Biotech firm has potential, but sales sluggish

Bulls:   1. Clean Harbors   2. Hologic   3. NMT Medical   4. DeWolfe   5. Indevus Pharmaceuticals Bears:   1. Sonus Networks   2. Art Technology Group   3. Praecis Pharmaceutical   4. American Tower   5. Dusa Pharmaceutical    The Bulls    The Bears    All the charts

usa, of Wilmington, is in an enviable position for a young biotech firm with negligible sales.

In contrast with many of its brethren, Dusa has an actual, approved product: a solution that makes cells sensitive to certain types of light. It is applied to precancerous lesions of the scalp and face and zapped with a proprietary light source. Dusa says its system offers a quicker, less painful method of removal, compared to freezing the skin or applying certain chemicals.

The company ended 2001 with more than $75 million in the bank. And it has a development and marketing agreement with Berlex Laboratories Inc., the US affiliate of German drug giant Schering AG.

So why did Dusa's stock drop $9.30, nearly 70 percent, to close the year ended March 31 at $4.01?

According to regulatory filings, Dusa hasn't sold many of its BLU-U light units or much of its Levulan Kerastick solution.

In January 2001, Dusa had to pay $100,000 to its light unit supplier, National Biological Corp., because it had not ordered the minimum number of units.

In February 2001, Dusa amended a separate agreement with North Safety Products Inc., which makes the solution applicator, also because of "underutilization." Dusa paid North Safety $1.2 million last year, with another $200,000 due by year's end. It may have to pay additional "underutilization" charges of up to $500,000, depending on production levels through June 2003.

It all adds up to a lot of out-of-pocket expenses for a company that had revenues of only $5.4 million in 2001. Dusa said it hopes new insurance reimbursement codes and continued education and marketing programs will build demand for the lesion therapy while it continues to develop its system for different skin problems and other medical conditions. However, the company said in a news release, "For 2002, Dusa is not anticipating a significant change in revenues."

JEFFREY KRASNER