DUSA Pharmaceuticals Reports Third Quarter Corporate Highlights and Financial Results; Significant Increase in BLU-U Contracts During October.

Business Editors/Health & Medical Writers

WILMINGTON, Mass.--(BW HealthWire)--Nov. 6, 2001

DUSA Pharmaceuticals, Inc. (NASDAQ NMS: DUSA) reported today its corporate highlights and financial results for the third quarter ended September 30, 2001, including a significant increase in BLU-U(R) contracts during October 2001. The Company also recently reported that the American Medical Association (AMA) granted a new CPT code for reimbursement of the photodynamic therapy (PDT) portion of the Levulan(R) PDT System, and the listing of a proposed reimbursement fee by the Center for Medicaid and Medicare Services (CMS).

Corporate Highlights:

AK Marketing and Reimbursement

During the third quarter, DUSA continued to support the U.S. marketing efforts of DUSA's Levulan Photodynamic Therapy (PDT) for non-hyperkeratotic actinic keratoses (AKs) of the face or scalp, together with Berlex Laboratories, Inc., a U.S. affiliate of Schering AG, Germany (FSE: SCH, NYSE: SHR), DUSA's worldwide dermatology marketing partner (except Canada).

By the end of Q3, 231 BLU-U brand lights were in place in doctors' offices as compared to 190 lights by the end of Q2, and 100 by the end of 2000. In addition, Berlex has informed DUSA that during Q3, Kerastick(R) end-user sales from distributors to doctors totaled 1,638 units, a level similar to sales during Q2.

Sampling of the Levulan Kerastick occurred as part of a new marketing program test-launched during August by DUSA and Berlex, with a subsequent national launch in mid-to-late September. Under this program, DUSA is also providing the BLU-U to physicians under a new deferred payment rental program, with no payments due during the first six months. The program is designed to allow physicians to gain first-hand experience using Levulan PDT before their payments begin.

DUSA is pleased to report that the new program is working well and there have already been more BLU-U contracts signed during the month of October 2001 than during the entire third quarter.

With respect to reimbursement, the AMA recently announced the new 2002 recommended CPT code for Levulan PDT, and the CMS proposed an interim reimbursement value (which translates into a nationalized fee of approximately $60) for the light portion of the procedure. In addition, Levulan PDT is considered to be a medical treatment, and as such, doctors may charge appropriate level office visit fees related to diagnosis, drug application, and follow-up (if necessary) of patients treated with Levulan PDT. It is expected that an average office visit fee would be approximately $40. Exact fees will vary depending on a geographical practice location factor.

For a Medicare patient receiving an initial treatment with Levulan PDT, a doctor would be expected to be reimbursed an average of $40 for the drug application visit, approximately $60 for the light treatment, and full reimbursement for the cost of the drug. Any additional required visits would be billed separately.

In addition, the CMS has a 60-day comment period during which they will accept input regarding the proposed values they have placed on this application process. Berlex plans to work closely with medical professionals and policy makers to examine the proposed reimbursement levels, and make additional submissions if appropriate.

Subject to any final revisions, the fee proposals will come into effect on January 1, 2002. This will also allow doctors offices to use the new codes electronically, rather than having to use the current manual miscellaneous codes for the procedure.

Dr. Geoffrey Shulman, DUSA's President and CEO, states "We are very pleased that Levulan PDT has received the new AMA code, as well as the proposed national reimbursement levels." "We believe that these fee proposals, combined with the ongoing education and marketing programs being carried out by Berlex Laboratories, will allow increasing acceptance of our therapy as an important new treatment modality for this common pre-cancerous condition".

In addition, DUSA has been supporting the efforts of Schering AG, Germany, as it prepares to market Levulan in Europe and elsewhere, as regulatory approvals are expected to begin in early 2002.

Clinical feedback from doctors and patients using the system also continues to be positive, especially for patients who have tried other therapies in the past.

Research Pipeline

During Q3, DUSA successfully initiated 3 Phase I/II Levulan PDT clinical trials. In dermatology, in co-operation with Schering AG, Germany, trials are now well underway in onychomycosis (nail fungus) and warts, joining the already ongoing study in acne. Initial results from all of these studies are expected during early-to-mid 2002, with the most promising ones expected to move on to pre-pivotal Phase II trials. DUSA also initiated its first official trial using Levulan PDT in the treatment of early-stage Barrett's esophagus during the quarter, and subsequently announced the start of a Phase I/II clinical trial in the treatment of late-stage Barrett's esophagus (please see our news release of October 10, 2001).

Miscellaneous

Subsequent to the quarter-end, DUSA participated in the recent UBS Warburg Healthcare Conference in NY, and will be making an investor presentation at the CIBC Healthcare Conference in NY on November 6.

Financial Highlights:

The net loss for the three-month period ended September 30, 2001 was $1,817,029 or ($0.13) per share, compared to $1,614,087 or ($0.12) per share for the same period last year. For the nine-month period ended September 30, 2001 the net loss was $4,632,424 or ($0.34) per share, compared to $4,295,240 or ($0.33) per share for the same period last year.

Total research and development costs for the current three-month period were $2,805,803, compared to $2,027,420 in the prior year period, due to increased expenditures for dermatology and internal indications. During the current quarter, $881,895 of the R&D expenditures were recorded in revenues representing reimbursement of two-thirds of dermatology co-development expenses by Schering AG, Germany. During the comparable quarter in 2000 there were no such reimbursed R&D expenditures. Other operating expenses for the current quarter increased to $984,745 from $531,142, primarily due to the hiring of staff, including key management personnel in administrative, financial, technical and operations functions, as DUSA continues the transition from being a development-stage company to a products-based company.

Interest income for the current quarter remained relatively unchanged at $978,932, compared to $944,475 for the same period in 2000, as higher investable cash balances were partly offset by lower rates.

---------------------------------------------------------------
Three Months Ended                           Nine Months Eneded
September 30                                       September 30
---------------------                   -----------------------

2001         2000                             2001         2000
---------------------------------------------------------------
$1,436,566   $139,583      Revenues     $4,143,280     $742,087
---------------------------------------------------------------
                           Cost of
$441,979     139,583       Product      $1,818,064      139,583
                            Sales
---------------------------------------------------------------
                         Research and
$2,805,803   $2,027,420  Development    $7,068,130   $5,496,268
                            Costs
---------------------------------------------------------------
                        Other Operating
$984,745     $531,142      Expenses     $2,902,931   $1,671,322
---------------------------------------------------------------
$978,932     $944,475   Interest Income $3,013,421   $2,269,846
---------------------------------------------------------------
$(1,817,029) $(1,614,087)  Net Loss   $(4,632,424) $(4,295,240)
---------------------------------------------------------------
 ($0.13)      ($0.12)   Loss Per Share    ($0.34)        ($.33)
---------------------------------------------------------------
                           Weighted
                         Average Number
13,796,004   13,619,731   of Common     13,770,494   13,136,280
                            Shares
                          Outstanding
---------------------------------------------------------------
                          Cash and U.S.
$66,734,181  $61,790,765   Government  $66,734,181  $61,790,765
                           Securities
---------------------------------------------------------------
                           Deferred
$23,348,697  $9,791,667     Revenue    $23,348,697   $9,791,667
---------------------------------------------------------------
                         Shareholders'
$52,831,051  $56,270,778    Equity     $52,831,051  $56,270,778
---------------------------------------------------------------
         (All figures are in US dollars and unaudited)

DUSA Pharmaceuticals, Inc. is a biopharmaceutical company engaged primarily in the development of Levulan Photodynamic Therapy (PDT) and Photodetection (PD) for multiple medical conditions. PDT and PD utilize light-activated compounds to induce a therapeutic or detection effect. DUSA is a world leader in topically or locally applied PDT and PD. The Company maintains offices in Wilmington, MA, Valhalla, NY and Toronto, Ontario.

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 belief that satisfactory reimbursement policies will allow increasing acceptance of the therapy, the expectation of results of clinical trials in mid-2002 and the continuation into later phases, anticipated fee reimbursements, that the CPT code should facilitate processing of claims, and that fee proposals will be effective January 1, 2002 and expectations of foreign regulatory approvals. Such risks and uncertainties include, but are not limited to the regulatory approval process, receipt of reimbursement at levels which allow DUSA's products to be competitive with other AK therapies, dependence upon third-party manufacturers of the Kerastick(R), BLU-U(R) and Levulan(R), the ability of Berlex to develop a market for the products, and other risks identified in DUSA's SEC filings from time to time, including its Form 10-K for the year ended December 31, 2000.