Derma Sciences to raise $29M through private placement

Jun 20 2011

Derma Sciences, Inc. ("Derma Sciences" or "the Company") (Nasdaq: DSCI), a medical device and pharmaceutical company focused on advanced wound care, today announced it has entered into definitive agreements with select institutional investors to raise gross proceeds of approximately $29 million. In the offering, the Company will issue approximately 3.5 million shares of common stock and five-year warrants to purchase approximately 1.75 million shares of common stock at an exercise price of $9.90 per share. Net proceeds from this financing will be used to advance the Company's pharmaceutical product DSC127 into Phase 3 trials for the treatment of diabetic foot ulcers, to hire additional salespeople for the Company's advanced wound care products, to repay debt and for general corporate purposes. The private placement is subject to standard and customary closing conditions and is expected to close on or about June 23, 2011.

"A number of well-respected institutions have invested in Derma Sciences now and we view this as validation of our development strategy of the past five years. We plan to use these funds to work with the FDA to advance our drug DSC127 into a Phase 3 trial we plan to commence during the first half of 2012," said Edward J. Quilty, chairman and chief executive officer of Derma Sciences. "DSC127 has shown great potential in the complete healing of diabetic foot ulcers in our recently reported Phase 2 trial, with healing rates exceeding any currently approved products and above the endpoints of the trial design. We estimate that the annual sales for a product such as DSC127 could be as much as $900 million worldwide. If approved, we believe this drug will fill an important unmet clinical need for the nearly 3 million diabetics with these ulcers globally, who without good treatment results could face consequences including amputation and death. Our Advanced Wound Care proprietary dressing business including our MEDIHONEY®, BIOGUARD® and XTRASORB® brands has been growing in excess of 50% each year with a relatively small sales force of 20 people. We will add up to 20 new sales representatives during the balance of 2011 and into 2012 in order to increase our market penetration and improve the value of these products."

Oppenheimer & Co. Inc. and Canaccord Genuity Inc. served as lead placement agents for the offering. Roth Capital Partners and Rodman & Renshaw served as advisors to the Company.

SOURCE Derma Sciences, Inc.