Derma Sciences, Inc. Announces First Quarter 2010 Results

PRINCETON, N.J., May 13 /PRNewswire-FirstCall/ -- Derma Sciences, Inc. (Nasdaq: DSCI), a specialty medical device/pharmaceutical company focused on advanced wound care, reported financial and operating results today for the three months ended March 31, 2010.

Highlights for First Quarter 2010:

• Net sales increased 23% to $12,844,382 versus $10,431,891 in first quarter 2009.
• Advanced wound care sales increased 70% to $2,281,564 versus $1,346,223 in first quarter 2009.
• Net loss was reduced to $534,904 (or $0.09 per fully diluted share) versus a net loss of $758,080 (or $0.15 per fully diluted share) in first quarter 2009. The net loss includes non-recurring charges for executive severance and retirement of debt totaling approximately $280,000. Excluding these charges, the loss would have been approximately, $255,000 (or $0.05 per fully diluted share).
• Improving financial performance, together with proceeds from the secondary public offering and modifications to loan covenants in the first quarter, have served to improve overall liquidity. Cash on hand and available borrowing capacity on the Company’s line of credit increased $1.5 million, to $3.8 million at March 31, 2010 from $2.3 million at December 31, 2009.

Chairman and CEO Edward J. Quilty commented, “The first quarter of 2010 was a very busy and productive quarter for Derma Sciences. We listed our stock on NASDAQ and completed our secondary public offering raising $4.5 million. We utilized these proceeds to finalize the Worldwide MEDIHONEY® License Agreement which will serve as the catalyst for the expansion of our international business, to pay off our long-term debt and for general working capital purposes, thereby improving our overall liquidity. The first quarter has historically been our toughest due to seasonality in our First Aid business and higher timing-related operating costs. That having been said, the 2010 top-line sales growth and lower net loss exceeded our expectations, especially when you consider the incremental severance and debt extinguishment expense.”

Mr. Quilty continued, “Looking ahead, we have a lot on our plate. We presently have 17 U.S. advanced wound care sales representatives on board and are well on our way to our objective of 20 representatives by the end of June, doubling the size of our selling organization in place at the end of 2009. Our XTRASORB and BIOGUARD line extensions are on schedule for launch this year, starting with XTRASORB Foam this month, and the filing of the 510K for our next MEDIHONEY® dressing is on track for third quarter 2010. We have hired a European-based Managing Director for Europe, Middle East, and Africa and have begun the process of expanding our international business using the worldwide rights to MEDIHONEY® as the platform. Our Operating team is responding to our growth initiatives and remains focused on our goal of building a cost effective global supply chain for our products. Enrollment in our Phase II trail for DSC127, our topical drug for wound healing with the first indication for diabetic foot ulcers, continues to progress and we expect to announce clinical data later this year.

Mr. Quilty concluded, “I am pleased with our progress to date. We have worked hard to create a number of exciting growth opportunities for Derma Sciences, and I am happy to report that we are seeing, and I am confident will continue to see, the rewards of successfully executing our plan.”

Conference Call and Webcast

Derma Sciences’ management team will hold a conference call on Thursday, May 13, 2010, at 11 AM Eastern Daylight Time (EDT).

To access the conference call, US-based listeners should dial 800-291-9234 and international listeners should dial 1-617-614-3923. All listeners should provide the following passcode: 10530567.

A webcast of the conference call will be broadcast simultaneously at http://phx.corporate-ir.net/playerlink.zhtml?c=107533&s=wm&e=3065007. Listeners should log in 15 minutes prior to the start of the call to test their browsers and register for the webcast.

Following the end of the conference call, a replay will be available through June 13, 2010, and can be accessed by dialing 888-286-8010 within the US or 617-801-6888 outside of the US. All listeners should provide the following passcode: 38923534. The webcast will also be available through June 13, 2010.

About Derma Sciences, Inc.

Derma Sciences is a global manufacturer and marketer of advanced wound care products. Its key product, MEDIHONEY®, is the leading brand of honey-based dressings for the management of wounds and burns. The product has been shown to be effective in a variety of indications, and was the focus of a positive large-scale randomized controlled trial on leg ulcers. Other key novel products introduced into the $14 billion global wound care market include XTRASORB for better management of wound exudate, and BIOGUARD for infection prevention. Derma also has in development DSC127, a novel pharmaceutical for accelerated wound healing and scar reduction. DSC127, an angiotensin analog, has shown positive healing results in multiple pre-clinical animal models. One possible mode of action of the drug is the up-regulation of mesenchymal stem cells at the wound site. Derma expects to announce the key efficacy endpoint result from this study by the end of 2010.

For more information about Derma Sciences, Inc., visit http://www.dermasciences.com.

Forward-Looking Statements

Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company’s actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company’s results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company’s actual results and forward-looking statements include but are not limited to, those discussed in the Company’s fillings with the Securities and Exchange Commission.