When Big Pharma veteran Robert Doman joined tiny Wilmington, MA-based Dusa Pharmaceuticals (NASDAQ: DUSA) in 2005, he found a company struggling to capitalize on a massive market opportunity. Dusa had won FDA approval in 2000 for a drug-device combination to treat actinic keratoses (AK), pre-cancerous skin growths. There are about 5 million cases of AKs treated each year—a number that’s growing more than 6 percent a year, says Doman, Dusa’s CEO.
But Dusa’s device—which uses blue light to activate a drug called aminolevulinic acid HCl—wasn’t catching on with dermatologists. “The initial launch didn’t go well because it didn’t have good [insurance] reimbursement,” Doman says. And Dusa had just “a handful” of sales reps, he says. The company lost $20 million in 2005.
Contrast that scenario with today, and it’s clear Dusa has gained some respect in the dermatology market. The company, which will be announcing its third-quarter earnings this morning, is expected to bring in about $44 million in revenues this year. Sales of the treatment, which the company brands Levulan Kerastick, have grown 34 percent on a compounded annual basis over the last five years. Dusa turned profitable last year, and in the first six months of this year it was cash-flow positive to the tune of $4.5 million.
Doman has spent the last six years building Dusa’s salesforce up to include 45 reps, and working to ensure physicians would get properly reimbursed for doing the procedure.
Doman estimates Dusa has grabbed about 5 percent of the market for AK treatments—not bad, but he wants much more. So later this month, Dusa will be starting a Phase 2 trial in more than 200 patients that’s designed to prove the company’s device can not only remove large quantities of AKs quickly, but it can also prevent them from recurring.
Dusa’s treatment was originally developed as a rather involved two-step process. Dermatologists must apply the drug to the AK lesions and then send patients home … Next Page »