[DUSA LOGO] EXHIBIT 99(a)
INNOVATION IN PHOTODYNAMIC THERAPY
DUSA PHARMACEUTICALS, INC. (R)
FOR RELEASE AT 8:00 A.M. EASTERN
DUSA PHARMACEUTICALS REPORTS
FOURTH QUARTER AND FULL YEAR 2003 FINANCIAL RESULTS
AND CORPORATE HIGHLIGHTS; AND SUBSEQUENT EVENTS
WILMINGTON, MA. MARCH 16, 2004 - DUSA Pharmaceuticals, Inc. (NASDAQ NMS: DUSA)
announced today its fourth quarter and full year 2003 financial results and
corporate highlights. During the fourth quarter, the Company's revenues from
product sales increased to $516,000, compared to $162,000 in 2002, based on the
previously reported increase in sales of our Levulan(R) Kerastick(R), as well as
increased sales of the Company's BLU-U(R) brand light source. Other highlights
of the fourth quarter included the launch of DUSA's direct sales force, along
with the signing of a number of independent sales representative agreements. We
also added a second drug distribution channel, enjoyed strong representation at
a number of dermatology educational meetings, and completed our Phase IV long
term actinic keratoses (AK) tracking study.
Subsequent to year-end, we reported a very solid response to Levulan
Photodynamic Therapy (PDT) at the annual meeting of the American Academy of
Dermatology (AAD); the start-up of Kerastick manufacturing at our Wilmington, MA
facility; the reacquisition of full Canadian rights to our technology; and the
decision to increase the size of the sales force based on significantly
increased demand for our therapy. Recently, we also strengthened our financial
position with a private placement of 2,250,000 shares of our common stock that
raised gross proceeds of $24,750,000. The Company will use the proceeds from the
sale of these securities to expand our sales force and for working capital
purposes, including research and development activities, and for potential
product acquisitions.
We are also pleased to be able to report that the positive sales trends achieved
in Q4 have continued in the first quarter of 2004. Interest in our therapy at
the South Beach Symposium, held immediately after the AAD meeting, was very
strong, and we have since supported a number of continuing medical education
(CME) meetings across the country. The actual number of Kerastick sales to
customers during Q1 04 will be reported after the end of the quarter.
In light of the increased demand for our therapy, we have decided to at least
double the size of our direct sales force of area managers and representatives,
from the current level of 8 to 16, with the potential for additional hires as
the year progresses. We have also continued to make excellent progress in
obtaining private insurance coverage for our therapy so that patients may be
reimbursed for their Levulan PDT treatment of AKs.
We have also continued to make progress on our new indication development
programs. These include a proposed Phase II short drug contact photodamaged skin
study, a new Phase II short drug contact study for the treatment of moderate to
severe acne vulgaris with Levulan and the BLU-U, and a pilot Phase II Barretts
esophagus high-grade dysplasia trial designed to test our new proprietary
endoscopic light delivery device. In
addition, we received approval from Health Canada to amend our medical device
license to market the BLU-U for light alone treatment of acne.
Since year-end, there has also been a positive development on the patent front.
We had previously received notice that our Netherlands patent was being formally
challenged by an anonymous agent, and we had filed a formal response to the
opposition. After receiving submissions from both parties, the Netherlands
Patent Office issued a notice that our patent was upheld and granted in amended
form. Although the opposing party had the right to appeal the decision, we are
now pleased to report that the deadline for the appeal has expired. Meanwhile,
the Australian patent dispute is scheduled to go to trial during April of this
year.
FINANCIAL HIGHLIGHTS:
For the three months ended December 31, 2003, DUSA's net loss was ($3,770,000),
or ($0.27) per common share, compared to a loss of ($3,693,000), or ($0.27) per
common share for 2002. For the twelve months ended December 31, 2003, the
Company incurred a net loss of ($14,827,000), or ($1.06) per common share, as
compared to a net income for 2002 of $5,763,000, or $0.42 per common share. The
prior year period included the one-time recognition of certain items as a result
of the September 2002 termination of our former marketing and development
collaboration, including $20,990,000 of research grant and milestone revenue,
and charges to cost of product sales and research and development costs totaling
$2,638,000 and $639,000, respectively. As a result of the recognition of these
items, net income for 2002 was increased by approximately $17,713,000, or $1.28
per common share.
Revenues for the three months ended December 31, 2003 increased to $516,000,
compared to $162,000 in 2002, due primarily to higher Kerastick end-user sales.
In addition, the Company began selling the BLU-U during the quarter following
our receipt of market clearance from the FDA in September 2003 to market the
BLU-U as a stand alone device for the treatment of moderate inflammatory acne
vulgaris. Revenues for the twelve months ended December 31, 2003 were comprised
of $970,000 in product sales, as compared to product sales of $319,000 in 2002.
Revenues for 2002 also included research grant and milestone revenues of
$22,312,000 and co-development revenue of $2,851,000 that was earned under our
former marketing and development collaboration.
Research and development expenses for the three months ended December 31, 2003
decreased to $1,237,000, compared to $2,802,000 in 2002. This decrease is mainly
attributable to the re-assignment of resources as of January 1, 2003 to
marketing and sales functions that were previously functioning in research and
development roles. Research and development costs for the twelve months ended
December 31, 2003 decreased to $5,404,000, compared to $12,122,000 in 2002, due
primarily to the absence of co-sponsored project costs under our former
marketing and development collaboration, and the aforementioned re-assignment of
resources to marketing and sales functions. The 2002 period also included the
write-off of $639,000 of previously deferred costs as a result of the
collaboration termination, and a $500,000 milestone payment under a license
agreement signed in December 2002 for proprietary technology related to ALA for
systemic dosing in the field of brain cancer.
Marketing and sales costs for the three and twelve months ended December 31,
2003 were $896,000 and $2,494,000, which includes $517,000 and $924,000,
respectively, of payroll related costs, including direct and indirect
commissions. As of January 1, 2003, we reassigned resources that were previously
functioning in research and development roles to our marketing and sales
function. In August 2003, DUSA hired an Associate
Vice President of Sales, and in October 2003 we hired, trained, and deployed a
regional sales force. In 2002, there were no marketing and sales expenses
incurred directly by DUSA as all rights and activities associated with the
marketing and sales of our products were the sole responsibility of our former
partner. We anticipate that the level of marketing and sales expenses will
continue to increase in 2004 as we expand our sales capacity to keep pace with
the success of our sales initiatives.
General and administrative expenses for the three months ended December 31, 2003
increased to $1,561,000, compared to $1,487,000 in 2002, due primarily to the
legal costs associated with the challenge to our Australian patent and related
patent issues. General and administrative expenses for the twelve months ended
December 31, 2003 increased to $6,344,000, compared to $5,591,000 in 2002, due
mainly to higher legal expenses of $3,253,000, compared to $1,970,000 in 2002.
Increased legal expenses were partly offset by lower 2003 staffing related costs
of approximately $458,000, due primarily to employee separations during 2002. It
is expected that legal costs will stay elevated as long as the patent dispute
continues.
As of December 31, 2003, total cash, cash equivalents, and United States
government securities, including long-term instruments, were $37,969,000,
compared to $52,880,000 at the end of 2002. Long-term debt, including current
maturities, as of December 31, 2003 was $1,518,000, compared to $1,788,000 at
the end of 2002.
DUSA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-------------------------
2003 2002
----------- -----------
ASSETS
CURRENT ASSETS
----------- -----------
Cash, and cash equivalents $ 4,294,482 $ 6,926,713
United States government securities 30,284,841 42,498,617
Accounts receivable 229,483 36,720
Inventory 712,831 1,188,659
Other current assets 1,534,209 1,615,368
----------- -----------
TOTAL CURRENT ASSETS 37,055,846 52,266,077
Restricted cash 139,213 137,883
United States government securities 3,250,940 3,316,330
Property and equipment, net 4,251,489 5,229,683
----------- -----------
TOTAL ASSETS $44,697,488 $60,949,973
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,818,039 $ 3,099,643
----------- -----------
Current maturities of long-term debt 270,000 270,000
----------- -----------
Deferred revenue 129,900 5,100
----------- -----------
TOTAL CURRENT LIABILITIES 3,217,939 3,374,743
Long-term debt, net of current maturities 1,247,500 1,517,500
----------- -----------
TOTAL LIABILITIES 4,465,439 4,892,243
TOTAL SHAREHOLDERS' EQUITY 40,232,049 56,057,730
----------- -----------
$44,697,488 $60,949,973
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY =========== ===========
DUSA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- ----------------------------
2003 2002 2003 2002
----------- ------------ ------------- ------------
REVENUES
Product sales and rental income $ 516,309 $ 162,008 $ 970,109 $ 319,378
Research grant and milestone revenue -- -- -- 22,312,498
Research revenue earned under -- -- -- 2,851,362
collaborative agreements
------------ ------------ ------------ -----------
TOTAL REVENUES 516,309 162,008 970,109 25,483,238
------------ ------------ ------------ -----------
OPERATING COSTS
Cost of product sales and royalties 1,016,581 557,329 3,481,248 5,253,424
Research and development 1,236,840 2,801,715 5,403,961 12,121,606
Marketing and sales 895,801 -- 2,494,405 --
General and administrative 1,561,295 1,486,529 6,343,680 5,591,039
------------ ------------ ------------ -----------
TOTAL OPERATING COSTS 4,710,517 4,845,573 17,723,294 22,966,069
------------ ------------ ------------ -----------
INCOME (LOSS) FROM OPERATIONS (4,194,208) (4,683,565) (16,753,185) 2,517,169
OTHER INCOME, NET 424,301 990,327 1,926,331 3,245,349
------------ ------------ ------------ -----------
NET INCOME (LOSS) $ (3,769,907) $ (3,693,238) $(14,826,854) $ 5,762,518
============ ============ ============ ===========
BASIC AND DILUTED NET INCOME (LOSS) PER $ (.27) $ (.27) $ (1.06) $ 0.42
COMMON SHARE
============ ============ ============ ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 13,965,540 13,887,612 13,936,482 13,877,566
============ ============ ============ ===========
DUSA Pharmaceuticals, Inc. is a biopharmaceutical company engaged primarily in
the development of Levulan Photodynamic Therapy (PDT) and Photodetection (PD)
for multiple medical indications. PDT and PD utilize light-activated compounds
such as Levulan to induce a therapeutic or detection effect. DUSA is a world
leader in topically or locally applied PDT and PD. The Company maintains offices
in Wilmington, MA, 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 the timing of the
report of Kerastick sales, the anticipation of increased marketing and sales
expenses in 2004, the expectation of elevated legal expenses and the use of
proceeds from the recent private placement. These statements are further
qualified by certain factors, including, but not limited to, changing market and
regulatory conditions, the impact of competitive products and their pricing, the
securities regulatory process, the uncertainties of the litigation process, the
results of clinical trials and other risks identified in DUSA's SEC filings from
time to time including its Form 10-K for the year ended December 31, 2003.
For further information contact: D. GEOFFREY SHULMAN, MD, President & CEO or
SHARI LOVELL, Director, Shareholder Services Tel: 416.363.5059 Fax 416.363.6602
or visit www.dusapharma.com