Derma Science Target Price $ 20

 

DSCI : NASDAQ : US$12.20
BUY 
Target: US$20.00

COMPANY DESCRIPTION:
Derma Sciences is a specialty medical device/pharmaceutical
company with a specific focus on wound and skin care. Derma
Sciences has a complete portfolio of innovative wound and skin
care products. Additionally, DSCI has licensed and clinically
advanced a differentiated, novel pharmacological agent, DSC127.
DSC127 has shown very promising results in a Phase II trial and
entered pivotal Phase III trials in 2013.

Life Sciences — Biomedical Devices and Services
Q4/13 PRELIMINARY REVENUES LIGHT; NEW TISSUE PRODUCT
BROADENS PORTFOLIO; MAINTAIN BUY, PT TO $20
Investment recommendation
We maintain our BUY rating. Derma Sciences had three material pieces
of news this week, one of which was positive. First, preliminary Q4/13
numbers came in softer than expected. Secondly, while DSC127 trials
continue to enroll, management now pegs completion of enrollment in
1H/15 vs 2H/14. On a positive note, Derma Sciences signed a licensing
agreement which filled out the companies’ product offering. The
addition of the AmnioMatrix tissue product not only expands the AWC
product portfolio but also positions the company into one of the fastestgrowing
unit segments of wound care.
Investment highlights
 Expanded product offering into the fast-growing skin substitutes
market with license of an amniotic tissue graft for wound repair.
 Full year 2013 preliminary revenues of $79.7M were below CG and
Street estimates of $82.1M, and $82.5M, respectively, with both
AWC and traditional wound care coming in below our expectations.
 Pivotal trial enrolment for DSC127 is now expected to complete in
the H1/15, from YE/14 previously, with new OUS sites expected to
come on-line in the H1/14.
Valuation
We are adjusting our price target to $20.00 from $19.00.

 

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