Company expects both pivotal studies to be enrolling patients by end of March 2013

PRINCETON, N.J.--(BUSINESS WIRE)--Feb. 6, 2013-- Derma Sciences, Inc. (the “Company”) (Nasdaq: DSCI), a medical device and pharmaceutical company focused on advanced wound care, announces that enrollment of patients has commenced in the first of two Phase 3 clinical trials with the Company’s investigational topical drug candidate DSC127. The two pivotal trials are expected to enroll a total of 1,055 patients, and are designed to assess the safety and efficacy of DSC127 in chronic, non-healing diabetic foot ulcers and to support the filing of a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA).

Both trials will evaluate a 0.03% formulation of DSC127 against a topical vehicle, while one will include an additional arm of patients treated with a standard of care hydrogel. This second trial is expected to begin enrolling patients by the end of March 2013. In addition, approximately 200 patients will be enrolled in a chronic use safety study.

“Non-healing foot ulcers are a tragic outcome of the rapidly growing diabetes epidemic and are an enormous burden on the healthcare system in the U.S. and around the world. Sadly, diabetic foot ulcers result in amputation or even death for far too many people,” said Peter P. Balingit, M.D., FACP, chief of the division of hospital medicine at Olive View-UCLA Medical Center in Los Angeles and a principal investigator of the DSC127 Phase 3 trials. “The simple truth is that the Western sedentary lifestyle and aging population are expected to result in continued rapid growth in this patient population, with 15% of a growing number of diabetics expected to develop a foot ulcer at some point. We are excited to begin pivotal studies with DSC127, and note that given the excellent results of the Phase 2 trial and the size of this underserved market, interest in enrolling patients is quite high.”

Recent laboratory studies indicate that DSC127 may facilitate recruitment of stem cells to the site of tissue injury. It is theorized that this action may help to re-set the trajectory of healing. In the Phase 2 study, 54% of wounds treated with DSC127 0.03% were healed at 12 weeks, compared with 33% in the vehicle control group. The difference between the two groups continued to expand out to 24 weeks, the last time wounds were assessed, with 65% in the arm treated with DSC127 0.03% healed compared with 38% in the vehicle control group.

“In commencing our Phase 3 trials we draw closer to potentially providing a safe and efficacious, much-needed pharmaceutical option for diabetics with non-healing ulcers,” said Edward J. Quilty, chief executive officer of Derma Sciences. “Our hope is that when we report Phase 3 trial results in early 2015, they will validate the excellent results achieved in our Phase 2 trial. This would represent another meaningful milestone for our first-in-class drug candidate. Our estimate is that DSC127, if approved for commercial distribution, could achieve up to $900 million in peak global sales.”

“In the meantime,” Mr. Quilty added, “we continue to execute on our vision to provide a full armamentarium of treatments to address diabetic foot ulcers and other chronic and hard-to-heal wounds, from dressings to casting systems, marketed by a specialized sales force in the U.S. and select countries, and globally by a network of quality distribution partners. We maintain our guidance for at least 30% annual sales growth in 2013 for this part of our business, which is consistent with our estimate for organic sales growth in 2012.”

About the DSC127 Phase 3 Clinical Trials

Derma Sciences expects to enroll 211 patients into each of the five arms of the Phase 3 program, which ultimately will include a total of more than 90 sites in the U.S. and Canada. The first trial will evaluate DSC127 0.03% against a topical vehicle, similar to the design of the Company’s completed Phase 2 trial. The second trial will evaluate DSC127 0.03% against a topical vehicle and against a standard of care hydrogel dressing. In both trials patients will receive 14 days of standard of care, including debridement, cleansing, hydrogel dressing and an off-loading device. At the conclusion of this run-in period, patients with wounds that have not healed by more than 30% will then be randomized into one of five arms in a blinded trial design.

Patients will receive drug, vehicle or placebo hydrogel once daily for four weeks, and will receive standard of care for up to six additional weeks. The primary endpoint of the Phase 3 trials is the proportion of ulcers healed at 10 weeks, which is defined as 100% epithelialized with no drainage, with a confirmation of healing two weeks after the first instance of complete closure. Secondary endpoints include rate of healing and safety.

In addition, a chronic use safety study of up to 200 patients will be conducted, and will include patients randomized into the pivotal trials as well as those enrolled but not randomized. This study will assess the safety of DSC127 dosed for a longer duration than in the pivotal studies, up to 12 weeks. Additionally, safety after repeat applications will be assessed on those patients whose ulcers either recur or who develop additional diabetic foot ulcers after their initial treatment has concluded.

Further information may be found at www.clinicaltrials.gov.

About DSC127

DSC127 is a novel angiotensin analog formulated as a topical gel discovered by researchers at the University of Southern California and licensed to Derma Sciences for all dermal-related indications. It has been shown to improve epithelialization, granulation and vascularization, and to accelerate wound healing in a variety of normal and diabetic animal models. These findings suggest that DSC127 produces different actions at the wound site during various stages of healing. There were no safety concerns observed in any of the preclinical, and human Phase 1 and Phase 2 studies of DSC127. In a randomized, vehicle-controlled Phase 2 trial, 54% of wounds treated with DSC127 0.03% were healed at 12 weeks, compared with 33% in the vehicle control group. DSC127 is covered by a number of issued U.S. patents, with expiration dates through 2032.

About Diabetic Foot Ulcers

According to the 2011 National Diabetes Fact Sheet, an estimated 25.8 million Americans – or approximately 10% of the population – are living with diabetes and nearly 1.6 million new cases of diabetes are diagnosed in people age 20 and older each year. The number of Americans with diabetes could triple by 2050, according to the Centers for Disease Control and Prevention. One in 10 U.S. adults has the disease now, which could increase to one in three in the next 40 years.

According to the National Institutes of Health, an estimated 15% of people with diabetes develop a foot ulcer at some point. In 2009 about 68,000 non-traumatic lower-limb amputations were performed in people with diabetes in the U.S. According to the American Diabetes Association, in 2007 (latest available data) the treatment of diabetes and its complications in the U.S. generated at least $116 billion in direct costs, with at least one third associated with the treatment of foot ulcers.

About Derma Sciences, Inc.

Derma Sciences is a medical technology company focused on three segments of the wound care marketplace: pharmaceutical wound care products, advanced wound care dressings to address chronic wounds, including diabetic ulcers and traditional dressings. The Company has begun Phase 3 clinical trials in diabetic foot ulcer healing with DSC127, based on excellent Phase 2 data. Its MEDIHONEY® product 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 involving 108 subjects with leg ulcers. TCC-EZ™ is its gold-standard total contact casting system for diabetic foot ulcers. Other novel products introduced into the $14 billion global wound care market include XTRASORB® for better management of wound exudate, and BIOGUARD® for infection prevention.

For more information please visit www.dermasciences.com.

Forward-Looking Statements

Statements contained in this news 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 that may be made in this news release or that are otherwise made by or on behalf of the Company. Factors that may affect the Company's results include, but are not limited to, uncertainty in clinical trial results, 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 SEC.

Source: Derma Sciences, Inc.

Derma Sciences, Inc.
Barry Wolfenson, 609-514-4744
Group President, Advanced Wound Care and Pharmaceutical Development
bwolfenson@dermasciences.com
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LHA
Investors and Media
Kim Sutton Golodetz, 212-838-3777
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