Trump says Iranian "president" has asked U.S. for ceasefire
Investment summary: DSC127 starts Phase III
Enrolment for Derma Sciences' (DSCID) lead candidate DSC127 has just started for the first of two Phase III studies in non-healing diabetic foot ulcers (DFUs), a $900m market. While long term investment returns will be tied heavily to Phase III results, the robust Phase II separation versus vehicle adds confidence, and Derma Sciences’ growing wound care products business also provides downside protection.
Phase III programme expected to last two years
DSC127 is a naturally occuring analogue; preclinical models suggest it accelerates dermal tissue repair. The announced c 422 patient Phase III study will compare a four week dosage of DSC127 0.03% with a placebo, with DFU heal rate set at 10 weeks. A second Phase III study c 633 patient (adding a hydrogel dressing arm) should start in March; data from both trials is expected in early 2015.
DSC127 shows attractive separation vs vehicle in earlier trials
In a randomised Phase II trial (Q211 data release), 54% of wounds treated with DSC127 0.03% were healed at 12 weeks, compared with 33% in the vehicle control group (21% gap); the difference widened to 27% at 24 weeks. This improvement over placebo compares favourably with that seen with other approved DFU products in similar studies (Regranex, Dermagraft, Apligraf). This level of efficacy bodes well for the Phase III studies.
Operating business expected to be EBITDA positive in 2013
Derma has guided that its operating business, consisting of legacy traditional wound care products (low-single digit growth), and proprietary advanced wound care (AWC) products (c 40% of 2013 sales; >30% pa growth forecast by management), will be cash flow and EBITDA positive across both lines starting H213, as it seeks to leverage its now fully-staffed (c 54) US sales team. AWC products include MEDIHONEY, TCC-EZ, XTRASORB, and BIOGUARD lines.
Valuation: EV of c $151m; fully funded to Phase III data
Derma should have sufficient capital to complete DSC127 R&D (total cost of US$35-45m, of which c US$8m had been spent as of YE12). Its Q312 cash position was $15.6m, and it subsequently raised $33.8m (net) equity in December 2012. The investment case is highly tied to the Phase III data results (no interim data expected), but meanwhile, potential catalysts are the out-licensing of ex-US rights to DSC127, or advances in other indications, such as scar reduction with DSC127.
To Read the Entire Report Please Click on the pdf File Below.
Enrolment for Derma Sciences' (DSCID) lead candidate DSC127 has just started for the first of two Phase III studies in non-healing diabetic foot ulcers (DFUs), a $900m market. While long term investment returns will be tied heavily to Phase III results, the robust Phase II separation versus vehicle adds confidence, and Derma Sciences’ growing wound care products business also provides downside protection.
Phase III programme expected to last two years
DSC127 is a naturally occuring analogue; preclinical models suggest it accelerates dermal tissue repair. The announced c 422 patient Phase III study will compare a four week dosage of DSC127 0.03% with a placebo, with DFU heal rate set at 10 weeks. A second Phase III study c 633 patient (adding a hydrogel dressing arm) should start in March; data from both trials is expected in early 2015.
DSC127 shows attractive separation vs vehicle in earlier trials
In a randomised Phase II trial (Q211 data release), 54% of wounds treated with DSC127 0.03% were healed at 12 weeks, compared with 33% in the vehicle control group (21% gap); the difference widened to 27% at 24 weeks. This improvement over placebo compares favourably with that seen with other approved DFU products in similar studies (Regranex, Dermagraft, Apligraf). This level of efficacy bodes well for the Phase III studies.
Operating business expected to be EBITDA positive in 2013
Derma has guided that its operating business, consisting of legacy traditional wound care products (low-single digit growth), and proprietary advanced wound care (AWC) products (c 40% of 2013 sales; >30% pa growth forecast by management), will be cash flow and EBITDA positive across both lines starting H213, as it seeks to leverage its now fully-staffed (c 54) US sales team. AWC products include MEDIHONEY, TCC-EZ, XTRASORB, and BIOGUARD lines.
Valuation: EV of c $151m; fully funded to Phase III data
Derma should have sufficient capital to complete DSC127 R&D (total cost of US$35-45m, of which c US$8m had been spent as of YE12). Its Q312 cash position was $15.6m, and it subsequently raised $33.8m (net) equity in December 2012. The investment case is highly tied to the Phase III data results (no interim data expected), but meanwhile, potential catalysts are the out-licensing of ex-US rights to DSC127, or advances in other indications, such as scar reduction with DSC127.
To Read the Entire Report Please Click on the pdf File Below.