EXHIBIT 99(a)
(DUSA(R) LOGO)
INNOVATION IN PHOTODYNAMIC THERAPY AND DERMATOLOGY
DUSA PHARMACEUTICALS, INC. (R)
FOR RELEASE AT 6:30 A.M.
DUSA PHARMACEUTICALS REPORTS
SECOND QUARTER 2006 CORPORATE HIGHLIGHTS
AND FINANCIAL RESULTS
REVENUES TOTAL $6.6 MILLION;
SALES FORCE INTEGRATION COMPLETED
WILMINGTON, MA - AUGUST 8, 2006 - DUSA Pharmaceuticals, Inc. (NASDAQ GM: DUSA)
today reported financial results for the second quarter ended June 30, 2006.
These results represent the first full quarter of integrated operations with
Sirius Laboratories, Inc. following the merger. Revenue for the quarter was $6.6
million, compared to $2.2 million in the second quarter of 2005. Revenue for the
six-months ended June 30, 2006 was $11.4 million, compared to $5.6 million in
the comparable 2005 period. Revenue for the six-month period ended June 30, 2006
of $11.4 million matches DUSA's full year 2005 revenue.
During the quarter, DUSA sold 34,944 Kerastick(R) units, versus 20,172 units
sold during Q2 2005. Year-to-date Kerastick sales totaled 67,878 units, as
compared to 48,876 units sold in the comparable 2005 period. Q2 BLU-U(R) sales
totaled 66, versus 69 units sold during Q2 2005. Year-to-date BLU-U sales
totaled 158 units as compared to 212 units sold in the comparable 2005 period.
At the end of the quarter there were 1,479 BLU-U units in the field, as compared
to 1,117 as of June 30, 2005.
During DUSA's first full quarter selling the former Sirius Laboratories'
products, sales of these products reached a total of $2.8 million, despite the
negative impact of a generic challenge to Nicomide(R), the lead product. After
suing the generic company for patent infringement in New Jersey, a preliminary
injunction was granted, stopping further sales of the generic to or from
wholesalers, and recalling the product from the wholesale distribution channel.
In addition, the generic company's original lawsuit against DUSA and Sirius in
Georgia was dismissed by that court. The generic company has also made a request
for re-examination of the Nicomide patent at the U.S. Patent and Trademark
Office. DUSA is not opposing that request. Re-examination, if it occurs,
generally takes between 2-3 years. DUSA has filed a motion to stay the New
Jersey litigation while the re-examination process takes place.
During the quarter, DUSA completed the sales force integration with Sirius, and
hired seven new representatives to fill the remaining territories. Combined with
the Company's sales management personnel and structure, the sales team now
totals 40 people, including 34 representatives.
Stiefel Laboratories, Inc., the Company's Latin American partner, is actively
working towards a Brazilian launch of Levulan(R), scheduled for the first
quarter of next year. With DUSA's support, Stiefel completed the regulatory
filing with the Brazilian regulatory authority during the second quarter.
Additional launches are expected to follow in a number of other Latin American
countries.
Progress was also made during the quarter on DUSA's planned Phase IIb clinical
trial using Levulan PDT in acne. Subject to finalization of the protocol, the
study is expected to begin during Q4 2006. Development of two new prescription
products for the treatment of acne and rosacea from the Sirius pipeline also
advanced, with the goal of having both products launched within the next 12-15
months.
The second quarter also included a number of additional highlights:
- Favorable settlement in the lawsuit with New England Compounding
Center related to the sale of compounded ALA for use in PDT
- Completed licensing agreement with PhotoCure ASA allowing
PhotoCure to market its products in the US and other territories
covered by DUSA patents, in return for royalties and other
consideration. DUSA received $1 million of pre-paid royalties
following signing of the agreement
- Kerastick revenues up 89% versus prior year quarter and 52% for
the six month period versus prior year
- Held first meeting of DUSA's newly expanded Medical Advisory
Board which includes prominent industry thought leaders in the
areas of acne, skin cancer and PDT
- Two key peer-reviewed journal articles by independent researchers
were published, highlighting the benefits of Levulan PDT in the
treatment of acne, actinic keratosis and photodamage:
- Rivard, J and Ozog, D. Case Reports: Henry Ford
Hospital Dermatology Experience with Levulan Kerastick
and Blue Light Photodynamic Therapy. J Drugs Dermatol;
6: 556-561 (2006)
- Gold M, Bradshaw V, Boring M et al. Split-face
comparison and photodynamic therapy with
5-aminolevulinic acid and intense pulsed light versus
intense pulsed light alone for photodamage. Dermatol
Surg; 32: 795-803 (2006).
- Market data received through May 2006 reflected a 15% increase in
Nicomide prescriptions versus the prior year
"We are extremely pleased with our sales and financial results for the second
quarter" said Bob Doman, DUSA President and COO. "Besides another strong quarter
of Levulan sales, we were very pleased with the growth in prescriptions written
for Nicomide, Sirius' lead product, during the first five months of the year. We
also completed the realignment of our sales force in April, and made significant
progress with the integration of the Sirius acquisition across all functional
areas during the quarter."
FINANCIAL HIGHLIGHTS:
For the three-month period ended June 30, 2006, DUSA's net loss in accordance
with generally accepted accounting principles (GAAP) was ($4,654,000), or
($0.24) per common share, compared to a net loss of ($4,826,000), or ($0.29) per
share for the comparable 2005 period. The non-GAAP net loss three-month period
ended June 30, 2006 was ($3,565,000) or ($0.18) per common share (refer to the
"Use of Non-GAAP Financial Measures" section and accompanying financial tables
for a reconciliation of GAAP to non-GAAP information).
Revenues for the three and six-month periods ended June 30, 2006 were $6,619,000
and $11,370,000, respectively, as compared to $2,228,000 and $5,597,000,
respectively for the comparable 2005 periods, and were comprised of the
following:
Three-months ended June 30 Six-months Ended June 30
-------------------------- ------------------------
2006 2005 2006 2005
---------- ---------- ----------- ----------
PDT Drug & Device Product Revenues
Kerastick Product Revenues
United States $2,912,000 $1,510,000 $ 5,722,000 $3,759,000
Canada 420,000 256,000 763,000 517,000
---------- ---------- ----------- ----------
Subtotal Kerastick Product Revenues 3,332,000 1,766,000 6,485,000 4,276,000
BLU-U Product Revenues
United States 451,000 340,000 1,117,000 1,026,000
Canada 59,000 122,000 92,000 295,000
---------- ---------- ----------- ----------
Subtotal BLU-U Product Revenues 510,000 462,000 1,209,000 1,321,000
---------- ---------- ----------- ----------
Total PDT Drug & Device Product Revenues 3,842,000 2,228,000 7,694,000 5,597,000
---------- ---------- ----------- ----------
Total Non-PDT Drug Product Revenues 2,777,000 -- 3,676,000 --
---------- ---------- ----------- ----------
TOTAL PRODUCT REVENUES $6,619,000 $2,228,000 $11,370,000 $5,597,000
========== ========== =========== ==========
The increase in 2006 Kerastick revenues for the three-month period ended June
30, 2006 in comparison to the comparable 2005 period was driven by a number of
factors, including: increased sales volumes, an increase in our average unit
selling price, a reduction in our overall sales volume discount programs, and
increased levels of direct distribution to customers. Effective January 1, 2006,
DUSA became the sole U.S. distributor of the Kerastick. Our average net selling
price for the Kerastick increased to $95.55 on a year-to-date basis in 2006 from
$87.48 for the comparable 2005 period. The increase in 2006 BLU-U revenue was
driven by an increase in our average selling price. There were 66 units sold
during the second quarter of 2006 versus 69 units in the comparable 2005 period.
Our average selling price increased to $7,478 on a year-to-date basis in 2006
from $6,187 for the comparable 2005 period. Non-PDT Drug Product revenues
represent the revenues generated by the products acquired as part of our merger
with Sirius. The substantial majority of this revenue is attributable to sales
of Nicomide.
Total product margins for the three-month period ended June 30, 2006 were
$3,624,000 or 55% as compared to $785,000 or 34% for the comparable 2005 period.
For the three-month period ended June 30, 2006, total PDT Drug and Device
Product margins were $2,622,000 or 68%, versus $785,000, or 34%, for the
comparable 2005 period. The incremental margin was driven by positive margin
gains on both the Kerastick and BLU-U.
Kerastick gross margins for the three-month period ended June 30, 2006 were 77%
versus 52% for the comparable 2005 period. BLU-U margins for the three-month
period ended June 30, 2006 were 9%, versus (35%) for the comparable 2005 period.
Similar to the increase in revenues, the increase in margin is mainly
attributable to an increase in our average unit selling prices, increased levels
of direct distribution to customers; as well as a reduction in our overall sales
volume discount programs.
Non-PDT Drug Product margins reflect the margin generated by the products
acquired as part of our March 10, 2006 acquisition of Sirius. Total margin for
the three-month period ended June 30, 2006 was $1,002,000 or 36%. It should be
noted that Non-PDT Drug Product margins were negatively impacted by the
recording of intangible asset amortization and the fair value adjustment to
inventory, both related to the Sirius merger. We expect the fair value purchase
accounting adjustment to continue to affect gross margins for the third quarter
of 2006; and beyond that we expect gross margins on Non-PDT Drug Products to be
in the 80% to 90% range, before considering the amortization expense related to
core/developed technologies acquired in the merger.
Total operating costs for the three-month period ended June 30, 2006 were
$8,458,000 as compared to $5,936,000 in 2005. Research and developments costs
decreased to $1,527,000 for the three-month period ended June 30, 2006 from
$1,799,000 in the comparable 2005 period due to decreased spending on clinical
trials as we completed both our Phase II acne study and our interim analysis
study on photo-damaged skin in the first quarter of 2006. Marketing and sales
costs increased to $3,177,000 from $2,296,000 in the comparable 2005 period due
primarily to increased headcount resulting from the Sirius acquisition, as well
as the addition of executive sales management during the three-month period
ended June 30, 2006. General and administrative costs increased to $3,754,000
from $1,841,000 due principally to increased legal spending, a $475,000 non-cash
stock-based compensation charge in accordance with SFAS 123R and incremental
costs associated with the acquisition of Sirius. The legal expenses include -$1M
related to matters surrounding the generic challenge to Nicomide.
As of June 30, 2006, total cash, cash equivalents, and United States government
securities including long-term instruments, were $20,354,000, compared to
$34,935,000 at December 31, 2005. The decrease is primarily attributable to cash
expended on the Sirius acquisition; as well as the funding of our operational
expenses. Net intangible assets and goodwill acquired as part of the Sirius
merger totaled $16,621,000 and $5,773,000 respectively as of June 30, 2006.
DUSA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2006 2005
----------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 5,615,118 $ 4,210,675
Marketable securities 14,584,968 30,579,486
Accounts receivable 2,062,456 373,130
Inventory 2,909,201 1,860,793
Other current assets 1,600,164 1,961,617
----------- -----------
Total current assets 26,771,907 38,985,701
Restricted cash 154,286 144,541
Property, plant and equipment 2,857,456 2,971,869
Intangible assets 16,620,652 --
Goodwill 5,772,505 --
Deferred charges and other assets 889,704 228,520
----------- -----------
TOTAL ASSETS $53,066,510 $42,330,631
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 4,874,530 $ 4,002,050
Deferred revenue 1,066,700 94,283
----------- -----------
Total current liabilities 5,941,230 4,096,333
Other liabilities 205,785 205,570
----------- -----------
TOTAL LIABILITIES 6,147,015 4,301,903
TOTAL SHAREHOLDERS' EQUITY 46,919,494 38,028,728
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $53,066,510 $42,330,631
DUSA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three-months ended June 30 Six-months Ended June 30
-------------------------- -------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Product Revenues $ 6,619,109 $ 2,228,116 $11,369,630 $ 5,596,730
Cost of Product Revenues and Royalties 2,995,163 1,470,528 4,785,922 3,474,156
----------- ----------- ----------- -----------
Gross Margin 3,623,947 757,588 6,583,708 2,122,574
Operating Costs
Research and Development 1,527,523 1,799,149 3,038,254 3,394,866
In-process research and development -- -- 1,600,000 --
Marketing and Sales 3,176,523 2,295,914 5,867,207 5,081,316
General and Administrative 3,753,796 1,841,239 5,824,087 3,523,718
----------- ----------- ----------- -----------
Total Operating Costs 8,457,842 5,936,302 16,329,548 11,999,900
----------- ----------- ----------- -----------
Loss from Operations (4,833,896) (5,178,714) (9,745,840) (9,877,326)
----------- ----------- ----------- -----------
Other Income
Other Income, net 179,942 352,596 451,578 719,593
----------- ----------- ----------- -----------
Net Loss $(4,653,954) $(4,826,118) $(9,294,262) $(9,157,733)
=========== =========== =========== ===========
Basic and Diluted Net Loss per Common Share $ (0.24) $ (0.29) $ (0.50) $ (0.54)
=========== =========== =========== ===========
Weighted Average Number of Common Shares 19,448,824 16,921,318 18,544,084 16,914,870
=========== =========== =========== ===========
USE OF NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with GAAP, we have
provided in the table below non-GAAP financial measures adjusted to exclude
share-based compensation expense, amortization of intangible assets and an
in-process research and development charge related to our merger with Sirius in
the first quarter of 2006. We believe this presentation is useful to help
investors better understand our financial performance this quarter, competitive
position and prospects for the future. We use the modified prospective method to
report compensation charges associated with the expensing of stock options.
Results for prior periods have not been adjusted to reflect non-GAAP financial
performance. Management believes these non-GAAP financial measures assist in
providing a more complete understanding of our underlying operational results
and trends and in allowing for a more comparable presentation of results in the
reported period to those in prior periods that did not include SFAS 123(R) stock
based compensation. Management uses these measures along with their
corresponding GAAP financial measures to help manage our business and to help
evaluate our 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 we use 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.
For the three- months ended June 30, 2006
---------------------------------------------------------------
Non-cash charges
SFAS 123R resulting from the
GAAP Adjustment (a) purchase of Sirius Non-GAAP
----------- -------------- ------------------ -----------
Product Revenues $ 6,619,109 $ 6,619,109
Cost of Product Revenues and Royalties 2,995,163 $(17,386) $(437,309)(b) 2,540,468
----------- -------- --------- -----------
Gross Margin 3,623,947 17,386 437,309 4,078,642
Operating Costs
Research and Development 1,527,523 (81,397) 1,446,126
Marketing and Sales 3,176,523 (78,330) 3,098,193
General and Administrative 3,753,796 (474,755) 3,279,041
----------- -------- -----------
Total Operating Costs 8,457,842 (634,482) 7,823,360
----------- -------- --------- -----------
Loss from Operations $(4,833,896) $651,868 $ 437,309 $(3,744,719)
----------- -------- --------- -----------
Other Income
Other Income, net 179,942 179,942
----------- -------- --------- -----------
Net Loss $(4,653,954) $651,868 $ 437,309 $(3,564,777)
=========== ===========
Basic and Diluted Net Loss per Common Share
$(0.24) $ (0.18)
=========== ===========
Weighted Average Number of Common Shares
Outstanding, Basic and Diluted 19,448,824 19,448,824
=========== ===========
(a) Share based compensation expense resulting from the adoption of SFAS 123R
on January 1, 2006
(b) Amortization of intangible assets for the three-month period ended June 30,
2006
For the six- months ended June 30, 2006
---------------------------------------------------------------
Non-cash charges
SFAS 123R resulting from the
GAAP Adjustment (a) purchase of Sirius Non-GAAP
----------- -------------- ------------------ -----------
Product Revenues $11,369,630 $11,369,630
Cost of Product Revenues and Royalties 4,785,922 $ (36,449) $ (539,348)(b) 4,210,125
----------- --------- ----------- -----------
Gross Margin 6,583,708 36,449 539,348 7,159,505
Operating Costs
Research and Development 3,038,254 (162,401) 2,875,853
In-process Research and Development 1,600,000 (1,600,000)(c) --
MARKETING AND SALES 5,867,207 (147,172) 5,720,035
GENERAL AND ADMINISTRATIVE 5,824,087 (624,042) 5,200,045
----------- --------- ----------- -----------
Total Operating Costs (16,329,548) (933,615) (1,600,000) 13,795,933
----------- --------- ----------- -----------
Loss from Operations $(9,745,840) $ 970,064 2,139,348 $ (6,636428)
----------- --------- ----------- -----------
Other Income
Other Income, net 451,578 451,578
----------- --------- ----------- -----------
Net Loss $(9,294,262) $ 970,064 $ 2,139,348 $(6,184,850)
=========== ===========
Basic and Diluted Net Loss per Common Share $ (0.50) $ (0.33)
=========== ===========
Weighted Average Number of Common Shares
Outstanding, Basic and Diluted 18,544,084 18,544,084
=========== ===========
(a) Share based compensation expense resulting from the adoption of SFAS 123R
on January 1, 2006
(b) Amortization of intangible assets from date of acquisition (March 10, 2006)
through June 30, 2006
(c) In-process research and development, one-time charge
DUSA Pharmaceuticals, Inc. is an integrated dermatology specialty pharmaceutical
company focused primarily on the development and marketing of its Levulan(R)
Photodynamic Therapy (PDT) technology platform, and complementary dermatology
products. Levulan PDT is currently approved for the treatment of pre-cancerous
actinic keratoses, and is being developed for the treatment of acne and
photodamage. DUSA's other dermatology products include Nicomide(R), and the
AVAR(R) line, resulting from its recent acquisition of Sirius Laboratories, Inc.
These products target patients with acne and rosacea. DUSA is also developing
certain internal indications of Levulan PDT. DUSA is based in Wilmington, MA.
Please visit our website at www.dusapharma.com.
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 intentions and
beliefs regarding the patent reexamination process, expectations regarding
launches of product in Latin America and regarding the commencement of the acne
study, anticipated launches of Sirius pipeline products, expectation for market
entry of products by PhotoCure, expectations regarding affects of purchase
accounting adjustments and range of gross margin on Non-PDT Drug Products, and
beliefs regarding non-GAAP presentations. Furthermore, the factors that may
cause differing results include the uncertainties of litigation and the patent
reexamination process, the regulatory approval process and drug/device
development, third-party marketing decisions, sufficient funding, maintenance of
DUSA's patent portfolio and other risks identified in DUSA's SEC filings from
time to time.
For further information contact:
D. GEOFFREY SHULMAN, MD, Chairman & CEO - 416.363.5059
ROBERT F. DOMAN, President & COO - 978.909.2216
SHARI LOVELL, Director, Shareholder Services - 416.363.5059