<PAGE>   1
                                   FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended      June 30, 2000
                                       --------------------------

                                                           OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from                 to
                                        ---------------    ----------------

Commission file number 0-19777

                           DUSA Pharmaceuticals, Inc.
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
    New Jersey                                             22-3103129
<S>                                                       <C>
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification No.)
</TABLE>


                                 25 Upton Drive
                        Wilmington, Massachusetts 01887
                    (Address of principal executive offices)
                                   (Zip Code)


                                 (978) 657-7500
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 month (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                 Yes   X                             No
                     -----                              -----


               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.


              Yes                        No
                  -----                     -----

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                     13,669,590 shares as of August 9, 2000



                                     - 1 -


<PAGE>   2



Part 1.
Item 1.  FINANCIAL STATEMENTS
DUSA PHARMACEUTICALS, INC
(a development stage company)

CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                         JUNE 30,
                                                                                           2000              DECEMBER 31,
                                                                                       (UNAUDITED)              1999
<S>                                                                                 <C>                    <C>
ASSETS

CURRENT ASSETS
  Cash (interest bearing)                                                                 $20,069,284         $7,028,618
  U.S. government securities available for sale, at market
  (cost- $43,282,229 and $19,951,281, respectively)                                        43,349,913         19,868,962
  Accrued interest receivable                                                                 686,449            266,621
  Inventory                                                                                   315,935                  -
  Receivable under co-development program                                                     602,504                  -
  Other current assets                                                                        114,648            132,833
                                                                                    -------------------------------------
                                                                                           65,138,733         27,297,034
FIXED ASSETS, NET                                                                           1,105,553            428,350
DEPOSITS ON EQUIPMENT                                                                               -             27,631
DEFERRED ROYALTY                                                                              403,830            403,830
DEFERRED CHARGES                                                                            1,000,000                  -
OTHER DEPOSITS                                                                                 45,176                  -
                                                                                    -------------------------------------
                                                                                          $67,693,292        $28,156,845
                                                                                    =====================================
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                                       $  163,058        $   117,109
    Accrued payroll                                                                           315,021            428,212
    Other accrued charges                                                                     584,142            299,929
    Due to PARTEQ                                                                                   -            370,000
    Income taxes payable                                                                            -             90,000
                                                                                    -------------------------------------

Total current liabilities                                                                   1,062,221          1,305,250
Deferred Revenues                                                                           9,791,667          9,791,667
                                                                                    -------------------------------------
                                                                                           10,853,888         11,096,917
SHAREHOLDERS' EQUITY
  Capital Stock
    Authorized: 100,000,000 shares of which 40,000,000 shares are
      designated as Common stock, no par, and 60,000,000 shares
      issuable in series or classes.
    Issued and outstanding shares of Common stock, no par:
    13,591,121 (1999: 11,908,357)                                                          94,060,613         51,749,987
  Additional paid in capital                                                                1,338,854          1,338,854
  Deficit accumulated during the development stage                                        (38,627,747)       (35,946,594)
  Net unrealized gain (loss) on U.S. government securities available
     for sale                                                                                  67,684            (82,319)
                                                                                    -------------------------------------
                                                                                           56,839,404         17,059,928
                                                                                    -------------------------------------
                                                                                          $67,693,292        $28,156,845
                                                                                    =====================================
</TABLE>


See the accompanying notes to the Consolidated Financial Statements




                                       - 2 -


<PAGE>   3





DUSA PHARMACEUTICALS, INC
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                               THREE MONTHS        THREE MONTHS
                                                                                  ENDED               ENDED         SIX MONTHS ENDED
                                                                                 JUNE 30,            JUNE 30,            JUNE 30,
                                                                                   2000                1999                2000
                                                                               (UNAUDITED)         (UNAUDITED)         (UNAUDITED)
<S>                                                                     <C>                   <C>                 <C>
RESEARCH AND DEVELOPMENT COSTS                                          $        2,109,074    $      1,047,760    $      3,378,725
      Research and Development Costs funded through
      co-development program                                                      (167,347)                               (602,504)
                                                                     --------------------------------------------------------------
NET RESEARCH AND DEVELOPMENT COSTS                                               1,941,727           1,047,760           2,776,221
                                                                     --------------------------------------------------------------
OPERATING COSTS
      General and administration                                                   376,489             486,197           1,125,072
      Depreciation and amortization                                                 64,339              18,264             105,231
                                                                     --------------------------------------------------------------

TOTAL OPERATING COSTS                                                              440,828             504,461           1,230,303
                                                                     --------------------------------------------------------------

TOTAL COSTS                                                                      2,382,555           1,552,221           4,006,524

NON OPERATING REVENUE
     Interest income                                                    $          942,627    $       $122,939    $      1,325,371
     Gain on foreign currency exchange                                                   -                   -                   -
     Gain on sale of U.S. government securities                                          -                   -                   -
     Unrealized loss on U.S. government securities available for
       sale                                                                              -                   -                   -
                                                                     --------------------------------------------------------------

                                                                                   942,627             122,939           1,325,371
                                                                     --------------------------------------------------------------

LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                  1,439,928           1,429,282           2,681,153

INCOME TAX EXPENSE                                                                       -                   -                   -

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                                      -                   -                   -
                                                                     --------------------------------------------------------------
NET LOSS                                                                $        1,439,928    $      1,429,282    $      2,681,153
OTHER COMPREHENSIVE (INCOME) LOSS
     Net unrealized (gain) loss on U.S. government securities
     available for sale                                                           (116,773)             57,425             (67,684)
                                                                     --------------------------------------------------------------

COMPREHENSIVE LOSS                                                      $        1,323,155    $      1,486,707    $      2,613,469
                                                                     ==============================================================

BASIC AND DILUTED NET LOSS PER COMMON SHARE                             $             0.11    $           0.13    $           0.21
                                                                     ==============================================================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                            13,556,659          10,946,167          12,860,362
                                                                     ==============================================================
</TABLE>



<TABLE>
<CAPTION>
                                                                                           CUMULATIVE PERIOD
                                                                                           FROM FEBRUARY 21,
                                                                                             1991 (DATE OF
                                                                      SIX MONTHS ENDED     INCORPORATION) TO
                                                                          JUNE 30,              JUNE 30,
                                                                            1999                  2000
                                                                        (UNAUDITED)           (UNAUDITED)
<S>                                                                <C>                   <C>
RESEARCH AND DEVELOPMENT COSTS                                     $      1,889,682      $       34,141,248
      Research and Development Costs funded through
      co-development program                                                                       (602,504)
                                                                  -----------------------------------------
NET RESEARCH AND DEVELOPMENT COSTS                                        1,889,682              33,538,744
                                                                  -----------------------------------------
OPERATING COSTS
      General and administration                                            815,828              12,250,533
      Depreciation and amortization                                          36,293                 411,668
                                                                  -----------------------------------------

TOTAL OPERATING COSTS                                                       852,121              12,662,201
                                                                  -----------------------------------------

TOTAL COSTS                                                               2,741,803              46,200,945

NON OPERATING REVENUE
     Interest income                                               $        283,199      $        7,313,335
     Gain on foreign currency exchange                                            -                  27,204
     Gain on sale of U.S. government securities                                   -                 322,659
     Unrealized loss on U.S. government securities available for
       sale                                                                       -                 (62,832)
                                                                  -----------------------------------------

                                                                            283,199               7,600,366
                                                                  -----------------------------------------

LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE           2,458,604              38,600,579

INCOME TAX EXPENSE                                                                -                  90,000

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                               -                 (62,832)
                                                                  -----------------------------------------
NET LOSS                                                           $      2,458,604      $       38,627,747
OTHER COMPREHENSIVE (INCOME) LOSS
     Net unrealized (gain) loss on U.S. government securities
     available for sale                                                      57,425                  14,635
                                                                  -----------------------------------------

COMPREHENSIVE LOSS                                                 $      2,516,029      $       38,642,382
                                                                  =========================================

BASIC AND DILUTED NET LOSS PER COMMON SHARE                        $           0.23      $             5.30
                                                                  =========================================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                     10,885,691               7,286,253
                                                                  =========================================
</TABLE>



See the accompanying notes to the Consolidated Financial Statements



DUSA PHARMACEUTICALS, INC


                                     - 3 -


<PAGE>   4
DUSA PHARMACEUTICALS, INC.

(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                               CUMULATIVE PERIOD
                                                                                                               FROM FEBRUARY 21,
                                                                                                                 1991 (DATE OF
                                                                       SIX MONTHS ENDED   SIX MONTHS ENDED     INCORPORATION) TO
                                                                           JUNE 30,           JUNE 30,             JUNE 30,
                                                                             2000               1999                 2000
                                                                         (UNAUDITED)         (UNAUDITED)          (UNAUDITED)
<S>                                                                     <C>                  <C>                 <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
     Net loss                                                            $(2,681,153)        $(2,458,604)         $(38,627,747)
     Adjustments to reconcile net loss to net cash used
      in operating activities
       Amortization of premiums and accretion of discounts on
          U.S. government securities available for sale and
          investment securities, net                                         (129,677)            (95,397)             (113,631)
       Depreciation and amortization                                          105,231              36,293               411,668
       Loss on foreign currency exchange                                            -                   -               (27,204)
       Vesting of non-employee options                                              -              84,000               424,710
       Issue of additional shares and warrants                                      -             152,495               152,495
       Gain on sale of U.S. government securities available
          for sale                                                                  -                   -              (322,659)
       Unrealized loss on U.S. government securities
          available for sale                                                        -                   -                62,832
       Cumulative effect of change in accounting principle                                                              (62,832)
       Write off of intangible assets                                               -                   -               307,519
       Compensation expense resulting from extension of
          outstanding stock options terms                                           -                   -               557,260
       Changes in other assets and liabilities impacting cash
          flows from operations:                                                    -                   -
          Accrued interest receivable                                        (419,828)            (59,829)             (686,449)
          Inventory                                                          (315,935)                                 (315,935)
          Receivable under co-development program                            (602,504)                                 (602,504)
          Other current assets                                                (26,991)            (43,301)             (159,824)
          Accounts payable                                                     45,949            (132,680)              163,058
          Corporate taxes payable                                             (90,000)                  -                     -
          Accrued payroll and other charges                                   171,022             (51,812)              899,163
          Due to PARTEQ                                                      (370,000)                                        -
          License agreement obligations                                                                                 (12,203)
                                                                    -------------------------------------------------------------

NET CASH USED IN OPERATING ACTIVITIES                                      (4,313,886)         (2,568,835)          (37,952,283)
                                                                    -------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED IN)
     INVESTING ACTIVITIES
     Purchases of U.S. government securities available for
        sale and investment securities                                    (30,301,271)        (10,968,902)         (173,742,057)
     Proceeds from maturing U.S. government securities
        available for sale and investment security                          7,100,000           6,544,040            77,120,000
     Proceeds from sale of U.S. government securities
        available for sale                                                          -                   -            53,776,118
     Intangible assets                                                              -                   -              (193,022)
     Purchases of fixed assets                                               (782,434)            (14,716)           (1,500,300)
     Deposits on equipment                                                     27,631            (169,098)                    -
     Deferred charges                                                      (1,000,000)                               (1,000,000)
     Deferred royalty                                                               -                   -              (403,830)
     Advances by a former parent                                                    -                   -            (2,867,900)
     Repayment of advances to former parent                                         -                   -             2,867,900
                                                                    -------------------------------------------------------------

NET CASH USED IN INVESTING ACTIVITIES                                     (24,956,074)         (4,608,676)          (45,943,091)
                                                                    -------------------------------------------------------------
</TABLE>


DUSA PHARMACEUTICALS, INC
(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
-------------------------------------------------------------------------------

                                     - 4 -


<PAGE>   5


<TABLE>
<CAPTION>
                                                                                                         CUMULATIVE
                                                                                                         PERIOD FROM
                                                                                                        FEBRUARY 21,
                                                                                                        1991 (DATE OF
                                                                                        SIX MONTHS     INCORPORATION)
                                                                   SIX MONTHS ENDED       ENDED              TO
                                                                       JUNE 30,          JUNE 30,         JUNE 30,
                                                                         2000              1999             2000
                                                                      (UNAUDITED)      (UNAUDITED)       (UNAUDITED)
<S>                                                                 <C>                <C>              <C>
 CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
     Stock offering costs (note 5)                                   $    (2,050,376)  $     (293,135)  $   $(7,395,614)
     Issuance of common stock and underwriters' options
     (note 5)                                                             43,500,000        7,516,875       102,964,442
     Proceeds from exercise of options                                       861,002                            861,002
     Payment received on note receivable from director                             -                -            68,047
     Redemption of option held by former parent                                    -                -        (2,250,000)
     Receipt of Section 16(b) common stock profits                                 -                -            17,125
     Payment on license agreement obligations                                      -                -          (119,215)
     Deferred revenue                                                              -                -         9,791,667
                                                                   -----------------------------------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                 42,310,626        7,223,740       103,937,454
                                                                   -----------------------------------------------------

EFFECT OF EXCHANGE RATES ON CASH                                                  -                 -            27,204
                                                                   -----------------------------------------------------

NET (DECREASE) INCREASE  IN CASH                                          13,040,666           46,229        20,069,284

CASH AT BEGINNING OF PERIOD                                                7,028,618        1,213,757                 -
                                                                   -----------------------------------------------------
CASH AT END OF PERIOD                                                $    20,069,284   $    1,259,986   $    20,069,284
                                                                   =====================================================
SUPPLEMENTAL SCHEDULE OF CASH FLOW
     INFORMATION
     Issuance of common stock for promissory note from former
        parent                                                                                         $        150,000
                                                                                                      ==================
     License agreement obligations incurred in the
        acquisition of an intangible asset                                                             $        131,418
                                                                                                      ==================

     Deferred stock offering costs offset against common stock                                         $      7,395,614
                                                                                                      ==================
     Note receivable from director originating upon exercise
        of options for common stock                                                                    $         68,047
                                                                                                      ==================

     Interest paid                                                                                     $         12,594
                                                                                                      ==================

     Income tax expense                                                                                $         90,000
                                                                                                      ==================
</TABLE>

See the accompanying notes to the Consolidated Financial Statements



                                     - 5 -



<PAGE>   6


DUSA PHARMACEUTICALS, INC.
(a development stage company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       The Consolidated Balance Sheet as of June 30, 2000, the Consolidated
     Statements of Operations for the three and six-month periods ended June
     30, 2000, and 1999 and for the period from February 21, 1991, (date of
     incorporation) to June 30, 2000, and the Consolidated Statements of Cash
     Flows for the six-month periods ended June 30, 2000, and 1999 and for the
     period from February 21, 1991, (date of incorporation) to June 30, 2000,
     have been prepared by the Company, without audit. In the opinion of
     management, all adjustments (which include only normal recurring
     adjustments) necessary to present fairly the financial position, results
     of operations and changes in cash flows as of June 30, 2000, and for all
     periods presented have been made.

         Certain information and footnote disclosures normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted. These financial
     statements should be read in conjunction with the Company's December 31,
     1999 audited consolidated financial statements and notes thereto.

         The consolidated financial statements include the accounts of the
     Company and its wholly-owned subsidiary, DUSA Pharmaceuticals New York,
     Inc. All significant intercompany accounts have been eliminated on
     consolidation.

2.       The Company's United States government securities available for sale
     consist of securities of the United States government, and its agencies,
     with interest rates and yields ranging from 4.97% to 7.42%, and maturity
     dates ranging from July 7, 2000 to May 13, 2005.

3.       Basic net loss per common share is based on the weighted average
     number of shares outstanding during each period. None of the stock options
     and warrants are included in the computation of the weighted average
     number of shares outstanding for diluted net loss per common share during
     the period as the effect would be antidilutive.

4.       The Company has entered into a series of agreements for research
     projects and clinical studies. As of June 30, 2000, future payments to be
     made pursuant to these agreements, under certain terms and conditions,
     total approximately $569,946 for the remainder of 2000.

5.       On March 22, 2000, the Company issued 1,500,000 shares of its common
     stock in a private placement pursuant to Regulation D of the Securities
     Act of 1933. The Company received gross proceeds of $42,750,000. The
     offering costs associated with the placement were $2,050,377.

6.       Under the terms of the dermatology marketing, development and supply
     agreement with Schering AG, Schering AG has agreed to fund two-thirds of
     the co-development program, up to a total of $3,000,000 per year, through
     2001 subject to the agreement of the Development Committee on the budget.
     The Company has accrued the estimated reimbursement for dermatology
     research and development costs incurred during the first and second
     quarter of 2000 which have not yet been approved by the Development
     Committee.

7.       In June, 2000, the Company amended its Supply Agreement with Sochinaz,
     S.A., the manufacturer of the bulk drug ingredient used in Levulan(R). The
     amendment grants an option to DUSA to extend the term of the Supply
     Agreement for an additional three years to December 3, 2007. As
     consideration for the amendment, DUSA agreed to reimburse Sochinaz for a
     portion of its costs to bring its manufacturing facilities in Switzerland
     into compliance with the FDA's cGMPs. DUSA paid $250,000 in cash and
     issued 26,666.66 unregistered shares of DUSA's Common Stock, at a fair
     market value of $750,000. The total $1,000,000 has been reported as
     deferred charges which will be amortized over the current term of the
     contract.



                                     - 6 -



<PAGE>   7


8.       Inventories are stated at the lower of cost (first-in, first-out
      method) or market. Inventories consist of the following at June 30, 2000:

         Raw Materials                                         $          58,125

         Purchased Parts and Subassembles                                257,810

                                                                        --------
         Total                                                 $         315,935
                                                                        ========


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

General


     The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes to the Consolidated Financial
Statements for the year ended December 31, 1999 and for the three-month and
six-month periods ended June 30, 2000, and June 30, 1999, respectively. DUSA
Pharmaceuticals, Inc. is a development-stage pharmaceutical company engaged
primarily in the research and development of a drug named 5-aminolevulinic
acid, or ALA, used in combination with appropriate light devices in order to
detect or treat a variety of medical conditions. The trademark for our brand of
ALA is Levulan(R). When we use Levulan(R) and follow it with exposure to light
to produce a therapeutic effect the technology is called photodynamic therapy
or PDT. When we use Levulan(R) and follow it with exposure to light to detect
medical conditions the technology is called photodetection or PD. Our first
product, Levulan(R) Kerastick(R) 20% topical solution with photodynamic therapy
for treatment of non-hyperkeratotic actinic keratosis of the face or scalp, was
approved by the United States Food and Drug Administration on December 3, 1999.
The clinical trial version of our BLU-U(TM) light device was also approved at
that time and the commercial version of the BLU-U(TM) is now under review by
the FDA. Schering AG, our dermatology partner, through the Berlex Dermatology
unit of its U.S. affiliate, Berlex Laboratories, Inc., will launch the
Levulan(R) Kerastick(R) for use with the BLU-U(TM), following the FDA's
approval of the BLU-U(TM) commercial unit. We have experienced significant
operating losses since our inception, as we have devoted substantial resources
to development of our first products, while advancing the Levulan(R) PDT/PD
technology platform for other medical uses. Our other



                                     - 7 -


<PAGE>   8

dermatology and non-dermatology potential indications are at exploratory, Phase
I or Phase II stages. As of June 30, 2000, we had an accumulated deficit of
$38,627,747.

         Our transition from a development-stage company to a profitable
operating company is partially dependent upon approval by the FDA of the PMA
Supplement, which was filed on March 20, 2000, covering the commercial version
of the BLU-U(TM). The FDA regulations allow six months for this agency action
and we understand from the agency that the review process is nearing
completion. As part of the review process, the FDA inspected our Wilmington
facilities and verbally reported no violations to us. Our BLU-U(TM)
manufacturer has also been inspected by the FDA as part of the Supplement
review process, also with no verbal report of violations. DUSA is not aware of
any issues, other than the normal processing time by the FDA, that would unduly
delay the approval of the PMA Supplement. Nonetheless, any significant delays
in the FDA approval process of our PMA Supplement, or in delivery to Schering
AG of sufficient product supplies from our third-party manufacturers for the
launch of the Levulan(R) Kerastick(R) or the BLU-U(TM) would delay the
marketing of our products and would have a significant adverse impact on our
near-term financial results.

         We are also dependent, in large part, on Berlex Laboratories, Inc. to
develop a market in the United States for our dermatology products. While
Schering AG has significant expertise in dermatology markets outside the United
States, and Berlex has significant expertise in non-dermatology markets in the
United States, our products represent Berlex's first dermatology marketing
effort in the United States.

         Subsequent to the product launch, we expect to continue to incur
operating losses into next year, depending upon sales levels achieved by Berlex
Laboratories, Inc. Using a portion of the funds from the Schering AG payments
already received, and the March 2000 private placement, we are continuing to
prepare for a significant expansion in our research and development efforts,
both in dermatology (in partnership with Schering AG), and in our
non-dermatology development programs.


                                     - 8 -


<PAGE>   9
We are planning to significantly expand our staffing from our current 26 to
perhaps 40 people by the end of the year, in order to efficiently carry out
these development programs, and to properly support the launch and ongoing
production, maintenance, and customer support for our first and future products,
including the development of second sources of supply where appropriate or
required under our contract with Schering AG. We do not know when the royalties
and supply fees to which we are entitled under our Schering AG agreement, along
with interest and/or other income, may offset the cost of these programs.

         As planned and previously disclosed on April 27, 2000, the Company's
Board of Directors authorized the redemption of all the rights which were
granted under the Company's Shareholder Rights Plan, dated September 26, 1997
(the "Plan"), and the termination of the Plan. The Plan was originally approved
by the Company's shareholders on June 11, 1998. The Board of Directors took
this action upon receiving a Schedule 13G filed by AMVESCAP PLC ("AMVESCAP"),
the parent holding company of investment advisors including the INVESCO Funds
Group, Inc. AMVESCAP indicates in its most recent Schedule 13G that it
beneficially owns in excess of 15% of the Company's outstanding common shares.
As the result of the acquisition of beneficial ownership in excess of 15% of
the outstanding shares of common stock of the Company by AMVESCAP, certain
provisions of the Plan were triggered.

         Pursuant to the redemption provisions of the Rights Agreement, all of
the outstanding rights were redeemed at a Redemption Price of $.001 per right
or approximately $14,000.

         Also during this quarter, we settled the previously disclosed
litigation with a British firm by agreeing to terminate a license agreement for
a light device which we had not yet fully developed as it was not appropriate
for our leading dermatology initiatives. No payments were made by either party
to the other.



                                     - 9 -



<PAGE>   10


Financial Condition

         The Company is in a strong cash position to continue and expand its
research and development activities for its Levulan(R) PDT/PD platform. The
Company's total assets were $67,693,292 as of June 30, 2000, compared to
$28,156,845 as of December 31, 1999. The increase is the direct result of the
completion of the private placement of the Company's shares in the first
quarter of this year. Management expects that assets will decline somewhat as
research and development activities proceed, until and unless the Company
successfully makes the transition to profitability based on product sales.
However, the decline will be partially offset by interest income on the
Company's liquid investments.

         As of June 30, 2000, the Company had outstanding current liabilities
of $1,062,221 as compared to $1,305,250 as of December 31, 1999. Since its
inception the Company has had no long-term debt.

         We are actively preparing for the commercial launch of our products
while the FDA is reviewing the PMA Supplement to the BLU-U(TM). As of June 30,
2000, the Company had fixed assets of $1,105,553 as compared to $428,350 as of
December 31, 1999, due primarily to the acquisition of equipment. The Company
expects that it will make significant additional capital expenditures during
the balance of 2000, or in 2001, in order to acquire equipment for a back-up
second source of supply for the manufacture of the Kerastick, as required under
our contract with Schering AG.

         The Company held United States government securities at a fair market
value of $43,349,913 as of June 30, 2000, as compared to $19,868,962 as of
December 31, 1999. In light of its enhanced cash position, the Company has
invested a portion of its funds in government securities with maturity dates of
up to five years, which are slightly longer term than the time to maturity of
instruments held in the past. See "Liquidity and Capital Resources."

Results of Operations.

         Research and Development Costs. Total research and development costs
for the three and six-month periods ended June 30, 2000 were $2,109,074 and
$3,378,725, respectively, as compared to


                                     - 10 -


<PAGE>   11


$1,047,760 and $1,889,682 for the comparable three and six-month periods ended
June 30, 1999. The increase is due primarily to manufacturing development
expenses, mainly caused by increased personnel costs and pre-production
activities. Subsequent to the launch of our products, we expect that a portion
of the on-going manufacturing personnel expenses will be allocated to cost of
goods and/or general and administrative expenses, since many manufacturing
development activities will be complete for the current products.

         Two-thirds of selected dermatology research and development expenses
will be reimbursed by Schering AG, up to $3,000,000 for 2000 and 2001. We have
accrued an estimated reimbursement amount of $167,347 and $ 602,504
respectively, for the three and six-month periods ended June 30, 2000 which are
subject to review and agreement by the joint committees under our Schering AG
agreement. We have been planning with Schering AG which dermatology clinical
programs will be funded this year and next and expect to have a complete plan
for the remainder of 2000 and 2001 in place by the end of the third quarter. As
we begin to implement our dermatology program with Schering AG, and to expand
our non-dermatology programs, we expect clinical research and development
expenses to increase significantly, although the dermatology expenses will be
partially reimbursed by Schering AG with research and development support
payments covering two-thirds of the agreed upon expenses. We now expect
dermatology research and development efforts to focus initially on acne, warts
and onychomychosis, as well as post-marketing Phase IV studies relating to
Levulan(R) PDT for actinic keratoses. Development plans for cosmetic
indications, such as hair removal and photodamaged skin, will be considered at
a later date.

         We are planning to begin an acne dose ranging study using Levulan(R)
solution of varying strengths later this year. We have agreed with Schering AG
to focus the initial trials on red light based upon earlier independent
clinical work. We also expect to initiate clinical pharmacokinetic studies on
patients suffering from recalcitrant warts and from onychomycosis before the
end of the year. Finally, for the dermatology program, we plan to begin the
required FDA Phase IV study to



                                     - 11 -


<PAGE>   12

test dermal allergenicity later this year. The second Phase IV study on the
long-term follow-up of Levulan(R) PDT treatment of actinic keratoses of the
face and scalp will likely begin next year. We will also be considering
additional Phase IV studies for post-marketing purposes.

         In the non-dermatology area, we are considering various approaches to
further development of the bladder cancer detection and photodetection of other
internal indications. DUSA's scientific personnel have also been and will be
taking an increasingly supportive and involved role in certain DUSA-supported
investigator studies, such as those involving Levulan(R) PDT for use in
restenosis following angioplasty and Barrett's esophagus. We expect independent
investigator studies for these two indications to begin later this year.

         Operating Costs. General and administration expenses decreased for the
three-month period to $376,489 as of June 30, 2000 from $486,197 as of June 30,
1999, but increased significantly for the six-month period to $1,125,072 as of
June 30, 2000, from $815,828 as of June 30, 1999. During the quarter, the
Company allocated approximately $160,000 of personnel costs for manufacturing
development to research and development expenses, causing general and
administrative expenses to be lower. Also, the three-month period ended June
30, 1999 included expenses related to negotiating with potential strategic
alliance partners as well as a stock option expense triggered by the terms of
the private placement that had occurred earlier in 1999. During 2000, the
Company has hired additional staff, including key management personnel in
technical and operations functions. These costs are expected to continue to
increase as we continue to add personnel, including the recent employment of
our Vice-President of Finance and other additional management level personnel.
See "Research and Development Costs."

         Non-Operating Income. We have not derived any commercial revenues from
product sales. We expect, however, to be entitled to receive royalties and
supply fees from Schering AG in the fourth quarter of this year, assuming the
FDA approves the commercial BLU-U(TM) before the end of the third quarter. As a
result of the $15,000,000 from Schering AG which we received during the fourth


                                     - 12 -


<PAGE>   13


quarter of 1999, and the net proceeds from the March, 2000 private placement of
approximately $41,000,000, interest income, earned primarily on United States
government securities, increased to $942,627 and $1,325,371, respectively, for
the three and six-month period ended June 30, 2000, as compared to $122,939 and
$283,199 for the three and six-month period ended June 30, 1999. Unless our PMA
Supplement is approved and a large market for our first products develop,
interest income will decline as funds are spent for our research and
development programs. Interest income for the cumulative period from February
21, 1991 (date of incorporation) to June 30, 2000 was $7,313,335.

         Net Losses. The Company incurred a net loss of $1,439,928, or $0.11
per share, and $2,681,153 or $.21 per share, for the three and six-month
periods ended June 30, 2000, respectively, as compared to a net loss of
$1,429,282, or $0.13 per share, and $2,458,604 or $0.23 per share, for the
three and six-month periods ended June 30, 1999, respectively.

         Recent Accounting Pronouncements. In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 133 ("SFAS No. 133"), Accounting for Derivative Instruments and
Hedging Activities. This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The effective date of SFAS 133 was deferred in SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133 which will now be effective for the fiscal quarters
of our fiscal year ending December 31, 2001. We are in the process of
evaluating the effect of this Statement on our consolidated financial
statements.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101 ("SAB 101") - "Revenue Recognition in Financial
Statements" which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101A was


                                     - 13 -


<PAGE>   14

released on March 24, 2000 and deferred the effective date to no later than the
second fiscal quarter beginning after December 15, 1999. In June 2000, the SEC
issued SAB 101B which delays the implementation date of SAB 101 until no later
than the fourth fiscal quarter of fiscal years beginning after December 15,
1999. SAB 101 requires companies to report any changes in revenue recognition
as a cumulative change in accounting principle at the time of implementation in
accordance with Accounting Principles Board Opinion No. 20, "Accounting
Changes." The Company's management does not expect the implementation of SAB
101 to have a significant impact on its financial statements.

         In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB Opinion No., 25."  FIN 44 is generally effective for
transactions occurring after July 1, 2000 but applies to repricings and some
other transactions after December 15, 1998.  The Company believes this
interpretation will not have a significant effect on its financial statements.

Liquidity and Capital Resources

         The Company's United States government securities available for sale
have an aggregate cost of $43,282,229 and a current aggregate market value of
$43,349,913 as of June 30, 2000, resulting in a net unrealized gain on
securities available for sale of $67,684, which has been included in
shareholders' equity. Due to fluctuations in interest rates and depending upon
the timing of the Company's need to convert government securities into cash to
meet its working capital requirements, some losses could be realized. The
Company's securities currently have interest rates and yields ranging from
4.97% to 7.42%, and maturity dates ranging from July 7, 2000 to May 13, 2005.

         The Company believes it has sufficient capital resources to proceed
with its current development program for Levulan(R) PDT/ PD for the foreseeable
future. The Company has invested its funds in liquid investments, so that it
will have ready access to its cash reserves, as needed, for the funding of its
development plans on a short-term and long-term basis.


                                     - 14 -


<PAGE>   15

         DUSA may also use its resources to acquire by license, purchase or
other arrangements, businesses, technologies, or products that enhance or
expand DUSA's business. This could include other light-sensitive drugs or light
devices, or other drug-device combination products.

         We are currently focused on the commercialization of the Levulan(R)
Kerastick(R) and the BLU-U(TM). As part of this effort, the Company amended its
Supply Agreement with SOCHINAZ, S.A., the manufacturer of the bulk drug
ingredient used in Levulan(R), in June 2000. The amendment grants an option to
DUSA to extend the term of the Supply Agreement for an additional three years
to December 3, 2007. As consideration for the amendment, DUSA agreed to
reimburse SOCHINAZ for a portion of its costs to bring its manufacturing
facilities in Switzerland into compliance with the FDA's cGMPs. DUSA paid
$250,000 in cash and issued 26,666.66 unregistered shares of DUSA's Common
Stock, at a fair market value of $750,000.00. The total $1,000,000 has been
reported as deferred charges and will be amortized over the current term of the
Supply Agreement which expires December 3, 2004.

         Although we have no long term debt, we do have a secured line of
credit from Schering AG for up to $1 million to help us finance inventory
purchases of our BLU-U(TM) from our supplier. This line of credit is
interest-free but must be re-paid within one year of our first draw down of
funds. We expect to make the first draw-down following approval of the PMA
Supplement for the commercial BLU-U(TM) unit.

         The Company had no change in deferred revenues from December 31, 1999
of $9,791,667, as the Company will not begin to amortize the Schering AG
milestone and other payments until the product is launched. The amortization
period is expected to be approximately 12 years, the term of the Schering AG
agreement, based upon current SEC revenue recognition principles.

Inflation

         Although inflation rates have been comparatively low in recent years,
inflation is expected to apply upward pressure on the operating costs of the
Company. The Company has included an


                                     - 15 -


<PAGE>   16

inflation factor in its cost estimates. However, the overall net effect of
inflation on the operations of the Company should be minimal in the near term.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We hold fixed income U.S. government securities that are subject to
interest rate market risks. We do not believe that the risk is material at this
time as we have apportioned our investments in short-term and longer-term
instruments, up to five years, and we strive to match the maturity dates of
these instruments to our cash flow needs. A ten percent decline in the average
yield of these instruments would not have a material effect on our results of
operations or cash flows. As noted above, if significant, sudden fluctuations
in interest rates occur, losses could be realized. We do not hold derivative
securities. Accordingly, we do not believe that there is any material market
risk exposure with respect to derivative or other financial instruments which
would require disclosure under this item.

Forward-Looking Statements

         The foregoing Management Discussion and Analysis contains various
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1993 and Section 21E of the Securities and Exchange Act of
1934, as amended, which represent the Company's expectations or beliefs
concerning future events, including, but not limited to statements regarding
management's expectations of the receipt and timing of regulatory approval,
timing of the product launch, and the commencement of receipt of royalties and
supply fees, expectations of continuing operating losses, expansion of certain
research and development programs and the commencement of clinical trials by
DUSA or independent investigators, the extent of a decline of assets to support
these efforts, the hiring of personnel and timing thereof, the allocation of
personnel costs to various activities, the timing and amount of capital
expenditures, reimbursement of selected dermatology expenses, the delay of
certain development activities for cosmetic uses, the probable increase in
general and administrative expenses, the effect of recent accounting
pronouncements, the sufficiency of capital



                                     - 16 -


<PAGE>   17

resources and potential uses thereof, the timing of use of its line of credit,
and market risk related to its government securities. These forward-looking
statements are further qualified by important factors that could cause actual
results to differ materially from those in the forward-looking statements.
These factors include, without limitation, changing market conditions, the
impact of competitive products and pricing, and the timely development, FDA
approval and market acceptance of the Company's products, fluctuations in
interest rates, the ability to hire qualified personnel, and reliance on
third-party manufacturers. Results actually achieved may differ materially from
expected results included in these statements as a result of these or other
factors, identified in DUSA's SEC filings, including its Form S-3, from time to
time.

                           PART II- OTHER INFORMATION

Items 1, 3, and  5.

                  None

Item 2.  Previously reported on Form 8-K, filed June 29, 2000.

Item 4.  Submission of Matters to a Vote of Security Holders
         Matters submitted to a vote of security holders of the Corporation at
         the Annual Meeting of Shareholders held June 15, 2000 included the
         election of five (5) directors and ratification of the selection of
         Deloitte and Touche LLP as the independent auditors for the
         Corporation for 2000;

     (1) The following persons were elected to serve as directors of the
         Corporation:

<TABLE>
<CAPTION>
                                                                                               Broker

                                                    For          Against      Abstained       non-votes
                                                ------------------------------------------------------------

<S>                                                 <C>           <C>             <C>             <C>
                 D. Geoffrey Shulman                9,590,749      317,395        0               0

                 John H. Abeles                     9,861,749       46,395        0               0

                 James P. Doherty                   9,861,749       46,395        0               0

                 Richard C. Lufkin                  9,861,749       46,395        0               0

                 Jay Haft                           9,861,749       46,395        0               0
</TABLE>



     (2) Shareholders ratified the selection of Deloitte & Touche LLP as the
         independent auditors for the Corporation for 2000 as follows:


                                     - 17 -


<PAGE>   18

<TABLE>
<S>                                               <C>
                Votes cast for                    9,892,211

                Votes cast against                8,395

                Abstained                         7,538

                Broker non-votes                  0
</TABLE>


Item 6.  Exhibits and Reports on Form 8-K.

     a) Exhibits 27 - Financial Data Schedule, which is submitted
electronically to the Securities and Exchange Commission for information only
and not filed.

     b)  i) Form 8-K dated April 27, 2000 and filed on April 28, 2000 relating
         to the termination of DUSA's Shareholder Rights Plan and redemption of
         the rights thereunder.

         ii) Form 8-K dated June 15, 2000 filed on June 16, 2000 regarding
         DUSA's Annual Shareholders Meeting.

         iii) Form 8-K dated June 28, 2000 filed on June 29, 2000 relating to
         an amendment to DUSA's Supply Agreement with Sochinaz, SA.

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
     registrant has duly caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.

                                         DUSA PHARMACEUTICALS, INC.

     DATE AUGUST 10, 2000       BY:   /S/D. GEOFFREY SHULMAN
          ---------------          -------------------------------------------
                                D. GEOFFREY SHULMAN, MD, FRCPC
                                PRESIDENT, CHIEF EXECUTIVE OFFICER,
                                AND CHIEF FINANCIAL OFFICER



                                     - 18 -


<PAGE>   19




                                 EXHIBIT INDEX


             Exhibit No.                          Description

                 27              Financial Data schedule, which is submitted
                                 electronically to the Securities and Exchange
                                 Commission for information only and not filed.






                                     - 19 -