UNITED STATES
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): May 4, 2023
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of Principal Executive Offices and Zip Code)
Registrant’s telephone number, including area code (858 ) 450-4222
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, par value $0.0001 per share | | |||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On May 4, 2023, the Company issued a press release announcing its financial results for the quarter ended March 31, 2023 and certain other information. This press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information set forth under this Item 2.02 and in Exhibit 99.1 is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of that section. The information contained herein and in the accompanying exhibit is not to be incorporated by reference in any filing of the Company under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DERMTECH, INC. | ||||||||
Date: May 4, 2023 | By: | /s/ Kevin Sun | ||||||
| Name: | Kevin Sun | |||||||
| Title: | Chief Financial Officer | |||||||
Exhibit 99.1
DERMTECH REPORTS FIRST-QUARTER 2023 FINANCIAL RESULTS
-Covered lives increased to 126 million
-Cash runway through the third quarter of 2024
SAN DIEGO – May 4, 2023 – DermTech, Inc. (NASDAQ: DMTK) (“DermTech” or the “Company”), a leader in precision dermatology enabled by a non-invasive skin genomics platform, today reported its first-quarter 2023 financial results.
“In the last few months, we had excellent overall progress with payers and strong execution by our commercial organization,” said John Dobak, M.D., CEO, DermTech. “We expanded coverage for the DermTech Melanoma Test (DMT) by nearly 40 percent since the end of 2022. Payer momentum remains strong across a broad mix of large and medium-sized regional payers, governmental payers, self-funded employer alliances and independent technology assessment organizations.”
Dr. Dobak continued, “We continue to see healthy signs for steadily improving average selling price (ASP) due to our recent increase in covered lives. We believe anchoring our effort around monetizing our already significant demand is the best way to reach a revenue inflection point and preserve our cash runway. We expect DMT volume to be roughly flat this year as we’ve shifted our focus to monetizing existing demand by increasing our proportion of reimbursed billable samples.”
Dr. Dobak concluded, “Prudently deploying our capital is a key priority as we push for additional savings in our cash expenses. Considering our adjusted operating plan and ability to access capital, we expect our cash runway to take us through the third quarter of 2024.”
First-Quarter 2023 Financial Results
•Billable sample volume grew 24 percent from the first quarter of 2022 to approximately 17,800.
•Test revenue was $3.4 million, down 3 percent from the first quarter of 2022, primarily due to changes in collection estimates for tests run in prior periods.
•Total revenue was $3.5 million, a 6 percent decrease from the first quarter of 2022, driven by lower contract revenue.
•Cost of test revenue was $3.8 million, a 7 percent increase from the first quarter of 2022, yielding a test gross margin of negative 11 percent, compared to 0 percent for the first quarter of 2022.
•Sales and marketing expenses were $15.4 million, roughly flat versus the first quarter of 2022.
•Research and development expenses were $4.4 million, a 30 percent decrease from the first quarter of 2022, largely due to lower employee-related and lab costs.
•General and administrative expenses were $11.9 million, a 39 percent increase from the first quarter of 2022. The increase was driven by higher infrastructure costs due to the Company’s new facility and higher employee-related expenses.
•Net loss was $31.3 million, or ($1.02) per share, which included $4.7 million of non-cash stock-based compensation expense, as compared to $30.1 million, or ($1.01) per share, for the first quarter of 2022, which included $3.9 million of non-cash stock-based compensation expense.
•Cash, cash equivalents, restricted cash and short-term marketable securities were $108.4 million as of March 31, 2023. DermTech believes it has sufficient cash resources to fund its planned operations through the third quarter of 2024.
Other Business Highlights
•In March 2023, the Company presented four new posters at the 2023 American Academy of Dermatology (AAD) Annual Meeting. The four new posters included data on the development of a basal cell carcinoma diagnostic gene signature and evaluation of the DMT in higher Fitzpatrick Skin Types. The posters were titled:
◦Non-invasive detection of RNAs associated with basal cell carcinoma. Bahrami-Samani et al.
◦Pigmented lesion assay performance in Fitzpatrick Phototypes IV-VI. Rock et al.
◦Fitzpatrick Skin Phototypes: More than just skin deep. Xayavong et al.
◦An analysis of the average age of skin cancer reported by subjects with Fitzpatrick Phototypes I through VI. Herron et al.
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, May 4, 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 platform. 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 StickersTM. DermTech markets and develops products that facilitate the early detection of skin cancers and is developing products that assess inflammatory diseases and customize drug treatments. For additional information, please visit www.dermtech.com.
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 monetize existing demand by increasing 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, implications and interpretations of any study results, expectations regarding agreements with or reimbursement or cash collection patterns from Medicare, government payers or commercial payers and related billing practices or number of covered lives, DermTech’s ability to expand its product offerings and develop pipeline products, and expectations regarding the search for, transition to and future contributions of a successor CEO. 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 Medicare, government payers 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.
Contact
Steve Kunszabo
DermTech
(858) 291-1647
steve.kunszabo@dermtech.com
DERMTECH, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Revenues: | |||||||||||
| Test revenue | $ | 3,425 | $ | 3,518 | |||||||
| Contract revenue | 52 | 200 | |||||||||
| Total revenues | 3,477 | 3,718 | |||||||||
| Cost of revenues: | |||||||||||
| Cost of test revenue | 3,791 | 3,530 | |||||||||
| Cost of contract revenue | 30 | 24 | |||||||||
| Total cost of revenues | 3,821 | 3,554 | |||||||||
| Gross (loss) profit | (344) | 164 | |||||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 15,417 | 15,443 | |||||||||
| Research and development | 4,409 | 6,338 | |||||||||
| General and administrative | 11,875 | 8,574 | |||||||||
| Total operating expenses | 31,701 | 30,355 | |||||||||
| Loss from operations | (32,045) | (30,191) | |||||||||
| Other income/(expense): | |||||||||||
| Interest income, net | 782 | 66 | |||||||||
| Change in fair value of warrant liability | (7) | 17 | |||||||||
| Total other income | 775 | 83 | |||||||||
| Net loss | $ | (31,270) | $ | (30,108) | |||||||
| Weighted average shares outstanding used in computing net loss per share, basic and diluted | 30,557,216 | 29,836,072 | |||||||||
| Net loss per share of common stock outstanding, basic and diluted | $ | (1.02) | $ | (1.01) | |||||||
DERMTECH, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
| March 31, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 48,438 | $ | 77,757 | |||||||
| Short-term marketable securities | 56,340 | 48,411 | |||||||||
| Accounts receivable | 3,690 | 4,172 | |||||||||
| Inventory | 1,574 | 1,757 | |||||||||
| Prepaid expenses and other current assets | 2,348 | 3,940 | |||||||||
| Total current assets | 112,390 | 136,037 | |||||||||
| Property and equipment, net | 6,262 | 6,375 | |||||||||
| Operating lease right-of-use assets | 54,800 | 56,007 | |||||||||
| Restricted cash | 3,501 | 3,488 | |||||||||
| Other assets | 168 | 168 | |||||||||
| Total assets | $ | 177,121 | $ | 202,075 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 1,680 | $ | 2,419 | |||||||
| Accrued compensation | 7,556 | 7,894 | |||||||||
| Accrued liabilities | 4,807 | 3,464 | |||||||||
| Short-term deferred revenue | 242 | 109 | |||||||||
| Current portion of operating lease liabilities | 1,756 | 1,634 | |||||||||
| Current portion of finance lease obligations | 97 | 116 | |||||||||
| Total current liabilities | 16,138 | 15,636 | |||||||||
| Warrant liability | 12 | 5 | |||||||||
| Long-term finance lease obligations, less current portion | 49 | 53 | |||||||||
| Operating lease liabilities, long-term | 53,680 | 54,028 | |||||||||
| Total liabilities | 69,879 | 69,722 | |||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $0.0001 par value per share; 50,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 31,088,911 and 30,297,408 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 3 | 3 | |||||||||
| Additional paid-in capital | 461,845 | 456,171 | |||||||||
| Accumulated other comprehensive loss | (289) | (774) | |||||||||
| Accumulated deficit | (354,317) | (323,047) | |||||||||
| Total stockholders’ equity | 107,242 | 132,353 | |||||||||
| Total liabilities and stockholders’ equity | $ | 177,121 | $ | 202,075 | |||||||