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Derma Sciences Reports Second Quarter 2009 Results

PRINCETON, N.J., Aug. 17 /PRNewswire-FirstCall/ -- Derma Sciences, Inc. (OTC Bulletin Board: DSCI), a provider of advanced wound care products, reports results today for the second quarter and six months ended June 30, 2009.

Highlights for second quarter and six months ended June 30, 2009:

  • Gross U.S. MEDIHONEY(R) sales increased $394,451, or 125%, to $664,766 in second quarter 2009, versus $295,315 in 2008. For the six months ended June 30, 2009, gross U.S. MEDIHONEY sales increased $555,042, or 94%, to $1,143.944 in 2009, from $588,902 in 2008.
  • BIOGUARD(TM), the Company's new novel anti-microbial advanced wound care product, was launched in June and recorded gross sales of $58,458 in just one month's time. This represents the strongest first-month sales for any of Derma's new products.
  • Combined gross sales of key new advanced wound care products in the U.S. for the six months ended June 30, 2009, were $2,141,065, versus $1,109,282 in 2008, representing an increase of $1,031,783 or 93%.
  • Gross profit margin percentage increased to 29.6% in second quarter 2009, from 27% in second quarter 2008. Gross profit margin for the six-month period increased to 30.8% in 2009, from 26.9% in 2008. The increase in gross profit margin percentage is principally attributable to the successful establishment of quality, cost-effective manufacturing for the First Aid Division, coupled with the growth of the higher margin advanced wound care business.
  • Selling, general and administrative expenses decreased $780,518, or 17.4%, in the second quarter 2009, versus the same period in 2008. Selling, general and administrative expenses for the six months decreased $1,236,807 million, or 14%, in 2009 versus 2008.
  • The Company's 2009 second quarter operating results improved by $709,986 as the net loss for the quarter was $560,502, or $0.01 per share, compared to a net loss of $1,270,488 million, or $0.03 per share, in 2008. Operating results for the first six months of 2009 improved by $1,361,695 million as the net loss was $1,318,581 million, or $0.03 per share, compared to a net loss of $2,680,276 million, or $0.07 per share, for the same period in 2008.
  • The Company's overall cash flow has improved significantly in the first half 2009 versus 2008. This turn around is principally attributable to the Company's positive cash flow from operating activities of $198,492 in 2009 versus a use of cash of $5,258,033 from operating activities in 2008.

For the three months ended June 30, 2009, the Company reported net sales of $11.6 million versus $13.1 million in the second quarter 2008. For the six months ended June 30, 2009, net sales were $22 million versus $24.8 million for the six months ended June 30, 2008. The decrease of $1.5 million in sales for the quarter and $2.8 million for the six months in 2009 versus 2008, was principally driven by lower sales from the First Aid Division, attributed to a weakening of the economy. In addition there was a decrease in Canadian net sales attributable to unfavorable exchange and inventory rationalization on the part of the Company's exclusive Canadian distributor.

Ed Quilty, Chief Executive Officer of Derma Sciences, commented, "A steady performance from our core business during the second quarter generated improvement in operating results and cash flow, allowing us to continue to focus on driving revenue for some of our newer products such as MEDIHONEY and BIOGUARD. As our results indicate, our Advanced Wound Care Line is gaining traction through the efforts of our sales team. The decrease in year over year sales is mostly related to our First Aid Division, which has experienced recession-related challenges. Though sales decreased, our gross margins on the First Aid Division products have improved, putting Derma in a favorable position to see strong growth from this division in the future."

Mr. Quilty continued, "We expect the positive Advanced Wound Care revenue growth to continue going forward, and we plan to expand our sales force to leverage this opportunity. Additionally, we will look for development and partnership opportunities in markets where the company does not currently have coverage. With regard to R&D, we continue to move forward with the clinical trial of DSC127, our novel pharmaceutical in development. DSC127 has the potential to be only the second approved drug on the market for accelerated healing. We are well on our way to completing enrollment in the Phase II trial and are very excited about the prospect of this product, which addresses a large unmet need. In summary, we are pleased with our progress this quarter and believe our new advanced wound care products will continue to gain momentum."

Conference Call/Webcast

Today at 11:00am EDT (8:00am PDT), a conference line will be held to review the DSCI results; interested parties should call 866-383-8108 (domestic) or 617-597-5343 (international), with passcode 38260746 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 September 17, 2009 and can be accessed by dialing 888-286-8010 (domestic), and 617-801-6888 (international). The passcode is 10578911.

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

About Derma Sciences, Inc.

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 fillings with the Securities and Exchange Commission.


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


    The Investor Relations Group
    Investor Relations:
    Rachel Olson
    Michael Crawford
    Media Relations:
    Susan Morgenbesser

- Financial Tables Follow -


                                                       Three Months Ended
                                                             June 30,
                                                       2009           2008
    Net Sales                                      $11,563,341    $13,083,966
    Cost of sales                                    8,135,574      9,552,991
    Gross Profit                                     3,427,767      3,530,975
    Operating Expenses
      Selling, general and administrative            3,703,038      4,483,556
      Research and development                          87,580        106,200
          Total operating expenses                   3,790,618      4,589,756
    Operating loss                                    (362,851)    (1,058,781)
    Other expense:
      Interest expense                                 239,600        232,572
      Other income                                     (42,252)       (29,092)
          Total other expense                          197,348        203,480
    Loss  before  provision for income taxes          (560,199)    (1,262,261)
    Provision for income taxes                             303          8,227
    Net Loss                                         $(560,502)   $(1,270,488)
    Loss per common share- basic and diluted            $(0.01)        $(0.03)
    Shares used in computing loss per
     common share - basic and diluted               40,234,974     40,073,710

                                                         Six Months Ended
                                                             June 30,
                                                       2009           2008
    Net Sales                                      $21,995,232    $24,808,788
    Cost of sales                                   15,213,830     18,135,606
    Gross Profit                                     6,781,402      6,673,182
    Operating Expenses
      Selling, general and administrative            7,567,164      8,803,971
      Research and development                         217,926        154,308
        Total operating expenses                     7,785,090      8,958,279
    Operating loss                                  (1,003,688)    (2,285,097)
      Other expense:
        Interest expense                               411,070        497,487
        Other income                                   (43,789)       (20,478)
          Total other expense                          367,281        477,009
    Loss before benefit for income taxes            (1,370,969)    (2,762,106)
    Benefit for income taxes                           (52,388)       (81,830)
    Net Loss                                       $(1,318,581)   $(2,680,276)
    Loss per common share - basic and diluted           $(0.03)       $ (0.07)
    Shares used in computing loss per
     common share - basic and diluted               40,188,119     37,055,958

                           CONSOLIDATED BALANCE SHEETS

    ASSETS                                            June 30,    December 31,
                                                        2009           2008
    Current Assets
      Cash and cash equivalents                       $167,040       $391,038
      Accounts receivable, net                       3,171,963      3,892,523
      Inventories                                   11,479,212     12,423,042
      Prepaid expenses and other current assets        359,117        397,117
    Total current assets                            15,177,332     17,103,720
    Cash - restricted                                2,025,722      2,014,422
    Equipment and improvements, net                  3,789,741      3,977,853
    Goodwill                                         7,119,726      7,119,726
    Other intangible assets, net                     4,651,249      5,310,129
    Other assets, net                                  611,308        681,472
    Total Assets                                   $33,375,078    $36,207,322
    Current Liabilities
      Line of credit borrowings                      3,781,381      3,446,605
      Current maturities of long-term debt           1,787,278      1,298,207
      Accounts payable                               2,596,861      3,614,764
      Accrued expenses and other
       current liabilities                           1,049,480      2,004,493
    Total current liabilities                        9,215,000     10,364,069
    Long-term debt                                   2,923,009      4,065,036
    Other long-term liabilities                         91,661         44,848
    Deferred tax liability                             333,300        340,871
    Total Liabilities                               12,562,970     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 June 30, 2009)         22,804         22,804
    Common stock, $.01 par value; 150,000,000
     authorized; issued and outstanding:
     40,315,743 at June 30, 2009; 40,140,743 at
     December 31, 2008                                 403,157        401,407
    Additional paid-in capital                      40,517,884     40,027,645
    Accumulated other comprehensive income -
     cumulative translation adjustments                850,667        604,465
    Accumulated deficit                            (20,982,404)   (19,663,823)
    Total Shareholders' Equity                      20,812,108     21,392,498
    Total Liabilities and Shareholders' Equity     $33,375,078    $36,207,322

SOURCE Derma Sciences, Inc.
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