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Derma Sciences Reports First Quarter 2009 Results

PRINCETON, N.J., May 18 /PRNewswire-FirstCall/ -- Derma Sciences, Inc. (OTC Bulletin Board: DSCI), a provider of advanced wound care products, announced results today for the first quarter ended March 31, 2009. For the quarter, the Company reported net sales of $10.4 million versus $11.7 million in the first quarter 2008. The sales decrease of $1.3 million was principally attributable to foreign exchange associated with a significant weakening in the Canadian dollar and inventory rationalization on the part of several customers due to current economic conditions. The Company's advanced wound care line continued with its positive growth trend in the quarter, led by MEDIHONEY(R) which recorded sales of $500,000 versus $320,000 in the first quarter 2008. Gross profit margins increased to 32.1% from 26.8% in the first quarter 2008 due to a favorable sales mix towards higher margined products and improved manufacturing performance (mainly in connection with the discontinuation of domestic manufacturing in the fourth quarter 2008 of our First Aid Division).

Selling, general and administrative costs decreased 10.6% in response to cost savings initiatives implemented in the fourth quarter 2008. The overall effect of all these changes significantly reduced the Company's quarterly net loss to $0.8 million or $0.02 per share in 2009, from a net loss of $1.4 million or $0.04 per share in 2008.

CEO Ed Quilty commented, "We are continuing to drive our results toward profitability and positive cash flow. The positive trends we have achieved are obvious, as margins improved, expenses decreased, and higher-margined proprietary products grew more quickly than our core products. In times like these, cash is king, and valuable products like MEDIHONEY, BIOGUARD(TM), ALGICELL(TM) Ag, XTRASORB(TM), and MOBILITY1(TM) can be the keys to better margins. Although we will not see a full quarter's impact until the third quarter, the Company will see a boost in sales from our new character bandages that will sell over retail counters around the United States."

Quilty added, "We now have several multi-million dollar products on the market, and we will continue to nurture the ones we have in development. We are continuing to make progress in the recruitment stage of the Phase II study for DSC127, our novel pharmaceutical in development. All these advancements from a technology perspective, combined with consistent operational and financial improvements, point to strong growth prospects for our company's overall valuation."

Conference Call / Webcast

Today at 11:00am EDT (8:00am PDT), a conference call will be held to review the DSCI results; interested parties should call 800-299-8538 (domestic) or 617-786-2902 (international), with passcode 98098954 to access the call. You may also access this call via the Internet at:

For those who are unavailable to listen to the live broadcast, a replay will be available through June 18, 2009 and can be accessed by dialing 888-286-8010 (domestic), and 617-801-6888 (international). The passcode is 82270316.

About Derma Sciences

Derma Sciences is a global manufacturer and marketer of advanced wound care products. Its key product, MEDIHONEY(R), 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. The barrier technology was licensed from Quick-Med Technologies, Inc. in Q1 of 2007. Derma also has in development DSC127, a novel angiotensin analog for accelerated wound healing and scar reduction. DSC127 was licensed from the University of Southern California in Q4 of 2007. Patient enrollment for a Phase II study began in Q4 of 2008. Results from this study are expected to be submitted to the FDA in Q2 of 2010.

For more information about Derma Sciences, Inc., visit

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 filings with the Securities and Exchange Commission.


    Derma Sciences, Inc.
    Edward J. Quilty
    Chairman and CEO
    (609) 514-4744

    Allen & Caron Inc
    Rudy Barrio (US Investors)
    (212) 691-8087

    Brian Kennedy (Media)
    (212) 691-8087

                            - FINANCIAL TABLES FOLLOW -

                                DERMA SCIENCES, INC.
                       Consolidated Statements of Operations

                                                Three Months ended March 31
                                                   2009             2008
    Net Sales                                 $10,431,891      $11,724,822
    Cost of sales                               7,078,255        8,582,613
    Gross Profit                                3,353,636        3,142,209
    Operating expenses
       Selling, general and administrative      3,864,127        4,320,417
       Research and development                   130,346           48,108
           Total operating expenses             3,994,473        4,368,525
    Operating  loss                              (640,837)      (1,226,316)
    Other expense, net:
       Interest expense                           171,470          264,915
       Other (income) expense                      (1,536)           8,614
           Total other expense                    169,934          273,529
    Loss before benefit for income taxes         (810,771)      (1,499,845)
    Benefit for income taxes                      (52,691)         (90,057)
    Net Loss                                    $(758,080)     $(1,409,788)
    Loss per common share - basic and
     diluted                                       $(0.02)          $(0.04)
    Shares used in computing loss per common
     share - basic and diluted                 40,140,743       34,038,207

                             Consolidated Balance Sheets

                                               March 31       December 31
    ASSETS                                       2009             2008
    Current Assets
      Cash and cash equivalents                $288,605         $391,038
      Accounts receivable, net                2,818,283        3,892,523
      Inventories                            11,728,833       12,423,042
      Prepaid expenses and other
       current assets                           477,028          397,117
    Total current assets                     15,312,749       17,103,720
    Cash - restricted                         2,020,734        2,014,422
    Equipment and improvements, net           3,696,866        3,977,853
    Goodwill                                  7,119,726        7,119,726
    Other intangible assets, net              4,979,749        5,310,129
    Other assets, net                           643,765          681,472
    Total Assets                            $33,773,589      $36,207,322
    Current Liabilities
      Line of credit borrowings               3,534,113        3,446,605
      Current maturities of long-term debt    1,290,523        1,298,207
      Accounts payable                        2,625,477        3,614,764
      Accrued expenses and other
       current liabilities                    1,541,653        2,004,493
    Total current liabilities                 8,991,766       10,364,069
    Long-term debt                            3,741,670        4,065,036
    Other long-term liabilities                  42,038           44,848
    Deferred tax liability                      315,095          340,871
    Total Liabilities                        13,090,569       14,814,824
    Shareholders' Equity
    Convertible preferred stock, $.01 par
     value; 11,750,000 shares authorized;
     issued and outstanding: 2,280,407 shares
     (liquidation preference of $4,210,231
     at March  31, 2009)                         22,804           22,804
    Common stock, $.01 par value;
     150,000,000 authorized; issued
     and  outstanding:  40,140,743              401,407          401,407
    Additional paid-in capital               40,268,832       40,027,645
    Accumulated other comprehensive
     income - cumulative translation
     adjustments                                411,880          604,465
    Accumulated deficit                     (20,421,903)     (19,663,823)
    Total Shareholders' Equity               20,683,020       21,392,498
    Total Liabilities and Shareholders'
     Equity                                 $33,773,589      $36,207,322

SOURCE Derma Sciences, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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