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Derma Sciences Reports Third Quarter 2009 Results

Tuesday, November 17, 2009 General News J E 4
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PRINCETON, N.J., Nov. 16 Derma Sciences, Inc. (OTC Bulletin Board: DSCI) a specialty medical device / pharmaceutical company focused on advanced wound care, reported financial and operating results today for the three months and nine months ended September 30, 2009.

Highlights for the three months ended September 30, 2009:

Edward Quilty, CEO, commented, "We are pleased to announce that we achieved profitability in the third quarter - the culmination of three straight quarters of steady improvement."

"Our sales team has done an outstanding job of boosting our Advanced Wound Care product revenues. Sales of MEDIHONEY(®) continue to grow at a rapid pace, and BIOGUARD(TM) sales have made a significant impact since the product was launched in June. Sales of XTRASORB(TM) and MedEfficiency Total Contact Cast systems also accelerated in the quarter."

"We generated significant cash flow during the third quarter, enabling us to substantially pay down our debt and increase our liquidity. It is important to note that our financial health has improved during a very challenging economic period. We are now well-positioned to take advantage of the opportunities that are beginning to emerge for us."

2009 Year-to-Date Results

Quilty continued, "The past two years were a transitional period for our company. For example, we made a substantial investment in our Advanced Wound Care business knowing there would be a temporary negative impact on earnings. Taking the long-term view, we knew that developing higher margin proprietary brands would drive the overall value of the company. As expected, it has taken us several quarters to ramp up, but as our performance indicates, our efforts are beginning to pay off."

"During the first nine months of 2009, we experienced a decline in First Aid product sales. We believe this decline is temporary, as First Aid product sales tend to correlate with the general economy. On the positive side, our First Aid product margins improved by 5.3% due to improvement in our manufacturing."

Quilty concluded, "Moving forward, our goal is to continue to grow our top line sales and to improve our financial performance."

Conference Call/Webcast

Derma Science's management team will hold a conference call on Monday, November 16, 2009 to discuss the results at 11:00 am EST. Interested parties should call (866) 788-0546 (domestic) or (857) 350-1684 (international), with passcode 81416481 to access the call. You may also access this call via the Internet at:

http://phx.corporate-ir.net/playerlink.zhtml?c=107533&s=wm&e=2539678

For those who are unavailable to listen to the live broadcast, a replay will be available through December 16, 2009 and can be accessed by dialing 888-286-8010 (domestic), and 617-801-6888 (international). The passcode is 43541503.

For more news and information on Derma Sciences, Inc., please visit www.IRGnews.com/coi/DSCI where you can find the CEO's video, a fact sheet on the company, investor presentations, and more.

About Derma Sciences

Derma Sciences is a specialty medical device / pharmaceutical company focusing on advanced wound care. Its key product, MEDIHONEY®, is sold throughout the world by Derma Sciences and Comvita New Zealand -- the licensor of the patented honey-based technology -- and 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 wounds and burns, and was the focus of a positive large-scale randomized controlled trial on leg ulcers. Derma's recently FDA cleared BIOGUARD(TM) Barrier Dressing is the Company's latest new product entrant into the $14 billion global wound care market. Derma also has in development DSC127; a novel angiotensin analog for accelerated wound healing and scar reduction. Patient enrollment for the Phase II diabetic foot ulcer study is expected to be completed in the first quarter of 2010, with clinical results being reported within the third quarter 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.

-- Net sales totaled $12,882,425 in the third quarter of 2009, an 11.4% increase compared to $11,563,341 in the second quarter of 2009, and a 0.4% increase compared to $12,832,574 in the third quarter of 2008. -- Net income of $139,603, or $0.00 per share (basic and diluted) was generated in the third quarter of 2009, compared to a net loss of $560,502, or $0.01 per share (basic and diluted), in the second quarter of 2009, and compared to a net loss of $701,619, or $0.02 per share (basic and diluted) in the third quarter of 2008. -- Cash flow from operations increased by $1,407,115 during the third quarter of 2009. These funds were used to pay down our line of credit balance by $945,792 and increase working capital. We had $1,725,641 available for borrowing as of September 30, 2009, compared to $495,766 available as of June 30, 2009. -- The DSC127 Phase II trial is over 50% enrolled and continues to be on track for the announcement of clinical results within the third quarter of 2010.

SOURCE Derma Sciences, Inc.
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