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Derma Sciences Reports Third Quarter 2012 Financial Results

“Our 54-person domestic field sales organization is beginning to hit its stride and we are very pleased to report 17% sequential-quarter sales growth in advanced wound care products with the same number of sales reps in both periods. We continue to expect 30% to 40% advanced wound care sales growth in 2013, and as a result our operating business, excluding DSC127 development expenses, is expected to achieve positive cash flow. In addition, as a result of the increase in our higher-margined advanced wound care products, which now account for more than one-third of net sales, our gross margin increased by more than five percentage points to 35.2% in the third quarter versus the prior year.

“As promised, revenue from advanced wound care products other than TCC products grew 36% during the quarter and 30% year-to-date, in line with our expectations for organic growth. We are very pleased that following the integration of MedEfficiency, revenues for TCC products grew 14% in the current quarter over the second quarter. Our TCC products, along with the MEDIHONEY family of dressings, are anchoring our advanced wound care product portfolio. In fact, MEDIHONEY has performed so well, that we will make a $1.0 million milestone payment to Comvita on November 30 th, based on reaching $10.0 million in MEDIHONEY sales.”

Mr. Quilty continued, “Last month we held a positive and constructive meeting with the FDA to discuss our drug candidate DSC127 and we expect to submit a final protocol for Phase 3 development to the FDA by the end of the month. We remain on track to begin studies with DSC127 for the treatment of diabetic foot ulcers by the end of the year.”

Mr. Quilty added, “Our traditional wound care products performed as expected during the quarter, with growth driven by first-aid products, and contributed positive cash flow to support our advanced wound care efforts. While this business will fluctuate from quarter to quarter, we are on track to meet our annual sales growth objective of 2% to 4%.”

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