Quarterly Domestic Kerastick® Revenues Up 21% Year-Over-Year; Company Generates Significant Improvement in Cash Flow
Conference Call and Audio Webcast Will be Held Today, August 2nd, at 8:30 a.m. EDT
WILMINGTON, Mass., Aug. 2, 2011 (GLOBE NEWSWIRE) -- DUSA Pharmaceuticals, Inc.® (Nasdaq: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 second quarter ended June 30, 2011.
Financial highlights for the second quarter include:
- Domestic Kerastick® revenues totaled $9.1 million for the second quarter of 2011, representing a $1.6 million, or 21%, improvement year-over-year.
- GAAP net income was $1.1 million for the second quarter of 2011, representing year-over-year improvement of $0.9 million.
- Non-GAAP net income was $2.4 million for the second quarter of 2011, representing year-over-year improvement of $1.7 million. Please refer to the section entitled "Use of Non-GAAP Financial Measures" included at the end of this release.
- The Company generated $3.1 million in positive cash flow (change in cash and cash equivalents and marketable securities) during the second quarter of 2011.
Management Comments:
"Continued growth in our core business revenue during the second quarter has driven significant income and cash flow improvement year-over-year," stated Robert Doman, President and CEO. "Our second quarter Kerastick® revenue growth of 21% reflects a continuation of the dynamic growth we have experienced over the past few years. The growth rate is even more impressive when taking into consideration that our Kerastick® sales volumes in the prior year quarter were positively impacted by a price increase, which we did not have this year."
"Our non-GAAP income of $4.2 million through the first half of 2011 matches our total for all of 2010; while positive cash flow of $4.5 million through the first half of 2011 exceeds our full year 2010 cash flow by more than 50%," continued Doman.
"Over the second half of 2011, we intend to build upon our strong year-to-date financial performance, and further leverage our growth potential. We also look forward to the initiation of our Phase 2 clinical trial of Levulan® PDT to, among other things, investigate the potential for Levulan® to reduce the occurrence rate of actinic keratoses on the face and scalp," concluded Doman.
Second Quarter 2011 Financial Results:
Total product revenues were $9.8 million in the second quarter of 2011, an increase of $1.1 million, or 12%, from $8.7 million in the second quarter of 2010. PDT revenues totaled $9.7 million, an increase of $1.3 million, or 15%, from $8.4 million for the comparable 2010 period. The increase in PDT revenues was attributable to a $1.2 million increase in Kerastick® revenues. The Kerastick® revenue improvement was driven by a $1.6 million, or 21%, increase in domestic Kerastick® revenue which was the result of a 12% increase in volume and an 8% increase in price. The Company instituted a 5% domestic price increase on May 1, 2010, which we believe positively impacted Kerastick® sales volumes in the prior year quarter. Overall Kerastick® sales volumes increased to 65,706 in the second quarter of 2011 from 61,778 units sold in the comparable 2010 period. Domestic Kerastick® sales volumes increased by 6,720 units and were partially offset by a 2,792 unit decrease in our international sales volumes. BLU-U® revenues were relatively flat year-over-year as lower sales volumes were fully offset by an increase in our average unit selling price. There were 56 units sold during the second quarter, as compared to the 63 units sold in the comparable prior year quarter. Non-PDT revenues were $0.1 million for the quarter, down $0.2 million year-over-year.
DUSA's net income on a GAAP basis for the second quarter of 2011 was $1.1 million, or $0.04 per common share on a diluted basis, compared to net income of $0.2 million, or $0.01 per common share on a diluted basis, in the second quarter of 2010. Net income on a GAAP basis for the three-month period ended June 30, 2011 includes $0.8 million related to the gain on the sale of the intangible assets relating to Nicomide®.
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 and six-month periods ended June 30, 2011 and 2010, respectively.
DUSA's non-GAAP net income for the second quarter of 2011 was $2.4 million, or $0.09 per common share on a diluted basis, compared to net income of $0.6 million, or $0.03 per common share on a diluted basis, in the prior year period. The improvement in the Company's profitability was primarily the result of the year-over-year increase in our PDT revenues and the proceeds from the sale of the intangible assets relating to Nicomide®, which were partially offset by an increase in our operating costs.
First Half 2011 Financial Results:
Total product revenues for the six-month period ended June 30, 2011 were $20.8 million, an increase of $3.4 million, or 20%, from $17.4 million in the comparable prior year period. PDT revenues totaled $20.7 million, an increase of $3.9 million, or 24%, from $16.7 million for the comparable 2010 period. The increase in PDT revenues was attributable to a $3.9 million increase in Kerastick® revenues. The Kerastick® revenue improvement was driven by a $4.2 million, or 28%, increase in domestic Kerastick® revenue which was the result of a 17% increase in volume and a 10% increase in price. Overall Kerastick® sales volumes increased to 140,919 units in 2011 from 123,200 units sold in 2010. Domestic Kerastick® sales volumes increased by 19,542 units, or 17%, and were partially offset by a 1,823 decrease in our international sales volumes. BLU-U® revenues were relatively flat year-over-year as lower sales volumes were fully offset by an increase in our average unit selling price. There were 120 units sold during the first half of 2011, as compared to the 140 units sold in the comparable prior year period. The prior year volume was positively impacted by incentive pricing offered to customers in an effort to sell off existing BLU-U® inventory in advance of the introduction of the upgraded design which became available in April 2010. Non-PDT revenues totaled $0.2 million down $0.5 million from the prior year period due to lower product sales volumes and the absence of AVAR® product line royalties.
DUSA's net income on a GAAP basis for the six-month period ended June 30, 2011 was $0.5 million, or $0.02 per common share on a diluted basis, compared to a net loss of $0.2 million, or $0.01 per common share in 2010 on a diluted basis. Net income on a GAAP basis for the six-month period ended June 30, 2011 includes $0.8 million related to the gain on the sale of the intangible assets relating to Nicomide®.
DUSA's non-GAAP net income for the six-month period ended June 30, 2011 was $4.2 million, or $0.16 per common share on a diluted basis, compared to net income of $0.6 million, or $0.03 per common share on a diluted basis in 2010. The improvement in the Company's non-GAAP profitability was primarily the result of the year-over-year increase in our PDT revenues and the proceeds from the sale of the intangible assets relating to Nicomide®, which were partially offset by an increase in our operating costs.
As of June 30, 2011, total cash, cash equivalents, and marketable securities were $24.1 million, compared to $19.6 million at December 31, 2010. The Company generated $4.5 million in positive cash flow (change in cash and cash equivalents and marketable securities) during the first half of 2011.
Other updates:
- The Company plans on initiating an exploratory DUSA-sponsored clinical trial designed to study the broad area application and/or short drug incubation, or BASDI, method of using the Levulan® Kerastick® in the second half of 2011. We have finalized the design of the study and are in the process of selecting the clinical sites. The protocol objectives are to compare the safety and efficacy of various incubation times (1, 2, or 3 hours) of Levulan® plus BLU-U® PDT versus vehicle plus BLU-U® for the treatment of multiple actinic keratoses (AKs) of the face or scalp and to investigate the potential to reduce the occurrence rate of AKs in the treatment areas.
- On June 30, 2011, the Company sold the patent which covers Nicomide®, together with the trademarks Nicomide® and Nicomide-T®, and related domain names to Acella Pharmaceuticals, LLC for cash consideration, which was paid on the closing of the transaction and resulted in a $750,000 gain this quarter.
Conference Call and Audio Webcast Details and Dial-in Information:
In conjunction with this announcement, DUSA will host a conference call and audio webcast today:
Tuesday, August 2, 2011 - 8:30 a.m. EDT
North American callers dial:
877-645-6210
International callers dial:
970-315-0447
Participant Conference ID: 85095288
To access the call online via webcast, please click here, or visit http://bit.ly/pD5Rok.
A telephone replay will be available shortly after the live call concludes. To access the replay, dial 855-859-2056 (North American callers) or 404-537-3406 (International callers). The telephone replay and webcast will also be accessible on the investors section of our website approximately six hours following the call at www.dusapharma.com.
Revenues Table, Condensed Consolidated Balance Sheets, Condensed Consolidated Statement of Operations and GAAP to Non-GAAP reconciliation follow:
Revenues for the three and six-month periods were comprised of the following:
| Three-months ended June 30, | Six-months ended June 30, | |||
|
2011 (Unaudited) |
2010 (Unaudited) |
2011 (Unaudited) |
2010 (Unaudited) |
|
| PDT Drug & Device Product Revenues | ||||
| Kerastick® Product Revenues: | ||||
| United States | $ 9,136,000 | $ 7,568,000 | $ 19,323,000 | $ 15,117,000 |
| Canada | -- | 169,000 | 183,000 | 225,000 |
| Korea | 83,000 | 104,000 | 199,000 | 213,000 |
| Rest of World | -- | 132,000 | 8,000 | 219,000 |
| Subtotal Kerastick® Product Revenues | 9,219,000 | 7,973,000 | 19,713,000 | 15,774,000 |
| BLU-U® Product Revenues: | ||||
| United States | 452,000 | 438,000 | 940,000 | 928,000 |
| Canada | -- | -- | -- | 5,000 |
| Subtotal BLU-U® Product Revenues | 452,000 | 438,000 | 940,000 | 933,000 |
| Total PDT Drug & Device Product Revenues | 9,671,000 | 8,411,000 | 20,653,000 | 16,707,000 |
| Total Non-PDT Product Revenues | 92,000 | 290,000 | 192,000 | 708,000 |
| TOTAL PRODUCT REVENUES | $ 9,763,000 | $ 8,701,000 | $ 20,845,000 | $ 17,415,000 |
| DUSA Pharmaceuticals, Inc. | ||
| Condensed Consolidated Balance Sheets | ||
|
June 30, 2011 (Unaudited) |
December 31, 2010 (Unaudited) |
|
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ 20,742,907 | $ 8,884,402 |
| Marketable securities | 3,378,403 | 10,762,559 |
| Accounts receivable, net | 2,157,047 | 3,311,467 |
| Inventory | 2,985,693 | 2,165,220 |
| Prepaid and other current assets | 1,121,303 | 1,344,062 |
| TOTAL CURRENT ASSETS | 30,385,353 | 26,467,710 |
| Restricted cash | 175,306 | 174,753 |
| Property, plant and equipment, net | 1,575,680 | 1,582,777 |
| Deferred charges and other assets | 66,333 | 68,099 |
| TOTAL ASSETS | $ 32,202,672 | $ 28,293,339 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | $ 1,128,250 | $ 162,742 |
| Accrued compensation | 788,790 | 2,243,997 |
| Other accrued expenses | 2,572,295 | 2,348,838 |
| Deferred revenue | 601,814 | 712,338 |
| TOTAL CURRENT LIABILITIES | 5,091,149 | 5,467,915 |
| Deferred revenues | 1,822,628 | 1,917,237 |
| Warrant liability | 4,267,923 | 1,203,553 |
| Other liabilities | 166,412 | 181,153 |
| TOTAL LIABILITIES | 11,348,112 | 8,769,858 |
| 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: 24,649,364 and 24,239,365 shares of common stock, no par, at June 30, 2011 and December 31, 2010, respectively |
151,985,400 |
151,703,468 |
| Additional paid-in capital | 9,971,055 | 9,399,434 |
| Accumulated deficit | (141,150,905) | (141,656,600) |
| Accumulated other comprehensive loss | 49,010 | 77,179 |
| TOTAL SHAREHOLDERS' EQUITY | 20,854,560 | 19,523,481 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 32,202,672 | $ 28,293,339 |
| DUSA Pharmaceuticals, Inc. | ||||
| Condensed Consolidated Statement of Operations | ||||
| Three-months ended June 30, | Six-months ended June 30, | |||
|
2011 (Unaudited) |
2010 (Unaudited) |
2011 (Unaudited) |
2010 (Unaudited) |
|
| Product revenues | $ 9,762,822 | $ 8,700,937 | $ 20,844,886 | $ 17,414,817 |
| Cost of product revenues and royalties | 1,594,189 | 1,782,108 | 3,354,559 | 3,600,293 |
| Gross margin | 8,168,633 | 6,918,829 | 17,490,327 | 13,814,524 |
| Operating costs: | ||||
| Research and development | 1,108,774 | 1,250,411 | 2,432,418 | 2,360,078 |
| Marketing and sales | 3,288,573 | 3,137,985 | 7,261,797 | 6,751,784 |
| General and administrative | 2,554,787 | 2,247,066 | 5,012,034 | 4,710,230 |
| Gain on sale of assets | (750,000) | -- | (750,000) | -- |
| Total operating costs | 6,202,134 | 6,635,462 | 13,956,249 | 13,822,092 |
| Income/(loss) from operations | 1,966,499 | 283,367 | 3,534,078 | (7,568) |
| Other income: | ||||
| Loss on change in fair value of warrants | (875,437) | (157,015) | (3,064,370) | (356,290) |
| Other income, net | 19,533 | 61,842 | 35,987 | 127,569 |
| Net income/(loss) | $ 1,110,595 | $ 188,194 | $ 505,695 | $(236,289) |
| Basic net income/(loss) per common share | $ 0.05 | $ 0.01 | $ 0.02 | $(0.01) |
| Diluted net income/(loss) per common share | $ 0.04 | $ 0.01 | $ 0.02 | $(0.01) |
| Weighted average number of basic common shares | 24,539,627 | 24,187,569 | 24,412,221 | 24,155,194 |
| Weighted average number of diluted common shares | 26,813,329 | 24,566,476 | 26,334,058 | 24,155,194 |
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 certain items including share-based compensation expense, consideration provided to the former Sirius shareholders, and the change in fair value of warrants. The Company believes that this presentation is useful to help investors better understand DUSA's financial performance and competitive position. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company's business, evaluate DUSA's performance, and incentivize employees. 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 June 30, | Six-months ended June 30, | |||
|
2011 (Unaudited) |
2010 (Unaudited) |
2011 (Unaudited) |
2010 (Unaudited) |
|
| GAAP net income/(loss) | $ 1,110,595 | $ 188,194 | $ 505,695 | $(236,289) |
| Share-based compensation (a) | 374,972 | 276,254 | 571,621 | 488,031 |
| Consideration to former Sirius shareholders (b) | 4,500 | 4,500 | 9,000 | 9,000 |
| Change in fair value of warrants (c) | 875,437 | 157,015 | 3,064,370 | 356,290 |
| Non-GAAP adjusted net income | $ 2,365,504 | $ 625,963 | $ 4,150,686 | $ 617,032 |
| Non-GAAP basic net income per common share | $ 0.10 | $ 0.03 | $ 0.17 | $ 0.03 |
| Non-GAAP diluted net income per common share | $ 0.09 | $ 0.03 | $ 0.16 | $ 0.03 |
| Weighted average number of basic common shares | 24,539,627 | 24,187,569 | 24,412,221 | 24,155,194 |
| Weighted average number of diluted common shares | 26,813,329 | 24,566,476 | 26,334,058 | 24,155,194 |
| (a) Share-based compensation expense based on the fair value of the awards granted to employees. | ||||
| (b) Accretion of milestone related to Sirius Laboratories acquisition. | ||||
| (c) Non-cash loss on change in fair value of warrants. | ||||
About DUSA Pharmaceuticals
DUSA Pharmaceuticals, Inc. is an integrated dermatology pharmaceutical company focused primarily on the development and marketing of its Levulan® PDT technology platform, and other dermatology products. Levulan® Kerastick® for topical solution plus DUSA's BLU-U® Blue Light Photodynamic Therapy Illuminator is currently approved for the treatment of minimally to moderately thick actinic keratoses (AKs) of the face or scalp. DUSA also sells other dermatology products, including ClindaReach®. DUSA is based in Wilmington, Mass. Please visit our website 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 intentions to build on financial performance, belief concerning the impact of a price increase, expectations concerning initiation of a BASDI clinical study and timing thereof, and management's 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, marketing of competitive products, actions by health regulatory authorities, clinical trial risks, expenses and results, changing economic conditions, the status of our patent portfolio, reliance on third parties, including sole source vendors, sufficient funding, and other risks and uncertainties identified in DUSA's Form 10-K for the year ended December 31, 2010.