Edward Quilty came on board as chief executive officer of Derma Sciences, a manufacturer and marketer of advanced wound care products, in 2000. At that time the company, many of whose products use an exotic honey for healing, had revenues of about $3 million and 10 employees. The company, based in Carnegie Center, now has 150 employees and annual revenues approaching $50 million, and it has just made a significant acquisition.
On November 9 Derma Sciences acquired the first aid division of NutraMax. With headquarters in Gloucester, Massachusetts, this division generates approximately $17 million in annual revenues and holds the number two market share position in private label adhesive strip sales. Of this step, Quilty says, “this acquisition is expected to add more than $3.5 million in cash flow. It also fits with our strategy of continuing to build our private label business.” The private label market for this product, he says, is $86 million, “with plenty of opportunities for growth.
Derma Sciences was founded in Old Forge, Pennsylvania, in 1984 by a nurse, Mary Clark, with a single advanced-wound-care product, Dermagran. In 1997 it moved its headquarters to the Princeton area. The firm also has a 100,000-square-foot facility in Toronto, with five clean rooms, where it manufactures advanced wound dressings and wound closure devices, and a business in Nankung, China, where it manufactures gauze bandages and other cotton-based products for operating rooms and hospitals.
Over the last couple of years, Derma Sciences’ revenues have derived increasingly from its own branded products, but it also produces many private label products for companies in similar businesses.
Seeking to differentiate itself as being technologically at the leading edge in wound care, Derma Sciences has in-licensed from Comvita the rights to use leptospermum honey, an antimicrobial and antibacterial, in wound dressings. This honey is created by bees whose hives are positioned to pollinate one of two sister plants, manuka in New Zealand and jellybush in Australia.
Barry Wolfenson, vice president of marketing and business development, explains that honey has been used in wound healing for 4,000 years. The oldest known medical text, the Edward Smith papyrus, found in the pyramids, talks about using honey, mixed with other agents, for wound care. It was only the discovery of penicillin in the 1940s, which was inexpensive and could be used systemically, that stopped the use of topical antimicrobials like honey and silver.
With the development of resistance to antimicrobial agents in the 1990s, these older products are getting a new look.
But there was a problem with most honeys that weakened their power as antibacterials. The low levels of the antibacterial hydrogen peroxide that these honeys produce can easily break down into oxygen and water, causing their antimicrobial properties to dissipate. A wound dressing made with a typical honey, then, would need to be replaced multiple times per day and would be cost-prohibitive.
Clinicians are looking for dressings they can leave on for four or more days. Dressings using silver, it turns out, can stay on from four to six days, and dressings made with leptospermum honey, which maintains its potency as an antimicrobial even in the presence of wound liquids, can be left on for three to five days. This, says Wolfenson, makes the product commercially viable.
Leptosermum honey also manages to avoid a significant downside of many antimicrobials: germ fighters like silver, iodine, and hydrogen peroxide also cause collateral damage to healthy tissue. That’s not a serious problem when a child scrapes a knee, because the skin knows how to heal on its own. But with the hard-to-heal chronic and acute wounds and burns for which Derma Sciences’ dressings are made, every cell is sacred.
The population that will use leptospermum dressings may be dealing with diabetes, vascular problems, obesity, malnutrition, and immunosuppression. Due to patients’ poor circulation, any wounds become difficult to close and heal. Christopher Reeve, the actor who was paralyzed in a riding accident, died of complications from the bed sores that developed when pressure that could not be relieved through normal movement caused his skin to break down. Nasty open wounds like these may expose bone and can last for months and potentially years, and they are susceptible to infection with deadly antiobiotic-resistant pathogens like MRSA.
The advantage of Derma Sciences’ new wound dressings is that the honey-based antimicrobial is nontoxic and that it also promotes tissue healing. In a study presented at the European Wound Management Association meeting in Scotland this May, Georgina Gethin reported a randomized control study that compared one advanced wound care product to another. The study used subjects with leg ulcers at least six months in duration and having a certain amount of dead tissue.
Half of 108 patients were treated with compression therapy and Hydrogel and the other half with compression therapy and leptospermum dressings. The presentation suggested a statistically significant improvement in healing rate in the group treated with the honey dressing.
The leptospermum product, launched in October, is expected to be the company’s biggest product, based on responses from the wound care community, including initial sales. The market for wound care dressings in the United States alone is $700 million, within a total advanced wound care market of $4 billion. In the United States the product is cleared as a dressing for wound care and burns, but not as an antimicrobial. In South America and Canada, however, it is cleared for all three.
Honey-based products are not the only things in Derma Sciences’ pipeline. The company has been marketing Algicell, an antimicrobial silver alginate dressing, and is has just licensed DSC 127, a topical application for the treatment of wounds associated with diseases such as diabetes, where blood vessels are compromised, from the University of Southern California. This product has recently completed its Phase I clinical program and is expected to begin its Phase II safety and efficacy clinical program in the first half of 2008. The market for this product is growing along with the number of people with uncontrolled diabetes worldwide. Given the $10 billion a year spent in the United States alone for the treatment of diabetic ulcers and associated amputations, Quilty says that DSC 127 has “blockbuster potential.”
Quilty received a bachelor’s in economics from Missouri State in 1973 and an MBA from Ohio University in Athens in 1977. His first job was at American Hospital Supplies. Then in 1992 he moved to Princeton, where he helped found Life Medical Sciences, which then merged with MedChem Products, a company listed on the New York Stock Exchange. He was CEO of the combined company, which sold out to CR Bard in 1996.
Quilty helped found Palatin Technologies, a biotech in Cranbury, where he was CEO until he moved in 2000 to Derma Sciences. Quilty has taken Derma Sciences through product development, licensing, and acquisitions. The company is now listed on the OTC Bulletin Board, and it intends to apply for a listing on a national exchange during the coming year. Quilty says, “We are poised to grow our revenues and, as result of new product introductions, expect to improve our profitability as well.”
Derma Sciences Inc. (DSCIOB), 214 Carnegie Center, Suite 300, Princeton 08540; 609-514-4744; fax, 609-514-0502. Edward J. Quilty, CEO. Home page: www.dermasciences.com.