August 7, 2007 - 5:30 AM EST
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DUSA 2.24 -0.08
Today 5d 1m 3m 1y 5y 10y
DUSA Pharmaceuticals Reports Second Quarter 2007 Corporate Highlights and Financial Results
Revenues total $6.9 million; Non-GAAP Bottom Line improves 44%; Initial Latin American Orders Received
DUSA Pharmaceuticals, Inc. (NASDAQ GM: DUSA), a dermatology company that is developing and marketing Levulan® photodynamic therapy (PDT) and other products targeting patients with common skin conditions, reported today its corporate highlights and financial results for the second quarter ended June 30, 2007.
Total product revenues for the quarter were $6.9 million as compared to $6.6 million for the comparable 2006 period. PDT revenues totaled $4.1 million versus $3.8 million for the comparable 2006 period. The increase in PDT revenues was driven primarily by a 19% increase in U.S. Levulan® Kerastick® revenue. Despite the anticipated impact on Nicomide® from the March 2007 lifting of the preliminary injunction which previously had prohibited River's Edge from selling its niacinamide based product, non-PDT revenues remained relatively flat year-over-year at $2.8 million.
Total product revenues for the six-months ended June 30, 2007 were $13.5 million as compared to $11.4 million for the comparable 2006 period. PDT revenues totaled $8.6 million versus $7.7 million in the comparable 2006 period. Non-PDT revenues totaled $4.9 million versus $3.7 million in the comparable 2006 period. Non-PDT revenues for 2006 represent the period following our merger with Sirius Laboratories, Inc.®, which occurred on March 10, 2006.
For the three-month and six-month periods ended June 30, 2007, DUSA's net loss on a GAAP basis was ($2.5) million, or ($0.13) per common share, and ($5.8) million, or ($0.30) per common share, respectively. GAAP net losses for the comparable 2006 periods were ($4.7) million, or ($0.24) per common share, and ($9.3) million, or ($0.50) per common share. On a non-GAAP basis, the Company's net losses for the three-month and six-month periods ended June 30, 2007 were ($2.0) million, or ($0.10) per common share, and ($5.1) million, or ($0.26) per common share, respectively. Non-GAAP net losses for the comparable 2006 periods were ($3.6) million, or ($0.18) per common share, and ($6.2) million, or ($0.33) per common share. The quarterly non-GAAP net loss represents a 44% decrease from the prior year. Investors are encouraged to refer to the "Use of Non-GAAP Financial Measures" section and the accompanying financial table for a reconciliation of GAAP to non-GAAP information.
Corporate Updates:
- Latin American launch of Levulan® PDT.
- We have been actively working with our Latin American marketing
partner, Stiefel Laboratories, Inc., to obtain acceptable final pricing
from the Brazilian regulatory authorities. At the same time, Stiefel
has been moving forward with launch plans for the other Latin American
countries. Subsequent to the end of the quarter, we received our first
purchase orders from Stiefel for distribution of the Levulan®
Kerastick® in Argentina and Mexico. In light of the unexpected delay
in receiving acceptable final pricing in Brazil, we are in the process
of amending certain terms of the original Stiefel agreement to reflect
current plans to launch in the other Latin American countries prior to
Brazil.
- Product Development.
- We began enrollment of our Phase IIb clinical trial of Levulan® PDT
for the treatment of moderate to severe acne during the first quarter
of 2007. We currently have 11 clinical sites that have accrued 54
patients in the trial.
- Management.
- Robert Doman was elected by the Board of Directors as President and
Chief Executive Officer on June 14, 2007, following the Company's
Annual Shareholders Meeting.
- Legal Proceedings.
- During the quarter, DUSA continued to execute marketing strategies
aimed at retaining Nicomide® market share versus the River's Edge
product, which re-entered the market as a result of the March 7, 2007,
dissolution of a preliminary injunction. On June 14, 2007, the court
granted DUSA's request to amend its complaint to assert claims against
River's Edge for violations of the Lanham Act and infringement of our
copyright. Also, the court dismissed the various state law claims that
River's Edge had alleged against us. The court has also ordered that
the parties participate in a non-binding mediation. The mediation is
set to occur on August 9, 2007. DUSA believes that the River's Edge
product re-entered the market in late March 2007 and expects its
presence to adversely impact Nicomide® sales throughout the
litigation process.
Management Comments:
"During the quarter, we invested a considerable amount of sales resources on the launch of our new product, ClindaReach(TM), and instituted strategies aimed at mitigating the effects of the reentry of the River's Edge product to the market," stated President and CEO Robert Doman. "While managing these additional factors, we are pleased to report that we were able to grow our U.S. Kerastick® revenue by 19% year over year."
"Our Phase IIb clinical trial of Levulan® PDT for the treatment of moderate to severe acne is now well underway", Doman continued.
"We are also pleased to report that, subsequent to the end of the quarter, we received our first purchase orders for Levulan® Kerastick® units for Latin America. This is a significant step forward as we continue to expand our PDT franchise globally," concluded Doman.
Financial Summary:
Revenues for the three and six-month periods ended June 30, 2007 were $6,862,000 and $13,539,000, respectively, as compared to $6,619,000 and $11,370,000, respectively for the comparable 2006 periods, and were comprised of the following:
Three-months ended Six-months ended
June 30, June 30,
-------------------------------------------------------------------------
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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PDT Drug & Device Product
Revenues
Kerastick® Product
Revenues:
United States $3,461,000 $2,912,000 $7,185,000 $5,722,000
Canada 192,000 420,000 393,000 763,000
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Subtotal Kerastick®
Product Revenues 3,653,000 3,332,000 7,578,000 6,485,000
BLU-U® Product
Revenues:
United States 380,000 451,000 946,000 1,117,000
Canada 29,000 59,000 94,000 92,000
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Subtotal BLU-U®
Product Revenues 409,000 510,000 1,040,000 1,209,000
Total PDT Drug & Device
Product Revenues 4,062,000 3,842,000 8,618,000 7,694,000
Total Non-PDT Drug Product
Revenues 2,800,000 2,777,000 4,921,000 3,676,000
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TOTAL PRODUCT REVENUES $6,862,000 $6,619,000 $13,539,000 $11,370,000
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The increase in Kerastick® revenues for the three-month period ended June 30, 2007 from the comparable 2006 period was driven by increased sales volumes and an increase in the average net unit selling price. There were 35,886 Levulan® Kerastick® units sold for the three months ended June 30, 2007 versus 34,944 units sold in the comparable 2006 period. The Company's average net selling price for the Levulan® Kerastick® increased to $101.78 in the second quarter of 2007 from $95.36 in the second quarter of 2006. The decrease in BLU-U® revenue was the result of lower overall sales volumes which were partially offset by an increase in the average selling price of this product. There were 46 units sold for the three months ended June 30, 2007 versus 66 units sold in the comparable 2006 period. The average net selling price for the BLU-U® increased to $8,269 for the three months ended June 30, 2007 from $7,454 in the comparable 2006 period. Non-PDT drug product revenues represent the revenues generated by the products acquired as part of DUSA's merger with Sirius. The substantial majority of this revenue is attributable to sales of Nicomide®. Non-PDT revenues for the three-month period ended June 30, 2007 were consistent with revenues in the comparable 2006 period. Non-PDT revenues for the six-month period ended June 30, 2006 reflects only the period March 10, 2006 (date of merger) through June 30, 2006.
Total product margins for the three-month period ended June 30, 2007 were 74% versus 55% in the prior year. Total PDT drug and device product margins for the second quarter of 2007 were $2.9 million, or 72%, versus $2.6 million, or 68% for the comparable 2006 period. Levulan® Kerastick® gross margins for the three-month period ended June 30, 2007 were 79%, versus 77% for the comparable 2006 period. Similar to the increase in revenues, the increase in margin is mainly attributable to increases in both unit sales volumes and average selling prices. BLU-U® margins for the second quarter of 2007 were 12%, versus 9% for the comparable 2006 period. Non-PDT drug product margins reflect the margin generated by the products acquired as part of DUSA's March 10, 2006 merger with Sirius. Total non-PDT gross margins for the three-month period ended June 30, 2007 were 77% compared with 36% for the comparable 2006 period. In 2006, non-PDT margins were negatively impacted by the recording of intangible asset amortization and the fair value adjustment to inventory.
Total operating costs for the three-month period ended June 30, 2007 were $7.7 million, compared with $8.5 million in the comparable 2006 period. Research and development costs remained relatively flat at $1.6 million as the increased spending on the Company's Phase IIb clinical trial on acne was offset by reduced spending for the development of Levulan® to treat photodamaged skin and Barrett's Esophagus. Marketing and sales costs increased to $3.3 million for the second quarter of 2007 from $3.2 million in the comparable 2006 period due primarily to increased spending on the launch of ClindaReach. General and administrative costs decreased to $2.8 million in the second quarter of 2007 from $3.8 million in the comparable 2006 period. This decrease is mainly attributable to lower legal and other professional services costs incurred during the second quarter of 2007 primarily involving the River's Edge case. General and administrative expenses are highly dependent on the Company's legal and other professional fees, which can vary significantly from period to period particularly in light of DUSA's litigation strategy to protect its intellectual property.
As of June 30, 2007, total cash, cash equivalents, and U.S. government securities were $13.0 million, compared to $18.2 million at December 31, 2006. The decrease is primarily attributable to cash expended to fund operational expenses. Net cash expenditures for second quarter of 2007 were $3.4 million.
Condensed Consolidated Balance Sheets, Condensed Consolidated Statement of Operations and GAAP to Non-GAAP reconciliation follow:
DUSA Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
June 30, December 31,
2007 2006
(Unaudited)
---------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
--------------------------------------------------------------------------
Cash and cash equivalents $3,028,932 $3,267,071
Marketable securities 10,020,979 14,943,196
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Accrued interest receivable 76,840 158,374
Accounts receivable, net 1,858,270 2,060,565
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Inventory 2,912,166 2,343,472
Prepaid and other current assets 1,078,409 1,535,819
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TOTAL CURRENT ASSETS 18,975,596 24,308,497
Restricted cash 166,813 162,805
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Property, plant and equipment, net 2,421,531 2,567,286
Goodwill 6,272,505 5,772,505
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Deferred charges and other assets 1,026,272 944,720
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TOTAL ASSETS $28,862,717 $33,755,813
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--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
--------------------------------------------------------------------------
Accounts payable $1,167,478 $649,523
Accrued compensation 750,100 1,674,470
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Other accrued expenses 2,782,808 3,841,891
Deferred revenue 412,002 57,270
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TOTAL CURRENT LIABILITIES 5,112,388 6,223,154
Other liabilities 2,244,146 1,199,086
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TOTAL LIABILITIES 7,356,534 7,422,240
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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: 19,495,067
and 19,480,067 shares of common stock, 143,250,537 142,959,298
no par, at June 30, 2007 and December 31,
2006 respectively
Additional paid-in capital 5,038,324 4,320,625
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Accumulated deficit (126,735,309) (120,886,977)
Accumulated other comprehensive loss (47,369) (59,373)
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TOTAL SHAREHOLDERS' EQUITY 21,506,183 26,333,573
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,862,717 $33,755,813
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DUSA Pharmaceuticals, Inc. Condensed Consolidated Statement of Operations
(Unaudited)
Three-months ended Six-months ended
June 30, June 30,
--------------------------------------------------------------------------
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product Revenues $6,862,198 $6,619,109 $13,539,038 $11,369,630
Cost of Product
Revenues and Royalties 1,776,491 2,995,163 3,932,643 4,785,922
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Gross Margin 5,085,707 3,623,946 9,606,395 6,583,708
Operating Costs:
Research and
Development 1,576,909 1,527,523 3,103,013 3,038,254
In-process research
and development - - - 1,600,000
Marketing and Sales 3,309,583 3,176,523 6,840,290 5,867,207
General and
Administrative 2,832,576 3,753,796 5,856,025 5,824,087
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Total Operating Costs 7,719,068 8,457,842 15,799,328 16,329,548
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Loss from Operations (2,633,361) (4,833,896) (6,192,933) (9,745,840)
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Other Income
Other Income, net 155,954 179,942 344,598 451,578
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Net Loss $(2,477,407) $(4,653,954) $(5,848,335) $(9,294,262)
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Basic and Diluted Net
Loss per Common Share $(0.13) $(0.24) $(0.30) $(0.50)
--------------------------------------------------------------------------
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Weighted Average
Number of Common
Shares 19,487,485 19,448,824 19,483,796 18,544,084
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 share-based compensation expense, amortization of intangible assets, and an in-process research and development charge related to the Company's merger with Sirius in the first quarter of 2006. The Company believes this presentation is useful to help investors better understand DUSA's financial performance, competitive position and prospects for the future. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. Management believes 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 Six-months ended
June 30, June 30,
--------------------------------------------------------------------------
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP Net Loss $(2,477,407) $(4,653,954) $(5,848,335) $(9,294,262)
Intangible Asset
Amortization (a) - 437,309 - 539,348
In-Process R&D (b) - - - 1,600,000
Stock Based
Compensation © 475,514 651,868 717,698 970,064
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Non-GAAP Adjusted Net
Loss $(2,001,893) $(3,564,777) $(5,130,637) $(6,184,850)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Non-GAAP Basic and
Diluted Net Loss per
Common Share $(0.10) $(0.18) $(0.26) $(0.33)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted Average Number
of Common Shares 19,487,485 19,448,824 19,483,796 18,544,084
(a) Amortization of intangible assets from date of merger (March 10, 2006)
through the end of periods identified.
(b) In-process research and development, one-time charge.
© Share based compensation expense resulting from the adoption of SFAS
123(R).
Conference Call Details and Dial-in Information
In conjunction with this announcement, DUSA will host a conference call
today:
Tuesday, August 7th - 8:30 a.m. Eastern
If calling from the US or Canada use the following toll-free number:
800.647.4314 Password - DUSA
For international callers use
435.871.6103 Password - DUSA
A recorded replay of the call will be available
North American callers use 877.863.0350
International callers use 858.244.1268
The call will be accessible on our web site approximately one hour following the call at www.dusapharma.com.
About DUSA Pharmaceuticals
DUSA Pharmaceuticals, Inc. is an integrated dermatology specialty 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 Grade 1 and Grade 2 actinic keratoses of the face and scalp, and is being developed for the treatment of acne. DUSA's other dermatology products include ClindaReach(TM), Nicomide®, and the AVAR® line. DUSA is also supporting development of certain internal indications of Levulan® PDT. 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 management's belief regarding reentry of the River's Edge niacinamide product, expectations for an adverse impact on Nicomide® sales, and 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, the uncertainties of the litigation process, actions by health or securities regulatory authorities, changing market and regulatory conditions, the maintenance of our patent portfolio, dependence on third-party manufacturers, the ability to maintain our sales force and impact of sales activities, and other risks and uncertainties identified in DUSA's Form 10-K for the year ended December 31, 2006.
Contacts:
DUSA Pharmaceuticals, Inc.
Robert F. Doman
President & CEO
(978) 909-2216
DUSA Pharmaceuticals, Inc.
Richard Christopher
VP Finance & CFO
(978) 909-2211
DUSA Pharmaceuticals, Inc.
Shari Lovell
Director, Shareholder Services
(416) 363-5059
The Trout Group LLC
Chad Rubin
Investor Relations Contact
(646) 378-2947
Source: Market Wire (August 7, 2007 - 5:30 AM EST)
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