- Covered lives increased to 133 million
- Average selling price and test revenue grew
sequentially
- Cash runway into the first quarter of
2025
DermTech, Inc. (NASDAQ: DMTK) (DermTech or the Company), a
leader in precision dermatology enabled by a non-invasive skin
genomics technology, today reported its second-quarter 2023
financial results.
“We’ve recently taken a few necessary steps to streamline
operations and put all our energy into scaling the DermTech
Melanoma Test (DMT) and prioritizing reimbursed billable samples to
grow revenue,” said Bret Christensen, CEO, DermTech. “We’re
pursuing a large addressable market where significant patient need
exists, with approximately 200,000 new cases of melanoma reported
every year in the U.S. resulting in $3.3 billion in annual
treatment costs. My vision is for the DMT to be deployed
universally as part of the melanoma care pathway and we have an
excellent product to execute against this goal.”
Christensen continued, “We’ve made solid progress in the first
half of 2023 entering into new payer agreements. Since the end of
last year, we’ve expanded covered lives approximately 45 percent to
133 million and now work with seven of the top ten Blues plans and
two large governmental payers. We must continue to actively engage
with payers and reinforce our message around the clinical and
health economic benefits of our test, as well as improve the
onboarding process once we’ve completed agreements. We’ve also
begun to adjust our commercial tactics to support our focus on
reimbursed tests and maximizing revenue. Importantly, we’ve
modified incentive compensation for our sales team to prioritize
revenue over volume and dissolved or merged certain sales
territories to focus on geographies where we have broad insurance
coverage. We’re also targeting our spending more closely to sales
team enablement rather than broad-based marketing efforts. We need
to build DMT adoption at the ground level with clinicians and are
confident this change in our approach will be beneficial.”
Christensen concluded, “We believe anchoring our effort around
monetizing our already significant demand is the best way to reach
a meaningful revenue inflection point while managing our cash
runway. We plan for revenue to grow in 2023, and as result of our
recent restructuring actions, anticipate that our cash runway will
now take us into the first quarter of 2025.”
Second-Quarter 2023 Financial Results
- Billable sample volume declined 5 percent from the second
quarter of 2022 to approximately 17,450.
- Test revenue was $3.6 million, down 14 percent from the second
quarter of 2022, primarily due to changes in collection estimates
for tests run in prior periods and lower billable sample
volume.
- Total revenue was $4.0 million, a 6 percent decrease from the
second quarter of 2022, driven by lower test revenue.
- Cost of test revenue was $3.9 million, a 21 percent increase
from the second quarter of 2022, yielding a test gross margin of
negative 10 percent, compared to 22 percent for the second quarter
of 2022. Cost of test revenue increased primarily because of higher
infrastructure costs related to the Company’s new facility and
higher materials expense.
- Sales and marketing expenses were $13.0 million, a 13 percent
decrease from the second quarter of 2022. The decrease was
primarily attributable to lower marketing expenditures.
- Research and development expenses were $3.9 million, a 44
percent decrease from the second quarter of 2022, largely due to
lower employee-related and clinical study costs.
- General and administrative expenses were $15.2 million, a $6.3
million or 71 percent increase from the second quarter of 2022. The
increase was driven by approximately $2.9 million in additional
non-cash stock-based compensation expense and $0.5 million in
severance costs related to the former CEO’s departure,
approximately $2.1 million of non-recurring restructuring costs and
approximately $1.2 million of increased infrastructure costs
related to the Company’s new facility.
- Net loss was $31.4 million, or ($0.99) per share, which
included $7.5 million of non-cash stock-based compensation expense,
as compared to $29.6 million, or ($0.99) per share, for the second
quarter of 2022, which included $4.8 million of non-cash
stock-based compensation expense.
- Cash, cash equivalents, restricted cash and short-term
marketable securities were $89.7 million as of June 30, 2023.
During the second quarter, the Company generated net proceeds of
approximately $4.5 million from the issuance of 1,759,210 shares of
common stock in at-the-market (ATM) offerings at a weighted average
price of $2.62 per share. DermTech believes it has sufficient cash
resources to fund its planned operations into the first quarter of
2025.
Conference Call Information
As previously announced, the Company will host a conference call
to discuss its results at 5:00 p.m. ET on Thursday, August 3, 2023.
For participants interested in asking questions during the
teleconference, please register. After registering for the event, a
confirmation e-mail will be sent with a meeting invitation and
access information. Registration is open during the live
teleconference, but advance registration is advised. For
participants interested in listening only, please register for the
webcast. For those unable to participate in the live call and
webcast, a webcast replay will be available on the Company’s
website shortly after the conclusion of the call.
About DermTech
DermTech is a leading genomics company in dermatology and is
creating a new category of medicine, precision dermatology, enabled
by its non-invasive skin genomics technology. DermTech’s mission is
to improve the lives of millions by providing non-invasive
precision dermatology solutions that enable individualized care.
DermTech provides genomic analysis of skin samples collected
non-invasively using our Smart Stickers™. DermTech markets and
develops products that facilitate the early detection of skin
cancers. For additional information, please visit DermTech.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. The expectations,
estimates, and projections of DermTech may differ from its actual
results and consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“outlook,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,”
“should,” “believe,” “predict,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, expectations and evaluations with respect to: the
performance, patient benefits, cost-effectiveness,
commercialization and adoption of DermTech’s products and the
market opportunity for these products, DermTech’s positioning and
potential growth, financial outlook and future financial
performance, ability to increase its proportion of reimbursed
billable samples, ability to maintain or improve its operating
efficiency and reduce operating expenses, the sufficiency of
DermTech’s cash resources and runway and ability to access capital
to fund its operating plan, the sufficiency of its cash resources
to fund planned operations for the anticipated period, anticipated
annual cash savings to be realized from the restructuring,
implications and interpretations of any study results, and
expectations regarding agreements with or reimbursement or cash
collection patterns from government payers (including Medicare) or
commercial payers and related billing practices or number of
covered lives. These forward-looking statements involve significant
risks and uncertainties that could cause the actual results to
differ materially from the expected results. Most of these factors
are outside of the control of DermTech and are difficult to
predict. Factors that may cause such differences include, but are
not limited to: (1) the outcome of any legal proceedings that may
be instituted against DermTech; (2) DermTech’s ability to obtain
additional funding to develop and market its products; (3) the
existence of favorable or unfavorable clinical guidelines for
DermTech’s tests; (4) the reimbursement of DermTech’s tests by
government payers (including Medicare) and commercial payers; (5)
the ability of patients or healthcare providers to obtain coverage
of or sufficient reimbursement for DermTech’s products; (6)
DermTech’s ability to grow, manage growth and retain its key
employees and maintain or improve its operating efficiency and
reduce operating expenses; (7) changes in applicable laws or
regulations; (8) the market adoption and demand for DermTech’s
products and services together with the possibility that DermTech
may be adversely affected by other economic, business, and/or
competitive factors; and (9) other risks and uncertainties included
in the “Risk Factors” section of the most recent Annual Report on
Form 10-K filed by DermTech with the Securities and Exchange
Commission (the “SEC”), and other documents filed or to be filed by
DermTech with the SEC, including subsequently filed reports.
DermTech cautions that the foregoing list of factors is not
exclusive. You should not place undue reliance upon any
forward-looking statements, which speak only as of the date made.
DermTech does not undertake or accept any obligation or undertaking
to release publicly any updates or revisions to any forward-looking
statements to reflect any change in its expectations or any change
in events, conditions, or circumstances on which any such statement
is based.
DERMTECH, INC.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues:
Test revenue
$
3,565
$
4,147
$
6,990
$
7,665
Contract revenue
415
86
467
286
Total revenues
3,980
4,233
7,457
7,951
Cost of revenues:
Cost of test revenue
3,909
3,236
7,700
6,766
Cost of contract revenue
63
37
93
61
Total cost of revenues
3,972
3,273
7,793
6,827
Gross profit/(loss)
8
960
(336
)
1,124
Operating expenses:
Sales and marketing
13,033
15,001
28,450
30,444
Research and development
3,887
6,915
8,296
13,253
General and administrative
15,220
8,878
27,095
17,452
Total operating expenses
32,140
30,794
63,841
61,149
Loss from operations
(32,132
)
(29,834
)
(64,177
)
(60,025
)
Other income/(expense):
Interest income, net
763
149
1,545
215
Change in fair value of warrant
liability
6
105
(1
)
122
Total other income
769
254
1,544
337
Net loss
$
(31,363
)
$
(29,580
)
$
(62,633
)
$
(59,688
)
Weighted average shares outstanding used
in computing net loss per share, basic and diluted
31,791,736
29,964,849
31,177,886
29,904,972
Net loss per share of common stock
outstanding, basic and diluted
$
(0.99
)
$
(0.99
)
$
(2.01
)
$
(2.00
)
DERMTECH, INC.
Condensed Consolidated Balance
Sheets
(in thousands, except share
and per share data)
(Unaudited)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
42,790
$
77,757
Short-term marketable securities
43,406
48,411
Accounts receivable
3,865
4,172
Inventory
1,352
1,757
Prepaid expenses and other current
assets
2,329
3,940
Total current assets
93,742
136,037
Property and equipment, net
6,074
6,375
Operating lease right-of-use assets
53,791
56,007
Restricted cash
3,467
3,488
Other assets
—
168
Total assets
$
157,074
$
202,075
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,324
$
2,419
Accrued compensation
7,387
7,894
Accrued liabilities
3,695
3,464
Short-term deferred revenue
295
109
Current portion of operating lease
liabilities
2,246
1,634
Current portion of finance lease
obligations
67
116
Total current liabilities
16,014
15,636
Warrant liability
6
5
Long-term finance lease obligations, less
current portion
46
53
Operating lease liabilities, long-term
52,931
54,028
Total liabilities
68,997
69,722
Stockholders’ equity:
Common stock, $0.0001 par value per share;
100,000,000 and 50,000,000 shares authorized as of June 30, 2023
and December 31, 2022, respectively; 33,408,810 and 30,297,408
shares issued and outstanding at June 30, 2023 and December 31,
2022, respectively
3
3
Additional paid-in capital
473,855
456,171
Accumulated other comprehensive loss
(101
)
(774
)
Accumulated deficit
(385,680
)
(323,047
)
Total stockholders’ equity
88,077
132,353
Total liabilities and stockholders’
equity
$
157,074
$
202,075
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803039075/en/
Steve Kunszabo DermTech (858) 291-1647
steve.kunszabo@dermtech.com
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