Click here to subscribe
CORPORATE OVERVIEW
Derma Sciences is a specialty medical device/pharmaceutical company dedicated to manufacturing, marketing, and selling a broad base of wound care products. The company focuses on three primary areas:
  1. Advanced Wound Care - Several newly-launched proprietary dressings along with a full line of products for chronic wounds and burns. Approximately 17% of current total revenue, expecting to grow to 28% of total revenue in 2010. This is our high-growth, high-margins area of concentration.
  2. Basic Wound Care - Includes both branded and private-label/OEM bandages, gauze-based dressings, wound closure strips, and first aid products. This is Derma's core business. Currently generating over 80% of current total revenue.
  3. Drug Development - Drug candidate DSC127 is in a Phase II study on Diabetic Foot Ulcer healing. Enrollment is expected to be completed within Q3 2010, with initial key efficacy results to be reported towards the end of Q4 2010.
Derma Sciences' products are marketed to wound care centers, long-term care facilities, hospitals, physicians' offices, clinics, home health care agencies and other health care institutions, as well as pharmacies on the retail side of the business.

INVESTMENT HIGHLIGHTS
  • Robust product licensing and development history
    • 5 novel, advanced wound care products successfully launched in the past 3 years, generating $6 million in sales in 2009 and expected to grow to $15M in sales in 2010
  • Powerful growth engine: Advanced Wound Care
    • Advanced Wound Care sales force in US will double in 2010 (from 10 to 20)
    • Global market for Advanced Wound Care products totals almost $5 billion and is growing approximately 10% annually
  • DSC127 has blockbuster potential
    • Total market for accelerated healing and scar reduction drug estimated at $30 billion
    • Phase II trial results expected in 4Q10.
  • Recently acquired perpetual, global rights to key brand, MEDIHONEY
    • Acquisition is a catalyst for company's international expansion
  • Strong cash flow core business with good growth potential
    • Positive cash flow will fund growth initiatives
  • DSCI stock is undervalued
    • Current market cap is substantially less than 2009 sales
KEY PRODUCT UNDER DEVELOPMENT 

DSDSC127 (angiotensin analog)
Novel angiotensin analog for use in wound healing and scar reduction. Successfully completed a phase I trial in 4Q07, and presently undergoing phase II trials to assess safety and efficacy of DSC127 on healing diabetic ulcers. Results from the phase II trials are expected in 4Q10.
  • "Blockbuster" potential - with applications in the following markets:
    • $10 billion chronic wound market
    • $8 billion scar prevention/reduction market
    • $6 billion burn market
    • $6 billion radiation and other wound markets
  • Limited competition - Systagenix's Regranex is the only FDA-approved drug for wound healing. (Systegenix is formerly Johnson & Johnson's Chronic Wound Care division.) 
    • Regranex has a black box warning and has achieved sales exceeding $100M per year
KEY PRODUCTS

MEDIHONEY (wound and burn dressings)
Novel, patented dressings comprised of a high percentage of active Leptospermum honey. This unique type of honey has been shown to result in durable antimicrobial, anti-inflammatory and immunomodulatory activities. Effective against virulent bacteria such as methicillin resistant staphylococcus aureus (MRSA) while also promoting cellular regeneration of tissue. MEDIHONEY dressings are ideal for the management of chronic and hard-to-heal wounds -- including ulcers, burns and post-operative wounds. The dressings are non-toxic and have been shown in a large scale randomized controlled study to promote healing.
  • Leading global brand - $4 million business (grew 80% in 2009 vs 2008)
  • Best-in-class product - with first mover advantage and strong IP / patents
  • DSCI's deepest product offering & pipeline - 4 products with several line extensions in the pipeline
  • Sourcing advantages - Worldwide licensing rights obtained from Comvita (New Zealand-based company that controls 75% of worldwide Leptospermum honey production)
XTRASORB™ (super absorbent polymer-based dressings)
Novel, proprietary dressing that utilizes a super absorbent polymer. While other absorbing dressings currently on the market use open cell structures to capture fluid, XTRASORB dressings convert fluid within the dressing into a gel, thus locking the exudates into the dressing. XTRASORB dressings have a distinct advantage over competitive dressings in that they absorb more fluid and hold the fluid away from the wound thus avoiding further deterioration of the wound.
  • Competitive edge - more absorbent than any dressing currently on the market, reducing nursing time and costs associated with dressing changes
  • Binding fluid - keeping fluid away from the wound reduces the risk of wound deterioration
  • Product line extension slated for 3Q10 - foam version (to compete in the largest category of moist wound dressings) with line extensions continuing into 2011
BIOGUARD™ (barrier dressings)
Novel, patented barrier dressings that contain an active antimicrobial compound. Dressings have been shown to kill > 99.999% of virulent bacteria such as methicillin resistant staphylococcus aureus (MRSA). Complete line-up of traditional wound care dressings.
  • Strong IP - Protected by nine U.S. patents and patents pending and 24 foreign counterparts
  • Exclusive license - 5-year license initially granted by QuickMed Technologies in 2007 with 3-year extension granted in February 2010
  • Exclusive distribution agreement with Medline Industries - Medline is 2nd largest provider of traditional wound care products to U.S. acute care facilities (with over 800 sales reps)