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 Contact:
 DUSA Pharmaceuticals Reports
Third Quarter 2008 Corporate Highlights and Financial Results
 Q3 Levulan ®Kerastick ® Revenues up 54% year over year;  Q3 U.S. Levulan ® Kerastick ®Revenues up 50% year over year
 WILMINGTON, Mass.  November 3, 2008 ® ®
 Third Quarter 2008 Financial Results:
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Year-to-Date 2008 Financial Results:
 ® ® ®
    Other Updates:
 
    
    Nicomide®.
 o
    
    In late June 2008, the Company placed the sales of Nicomide®, a
vitamin-mineral product 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 is in the process of bringing the product into compliance under DSHEA (Dietary
Supplement Health and Education Act) and is currently in discussions with the FDA
regarding new labeling, including the use of the trademark. At the same time, the
Company is also considering the possible sale of the product and the related patent.o
    
    On August 14, 2008, the Company announced that it had entered into a
non-exclusive patent license agreement granting Rivers Edge Pharmaceuticals, LLC
rights for a vitamin-mineral product (nicotinamide, zinc, copper and folic acid)




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substitutable for Nicomide® in the prescription market. In consideration
for granting
the license, the Company is being paid a share of the net revenues, as defined in the
license agreement, of Rivers Edges licensed product sales.
 
    
    Phase IIB Acne Trial.
 o
    
    On October 22, 2008, the Company announced results from its Phase IIB clinical
trial to compare the safety and efficacy of photodynamic therapy (PDT) using DUSAs
BLU-U® brand light plus vehicle containing Levulan®(aminolevulinic acid HCl) to that of PDT using the BLU-U® plus vehicle
without Levulan® (the control group) in patients with moderate to severe
facial acne vulgaris. The study demonstrated that both treatments were safe and well
tolerated with no serious adverse events. While both groups showed a statistically
significant reduction in inflammatory lesions from baseline, the results did not
demonstrate a statistically significant difference between the Levulan® PDT
and control groups. Based on these results, DUSA will not pursue further clinical
development of Levulan® PDT in combination with BLU-U® for
moderate to severe acne. The Company intends to file a 510K to expand the allowed
claims on BLU-U® to include severe acne. The results showed that
BLU-U® plus vehicle without Levulan® demonstrated a 50% reduction
in inflammatory lesions in severe acne.
 
    
    Clinical Development  SOTR.
 o
    
    Chronically immunosuppressed solid organ transplant recipients (SOTRs) with
fair skin are at very high risk of developing actinic keratoses (AKs) and are also
prone to the development of multiple skin cancers, particularly squamous cell
carcinomas (SCCs). We are initiating a new study which will determine 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 group over the course of one year. We anticipate accruing a total
of 36 or 40 patients to this study at up to 6 clinical trial sites across the United
States. Patients will be randomized to one of the following two treatment groups (1:1)
to receive topical Levulan® Kerastick®containing 20%
aminolevulinic acid HCL (ALA, active study drug) or the Kerastick®containing vehicle ingredients only (VEH). We plan to initiate at least one
clinical trial site by year-end.
 
    
    Daewoong Pharmaceutical, Co., Ltd
 o
    
    During the quarter, the Company amended its existing marketing and distribution
agreement with Daewoong Pharmaceutical, Co., Ltd, the exclusive distributor of the
Levulan® Kerastick® in Asia Pacific. The amendment now allows
Daewoong to market and distribute the product in Japan. The product will be sold into
Japan on a named-patient basis.
 Management Comments:
 ® st




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Three-months ended
    
    
    Nine-months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)PDT Drug & Device Product RevenuesKerastick® Product Revenues:United States
    
    $
    4,374,000
    
    
    $
    2,923,000
    
    
    $
    13,720,000
    
    
    $
    10,108,000Canada
    
    
    72,000
    
    
    
    143,000
    
    
    
    449,000
    
    
    
    536,000Korea
    
    
    186,000
    
    
    
    
    
    
    
    710,000
    
    
    
    Rest of World
    
    
    99,000
    
    
    
    
    
    
    
    289,000
    
    
    
    Subtotal Kerastick® Product Revenues
    
    
    4,731,000
    
    
    
    3,066,000
    
    
    
    15,168,000
    
    
    
    10,644,000BLU-U® Product Revenues:United States
    
    
    376,000
    
    
    
    423,000
    
    
    
    1,198,000
    
    
    
    1,369,000Canada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94,000Korea
    
    
    50,000
    
    
    
    
    
    
    
    50,000
    
    
    
    Subtotal BLU-U® Product Revenues
    
    
    426,000
    
    
    
    423,000
    
    
    
    1,248,000
    
    
    
    1,463,000Total PDT Drug & Device Product Revenues
    
    
    5,157,000
    
    
    
    3,489,000
    
    
    
    16,416,000
    
    
    
    12,107,000Total Non-PDT Product Revenues
    
    
    569,000
    
    
    
    2,295,000
    
    
    
    5,352,000
    
    
    
    7,216,000TOTAL PRODUCT REVENUES
    
    $
    5,726,000
    
    
    $
    5,784,000
    
    
    $
    21,768,000
    
    
    $
    19,323,000




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September 30,2008
    
    December 31,(Unaudited)
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    5,225,879
    
    
    $
    4,713,619Marketable securities
    
    
    15,004,901
    
    
    
    18,311,650Accrued interest receivable
    
    
    140,454
    
    
    
    97,243Accounts receivable, net
    
    
    1,911,968
    
    
    
    2,667,178Inventory
    
    
    2,999,468
    
    
    
    2,672,105Prepaid and other current assets
    
    
    1,739,689
    
    
    
    1,843,873TOTAL CURRENT ASSETS
    
    
    27,022,359
    
    
    
    30,305,668Restricted cash
    
    
    173,385
    
    
    
    170,510Property, plant and equipment, net
    
    
    2,034,357
    
    
    
    2,142,658Deferred charges and other assets
    
    
    193,258
    
    
    
    273,404TOTAL ASSETS
    
    $
    29,423,359
    
    
    $
    32,892,240LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    554,955
    
    
    $
    1,213,867Accrued compensation
    
    
    1,040,243
    
    
    
    491,529Other accrued expenses
    
    
    3,210,876
    
    
    
    3,322,642Deferred revenue
    
    
    873,505
    
    
    
    1,256,494TOTAL CURRENT LIABILITIES
    
    
    5,679,579
    
    
    
    6,284,532Deferred revenues
    
    
    4,051,249
    
    
    
    2,918,850Warrant liability
    
    
    486,964
    
    
    
    1,262,600Other liabilities
    
    
    266,657
    
    
    
    319,736TOTAL LIABILITIES
    
    
    10,484,449
    
    
    
    10,785,718SHAREHOLDERS EQUITYCapital stockAuthorized: 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: 24,078,610 and
24,076,110 shares of common stock, no
par, at September 30, 2008 and December
31, 2007 respectively
    
    
    151,652,941
    
    
    
    151,648,943Additional paid-in capital
    
    
    6,928,164
    
    
    
    5,885,353Accumulated deficit
    
    
    (139,860,271
    )
    
    
    (135,600,484
    )Accumulated other comprehensive loss
    
    
    218,076
    
    
    
    172,710TOTAL SHAREHOLDERS EQUITY
    
    
    18,938,910
    
    
    
    22,106,522TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    29,423,359
    
    
    $
    32,892,240




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Three-months ended
    
    
    Nine-months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Product revenues and royalties
    
    $
    5,726,071
    
    
    $
    5,784,194
    
    
    $
    21,767,810
    
    
    $
    19,323,232Cost of product revenues and royalties
    
    
    1,462,028
    
    
    
    1,573,897
    
    
    
    4,950,039
    
    
    
    5,506,540Gross margin
    
    
    4,264,043
    
    
    
    4,210,297
    
    
    
    16,817,771
    
    
    
    13,816,692Operating costs:Research and development
    
    
    1,487,816
    
    
    
    1,225,462
    
    
    
    5,049,327
    
    
    
    4,328,475Marketing and sales
    
    
    2,967,431
    
    
    
    2,887,370
    
    
    
    9,520,865
    
    
    
    9,727,660General and administrative
    
    
    1,911,028
    
    
    
    2,110,766
    
    
    
    6,603,989
    
    
    
    7,966,791Impairment charge for contingent consideration
    
    
    1,500,000
    
    
    
    
    
    
    
    1,500,000
    
    
    
    Net gain on settlement of litigation
    
    
    650
    
    
    
    
    
    
    
    (282,775
    )
    
    
    Total operating costs
    
    
    7,866,925
    
    
    
    6,223,598
    
    
    
    22,391,406
    
    
    
    22,022,926Loss from operations
    
    
    (3,602,882
    )
    
    
    (2,013,301
    )
    
    
    (5,573,635
    )
    
    
    (8,206,234
    )Other income:Other income, net
    
    
    114,260
    
    
    
    135,519
    
    
    
    538,212
    
    
    
    480,117Gain on change in fair value of warrants
    
    
    651,767
    
    
    
    
    
    
    
    775,636
    
    
    
    Net loss
    
    $
    (2,836,855
    )
    
    $
    (1,877,782
    )
    
    $
    (4,259,787
    )
    
    $
    (7,726,117
    )Basic and diluted net loss per common share
    
    $
    (0.12
    )
    
    $
    (0.10
    )
    
    $
    (0.18
    )
    
    $
    (0.40
    )Weighted average number of common shares
    
    
    24,078,610
    
    
    
    19,495,067
    
    
    
    24,078,546
    
    
    
    19,487,594




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Use of Non-GAAP Financial Measures
   Three-months ended
    
    
    Nine-months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)GAAP net loss
    
    $
    (2,836,855
    )
    
    $
    (1,877,782
    )
    
    $
    (4,259,787
    )
    
    $
    (7,726,117
    )Stock-based compensation (a)
    
    
    353,262
    
    
    
    428,416
    
    
    
    1,042,812
    
    
    
    1,146,114Payment on acquisition (b)
    
    
    1,500,000
    
    
    
    
    
    
    
    1,500,000
    
    
    
    Gain on change in fair value of warrants (c)
    
    
    (651,767
    )
    
    
    
    
    
    
    (775,636
    )
    
    
    Non-GAAP adjusted net loss
    
    $
    (1,635,360
    )
    
    $
    (1,449,366
    )
    
    $
    (2,492,611
    )
    
    $
    (6,580,003
    )Non-GAAP basic and diluted net loss per
common share
    
    $
    (0.07
    )
    
    $
    (0.07
    )
    
    $
    (0.10
    )
    
    $
    (0.34
    )Weighted average number of common shares
    
    
    24,078,610
    
    
    
    19,495,067
    
    
    
    24,078,546
    
    
    
    19,487,594
 
 (a)
    
    Stock-based compensation expense resulting from the application of SFAS 123(R).(b)
    
    Milestone payment related to Sirius Laboratories acquisition.(c)
    
    Non-cash gain on change in fair value of warrants.




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