DermTech, Inc. Reports Third Quarter 2019 Financial Results and Provides Corporate Update
Third Quarter 2019 Business Highlights:
- Received Proprietary Laboratory Analyses (“PLA”) code (0089U) and favorable crosswalk recommendation to code 0005U by Clinical Diagnostic Laboratory Test Committee (“CDLT”)
-
Signed new agreements for
$1.4 million of contract revenue with pharmaceutical partners with the majority of these amounts expected to be recognized as revenue in the fourth quarter - Strengthened the senior leadership team with the hiring of CFO and COO
- Continued to expand the commercial team with the hiring of Sr. VP of Payer Access, Director of Managed Care and Payor Contracts and built out the direct sales force
- Initiated the TRUST clinical study to further confirm the Pigmented Lesion Assay’s high negative predictive value, through repeat clinical assessment and genomic testing of suspicious lesions after up to two years follow-up
- Announced the publication of consensus expert panel recommendations for use for the Pigmented Lesion Assay
- Expanded patent portfolio to include PRAME, a key gene in the non-invasive assessment of melanoma using genomics
- Presented 1-year Pigmented Lesion Assay real-world registry study data
Third Quarter 2019 Financial Highlights:
-
Closed Business Combination and PIPE financing to list on The
Nasdaq Capital Market , and generated gross cash proceeds of approximately$29 million -
Reported assay revenue of
$0.4 million , a 20% increase compared to the third quarter of 2018 - Reported billable sample volume increase of 18% to 3,596 for the third quarter of 2019 compared to 3,043 for the same period in 2018
-
Ended the quarter with
$21.4 million in cash and cash equivalents
“We spent much of the last quarter building the foundation to scale our commercial operations around our breakthrough Pigmented Lesion Assay for enhanced early melanoma detection. Key areas of success included: completing the business combination and financing, strengthening our senior management team with seasoned executives from the life sciences industry, expanding our payor access team and direct sales force, and establishing our reimbursement code and anticipated price with
Third Quarter 2019 Financial Results
Assay revenue increased 20% to
Gross margin for the three months ended
Sales and marketing expense increased
Research and development expense increased
General and administrative expense increased
Loss from operations was
Net loss for the three months ended
Cash and cash equivalents totaled
Closed Business Combination
On
PLA Code Issued
New Contract Revenue Agreements
During the three months ended
New Leadership Hires
In September, the Company announced that
In November,
Commercial Team Expansion
In November,
In September,
During the third quarter we continued to increase our direct sales force from 7 sales reps at the beginning of the year to 23 sales reps as of the beginning of the fourth quarter. All sales reps have significant experience direct selling and launching new products in dermatology. In preparation for our anticipated LCD from
Initiated TRUST Clinical Study
The TRUST study is the first of its kind for the Company to provide repeat clinical assessments and genomic testing on pigmented lesions suspicious for melanoma that were initially tested negative with the Pigmented Lesion Assay. This study will further confirm the high negative predictive value of the Pigmented Lesion Assay (>99%), by examining the long-term clinical behavior of pigmented lesions initially determined to be negative for melanoma after testing with the Pigmented Lesion Assay. The study will perform the repeat assessment and testing 1 to 2 years following the initial test. We expect the results to be available in 2020.
Inclusion in Clinical Management Recommendations
In October, the Company announced its inclusion in Clinical Management Recommendations, “Appropriate Use Criteria for the Integration of Diagnostic and Prognostic Gene Expression Profile Assays into the Management of Cutaneous Malignant Melanoma: An Expert Panel Consensus-Based Modified Process Assessment” published in the September issue of SKIN. A panel of dermatologists and dermatopathologists with expertise in pigmented lesions, melanoma, and gene expression technology evaluated commercially available gene expression tests and recommended use of DermTech’s non-invasive Pigmented Lesion Assay, or 2-Gene Expression Profile test, in cases in which patients present with atypical lesions requiring additional assessment beyond visual inspection in order to inform the decision to surgically biopsy. This recommendation closely aligns with the previously published utility data on the Pigmented Lesion Assay (Ferris et al.,
Expanded Patent Portfolio
In October, the Company announced the issuance of a patent, US 10,407,729, to further expand the Company’s intellectual property and leadership position. This patent is entitled “Diagnosis of melanoma by nucleic acid analysis” and includes claims in connection with DermTech’s technology to non-invasively obtain genomic information for characterizing skin lesions. The patent includes claims related to using expression levels of PRAME (also known as preferentially expressed antigen in melanoma, which is overexpressed in this type of cancer) to differentiate melanoma from non-melanoma skin samples obtained via the company’s adhesive patch-based sample collection platform.
Presentation of 1-Year Pigmented Lesion Assay Registry Study Data
In August, the Company presented 1-year Pigmented Lesion Assay registry data on 3,418 real-world cases from 53 US-based sites at the ‘Practical Symposium,’ an annual well recognized dermatology conference held in
About
Forward-looking Statement
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, INC. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) |
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September 30, 2019 |
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December 31, 2018 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
21,437 |
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$ |
4,753 |
|
Accounts receivable, net |
|
|
814 |
|
|
|
580 |
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Inventory |
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44 |
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|
40 |
|
Prepaid expenses and other current assets |
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1,399 |
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|
26 |
|
Total current assets |
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23,694 |
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5,399 |
|
Property and equipment, net |
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|
210 |
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|
215 |
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Other assets |
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|
84 |
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|
|
50 |
|
Total assets |
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$ |
23,988 |
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$ |
5,664 |
|
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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Current liabilities: |
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Accounts payable |
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$ |
1,004 |
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$ |
286 |
|
Accrued compensation |
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1,099 |
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|
480 |
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Accrued liabilities |
|
|
171 |
|
|
|
286 |
|
Deferred revenue |
|
|
1,457 |
|
|
|
1,552 |
|
Deferred underwriting fees |
|
|
1,363 |
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|
— |
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Convertible notes payable, net |
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— |
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5,019 |
|
Derivative liability |
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— |
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2,880 |
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Total current liabilities |
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5,094 |
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10,503 |
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Notes payable, noncurrent |
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— |
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|
|
516 |
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Total liabilities |
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|
5,094 |
|
|
|
11,019 |
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Commitments and contingencies |
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Series A convertible preferred stock, $0.0001 par value per share; 5,000,000 and zero Series A shares authorized as of September 30, 2019 and December 31, 2018; 1,231 shares issued and outstanding at September 30, 2019 and December 31, 2018; $6.9 million and zero liquidation preference at September 30, 2019 and December 31, 2018 |
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— |
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— |
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Series C convertible preferred stock, $0.0001 par value per share; zero and 1,400,000 Series C shares authorized as of September 30, 2019 and December 31, 2018; zero and 1,524,122 shares issued and outstanding at September 30, 2019 and December 31, 2018; zero and $14.5 million liquidation preference at September 30, 2019 and December 31, 2018 |
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— |
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— |
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Stockholders’ equity (deficit): |
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0 |
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|
0 |
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Common stock, $0.0001 par value per share; 50,000,000 and 13,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 11,964,329 and 4,411,567 shares issued and outstanding at September 30, 2019 and December 31, 2018 |
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1 |
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|
1 |
|
Additional paid-in capital |
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104,889 |
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66,021 |
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Accumulated deficit |
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(85,996 |
) |
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(71,377 |
) |
Total stockholders’ equity (deficit) |
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18,894 |
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(5,355 |
) |
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) |
$ |
23,988 |
$ |
5,664 |
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DERMTECH, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (in thousands, except share and per share data) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Revenues: |
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Assay revenue |
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$ |
385 |
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|
$ |
321 |
|
|
$ |
905 |
|
|
$ |
853 |
|
Contract revenue |
|
|
180 |
|
|
|
320 |
|
|
|
870 |
|
|
|
960 |
|
Total revenues |
|
|
565 |
|
|
|
641 |
|
|
|
1,775 |
|
|
|
1,813 |
|
Cost of revenues |
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|
779 |
|
|
|
687 |
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|
|
2,100 |
|
|
|
2,038 |
|
Gross loss |
|
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(214 |
) |
|
|
(46 |
) |
|
|
(325 |
) |
|
|
(225 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Sales and marketing |
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1,976 |
|
|
|
675 |
|
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|
3,872 |
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|
|
2,173 |
|
Research and development |
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|
757 |
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|
|
549 |
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|
|
1,847 |
|
|
|
1,616 |
|
General and administrative |
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|
3,212 |
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|
|
840 |
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|
6,446 |
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|
|
2,622 |
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Total operating expenses |
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|
5,945 |
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|
|
2,064 |
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|
12,165 |
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|
6,411 |
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Loss from operations |
|
|
(6,159 |
) |
|
|
(2,110 |
) |
|
|
(12,490 |
) |
|
|
(6,636 |
) |
Other income (expense): |
|
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|
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Gain on debt extinguishment |
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|
928 |
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— |
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|
928 |
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— |
|
Interest expense, net |
|
|
(364 |
) |
|
|
(100 |
) |
|
|
(2,657 |
) |
|
|
(108 |
) |
Other expense |
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(131 |
) |
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— |
|
|
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(355 |
) |
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— |
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Total other income (expense) |
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433 |
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(100 |
) |
|
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(2,084 |
) |
|
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(108 |
) |
Net loss and comprehensive loss |
|
$ |
(5,726 |
) |
|
$ |
(2,210 |
) |
|
$ |
(14,574 |
) |
|
$ |
(6,744 |
) |
Weighted average shares outstanding used in computing net loss per share, basic and diluted |
|
|
7,134,642 |
|
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|
4,411,255 |
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|
5,331,876 |
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|
4,410,789 |
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Net loss per common share outstanding, basic and diluted |
|
$ |
(0.80 |
) |
|
$ |
(0.50 |
) |
|
$ |
(2.73 |
) |
|
$ |
(1.53 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005871/en/
Source:
Press and Media:
Sarah Dion
sdion@dermtech.com
(858) 450-4222
Investors:
Westwicke, an ICR company
Caroline Corner, PhD
caroline.corner@westwicke.com
(415) 202-5678