DUSA PHARMACEUTICALS REPORTS PHASE III LEVULAN PDT CLINICAL PROGRESS, 1996 HIGHLIGHTS AND FINANCIAL RESULTS.

TORONTO, Ontario--(BUSINESS WIRE)--March 3, 1997--DUSA Pharmaceuticals Inc. (NASDAQ NMS: DUSA) announced today its Phase III progress, along with corporate highlights and audited financial results for the year ended Dec. 31, 1996.

DUSA achieved its key corporate objective of 1996 with the initiation in December of pivotal Phase III clinical trials using Levulan(TM) Photodynamic Therapy (PDT) for pre-cancerous actinic keratoses (AKs) of the skin, following Phase II data which showed complete clinical clearance of up to 100% of lesions after 1-2 treatments. The two Phase III studies of 100 patients each, being carried out at 13 sites across the U.S., are now actively accruing patients, with completion targeted for late summer '97.

During 1996, DUSA also completed a Phase I/II Levulan PDT acne study, and advanced development of its bladder cancer photodiagnosis and hair removal programs, through support of independent investigator studies in these indications at Massachusetts General Hospital. Other achievements during 1996 included the unveiling of DUSA's low cost, non-laser blue light source for AK treatment; the disentanglement of remaining ownership and administrative ties with DUSA's former controlling shareholder; and a follow-on public offering of 750,000 shares of common stock.

In 1997, the Company expects to complete Phase III AK trials in preparation for its first planned New Drug Application (NDA) to the Food and Drug Administration (FDA); commence Phase I/II multicenter bladder cancer and hair removal trials, and support further studies on acne and endometrial ablation. In addition, the Company has begun to seek strategic partnership(s) in the field of dermatology.

The net loss for 1996 was $6,800,319, or ($0.75) per share, compared to $3,647,533 or ($0.65) per share, in 1995. Research and development costs were $5,652,442, or 72% of total 1996 expenses, compared to $3,044,979, or 72%, in the prior year. The increase in research and development costs reflects primarily the completion of multiple Phase II trials and commencement of Phase III trials for the AK indication, and costs related to the bladder cancer development program.

Other expenses increased to $2,220,883 from $1,175,296, primarily due to a non-cash charge of $557,260 resulting from the extension of stock options issued prior to 1994, from 5-year terms to 10-year terms. The extensions, which were approved by shareholders at last year's annual meeting, bring the term of these options in line with those issued under the current stock option plan. There were also increases in personnel and administrative costs. Interest income totaled $1,074,902, compared to $579,092 the year earlier, due to increased interest earned on the net proceeds of the Company's stock offerings in December 1995, and May 1996.

At year end 1996, the Company had cash and United States Government securities totaling $19,719,496, and shareholders' equity of $19,101,790 or $2.04 per share, compared to $20,479,592 and $20,219,240 respectively, at year end 1995. -0-

Three Months Ended Dec. 31               Year Ended December 31
1996                1995                     1996           1995
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$269,591       $ 143,709 Interest Income   $ 1,074,902  $579,092
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                          Research and
$1,447,270     $ 868,187 Development Costs $ 5,652,442 $3,044,979
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                          Other Operating
$974,918       $ 351,155     Expenses      $ 2,220,833 $1,175,296
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($2,152,597) ($1,075,695)   Net (Loss)   ($ 6,800,319)($3,647,533)
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  ($0.23)      ($0.18)    Loss Per Share    ($0.75)      ($0.65)
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                          Average Number of
9,355,826      6,037,522 Shares Outstanding 9,087,823  5,589,486
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                         Cash and U.S.
                          Government
$19,719,496  $20,479,592  Securities     $ 19,719,496  $20,479,592
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                          Shareholders'
$19,101,790  $20,219,240    Equity       $ 19,101,790  $20,219,240
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(All figures are in US dollars and the year end figures are audited)

DUSA Pharmaceuticals Inc. is a development stage pharmaceutical company engaged primarily in the development of Levulan PDT and Photodiagnosis ("PD") for multiple medical indications. PDT and PD utilize light-activated compounds such as 5-aminolevulinic acid to induce a therapeutic or diagnostic effect. DUSA is a world leader in topically or locally applied PDT and PD. The Company is incorporated in New Jersey, with executive offices in Toronto, Ontario, and R&D administration in Tarrytown, New York.

Except for historical information, this news release contains certain forward looking statements that involve risk and uncertainties, which may cause actual results to differ materially from the statements made. Such factors include, but are not limited to, changing market conditions, the progress of clinical trials and the results obtained, the establishment of new corporate alliances, the impact of competitive products and pricing, the timely development of light devices for several indications, FDA approval and market acceptance of the Company's products, and other risks detailed from time to time in the Company's United States Securities and Exchange Commission (SEC) filings.

CONTACT: DUSA Pharmaceuticals Inc.

D. Geoffrey Shulman, MD, President & CEO

Tel: [phone] Fax [phone]

or

Sunrise Financial Group

Derek Caldwell, Executive Vice President

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