WILMINGTON, MA--(Marketwire - March 11, 2009) - DUSA Pharmaceuticals, Inc.® (NASDAQ: 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 fourth quarter and full year ended December 31, 2008.
Financial highlights for the fourth quarter and full year include:
-- Domestic Kerastick® revenues for the fourth quarter improved by $1.5 million or 29% versus the prior year. -- Domestic Kerastick® revenues for the year improved by $5.1 million or 34%. -- Kerastick® gross margins for the year reached a record high of 83%. -- Non-GAAP net loss for the year improved by $3.1 million or 44% year over year, despite the loss of Nicomide® revenues. -- Cash burn, excluding non-recurring items, totaled $2.4 million for 2008, down $5.9 million from the 2007 cash burn of $8.3 million.
Management Comments:
“We were pleased with the 29% increase in Kerastick® revenues and the sale of 75 BLU-U® units in the U.S. during the fourth quarter in a very challenging economic environment. Despite the loss of Nicomide® sales and the economic slowdown, the Company was able to deliver significant P&L improvement in 2008. The combination of 35% Kerastick® revenue growth, record Kerastick® gross margins of 83%, and operating cost containment drove a $3.1 million or 44% year over year improvement in our non-GAAP bottom line. We are also pleased to report that we significantly reduced our annual cash burn, excluding non-recurring items, from $8.3 million in 2007 to just $2.4 million in 2008,” stated Robert Doman, President and CEO.
“Through the first half of the year, the Company was well positioned to reach its goals of becoming both cash flow positive and profitable sometime late in the year. The mid-year loss of Nicomide® revenues, due to FDA action, had a significant adverse impact on our financials and ultimately prevented us from reaching these goals,” continued Doman.
“Like most businesses, we will be faced with many challenges in 2009, particularly in light of the macroeconomic conditions. However, we look forward to building upon the momentum of our core PDT business as we continue to strive towards our goal of becoming a cash flow positive and profitable company,” concluded Doman.
Fourth Quarter 2008 Financial Results:
PDT revenues for the fourth quarter of 2008 totaled $7.5 million, an increase of $1.3 million over the comparable 2007 period. The increase in PDT revenues was attributable to a $1.1 million increase in Kerastick® revenues, driven by 29% domestic revenue growth. Overall Kerastick® sales volumes increased to 62,260 units in the fourth quarter of 2008 up from 60,580 units in the comparable prior year period. Domestic Kerastick® sales volumes increased by 8,802 units year over year, and were partially offset by a 7,122 unit decrease in international sales volumes caused by initial launch stocking orders placed during the fourth quarter of 2007. Non-PDT revenues totaled $0.3 million versus $2.2 million for the comparable 2007 period. Non-PDT revenues were adversely impacted by the absence of sales of Nicomide® during the fourth quarter of 2008 (see “Other Updates” section below). Total product revenues for the quarter were $7.8 million as compared to $8.3 million in the fourth quarter of 2007.
DUSA’s net loss on a GAAP basis for the fourth quarter of 2008 was ($2.0) million or ($0.08) per common share, compared to a net loss of ($7.0) million or ($0.31) per common share in the fourth quarter of 2007.
DUSA’s non-GAAP net loss for the fourth quarter of 2008 was ($1.4) million or ($0.06) per common share, compared to a net loss of ($0.5) million or ($0.02) per share common in the prior year. Please refer to the section entitled “Use of Non-GAAP Financial Measures” and the accompanying financial table included at the end of this release for a reconciliation of GAAP to non-GAAP results for the three month periods ended December 31, 2007 and 2008, respectively.
Full Year 2008 Financial Results:
PDT revenues for the twelve month period ended December 31, 2008 totaled $23.9 million, an increase of $5.7 million over the comparable 2007 period. The increase in PDT revenues was attributable to a $5.7 million increase in Kerastick® revenues, driven by 34% domestic revenue growth. Overall Kerastick® sales volumes increased 26% to 207,516 units in 2008 up from 164,944 units in 2007. Domestic Kerastick® sales volumes increased by 36,096 units or 25% year over year, Non-PDT revenues totaled $5.6 million in 2008 versus $9.4 million in 2007. Non-PDT revenues were adversely impacted by the absence of sales of Nicomide® during the second half of 2008 (see “Other Updates” section below). Total product revenues for the year were $29.5 million as compared to $27.7 million in 2007.
DUSA’s net loss on a GAAP basis for the twelve months ended December 31, 2008 was ($6.3) million or ($0.26) per common share, compared to a net loss of ($14.7) million or ($0.73) per common share for the comparable 2007 period.
DUSA’s non-GAAP net loss for the twelve months ending December 31, 2008 improved 44% from ($7.1) million or ($0.35) per common share in 2007 to ($3.9) million or ($0.16) per common share in 2008. Please refer to the section entitled “Use of Non-GAAP Financial Measures” and the accompanying financial table included at the end of this release for a reconciliation of GAAP to non-GAAP results for the twelve month periods ended December 31, 2007 and 2008, respectively.
As of December 31, 2008, total cash, cash equivalents, and marketable securities were $18.9 million, compared to $23.0 million at December 31, 2007. The decrease in our cash balance was primarily attributable to cash expended to fund operational expenses, as well as a $1.5 million milestone payment made to the former Sirius shareholders. Cash burn, excluding non-recurring items, totaled $2.4 million for 2008, down $5.9 million from the 2007 cash burn of $8.3 million.
Other Updates:
-- Clinical Development - SOTR.
-- Chronically immunosuppressed solid organ transplant recipients (SOTRs) with fair skin are at high risk of developing actinic keratoses (AKs) and are also prone to the development of multiple aggressive skin cancers, particularly squamous cell carcinomas (SCCs). We are initiating a new proof of concept study in up to 40 patients at up to 10 sites to examine the effect of multiple courses of Levulan® plus BLU-U® on the treatment of AKs, as well as the reduction of the incidence of new non-melanoma skin cancers on the scalp or forearms of this patient group over the course of one year. We had originally planned to initiate the study by the end of 2008 and now expect to initiate the study during the second quarter of 2009. We filed an application for orphan drug designation in 2008 and are awaiting a determination from the FDA.
-- Nicomide®.
-- In late June 2008, the Company placed the sales of Nicomide®, a vitamin-mineral product formerly prescribed by dermatologists, on hold. The decision came in response to discussions with the Food and Drug Administration (FDA) regarding our marketing of certain products considered by FDA to be marketed unapproved drugs. The Company has been in on-going discussions with the FDA to finalize product labeling in order to bring the product into compliance under DSHEA (Dietary Supplement Health and Education Act). At the same time, the Company is also actively engaged in discussions regarding the possible sale or license of the product and the related patent.
Revenues Table, Condensed Consolidated Balance Sheets, Condensed Consolidated Statement of Operations and GAAP to Non-GAAP reconciliation follow:
Revenues for the three month and twelve month periods were comprised of the following: Three months ended Twelve months ended December 31, December 31, ----------------------- ----------------------- 2008 2007 2008 2007 ----------- ----------- ----------- ----------- PDT Drug & Device Product Revenues Kerastick® Product Revenues: United States $ 6,486,000 $ 5,031,000 $20,206,000 $15,139,000 Canada 250,000 204,000 699,000 740,000 Korea 110,000 436,000 820,000 436,000 Rest of World 56,000 92,000 345,000 92,000 ----------- ----------- ----------- ----------- Subtotal Kerastick® Product Revenues 6,902,000 5,763,000 22,070,000 16,407,000 BLU-U® Product Revenues: United States 612,000 355,000 1,810,000 1,724,000 Canada - - - 94,000 Korea - 50,000 50,000 50,000 ----------- ----------- ----------- ----------- Subtotal BLU-U® Product Revenues 612,000 405,000 1,860,000 1,868,000 Total PDT Drug & Device Product Revenues 7,514,000 6,168,000 23,930,000 18,275,000 Total Non-PDT Product Revenues 263,000 2,171,000 5,615,000 9,388,000 ----------- ----------- ----------- ----------- TOTAL PRODUCT REVENUES $ 7,777,000 $ 8,339,000 $29,545,000 $27,663,000 =========== =========== =========== =========== DUSA Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets December 31, December 31, 2008 2007 ------------- ------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,880,673 $ 4,713,619 Marketable securities 15,002,830 18,311,650 Accrued interest receivable 155,728 97,243 Accounts receivable, net 2,367,803 2,667,178 Inventory 2,812,825 2,672,105 Prepaid and other current assets 1,718,073 1,843,873 ------------- ------------- TOTAL CURRENT ASSETS 25,937,932 30,305,668 Restricted cash 173,844 170,510 Property, plant and equipment, net 1,937,978 2,142,658 Deferred charges and other assets 160,700 273,404 ------------- ------------- TOTAL ASSETS $ 28,210,454 $ 32,892,240 ============= ============= LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 305,734 $ 1,213,867 Accrued compensation 1,515,912 491,529 Other accrued expenses 3,226,571 3,322,642 Deferred revenue 611,602 1,256,494 ------------- ------------- TOTAL CURRENT LIABILITIES 5,659,819 6,284,532 Deferred revenues 4,157,305 2,918,850 Warrant liability 436,458 1,262,600 Other liabilities 244,673 319,736 ------------- ------------- TOTAL LIABILITIES 10,498,255 10,785,718 ------------- ------------- 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: 24,089,452 and 24,076,110 shares of common stock, no par, at December 31, 2008 and December 31, 2007 respectively 151,663,943 151,648,943 Additional paid-in capital 7,514,900 5,885,353 Accumulated deficit (141,850,925) (135,600,484) Accumulated other comprehensive loss 384,281 172,710 ------------- ------------- TOTAL SHAREHOLDERS’ EQUITY 17,712,199 22,106,522 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 28,210,454 $ 32,892,240 ============= ============= DUSA Pharmaceuticals, Inc. Consolidated Statement of Operations Three months ended Twelve months ended December 31, December 31, -------------------------- -------------------------- 2008 2007 2008 2007 ------------ ------------ ------------ ------------ Product revenues and royalties $ 7,777,596 $ 8,339,366 $ 29,545,406 $ 27,662,598 Cost of product revenues and royalties 2,175,056 2,322,744 7,125,095 7,829,284 ------------ ------------ ------------ ------------ Gross margin 5,602,540 6,016,622 22,420,311 19,833,314 Operating costs: Research and development 1,593,880 1,648,253 6,643,207 5,976,728 Marketing and sales 3,590,787 3,583,654 13,111,652 13,311,314 General and administrative 2,583,837 2,344,499 9,187,826 10,311,290 Impairment charge for contingent consideration - 6,772,505 1,500,000 6,772,505 Net gain on settlement of litigation - (582,866) (282,775) (582,866) ------------ ------------ ------------ ------------ Total operating costs 7,768,504 13,766,045 30,159,910 35,788,971 Loss from operations (2,165,964) (7,749,423) (7,739,599) (15,955,657) Other income: Gain on change in fair value of warrants 50,506 687,300 826,142 687,300 Other income, net 124,804 74,733 663,016 554,850 ------------ ------------ ------------ ------------ Net loss $ (1,990,654) $ (6,987,390) $ (6,250,441) $(14,713,507) ============ ============ ============ ============ Basic and diluted net loss per common share $ (0.08) $ (0.31) $ (0.26) $ (0.73) ============ ============ ============ ============ Weighted average number of common shares 24,082,159 22,681,880 24,079,414 20,292,729
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 stock-based compensation expense, the non-cash gain on the change in fair value of warrants, and impairment of goodwill. The Company believes this presentation is useful to help investors better understand DUSA’s financial performance, competitive position and prospects for the future. 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 Twelve months ended December 31, December 31, -------------------------- -------------------------- 2008 2007 2008 2007 ------------ ------------ ------------ ------------ GAAP net loss $ (1,990,654) $ (6,987,390) $ (6,250,441) $(14,713,507) Stock-based compensation (a) 597,735 418,613 1,640,547 1,564,727 Gain on change in fair value of warrants (b) (50,506) (687,300) (826,142) (687,300) Impairment of goodwill (c) - 6,772,505 1,500,000 6,772,505 ------------ ------------ ------------ ------------ Non-GAAP adjusted net loss $ (1,443,425) $ (483,572) $ (3,936,036) $ (7,063,575) ============ ============ ============ ============ Non-GAAP basic and diluted net loss per common share $ (0.06) $ (0.02) $ (0.16) $ (0.35) ============ ============ ============ ============ Weighted average number of common shares 24,082,159 22,681,880 24,079,414 20,292,729 (a) Stock-based compensation expense resulting from the application of SFAS 123(R). (b) Non-cash gain on change in fair value of warrants. (c) The goodwill impairment charges relate to the Company’s revised estimates of cash flows associated with the Sirius products and product pipeline.
Conference Call Details and Dial-in Information
In conjunction with this announcement, DUSA will host a conference call today:
Wednesday, March 11th - 8:30 a.m. Eastern If calling from the U.S. or Canada use the following toll-free number: 800.647.4314 Password - DUSA For international callers use 502.498.8422 Password - DUSA A recorded replay of the call will be available approximately 15 minutes following the call U.S. or Canada callers use 877.863.0350 International callers use 858.244.1268
The call will be accessible on our Web site approximately four hours following the call at www.dusapharma.com.
About DUSA Pharmaceuticals
DUSA Pharmaceuticals, Inc. is an integrated dermatology 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 2 actinic keratoses of the face and scalp. DUSA also markets other dermatology products, including ClindaReach®. DUSA is researching the use of Levulan® PDT to prevent AKs and squamous cell carcinomas in immunosuppressed solid organ transplant recipients and is supporting research related to oral leukoplakia in collaboration with National Institutes of Health (NIH). 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 challenges for 2009, expectations for initiation of the SOTR study, and management’s beliefs and calculations 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, actions by health regulatory authorities, the uncertainties regarding clinical research, reliance on third parties, sufficient funding, and other risks and uncertainties identified in DUSA’s Form 10-K for the year ended December 31, 2008.
