When Ed Quilty, right, joined Princeton Derma Sciences in 1996, it had one product (Dermagran) and hadn’t grown far beyond its roots. The company was founded in 1984 in Old Forge, Pennsylvania, by a nurse, Mary Clark, to market the ointment she invented using zinc and magnesium. Quilty wanted the company to be something more, so he moved the headquarters to Carnegie Center to be in the heart of the pharmaceutical industry.
Quilty began a campaign of buying niche companies in an attempt to create a wound care empire. But in a case of bad timing, Derma was expanding its wound care business right when that business was about to go off the rails.
After the September 11 terrorist attacks, the biotech industry in general, and especially small wound care-related businesses, took a plunge along with the rest of the economy, nearly taking Derma along with it. “There were a lot of moments when I thought we might not make it,” Quilty recalls. “I never told anybody that.” Quilty used his personal American Express card to fund business trips. But somehow, Quilty and his management team figured out a way to make it.
Although Derma is still small by biotech standards, it’s safe to say that Quilty’s plan to grow the business has worked. Today Derma makes more than 2,000 wound care products of all kinds. It has three divisions: one for standard wound care products like band-aids and gauze; another for advanced wound care products such as its Medihoney line that are made from a special kind of honey known for its antibacterial effects; and another for pharmaceutical research.
The company sells a billion band-aids a year under generic store brands. It is developing a product, currently named DSC127 that would be the first FDA-approved drug treating diabetic foot ulcers. Although still losing money, as R&D companies do, Princeton Derma anticipates taking in $92 million next year, and in late January raised $86 million in a stock offering on NASDAQ.
Business has been good in the standard and advanced wound care arenas. Every month 15 cargo containers arrive, full of dressings and bandages produced in the company’s Chinese factory. A factory in Canada produces the company’s “advanced” products. The other two wings of the business are supporting a very large bet on the future of DSC127, a technology that Derma licensed from the University of Southern California in 2007. The drug is currently undergoing phase 3 clinical trials in the United States and South Africa. The trial is taking place over 90 hospitals on 1,055 patients and is costing the company $55 million.
However, if the product proves to be effective, it will position Derma as the first entrant into what Quilty believes is a $500 million market in the treatment of diabetic foot ulcers.
Foot ulcers are one of the nastier effects of diabetes. About 15 percent of diabetics develop them and of those, almost a quarter eventually have to have their feet amputated, according to the American Podiatric Medical Association. Currently, doctors treat them with dressings and skin substitutes, but there is no medication specifically designed to treat these ulcers.
Derma’s technology is designed to do just that. The company says the drug has shown promise in animal studies, promoting healing and reducing scarring in all kinds of wounds. A small study of 77 human subjects showed that applying the drug helped patients’ ulcers heal in about a third the time of those receiving standard care.
Quilty grew up in Nanuet, New York, where his father, a decorated World War II veteran, was a professor of business. Quilty says his father, who died last year, always encouraged him to go into business. “My dad was a great influence in all our lives,” He says. “His children all have college degrees, and six of eight of them have master’s degrees.”
Quilty earned a bachelor of science from Missouri State University in 1973 and an MBA from Ohio University in 1987. His long career in the healthcare industry includes leading other biotech firms including MedChem Products, Life Medical Science Inc., and Cranbury-based Palatin Technologies. His first job out of college, at Baxter American Hospitals, convinced him that the medical business was a good field to go into.
In 1992 Quilty moved from California to Princeton to take a job with Life Medical Sciences, which also operated out of Carnegie Center. He chose Princeton as a location since he was from New York, his wife, the head nurse of Bryn Mawr Hospital, was from Philadelphia, and Princeton was a happy medium. LMS was bought by Medchem, and Quilty continued to serve as CEO of the combined company until it was bought by C.R. Bard in 1995. He joined Derma as a director in 1996 and became CEO two years later.
Quilty says the most important thing he did to make Princeton Derma Sciences successful was to hire good executives, some of whom have been with the company for a decade or more. He singled out Barry Wolfenson, head of the pharmaceutical and advanced wound care divisions, for finding the company’s candidate drug.
The going has not always been easy for Princeton Derma Sciences. Last February the Cochrane Review, a respected British scientific journal, published a review of honey-based wound dressings that was critical of them overall. The journal wrote that various studies had shown honey wound products, such as Derma’s Medihoney line, were not effective for certain types of wounds, and that their benefits for other kinds of wounds had not been sufficiently proven. It recommended that hospitals not use honey-based dressings.
Derma’s competitors used this report as fodder for a series of advertisements in wound care journals. Quilty says the ad campaign has hurt Derma’s sales, but that he is working to mitigate the damage, going so far as to fly to London to dispute the report in person. “They overstepped the charter of the Cochrane group by recommending hospitals not use honey-based products,” he says. “In my opinion, that is way out of line.”
Quilty says he got the negative ads pulled from a number of journals because they were made to look like editorial content, and responded with a series of ads highlighting the studies showing benefits to Medihoney — wound dressing products made with a kind of honey called Leptospermum. Derma Sciences also uses this kind of honey for its slight acidity and ability to keep a wound moist, both conditions that are believed to promote healing. The company began selling MediHoney products after winning FDA approval in 2007.
Quilty has high hopes that Derma’s research gamble will pay off. Quilty is confident enough in the company’s future that he’s continuing to expand his company, hiring more staff and expanding the headquarters, which now takes up almost an entire floor. He says Derma is currently in the process of hiring about 50 people.
Derma Sciences Inc. (DSCIOB), 214 Carnegie Center, Suite 300, Princeton 08540; 609-514-4744; fax, 609-514-0502. Edward J. Quilty, CEO. www.dermasciences.com.