Exhibit 10.40

# PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT
(Agreement) made this ___ day of January, 2005, by and between Derma Sciences, Inc., a Pennsylvania corporation with
offices located at 214 Carnegie Center, Suite 100, Princeton, New Jersey, 08540 (Derma Sciences or the
Company) and ____________________________________ (Purchaser).



IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the
Purchaser agree as follows:

1.       
          Authorization of Sale of the Units. The Company has authorized the sale
          of a maximum of $1,500,000 in dollar amount of the Companys units (the
          Units) at the price of $0.50 per Unit, each Unit consisting of one
          share of the Companys common stock, par value $0.01 per share (the
          Common Stock), and one four-year warrant to purchase one share of
          Common Stock at an exercise price of $1.05 per share (the
          Warrant(s)). Each Warrant shall be issued pursuant to a warrant
          agreement (the Warrant Agreement) substantially in the form included
          as Exhibit D to the private placement memorandum. Shares of Common Stock
          issuable upon exercise of the Warrants are referred to herein and in the
          Registration Rights Agreement as Warrant Shares.

2.       
          Agreement to Sell and Purchase the Units. At the Closing (as defined in
          Section 4), the Company will sell and deliver to the Purchaser, and the
          Purchaser will buy from the Company and accept delivery of, the Units at the
          price of $0.50 per Unit and upon the terms and conditions hereinafter set forth:

2.1.       
          Number and Dollar Amounts of the Units. The number of Units and dollar
          amount of the Units to be purchased are as follows:

| |                     |  |                     | 
| | ------------------- |  | ------------------- | 
| | Number of Units     |  | Amount              | 
| | ___________________ |  | $__________________ | 

2.2.       
          Documents. This Agreement and all other agreements executed by the
          Company and the Purchaser relative to the Units are hereinafter sometimes
          collectively referred to as the Documents. The term Documents shall
          mean, inter alia, this Agreement, the Registration Rights Agreement and
          the Warrant Agreement, together with, as the context may require, the private
          placement memorandum and purchase agreements and registration rights agreements
          executed by Additional Purchasers (defined below) and any schedules or exhibits
          thereto.

2.3.       
          Additional Purchasers. The Company may, but shall be under no obligation
          to, sell the Units upon the terms set forth in this Agreement to purchasers in
          addition to the Purchaser (these latter individually, Additional
          Purchaser and collectively, Additional Purchasers). The
          default of the Purchaser or Additional Purchasers under this Agreement or any
          other agreement of like tenor for purchase of the Units shall not alter or
          affect the obligations of the Purchaser or any Additional Purchasers hereunder
          or thereunder.

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2.4
Over-subscription. In the event the offering of the Units is over-subscribed, the
Company reserves the right to allot to the Purchaser or any Additional Purchasers less
than the number of Units subscribed for by the Purchaser or Additional Purchasers.

3.       
          Registration Rights. The Common Stock and Warrant Shares will be
          registered by the Company for public sale. Terms and conditions governing
          registration of the Common Stock and Warrant shares are set forth in the
          Registration Rights Agreement attached hereto.

4.       
          Delivery of the Common Stock and Warrants at the Closing. The completion
          of the purchase and sale of the Units (the Closing) shall occur at a
          place and time (the Closing Date) to be determined by the Company
          and of which the Purchaser will be notified by facsimile transmission or
          otherwise; provided, however, that the Closing shall not occur later than
          January 31, 2005. At the Closing, the Company shall deliver to the Purchaser one
          or more certificates registered in the name of the Purchaser, or in such nominee
          name(s) as designated by the Purchaser, representing the Common Stock and
          Warrants comprising the Units purchased by the Purchaser as set forth in section
          2.1 hereof. The Companys obligation to complete the purchase and sale of
          the Units at the Closing shall be subject to receipt of Federal Reserve
          (same-day) funds in the full amount of the purchase price for the Units being
          purchased hereunder by the Purchaser. The Purchasers obligation to accept
          and to pay for the Units shall be subject to the condition that the Company
          shall have (a) entered into a Registration Rights Agreement in the form attached
          hereto (the Registration Rights Agreement) and (b) the accuracy in
          all material respects of the representations and warranties made by the Company
          herein and the fulfillment in all material respects of those undertakings of the
          Company to be fulfilled prior to Closing.

5.       
          Representations, Warranties and Covenants of the Company. The Company
          hereby represents and warrants to, and covenants with, the Purchaser as follows:

5.1.       
          Organization and Qualification. Each of the Company and its subsidiaries
          is a corporation duly organized, validly existing and in good standing under the
          laws of its jurisdiction of incorporation and has all requisite corporate power
          and authority to conduct its business as currently conducted and to own its
          assets wherever located. Each of the Company and its subsidiaries is qualified
          to do business as a foreign corporation and is in good standing in each
          jurisdiction in which the failure to so qualify would have a material adverse
          effect on the operations of the Company and its subsidiaries, taken as a whole.

5.2.       
          Due Execution, Delivery and Performance of the Agreement. The Company has
          full power and authority to enter into this Agreement and each of the Documents.
          This Agreement has been, and each Document and the Common Stock will be, duly
          authorized, executed and delivered by the Company. The Companys execution,
          delivery and performance of this Agreement and each Document will not violate
          (i) any law, rule or regulation applicable to the Company or its subsidiaries or
          (ii) the Certificate of Incorporation or Bylaws of the Company or its
          subsidiaries or (iii) any provision of any indenture, mortgage, agreement,
          contract or other instrument to which the Company or its subsidiaries is a party
          or by which the Company or its subsidiaries or any of their properties or assets
          is bound as of the date hereof, or result in a breach of or constitute (upon
          notice or lapse of time or both) a default under any such indenture, mortgage,
          agreement, contract or other instrument or result in the creation or imposition
          of any lien, security interest, mortgage, pledge, charge or other encumbrance
          upon any properties or assets of the Company or its subsidiaries, except, in the
          case of such clause (iii), where such violation, breach or default would not
          have a

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material adverse effect on the business, properties, prospects, condition
          (financial or otherwise), net worth or results of operations of the Company and
          its subsidiaries taken as a whole (a Material Adverse Effect). Upon
          their execution and delivery (assuming the valid execution thereof by the
          respective parties thereto other than the Company), this Agreement and the
          Documents will constitute valid and binding obligations of the Company,
          enforceable in accordance with their respective terms, except as enforceability
          may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
          or similar laws affecting creditors and contracting parties rights
          generally and except as enforceability may be subject to general principles of
          equity (regardless of whether such enforceability is considered in a proceeding
          in equity or at law).

5.3.       
          Issuance of the Common Stock and Warrants Shares. Upon issuance, the
          Common Stock and Warrant Shares will be duly authorized and validly issued and,
          upon payment therefor, will be non-assessable.

5.4.       
          Litigation. There is no action, suit or proceeding before or by any court
          or governmental agency or body, domestic or foreign, now pending, or, to the
          knowledge of the Company, threatened against or affecting the Company or its
          subsidiaries which might result in any material adverse change in the condition,
          financial or otherwise, or in the earnings, business affairs or business
          prospects of the Company and its subsidiaries, taken as a whole, or which might
          materially and adversely affect their property or assets or which might
          materially and adversely affect the consummation of this Agreement and the other
          Documents. All pending legal or governmental proceedings to which the Company or
          its subsidiaries is a party or of which any of their property or assets is the
          subject, including ordinary routine litigation incidental to the business, are,
          considered in the aggregate, not material to the business of the Company and its
          subsidiaries.

5.5.       
          Exchange Act Reports; No Material Misstatement or Omission. The Company
          has timely filed all periodic reports required to be filed under the Securities
          Exchange Act of 1934 (Exchange Act Reports). As of their respective
          dates, the Companys Exchange Act Reports do not contain any untrue
          statement of a material fact or omit to state a material fact required to be
          stated therein or necessary in order to make the statements therein, in the
          light of the circumstances under which they were made, not misleading.

5.6.       
          No Material Change. Save as disclosed in the Companys Exchange Act
          Reports, the Company has not incurred any material liabilities or obligations,
          direct or contingent, nor has the Company or its subsidiaries purchased any of
          their outstanding capital stock, nor paid or declared any dividends or other
          distributions on their capital stock; and there has been no change in the
          capital stock or consolidated long-term debt or any increase in the consolidated
          short-term borrowings (other than in the ordinary course of business) of the
          Company or any material adverse change to the business, properties, assets, net
          worth, condition (financial or other), results of operations or prospects of the
          Company and its subsidiaries, taken as a whole.

5.7.       
          Common Stock and Warrant Shares Legend. After the Registration Statement
          (as defined in the Registration Rights Agreement) is declared effective by the
          Securities and Exchange Commission, if any holder of Common Stock and/or Warrant
          Shares shall deliver to the Company s transfer agent (i) the certificate
          representing such Common Stock and/or Warrant Shares and (ii) a letter of
          representations to the effect of Sections 6(b) and (c) herein, then the
          Companys transfer agent shall within 3 business days after receipt of the
          foregoing issue new Common Stock and/or Warrant Shares which new Common Stock
          and/or Warrant Shares shall be legended as follows:

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| | THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SHARES MAY BE SOLD PURSUANT TO THE REGISTRATION STATEMENT PROVIDED
THAT THE HOLDER COMPLIES WITH THE PROSPECTUS DELIVERY REQUIREMENTS UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE SALE IS IN COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET
FORTH IN THE PROSPECTUS.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.8.       
          Certificate. The Company shall deliver a certificate of the Company
          executed by the Chairman of the Board or President and the chief financial or
          accounting officer of the Company, to be dated the Closing Date, in form and
          substance satisfactory to the Purchaser to the effect that the representations
          and warranties of the Company set forth in this Section 5 are true and correct
          as of the date of this Agreement and as of the Closing Date and the Company has
          complied with all the agreements and satisfied all the conditions on its part to
          be performed or satisfied on or prior to such Closing Date.

6.       
          Representations, Warranties and Covenants of the Purchaser. (a) The
          Purchaser represents and warrants to, and covenants with, the Company that: (i)
          the Purchaser is know-ledgeable, sophisticated and experienced in making, and is
          qualified to make, decisions with respect to investments presenting an
          investment decision like that involved in the purchase of the Units and has
          requested, received, reviewed and considered all information he/she/it deems
          relevant in making an informed decision to purchase the Units; (ii) the
          Purchaser is acquiring the Common Stock and Warrant Shares set forth in Section
          2 above in the ordinary course of his/her/its business and for his/her/its own
          account for investment (as defined for purposes of the Hart-Scott-Rodino
          Antitrust Improvement Act of 1976 and the regulations thereunder) only and with
          no present intention of distributing any of such Common Stock or Warrant Shares
          or any arrangement or understanding with any other persons regarding the
          distribution or purchase of such Common Stock and/or Warrant Shares; (iii) the
          Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or
          otherwise dispose of (or solicit any offers to buy, purchase or otherwise
          acquire or take a pledge of) any of the Common Stock and/or Warrant Shares
          except in compliance with the Securities Act of 1933, as amended (the
          Securities Act), and the rules and regulations promulgated
          thereunder and the Exchange Act, and the rules and regulations promulgated
          thereunder, and the terms and conditions of this Agreement; (iv) the
          Purchaser has, in connection with his/her/its decision to purchase the Units set
          forth in Section 2 above, read and considered the Companys confidential
          private placement memorandum dated December 6, 2004, as amended, with exhibits
          thereto, the Companys Form 10-KSB for the year ended December 31, 2003 and
          its Forms 10-QSB for the quarters ended March 31, June 30 and September 30,
          2004, together with such other of the Companys Exchange Act Reports as the
          Purchaser considered appropriate, and has relied solely upon the information
          contained in the foregoing memorandum, Exchange Act Reports and the
          representations and warranties of the Company contained in writing herein, and
          has not relied upon any other statements, representations, warranties, covenants
          or assurances of the Company, (v) the Purchaser is an accredited
          investor within the meaning of Rule 501 of Regulation D promulgated under
          the Securities Act (Regulation D); and (vi) the Purchaser
          understands that certificates representing the Common Stock and Warrant Shares,
          except as provided in Section 5.8 hereof, will contain a legend to the following
          effect:

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| | THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION STATEMENT
FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THESE SECURITIES ARE SUBJECT TO CERTAIN
REGISTRATION RIGHTS AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)       
          The Purchaser hereby covenants with the Company that he/she/it will not directly
          or indirectly make any offer, sale, pledge, transfer or other disposition of the
          Common Stock and/or Warrant Shares other than in accordance with all applicable
          federal and state securities laws and the terms and conditions of this
          Agreement, including, but not limited to, the other representations, warranties
          and covenants of the Purchaser in this Section 6.

(c)       
          The Purchaser hereby covenants with the Company not to make any public sale of
          the Common Stock and/or Warrant Shares without effectively causing any
          applicable prospectus delivery requirement under the Securities Act to be
          satisfied, and the Purchaser acknowledges and agrees that the Common Stock and
          Warrant Shares are not transferable on the books of the Company unless the
          certificates submitted to the transfer agent evidencing the Common Stock and/or
          Warrant Shares are accompanied by a separate officers certificate: (i)
          executed by an officer of, or other authorized person designated by, the
          Purchaser, and (ii) to the effect that (A) the Common Stock and/or Warrant
          Shares have been sold in accordance with a Registration Statement and (B) the
          requirement of delivering a current prospectus has been satisfied or does not
          apply.

(d)       
          The Purchaser further represents and warrants to, and covenants with, the
          Company that (i) the Purchaser has full right, power, authority and capacity to
          enter into this Agreement and to consummate the transactions contemplated hereby
          and has taken all necessary action to authorize the execution, delivery and
          performance of this Agreement, and (ii) upon the execution and delivery of this
          Agreement, this Agreement shall constitute a valid and binding obligation of the
          Purchaser enforceable in accordance with its terms, except as enforceability may
          be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
          similar laws affecting creditors and contracting parties rights
          generally and except as enforceability may be subject to general principles of
          equity (regardless of whether such enforceability is considered in a proceeding
          in equity or at law).

(e)       
          The Purchaser acknowledges that he/she/it has had such access to financial and
          other information concerning the Company as he/she/it deemed necessary in
          connection with his/her/its decision to purchase the Units, including an
          opportunity to ask questions and request information from the Company and its
          management, and all such questions have been answered and all information
          requested has been provided to the satisfaction of the Purchaser.

(f)       
          If the Purchaser proposes to sell, pledge, assign or otherwise transfer or
          convey, directly or indirectly, any of the Common Stock or Warrant Shares prior
          to the date that the

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Registration Statement becomes effective, then the
          Purchaser shall provide the Company, prior to any such sale, with a legal
          opinion in form and substance satisfactory to the Company that such sale,
          pledge, assignment, transfer or conveyance is exempt from the registration
          requirements under the Securities Act and any applicable state securities and
          blue sky laws.

7.       
          Survival of Representations, Warranties and Agreements. Notwithstanding
          any representation made by any party to this Agreement, all covenants,
          agreements, representations and warranties made by the Company and the Purchaser
          in writing herein and in the closing certificates delivered pursuant hereto
          shall survive the execution of this Agreement, the delivery to the Purchaser of
          the Units being purchased and the payment therefor.

8.       
          Notices. All notices, requests, consents and other communications
          hereunder shall be in writing, shall be by telecopier with the original being
          forwarded by a nationally recognized overnight express courier, shall be deemed
          given when receipt is acknowledged by transmit confirmation report and shall be
          addressed as set forth at the head of this Agreement or to such other address as
          may hereafter be furnished in writing.

9.       
          Changes. This Agreement may not be modified or amended except pursuant to
          an instrument in writing signed by the Company and the Purchaser.

10.       
          Headings. The headings of the various sections of this Agreement have
          been inserted for convenience of reference only and shall not be deemed to be
          part of this Agreement.

11.       
          Severability. In case any provision contained in this Agreement should be
          invalid, illegal or unenforceable in any respect, the validity, legality and
          enforceability of the remaining provisions contained herein shall not in any way
          be affected or impaired thereby.

12.       
          Governing Law. This Agreement shall be governed by and construed in
          accordance with the laws of the Commonwealth of Pennsylvania (without reference
          to its rules as to conflicts of law) and the federal law of the United States of
          America.

13.       
          Counterparts. This Agreement may be executed in two or more counterparts,
          each of which shall constitute an original, but all of which, when taken
          together, shall constitute but one instrument, and shall become effective when
          one or more counterparts have been signed by one party hereto and delivered to
          the other party. Facsimile signatures are considered to be originals and shall
          have the same effect.

14.       
          Entire Agreement. This Agreement is intended by the parties as a final
          expression of their agreement and intended to be a complete and exclusive
          statement of the agreement and understanding of the parties hereto in respect of
          the subject matter contained herein. This Agreement supersedes all prior
          agreements and understandings between the parties with respect to such subject
          matter.

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

| | COMPANY:                                  
| | ------------------------------------------
| | DERMA SCIENCES, INC.                      
| | By:____________________________           
| | Edward J. Quilty                          
| | President and Chief Executive
     Officer
| | PURCHASER:                                
| | _______________________________           
| | _______________________________           
| | (Additional Signature if Joint Ownership) 
|

Please
complete the Purchaser Information on the next page.

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# Purchaser Information

`Type of Ownership (Check One):

___ Individual Ownership                                ___Joint Tenants with Right of Survivorship
                                                           (both parties must sign)

___ Corporation (president or vice president and        ___Community Property (one signature required)
    secretary or assistant secretary must sign)

___ Trust or Estate (trustee or executor must sign)     ___Tenants-in-Common (all parties must sign)

___ Partnership (general partner must sign)




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State of Legal Residence                                Mailing Address


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Name (Typed or Printed)                                 City, State and Zip Code


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Tax ID Number or Social Security Number                 Home Telephone


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E-mail Address                                          Business Phone`

This
Purchase Agreement with the accompanying Registration Rights Agreement should be forwarded
via overnight courier to:

| | Derma Sciences, Inc.214 Carnegie Center, Suite
     100Princeton NJ 08540 | 
| | ------------------------------------------------------------------------- | 

Funds
representing the purchase price for the Common Stock should be wired to:

| | Mellon Bank, Pittsburgh PAABA # 043000261 For:
     Merrill Lynch Denver Service Center Account # 1011730For further credit to: DSI Account #876-07H74 | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------ | 

| | 
| | 

If
you have any questions, please call Edward J. Quilty at 609-514-4744.

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