Derma Sciences Awarded $244,479 from U.S. Government under the Patient Protection and Affordable Care Act

Derma Sciences, Inc. (Nasdaq: DSCI), a medical device and pharmaceutical company focused on advanced wound care, today announced that it has been awarded a research and development grant of $244,479 from the U.S. government under HR: 3590 – Patient Protection and Affordable Care Act (the "Act”) in immediately available funds.

Under the Act, $1 billion was earmarked for qualifying therapeutic discovery projects that treat areas of unmet medical need or prevent, detect or treat chronic or acute diseases and conditions, and/or reduce the long-term growth of healthcare costs in the United States. In addition, allocation of the credit took into consideration which projects show the greatest potential to create and sustain high-quality, high-paying U.S. jobs and to advance U.S. competitiveness in life, biological and medical sciences. Derma Sciences submitted an application for DSC127, its novel pharmaceutical product currently completing Phase 2 trials in diabetic foot ulcer healing. Applicants were required to submit detailed information demonstrating that their research conformed to the parameters of the Act, along with a summary of qualifying expenditures that formed the basis for the award.

Derma Sciences Chairman and Chief Executive Officer Edward J. Quilty said, "Not only does this grant represent a non-dilutive source of financing, but we also are pleased that the U.S. government has recognized the potential for DSC127 to make a significant difference in patient care. We look forward to reporting top-line efficacy results of our Phase 2 trial in late December or early January, and to furthering the development of this drug either alone or with a partner.”

About DSC127

Skin represents one of the few human tissues with a high turnover rate. Upon injury the expression of receptors in injured skin is upregulated, and subsequently down regulates as the skin heals. In human skin, angiotensin II type 1 (AT1) and angiotensin II type 2 (AT2) receptors are found in the epidermis and in dermal vessel walls. DSC127, a novel angiotensin analog, has been shown to accelerate skin healing in a variety of animal models including wound repair after full-thickness excision in normal rats, in adriamycin or steroid-treated rats, in diabetic mice, after partial thickness thermal injuries in guinea pigs and after random flap injuries in rats. In studies with diabetic mice, DSC127 was shown to accelerate wound healing, with 60% of mice completely healed within 21 days, compared with 0% completely healed in control mice treated with REGRANEX® gel¹.

DSC127 upregulates a cassette of genes at the site of skin healing. These genes are involved in energy metabolism (glycolysis and electron transport), oxidative stress and production of cytoskeletal proteins, all of which could be involved in the growth of new skin during wound healing. This finding suggests that DSC127 produces different actions at the wound site during various stages of healing. DSC127 appears to stimulate production of dermal adult progenitor cells, including mesenchymal stem cells, following injury.

Acute and chronic administration of DSC127 in rodents and dogs failed to demonstrate any meaningful toxicity to major organ systems. No mutagenic effects of DSC127 were observed in standard test panels. Preclinical and human Phase 1 studies of DSC127 have demonstrated safety.

About Derma Sciences, Inc.

Derma Sciences is a medical technology company focused on three segments of the wound care marketplace, traditional dressings, advanced wound care dressings and pharmaceutical wound care products. Its MEDIHONEY® product is the leading brand of honey-based dressings for the management of wounds and burns. The product has been shown to be effective in a variety of indications, and was the focus of a positive large-scale, randomized controlled trial involving 108 patients with leg ulcers. Other novel products introduced into the $14 billion global wound care market include XTRASORB® for better management of wound exudates, and BIOGUARD® for infection prevention. As noted above, Derma Sciences expects to complete the efficacy portion of its Phase 2 clinical study with DSC127, a novel pharmaceutical for accelerated wound healing and scar reduction, by the end of 2010.

For more information please visit www.dermasciences.com.

Forward-Looking Statements

Statements contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release or that are otherwise made by or on behalf of the Company. 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, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include but are not limited to, those discussed in the Company's fillings with the U.S. Securities and Exchange Commission.

¹ Rodgers KE et al. Plast Reconst Surg 111:1195-1206, 2003