Dusa Pharma (Dusa)

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DUSA Pharmaceuticals Reports Full Year 2010 Corporate Highlights and Financial Results

Record Fourth Quarter Results Drive the Company to its First Full Year of Profitability and Positive Cash Flow

Fourth Quarter Highlighted by 45% Domestic PDT Revenue Growth

Conference call will be held today, March 3rd, at 8:30am EDT

A patient receiving Levulan photodynamic therapy. (Photo:
Press Release Source: DUSA Pharmaceuticals, Inc. On Thursday March 3, 2011, 6:30 am EST

WILMINGTON, Mass.--(BUSINESS WIRE)-- DUSA Pharmaceuticals, Inc.® (NASDAQ GM: 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 fourth quarter and full year ended December 31, 2010.

Fourth quarter and full year financial highlights:

* For the first time in its history, the Company reached profitability on both a GAAP and non-GAAP basis; as well as, generated positive cash flow (change in cash and cash equivalents and marketable securities) for the full year 2010.
o GAAP net income was $2.9 million for the fourth quarter and $2.7 million for the full year 2010, representing year-over-year improvements of $2.5 million and $5.2 million, respectively.
o Non-GAAP net income was a record $3.0 million for the fourth quarter and $4.2 million for the full year 2010, representing year-over-year improvements of $2.1 million and $5.2 million, respectively.
o The Company generated $2.7 million in positive cash flow during the fourth quarter and $3.0 million in positive cash flow for the full year 2010.
* Domestic PDT revenues reached a record high of $11.7 million for the fourth quarter of 2010, representing a $3.6 million or 45% improvement as compared to the prior year quarter. Full year 2010 domestic PDT revenues totaled $34.7 million, representing an $8.0 million or 30% improvement year-over-year.

Management Comments:

“2010 was a landmark year for DUSA,” stated Robert Doman, President and CEO. “For the first time in our history, we reached profitability and generated positive cash flow on a full year basis.”

“Our record fourth quarter results, highlighted by a 45% year-over-year increase in our domestic PDT revenues, 88% gross margin achievement on the Kerastick®, and $3.0 million in non-GAAP income, allowed us to deliver on our goals of achieving profitability and positive cash flow for 2010. We were also pleased with the 91 BLU-U® units sold, a 69% increase from the same quarter the previous year,” continued Doman.

“The strength of our fourth quarter results clearly demonstrates the continued uptake of Levulan® and BLU-U® by the dermatological community. At this point, with mid-single digit market penetration, we believe that there is significant upside potential for Levulan® PDT. As we enter 2011, we intend to build the business on the momentum created in 2010 by expanding our sales force headcount by 5 and by planning to initiate a clinical trial in the second quarter aimed at expanding the label on our approved actinic keratosis indication as we continue our efforts to drive shareholder value,” concluded Doman.

Other 2010 Highlights:

* On May 7, 2010, the Company announced that the United States Patent and Trademark Office had issued a notice of allowance for a key patent related to its proprietary PDT light source, the BLU-U®, Blue Light Photodynamic Therapy Illuminator. The patent, which issued on May 25, 2010, has method of treatment claims which cover the use of DUSA’s blue light technology and aminolevulinic acid HCL (Levulan®) for the treatment of actinic keratosis as well as the diagnosis and treatment of other disease states such as acne, cancer, psoriasis and photodamaged skin. The patent also has claims that cover DUSA’s blue light technology in conjunction with its proprietary Levulan® Kerastick® formulation of aminolevulinic acid HCL. The patent covers our approved Levulan® PDT therapy until June 2019.
* 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.” Subsequently, the USPTO issued an 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 (see above).
* On October 26, 2010, the Company announced that it had been named to Deloitte’s 2010 Technology Fast 500 list for the third consecutive year. Deloitte recognized DUSA as one of the Top 500 fastest growing technology, media, telecommunications, life sciences, and clean technology companies in North America. Rankings are based on percentage of fiscal year revenue growth during the period 2005-2009.

Looking Forward into 2011:

* In support of our rapidly expanding domestic PDT business, effective January 1, 2011 the Company has expanded its sales force by adding 4 territory managers and 1 regional sales manager. The sales force now stands at 40 territories and 5 regions.
* During late 2010, the Company began preparations to initiate a DUSA-sponsored clinical trial to support the addition to our label of a broad area application, short drug incubation, or BASDI, method of using the Levulan® PDT. The purpose of the planned Phase 2 clinical trial, at 8 sites and with approximately 160 patients, will be to investigate the optimal incubation time that Levulan® remains on the skin prior to use of our BLU-U®, which, if successful and with agreement with the FDA, could then be used in a subsequent Phase 3 study. The Phase 2 study objectives would be to determine and compare the safety and efficacy of the BASDI method of using Levulan® PDT as compared to vehicle with light, and to evaluate the effect of incubation times (1, 2 or 3 hours) on the treatment of multiple actinic keratoses and photodamage of the face or scalp. We are finalizing the clinical protocol, and are targeting the initiation of the study for the second quarter of 2011.

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