Derma Sciences, Inc. (DSCI)

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Derma Sciences, Inc. (DSCI)

Q1 2014 Earnings Conference Call

May 8, 2014 11:00 ET


Kim Golodetz - Senior Vice President, Principal, LHA, Inc.

Ed Quilty - Chairman, President, CEO

John Yetter - CFO, EVP, Finance

Barry Wolfenson - Group President, Advanced Wound Care and Pharmaceutical Development


Scott Henry - ROTH Capital

Kyle Stanley - Canaccord Genuity

Traver Davis - Piper Jaffray

Joe Munda - Sidoti & Company



Welcome to the Derma Sciences' First Quarter Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Kim Golodetz. Please go ahead, ma'am.

Kim Golodetz

Thank you. This is Kim Golodetz with LHA. Thank you all for participating in today's call.

Joining me from Derma Sciences are Ed Quilty, Chairman and Chief Executive Officer and John Yetter, Executive Vice President of Finance and Chief Financial Officer. Joining us for the Q&A portion of the call, we also will have Barry Wolfenson, the company's Group President of Advanced Wound Care and Pharmaceutical Development, Fred Eigner, Executive Vice President for Operations and General Manager of Derma Sciences Canada and Bob Cole, President of Traditional Wound Care and Corporate Accounts.

Earlier today, Derma Sciences announced financial results for the 2014 first quarter. If you have not received this news release or if you would like to be added to the company's distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Curran.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Derma Sciences. I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation, the company's Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Factors that may affect the company's results include, but are not limited to product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade legal, social and economic risks. Also, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live call, today, May 8, 2014. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that, I would like to turn the call over to Ed Quilty. Ed?

Ed Quilty

Thank you, Kim. And my thanks to each of you for joining us here this morning.

It's been less than two months since our last conference call and I'm pleased to report that we continue to make excellent progress toward our goal leadership and advanced wound care with the focus of the treatment of chronic wounds in particular diabetic foot ulcers. We are delighted also to be informing our full year financial guidance today as well as our guidance regarding the DSC127 Phase 3 timetable and program cost.

During the quarter, we introduced AMNIOEXCEL to the marketplace, a full quarter ahead of plan. Just a first of two important placental-derived wound care products that we licensed from BioD in January.

Skin substitute had a key presence at our booth at the Spring Symposium on Advanced Wound Care or SAWC held in Orlando a few weeks ago. Also at SAWC, MEDIHONEY and TCC were the subjects of numerous presentations on independent and sponsored studies.

Later in this call, I will give you more color on the symposium and the reception Derma Sciences received from the key opinion leaders and practitioners.

As you know, we are expanding our sales organization and during the quarter, we added 24 terrific people to our global sales and marketing operations. We initiated a direct to patient program to further drive enrollment in DSC127 Phase 3 studies for diabetic foot ulcer healing. And this program is performing as planned. With considerable enthusiasm for DSC127 both among those conducting the trials and otherwise. Need awareness of this drug in our pivotal trials, it is growing by the day. I'm pleased that we are making steady progress and our comfortable we will reach the halfway market enrollment in our studies by the end of this year.

Before I turn the call over to John Yetter, I wanted to provide a quick comment on our financial results for the quarter.

Mentioned during our last conference call, the first quarter was impacted by severe winter weather, which caused declines in patient visits to wound clinics of 15% to 20% by some estimate. The same time, we were realigning our sales territories and integrating many new sales representatives and related professionals. So there was some temporary moderating effect on sales. However, its important to note that growth in sales of the AWC products has begun to show strength in recent weeks, our organization is performing well and we expect to meet our sales goals for the year.

Now, I will turn the call over to John, who will go through the financial results in more detail and then I will come back and give you more color on the quarter and coming months. John?

John Yetter

Thank you, Ed, and good morning for our listeners.

I want to point out we filed our 10-Q last night and that document contains more details on our quarter. I will limit my discussion this morning to key financial highlights and should anyone want to drill down further I will be happy to answer additional questions during the Q&A portion of the call.

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