Derma Sciences, Inc. (Nasdaq: DSCI), a medical device and pharmaceutical company focused on advanced wound care, today announced that in the follow-up portion of its Phase 2 clinical trial in patients with diabetic foot ulcers, the percentage of patients treated with the therapeutic (0.03%) dose of DSC127 with complete healing at 24 weeks following trial enrollment was 73% in the intent-to-treat (ITT) population and 85% in the per-protocol population (PP), a difference of 27 and 33 percentage points, respectively, compared with patients treated with placebo/standard of care (placebo). DSC127 is a patented, topically applied novel angiotensin analog that targets receptors that are up-regulated upon injury to tissue.

Healing was defined as 100% epithelialized with no drainage. The Company previously announced that the 0.03% dose of DSC127 exceeded the trial’s goal of an improvement of 15 percentage points in complete healing of wounds at 12 weeks for both the ITT (21 percentage point increase) and PP (27 percentage point increase) populations, compared with placebo. With today’s announcement, the improvement at 24 weeks between patients treated with DSC127 0.03% and patients treated with placebo is even more pronounced. There were no drug-related adverse safety events during the entire 24-week study period.

The double-blind, placebo-controlled, multi-center Phase 2 clinical trial randomized 80 patients to receive one of two dose strengths of DSC127 (0.03% or 0.01%) or vehicle placebo control. After 14 days of best standard-of-care to evaluate ulcer healing and ensure the wounds were chronic, those patients randomized into the study received four weeks of active treatment followed by eight weeks of observation and assessment. Although the primary endpoint of the trial was healing at 12 weeks, patients continued to be followed for an additional 12 weeks to gain further information on the drug and its effects. Consistent with what was seen at week 12, the 0.01% dose of DSC127 continued to be comparable to placebo at week 24, and therefore non-therapeutic. The table below shows the percentage of patients healed at weeks 12 and 24, with the 0.03% dose of DSC127 and placebo.
                 
        Complete Healing at 12 weeks       Complete Healing at 24 weeks
        0.03%   Placebo   Difference       0.03%   Placebo   Difference
ITT       54%   33%   21 points       73%   46%   27 points
PP       65%   38%   27 points       85%   52%   33 points
                   

Based on an odds-ratio analysis, patients treated with DSC127 0.03% are 3.2 times more likely to heal by 24 weeks for the ITT group, and 5.2 times more likely for the PP group, compared with patients treated with placebo. The trial was not powered for statistical significance, however there was a statistically significant (p=0.0318) difference in healing for the PP population at 24 weeks.

The rate of healing as measured by median time to full closure was significantly faster in both ITT and PP groups compared with placebo, and reached statistical significance in the PP group (p=0.0471). Specifically, the median time to complete healing in the ITT population was 10.0 weeks for patients treated with DSC127 0.03% and 23.0 weeks for patients treated with placebo, and in the PP population was 8.5 weeks for patients treated with DSC127 0.03% and 22.0 weeks for patients treated with placebo.

In addition, wounds that did not completely heal by study end re-epithelialized more rapidly as measured by a reduction of wound area of 72 percentage points greater in both the DSC127 0.03% ITT and PP groups compared with placebo. At week 24, the mean reduction of area from baseline for both the ITT and PP populations was 95% for patients treated with DSC127 0.03% and 23% for patients treated with placebo.

Granulation as measured by reduction in ulcer depth showed an improvement of 46 percentage points in the ITT group and 49 percentage points in the PP group over placebo. At week 24, the mean percent reduction of depth from baseline in the ITT population was 83% for patients treated with DSC127 0.03% and 37% for patients treated with placebo, and in the PP population was 89% for patients treated with DSC127 0.03% and 40% for patients treated with placebo.

No wounds treated with 0.03% DSC127 had increased in size by the end of the 24-week study, whereas some wounds treated with placebo had increased in size by the end of the 24-week period.

David Armstrong, DPM, MD, PhD, Professor of Surgery and Director of the Southern Arizona Limb Salvage Alliance (SALSA) at the University of Arizona and the study's lead investigator, said, “The continuation of a widening gap between 0.03% DSC127 and placebo out to 24 weeks is both promising and intriguing. It potentially suggests a durable action by the drug that may last well beyond the initial four weeks of treatment. This type of response tracks well with the proposed method of action, interacting with receptors that are up-regulated at the time of injury, and helping to set those otherwise non-healing wounds on a trajectory towards healing. I would reiterate what I have said previously, that although further testing in a pivotal study is required, it seems that DSC127 has the potential to be an important therapy for the treatment of diabetic wounds.”

Derma Sciences Chairman and Chief Executive Officer Edward J. Quilty said, “We are delighted that 24-week data show that DSC127 0.03% continues to have a therapeutic effect, long after the patients stop using it. These results are even better than we had hoped for, and unequivocally support the continued development of this drug. The market potential of DSC127 is very large, and growing rapidly throughout the world. We are very excited about the potential of DSC127 for patients, healthcare practitioners and our shareholders.

“This summer, we will request an end-of-Phase 2 meeting with the U.S. Food and Drug Administration (FDA) to discuss our Phase 2 clinical trial results, our continued development plan to commercialization and our proposed protocol for the Phase 3 pivotal trials that we plan to begin in the first half of 2012. We are in discussions with several potential collaboration partners, but as previously announced, in order to maximize the value of DSC127, we plan to advance this drug to Phase 3 readiness, which includes the development of the Phase 3 clinical trial design and the completion of certain non-clinical activities. Should Phase 3 clinical studies show comparably robust results to our Phase 2 clinical trial and DSC127 be approved, this drug’s benefits to the medical community, and most importantly, the patients could be substantial,” Mr. Quilty concluded.

Slides summarizing the clinical data contained in this news release are available at dermasciences.com/dsc127slides.

About Diabetes and Diabetic Foot Ulcers

Diabetes is common, disabling and deadly. In the U.S., diabetes has reached epidemic proportions. According to the American Diabetes Association, about 24 million people (8% of the U.S. population) have diabetes, and nearly 2 million new cases are diagnosed in people age 20 and above each year. Up to 25% of people with diabetes will develop a diabetic foot ulcer, resulting in 3 million diabetic foot ulcers annually in the U.S. alone. A recent study by researchers at the University of Chicago suggests that treatment costs for diabetes in the U.S. will reach $336 billion by 2034. According to the World Health Organization, at least 220 million people worldwide have diabetes, a number that is expected to more than double by 2030, due mainly to obesity and aging.

About DSC127

DSC127, a novel angiotensin analog, has been shown to improve epithelialization, granulation and vascularization, accelerating wound healing in a variety of normal and diabetic animal models. This finding suggests that DSC127 produces different actions at the wound site during various stages of healing. There were no safety concerns observed in the preclinical, human Phase 1 and Phase 2 studies of DSC127.

Conference Call and Webcast

Derma Sciences management will hold a conference call to discuss this press release and answer questions at 11:00 a.m. Eastern time today. To access the conference call, from the U.S. please dial (888) 563-6275 and from outside the U.S. please dial (706) 634-7417. All listeners should provide the following passcode: 67127770. Individuals interested in listening to the live conference call via the Internet may do so by logging on to the IR portion of the Company’s website, www.dermasciences.com.

Following the end of the conference call, a telephone replay will be available through June 1, 2011, and can be accessed by dialing (800) 642-1687 from the U.S. or (706) 645-9291 from outside of the U.S. All listeners should provide the following passcode: 67127770. The webcast will be available for 30 days.

About Derma Sciences, Inc.

Derma Sciences is a medical technology company focused on three segments of the wound care marketplace, traditional dressings, advanced wound care dressings, and pharmaceutical wound care products. 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. 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. Derma Sciences has successfully completed a Phase 2 clinical trial in diabetic foot ulcer healing with DSC127, a novel pharmaceutical drug under development for accelerated wound healing and scar reduction. 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, 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 U.S. Securities and Exchange Commission.

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