government
Securities in 2002 as compared to 2001.
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Three Months Ended Dec. 31 Year Ended Dec. 31
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2002 2001 2002 2001
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$162,008 $1,247,456 Revenues $25,483,238 $5,390,736
$557,329 $330,930 Cost of Product Sales and $5,253,424 $2,148,994
Royalties
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Research and
$2,801,715 $3,733,526 Development Costs $12,121,606 $10,789,906
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General and Administrative
$1,486,529 $740,111 Costs $5,591,039 $3,654,792
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$990,327 $831,439 Other Income, net $3,245,349 $3,844,860
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($0.27) ($0.20) Income (Loss) Per Share $.42 ($.53)
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Weighted Average Number of
13,887,612 13,854,765 Common Shares Outstanding 13,877,566 13,791,735
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Cash and U.S. Government
Cash and U.S
$52,879,543 $64,709,625 Government Securities $52,879,543 $64,709,625
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$5,100 $22,585,856 Deferred Revenue $5,100 $22,585,856
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$1,787,500 $0 Long-term Debt $1,787,500 $0
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$56,057,730 $49,834,537 Shareholders' Equity $56,057,730 $49,834,537
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(All figures are in US dollars and the year end figures are audited)
DUSA Pharmaceuticals, Inc. is a biopharmaceutical company engaged primarily in
the development of Levulan(R) Photodynamic Therapy (PDT) and Photodetection (PD)
for multiple medical conditions. PDT and PD utilize light-activated compounds to
induce a therapeutic or detection effect. DUSA is a world leader in topically or
locally applied PDT and PD. The Company is based in Wilmington, MA, with
satellite offices in 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 expectations for
expanding the AK market, future net losses, increase in Kerastick(R) usage,
participation at educational meetings, including the American Academy of
Dermatology, continued elevated legal expenses and intention to review the
carrying value of its manufacturing facility. Such risks and uncertainties
include, but are not limited to, our limited marketing experience, regulatory
compliance and approval of our facility, reliance on third-party manufacturers,
acceptance of our products by the medical and consumer constituencies,
sufficiency of funds to defend and maintain our patents and other risks
identified in DUSA's SEC filings from time to time, including its Form 10-K for
the year ended December 31, 2002.
For further information contact:
D. GEOFFREY SHULMAN, MD, President, CEO & CFO
or SHARI LOVELL, Director, Shareholder Services Tel: 416.363.5059
Fax 416.363.6602 or visit www.dusapharma.com