Derma Sciences Begins Enrollment in DSC127 Phase 3 Trial

Derma Sciences, Inc. (the “Company”)

, 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.”