DermTech Reports Second-Quarter 2023 Financial Results
- Covered lives increased to 133 million
- Average selling price and test revenue grew sequentially
- Cash runway into the first quarter of 2025
“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
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 ofJune 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
About
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
Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
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 |
) |
Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (Unaudited) |
|||||||
|
|
|
|
||||
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, |
|
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/
(858) 291-1647
steve.kunszabo@dermtech.com
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