DUSA Pharmaceuticals Inc. (DUSA) filed Quarterly Report for the period ended 2009-06-30.
DUSA Pharmaceuticals Inc. is a pharmaceutical company developing drugs in combination with light devices to treat or detect a variety of conditions in processes known as photodynamic therapy or photodetection. They are engaged primarily in the research and development of our first drug the Levulan brand of aminolevulinic acid HCl with light for use in a broad range of medical conditions. DUSA Pharmaceuticals Inc. has a market cap of $29.6 million; its shares were traded at around $1.23 with and P/S ratio of 1.
Highlight of Business Operations:
On August 12, 2008, we entered into a worldwide non-exclusive patent License Agreement to our patent covering Nicomide®, or License Agreement, with River’s Edge Pharmaceuticals, LLC, or River’s Edge, and an amendment to our Settlement Agreement with River’s Edge regarding earlier litigation. See Note 15 of the Notes to the Condensed Consolidated Financial Statements. The amendment to the Settlement Agreement allowed River’s Edge to manufacture and market a prescription product that could be substitutable for Nicomide® pursuant to the terms of the License Agreement and changed certain payment obligations of River’s Edge for sales of its substitutable product. In consideration for granting the license, we were paid a share of the net revenues, as defined in the License Agreement, of River’s Edge’s licensed product sales. In April 2009, we and River’s Edge entered into an Amendment to the License Agreement, or License Amendment. The License Amendment grants River’s Edge an exclusive license to U.S. Patent, No. 6,979,468, and a license to use all know-how and the trademark associated with the Licensed Products worldwide. Under the License Amendment, we are required to transfer all of our rights, title and interest in and to DUSA’s patent, know-how and trademark relating to the Licensed Products (but not the copyright registration relating to product labeling) to River’s Edge upon our receipt of $5,000,000. Of the $5,000,000, River’s Edge is required to make a minimum guaranteed payment to us of $2,600,000, in thirteen monthly installments of $200,000, subject to reduction under certain conditions, and pay additional consideration of $2,400,000 payable over time based on a share of River’s Edge’s net revenues as defined in the License Amendment. The License Agreement, as amended, has a term of 30 months, subject to a further extension under certain circumstances to 48 months, and may be terminated early by River’s Edge on 30 days’ prior written notice. Under the License Agreement, River’s Edge has assumed all regulatory responsibilities for the Licensed Products. If the License Agreement is terminated prior to the payment of the $5,000,000, all of the rights and licenses granted by us to River’s Edge will revert to us. We are recording the revenue under the License Amendment on a cash basis. We received the first $200,000 installment payment under the License Amendment during the three-month period ended June 30, 2009, which is included in Product Revenues in the accompanying Consolidated Statements of Operations. The Company has not received the payments which were due on June 1, July 1 and August 1, 2009. We are evaluating our options to collect the outstanding amounts due from River’s Edge under the License Agreement, as amended, and have not yet determined our course of action.
For the three and six-month periods ended June 30, 2009, total PDT Drug and Device Products revenues, comprised of revenues from our Kerastick® and BLU-U® products, were $6,418,000 and $13,137,000, respectively. This represents an increase of $989,000, or 18%, and $1,878,000, or 17%, over the comparable 2008 totals of $5,429,000 and $11,259,000, respectively. The incremental revenue was driven primarily by increased Kerastick® revenues and BLU-U® revenues in the United States.
For the three and six-month periods ended June 30, 2009, Kerastick® revenues were $5,939,000, and $12,016,000, respectively, representing a $857,000, or 17%, and $1,579,000, or 15%, increase over the comparable 2008 totals of $5,082,000 and $10,437,000, respectively. Kerastick® unit sales to end-users were 49,815 and 101,762, for the three and six-month periods ended June 30, 2009, respectively, including on a year-to date basis 2,700 sold in Canada and 3,726 sold in Korea. This represents an increase from 48,478 and 100,588 Levulan® Kerastick® units sold in the three and six-month periods ended June 30, 2008, respectively, including on a year-to date basis 4,800 sold in Canada and 8,100 sold in Korea. Our overall average net selling price for the Kerastick® increased to $116.41 per unit for the first six months of 2009 from $102.21 per unit for the first six months of 2008. Our average net selling price for the Kerastick® in the United States increased to $121.75 per unit in 2009 from $110.16 per unit in 2008. The increase in 2009 Kerastick® revenue was driven by increased sales volumes in the United States along with the increase in our overall average unit selling price.
For the three and six-month periods ended June 30, 2009, BLU-U® revenues were $479,000 and $1,121,000, respectively, representing a $132,000, or 38%, and $299,000, or 36%, increase over the comparable 2008 totals of $347,000 and $822,000, respectively. The increase in year-to-date 2009 BLU-U® revenues was driven by increased overall sales volumes, partially offset by a decrease in our average selling price. In the three and six-month periods ended June 30, 2009, there were 58 and 139 units sold, respectively, versus 41 and 97 units sold, respectively, in the comparable 2008 periods. All of the units sold in
On August 12, 2008, we entered into a worldwide non-exclusive patent License Agreement (the “License Agreement”) to our patent covering Nicomide® with River’s Edge Pharmaceuticals, LLC and an amendment to our Settlement Agreement with River’s Edge. In April 2009, we and River’s Edge entered into an Amendment to the License Agreement (the “License Amendment”) which granted River’s Edge an exclusive license to U.S. Patent, No. 6,979,468, and a license to use all know-how and the trademark associated with the Licensed Products worldwide. Under the License Amendment, DUSA is required to transfer all of its rights, title and interest in and to the DUSA’s patent, know-how and trademark relating to the Licensed Products (but not the copyright registration relating to product labeling) to River’s Edge upon our receipt of $5,000,000. Of the $5,000,000, River’s Edge is required to make a minimum guaranteed payment to us of $2,600,000, in thirteen monthly installments of $200,000, subject to reduction under certain conditions, and pay additional consideration of $2,400,000 payable over time based on a share of River’s Edge’s net revenues as defined in the License Amendment. The License Agreement, as amended, has a term of 30 months, subject to a further extension under certain circumstances to 48 months, and may be terminated early by River’s Edge on 30 days’ prior written notice to us. Under the License Agreement, River’s Edge has assumed all regulatory responsibilities for the Licensed Products. If River’s Edge terminates the License Agreement prior to the payment of the $5,000,000, all of the rights and licenses granted by us to River’s Edge will revert to us. We are recording the revenue under the License Amendment on a cash basis. We received the first $200,000 installment payment under the License Amendment during the three-month period ended June 30, 2009, which is included in Product Revenues in the accompanying Consolidated Statements of Operations. We have not received payments which were due on June 1, July 1 and August 1, 2009. We are evaluating our options to collect the outstanding amounts due from River’s Edge under the License Agreement, as amended, and have not yet determined our course of action.
MARGINS — Total product margins for the three and six-month periods ended June 30, 2009 were $5,525,000 and $10,725,000, respectively, as compared to $6,325,000 and $12,554,000 for the comparable 2008 periods, as shown below:
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