DUSA Pharmaceuticals Reports 1998 Corporate Highlights and Financial Results.

TORONTO, Ontario--(BUSINESS WIRE)--March 1, 1999--DUSA Pharmaceuticals, Inc. (Nasdaq/NMS:DUSA) announced today its corporate highlights and audited financial results for the year ended December 31, 1998.

1998 Corporate Highlights

"DUSA's major achievement for 1998 was the submission of its New Drug Application (NDA) for Levulan Photodynamic Therapy (PDT) in the treatment of Actinic Keratoses (AKs) of the face and scalp. The Company was subsequently notified that the US Food & Drug Administration (FDA) had accepted the 35,000 page NDA for filing, and the document is now under active review by the agency," stated Dr. Geoffrey Shulman, DUSA President & CEO.

"The Company also significantly strengthened its management team during 1998. In May, the principals and staff of Lumenetics, Inc., DUSA's PDT device consultants, joined DUSA as employees. Ronald Carroll became DUSA's Executive Vice President and Chief Operating Officer, while Scott Lundahl became DUSA's Director of Technology Development. In preparation for commercialization of the Company's initial products, DUSA recently hired Patricia Parker as Director of Manufacturing and Jim Mazzola as Manager, Production Engineering. Combined with DUSA's R&D staff headed by Dr. Stuart Marcus, Senior Vice President & Chief Scientific Officer, DUSA is now well-positioned to proceed with commercialization and further development of its Levulan PDT/PD technology platform."

"During 1998, besides the AK NDA filing, development work included Company-sponsored studies in bladder cancer photodetection and hair removal, and preparation for a new Phase l/ll acne study using blue light. DUSA is also considering development of additional internal indications during 1999 and plans to continue supporting certain investigator-sponsored clinical studies that could lead to future indications for the Company."

"DUSA also suffered a disappointment during 1998. After reaching an agreement-in-principle with a major multi-national pharmaceutical company on a dermatology licensing partnership, the deal did not close, for reasons unrelated to DUSA. DUSA is now discussing potential licensing alliances with other companies, while also examining marketing alternatives such as distribution and co-promotion arrangements."

1998 Financial Results

The net loss for 1998 was $5,716,948, or ($0.61) per share, compared to $7,120,092 or ($0.76) per share, in 1997. Research and development costs were $4,502,391, or 72% of total 1998 expenses, compared to $6,252,830, or 78%, in the prior year. The reduction in research and development costs of 28% in 1998 reflects the conclusion of the Phase III clinical trial costs on the AK indication by the end of 1997, lower regulatory expenses after the NDA filing in mid-year '98 and lower R&D spending in other indications. Other expenses decreased to $1,729,741 from $1,760,409. Interest and other income in 1998 decreased to $515,184, from $893,147 in 1997.

At year end 1998, the Company had cash and United States Government securities totaling $6,722,132, and shareholders' equity of $6,416,146, compared to $12,767,142 and $12,019,351, at year end 1997.

Subsequent to the 1998 year end, DUSA raised gross proceeds of $7.5 million in a private placement for additional working capital and to fund ongoing R&D expenditures. -0-

Three Months Ended Dec.31                   Year Ended Dec. 31
1998             1997                           1998      1997
$107,796     $188,460    Interest &       $515,184    $893,147
                         other Income
$829,008     $1,763,960  Research and   $4,502,391  $6,252,830
                         Development
                         Costs
$350,136     $493,920    Other Operating$1,729,741  $1,760,409
                         Expenses
($1,071,348) ($2,069,420)Net(Loss)    ($5,716,948)($7,120,092)
($0.11)      ($0.22)     Loss Per Share     ($.61)     ($0.76)
9,365,950    9,358,038   Average Number  9,365,950   9,358,038
                         of Shares
                         Outstanding
$6,722,132   $12,767,142 Cash and U.S.  $6,722,132 $12,767,142
                         Government
                         Securities
$6,416,146   $12,019,351 Shareholders'  $6,416,146 $12,019,351
                         Equity

-0-

(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 Photodynamic Therapy (PDT) and Photodetection (PD) for multiple medical indications. PDT and PD utilize light-activated compounds such as Levulan to induce a therapeutic or detection 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, R&D administration in Valhalla, N.Y., and manufacturing, technology and operations offices in Norwell, Mass.

Except for historical information, this news release contains certain forward-looking statements that involve known and unknown risk and uncertainties, which may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the statements made. These forward-looking statements relate to the preparation for commercialization and further development of its products, support for investigator-sponsored clinical studies and discussion and examination of potential licensing and marketing alternatives. Such risks and uncertainties include, but are not limited to the results of clinical trials, whether the Company's NDA filing will receive marketing approval, the status of its patents and proprietary protection, reliance on third parties to manufacture (in compliance with FDA regulations), uncertainties regarding the marketing of its products and whether a marketing alliance will be consummated, unanticipated expenses relating to potential regulatory requests, the availability of funds for ongoing operations and further development activities and other risks detailed from time to time in the Company's United States Securities and Exchange Commission (SEC) filings.