Derma Sciences (DSCI)

Business description

Derma Sciences is a specialty medical device/pharmaceutical company. It focuses on developing and commercialising traditional and novel advanced wound care products, including MEDIHONEY and TCC-EZ.

Share price chart

Share chart

Stock data

Market cap.US$226m
Last closeUS$8.95
High / Low (52 weeks)US$15.2 / US$8.0
Stock market listingUS
Forecast net cash (US$m)72.9
Forecast gearing ratio (%)N/A
TeamHealthcare
SectorPharmaceutical & Healthcare

Price performance

%1m3m12m
Actual6.3(11.1)(24.5)
Relative *8.0(9.5)(32.4)

* % Relative to local index

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Y/E Dec Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (c) P/E (x) P/CF (x)
2012A 72.5 (8.9) (12.2) (78.4) N/A N/A
2013A 79.7 (14.9) (21.0) (123.8) N/A N/A
2014E 86.5 (29.6) (36.3) (141.0) N/A N/A
2015E 95.3 (27.3) (35.0) (132.0) N/A N/A

Last updated on 19/09/2014

Investment summary

Derma Sciences offers a compelling risk/reward profile with the DSC127 trial and the AWC franchise advancing well in a vastly underserved market. The $80m fund-raising in January affords the company higher R&D and sales force spending, which we expect to propel strong sales growth, but to deepen operating losses in 2014-15. It expects its Phase III trials of DSC127 for diabetic foot ulcers to be fully enrolled in 2015 with top-line data available in Q116. In Q214, sales rose by 15% to $21m, despite challenging reimbursement and competition for its core TCC-EZ and MEDIHONEY products, respectively. We envisage that both these headwinds will ease and growth in the AWC business will reaccelerate to 20%. We believe the current share price attributes no probability to DSC127 successfully reaching the market. We value the stock at $13.8, based on DCF.

Last updated on 30/09/2014

Industry outlook

Derma Sciences operates in three segments of the wound care market: traditional (TWC), advanced (AWC) and pharmaceutical wound care (PWC). The slow-growing but cash-positive TWC unit provides the company with investment capital for the fast-growing AWC unit, which has seen a five-year CAGR of 53% and is expected to grow 20% in the next few years.

Last updated on 30/09/2014

Key management

Edward Quilty , CEO
John Yetter , CFO

Company address

214 Carnegie Center
Suite 300
Princeton
NJ 08540
United States
+1 800-445-7627
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