EX-10.01

                            BOND AMENDMENT AGREEMENT


     THIS BOND AMENDMENT AGREEMENT (the "Agreement") is made effective as of the
5th day of January, 2001, by and among Derma Sciences, Inc., a Pennsylvania
corporation with offices located at 214 Carnegie Center, Suite 100, Princeton,
New Jersey ("Company"), and Galen Partners III, L.P., a Delaware limited
partnership with offices at 610 Fifth Avenue, New York, New York 10020, Galen
Partners International III, L.P., a Delaware limited partnership with offices at
610 Fifth Avenue, New York, New York 10020 and Galen Employee Fund III, L.P., a
Delaware limited partnership with offices at 610 Fifth Avenue, New York, New
York 10020 (these latter individually, a "Bondholder" and collectively, the
"Bondholders").

     IN CONSIDERATION of the mutual promises and covenants herein contained, the
Company and each of the Bondholders agree as follows:

     1. APPLICABILITY. This Agreement applies to, and modifies, those certain
convertible bonds of the Company, including the Terms and Conditions thereof,
(collectively, the "Bonds") hereinbelow described:

  SERIES C CONVERTIBLE BONDS ORIGINALLY DUE AUGUST 15, 2000 ("SERIES C BONDS")

Bondholder                                Certificate No.    Principal Amount
                                          ---------------    ----------------
Galen Partners III, L.P.                        CB-6               $22,839.00
Galen Partners International III, L.P.          CB-7                $2,067.00
Galen Employee Fund III, L.P.                   CB-8                   $94.00

 SERIES D CONVERTIBLE BONDS ORIGINALLY DUE DECEMBER 31, 2000 ("SERIES D BONDS")

Bondholder                                Certificate No.    Principal Amount
                                          ---------------    ----------------
Galen Partners III, L.P.                        CBB-1             $411,104.00
Galen Partners International III, L.P.          CBB-2              $37,212.00
Galen Employee Fund III, L.P.                   CBB-3               $1,684.00


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     2. POSTPONEMENT OF STATED MATURITY. The "Stated Maturity" as this term is
defined in paragraph 1, page 1, of the bond instrument, as amended, of each of
the Bonds, is hereby amended to read, and each of the Bonds shall mature and be
payable on, January 7, 2002.

     3. NOTICE OF PREPAYMENT. The penultimate sentence in paragraph 2, page 1,
of the bond instrument, as amended, of each of the Bonds, is hereby amended to
read in full as follows: "Upon not less than ten (10) business days prior
written notice to each Bondholder, all or any part of the unpaid principal
balance or accrued but unpaid interest may be prepaid by the Company at any
time, and from time to time, without premium or penalty."

     4. ACCRUAL OF INTEREST. The provisions of paragraph 2, page 1, of the bond
instrument, as amended, of each of the Bonds notwithstanding, interest on the
Bonds shall accrue and be payable upon the Stated Maturity thereof. In addition
to the foregoing, the Company hereby acknowledges that accrued but unpaid
interest in the aggregate amount of $32,709.59 was due and owing at the time of
the conversion by the Bondholders of an aggregate of $375,000 original principal
amount of the $400,000 original principal amount Series C Convertible Bonds on
July 26, 2000 (the "Conversion Date"), and that this amount, together with
interest accruing thereon commencing the Conversion Date at the "Prime Rate" as
specified in the bond instrument, as amended, of each of the Series C
Convertible Bonds, shall be payable upon the Stated Maturity of the remaining
Series C Convertible Bonds together with regular accrued interest on such
remaining Series C Convertible Bonds.

     5. CONVERSION. Each of paragraph 2, page 2, of the bond instrument, as
amended, of each of the Bonds, and the last sentence of paragraph 1(d) of the
Terms and Conditions of the Bonds, is hereby amended to provide that a
Bondholder may, at its option, convert all or any


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portion of the unpaid principal sum and accrued unpaid interest of the Bonds
into Units in accordance with the Terms and Conditions of the Bonds.

     6. UNIT PURCHASE PRICE. The Unit Purchase Price set forth in paragraph 2(c)
of the Terms and Conditions of each of the Bonds is amended from "$1.10" (Series
C Bonds) and from "$1.0125" (Series D Bonds) to "$0.50," respectively.

     7. WARRANT COVERAGE AND EXERCISE PRICE. The ratio of warrants to preferred
stock comprising the Units specified in paragraph 1(d) of the Terms and
Conditions of the Bonds is amended from "one share of Series C Convertible
Preferred Stock and one Warrant" (Series C Bonds) and from "one share of Series
D Convertible Preferred Stock and one Warrant" (Series D Bonds) to "one share of
Series C Convertible Preferred Stock and one and one tenth Warrants" (Series C
Bonds) and "one share of Series D Preferred Stock and one and one tenth
Warrants" (Series D Bonds). The exercise price of the Warrants referred to in
this paragraph 7 is amended from "$1.10" (Series C Bonds) and from "$1.01"
(Series D Bonds) to "$0.57," respectively.

     8. GRANT OF COMMON STOCK. The Company will issue a total of Fifty Seven
Thousand (57,000) shares of its common stock (the "Common Stock") to the
Bondholders, and in the amounts, set forth below:

       Bondholder                                        Number of Shares
       ----------                                        ----------------
       Galen Partners III, L.P.                                51,764
       Galen Partners International III, L.P.                   5,009
       Galen Employee Fund III, L.P.                              227

     Upon the issuance thereof, such shares of Common Stock will be fully-paid
and nonassessable, and free and clear of any liens, claims or encumbrances.
Within ninety (90) days of the date hereof, the Company will file with the
Securities and Exchange Commission a


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registration statement covering the sale of the Common Stock and will use its
best efforts to cause same to be declared effective as promptly as practicable.

     9. REAFFIRMATION. Except as otherwise modified herein, the Bonds remain
enforceable obligations of the Company in accordance with their original tenor,
terms and conditions.





                            [Signatures on next page]


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     IN WITNESS WHEREOF, the Bondholders and the Company have caused this
Agreement to be executed by their duly authorized representatives the day and
year first above written.

                              GALEN PARTNERS III, L.P.

                              By:   Claudius, L.L.C.
                                    Its General Partner



                              By:  /s/Bruce F. Wessen
                                  --------------------------------------------
                                    Bruce F. Wesson
                                    Senior Managing Member

                              GALEN PARTNERS INTERNATIONAL III, L.P.

                              By:   Claudius, L.L.C.
                                    Its General Partner



                              By:  /s/Bruce F. Wessen
                                 ---------------------------------------------
                                    Bruce F. Wesson
                                    Senior Managing Member

                              GALEN EMPLOYEE FUND III, L.P.

                              By:   Wesson Enterprises, Inc.
                                    Its General Partner



                              By:  /s/Bruce F. Wessen
                                 ---------------------------------------------
                                    Bruce F. Wesson
                                    President


                              DERMA SCIENCES, INC.:



                              By:  /s/John E. Yetter
                                 ---------------------------------------------
                                    John E. Yetter, CPA
                                    Vice President and Chief Financial Officer


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8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 5, 2001



Derma Sciences, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania	1-31070	23-2328753
(State or other jurisdiction	(Commission	(IRS employer
of incorporation)	File Number)	identification number)

214 Carnegie Center, Suite 100
Princeton, NJ 08540
(609) 514-4744
(Address including zip code and telephone
number, of principal executive offices)

Item 5. Other Events

        The Registrant has entered into an agreement (the “Agreement”) with the holders of its series C convertible bonds (“Series C Bonds”) and series D convertible bonds (“Series D Bonds”) (collectively, the “Bonds”) whereby the maturity of the Bonds is postponed from January 7, 2001 to January 7, 2002. The Bonds that are subject to the Agreement are described below:

Derma Sciences, Inc.Series
C and Series D Convertible Bonds

                                            Series C        Series D         Total
                                            Principal       Principal      Principal
                                            ---------       ---------      ---------
Bondholders
- -----------
Galen Partners III, L.P.                     $22,839        $411,104       $433,943
Galen Partners International III, L.P.         2,067          37,212         39,279
Galen Employee Fund III, L.P.                     94           1,684          1,778
                                            --------       ---------      ---------

Totals                                       $25,000        $450,000       $475,000

        The Agreement provides that interest under the Bonds will accrue and be payable upon the maturity thereof. Interest under the Bonds is established at New York prime. Accrued and unpaid interest as of December 31, 2000 was $79,600.

        The Agreement further provides that the Registrant will accord to the Bondholders the following consideration.

        1. Conversion Price. The price of the series C units into which the Series C Bonds are convertible was reduced from $0.75 to $0.50. The price of the series D units into which the Series D Bonds are convertible was reduced from $0.75 to $0.50. As a result, the number of series C units obtainable by converting the Series C Bonds increased from 33,334 to 50,000. The number of series D units obtainable by converting the Series D Bonds increased from 600,000 to 900,000.

        The series C units, prior to the below described amendments effected by the Agreement, each consisted of one share of series C preferred stock and one warrant to purchase one share of common stock at a price per share of $0.85. The series D units, prior to the below described amendments effected by the Agreement, each consisted of one share of series D preferred stock and one warrant to purchase one share of common stock at a price per share of $0.85.

        2. Warrant Coverage and Exercise Price. The number of warrants comprising each series C and series D unit was increased from one to one and one tenth. The exercise price of the warrants was reduced from $0.85 to $0.57. The amended warrants comprising the series C and the series D units into which the Bonds are convertible have been designated as the Registrant’s series F warrants.

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        3. Grant of the Common Stock. A total of 57,000 shares of common stock will be issued to the Bondholders. These shares are required to be included in a registration statement to be filed by the Registrant with the Securities and Exchange Commission not later than June 2, 2001.

        Srini Conjeevaram, a director of the Registrant, is a general partner of Claudius, L.L.C. Claudius, L.L.C. is the managing partner of Bondholders Galen Partners III, L.P. and Galen Partners International III, L.P. and is an affiliate of Bondholder Galen Employee Fund III, L.P.

        For additional information concerning the series C and series D bonds, please refer to the Registrant’s current reports on Form 8-K filed August 20, 1999 and January 10, 2000. For information concerning the prior conversion by the Bondholders of $375,000 of their series C convertible bonds, please refer to the Registrant’s current report on Form 8-K filed July 18, 2000 and amended August 14, 2000.

        The Registrant incorporates by reference herein a conformed copy of the Agreement discussed above which Agreement is attached hereto as Exhibit 10.01.

Item 7. Financial Statements and Exhibits

           (a)    Not applicable
           (b)    Not applicable
           (c)    Exhibits:

                    10.01 – Agreement

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        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DERMA SCIENCES, INC.
Date: March 15, 2001	By: /s/ John E. Yetter            John E. Yetter, CPA       Vice President and Chief Financial Officer

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