Derma Sciences Inc (NASDAQ:DSCI)

CAPS Rating: 1 out of 5

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Player Avatar zzlangerhans (99.73) Submitted: 11/3/2012 12:48:18 AM : Underperform Start Price: $11.54 DSCI Score: +9.45

Perhaps it's unfair, but I'm biased against Derma because I despise small cap wound care companies in general. The niche seems to attract the worst of biopharma, from Oculus to Novabay, and I haven't seen anything that distinguished Derma except a somewhat larger revenue base. They still lose money every quarter, there's no upward trend in revenues, and they seem to drag out their pipeline development endlessly. The company is now saying they will "begin their phase III program" for DSC127 for diabetic foot ulcers in 12/12. Aside from being at least six months behind schedule, that type of semantics is code for "we'll actually start enrolling patients when we damn well feel like it".

When it finally really does begin, the phase III trial will compare DSC127 with placebo, and there's a good chance of showing stat sig benefit. That won't necessarily translate into commercial viability, however, as there are already many wound treatments for diabetic foot ulcers that do better than placebo. The company just diluted to buy MedEfficiency, but the 1.5M in revenues from that source didn't do much for their bottom line this quarter. I expect significantly more dilution to take place before we see any phase III results for DSC127.

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