DermTech Reports Second Quarter 2021 Financial Results

DermTech Reports Second Quarter 2021 Financial Results




DermTech Reports Second Quarter 2021 Financial Results

LA JOLLA, Calif.–(BUSINESS WIRE)–DermTech, Inc. (NASDAQ: DMTK) (“DermTech”), a leader in precision dermatology enabled by a non-invasive skin genomics platform, today reported unaudited financial results for the quarter ended June 30, 2021.

Second Quarter 2021 Highlights

  • Billable sample volume of approximately 11,750 for the second quarter of 2021, a 267% increase compared to approximately 3,200 recorded for the second quarter of 2020 and a 25% sequential increase over the first quarter of 2021.
  • Assay revenue of $2.9 million for the second quarter of 2021, a 349% increase compared to the second quarter of 2020 and a 33% sequential increase over the first quarter of 2021.
  • Total revenue of $3.1 million for the second quarter of 2021, a 269% increase compared to the second quarter of 2020 and a 24% sequential increase over the first quarter of 2021.
  • Achieved second consecutive full quarter with positive assay gross margin of 11% compared to negative 118% for the same period of 2020.
  • Launched PLAplus, our next generation test for the enhanced early detection of melanoma, which adds TERT (“Telomerase Reverse Transcriptase”) promoter DNA driver mutation analyses to the current RNA gene expression based Pigmented Lesion Assay (“PLA” or the “DermTech Melanoma Test”). The combined tests elevate the sensitivity from 91% to 97% and maintain a negative predictive value of >99%, resulting in a less than 1% probability of missing melanoma.
  • Released topline results from second economic study of the PLA in connection with an actuarial model developed by OptumInsight to evaluate the economic impact of inserting the PLA into the visual assessment and histopathology pathway for pigmented skin lesions clinically suspicious of melanoma.
  • Cash, cash equivalents and short-term marketable securities were $268.3 million at the end of the quarter.

“DermTech continued to execute on its core business drivers during Q2 by delivering healthy sample volume and revenue growth as we began to emerge from the peak of the pandemic,” said John Dobak, M.D., chief executive officer of DermTech. “Our recent efforts to complete the sales force expansion planning, the start of our in-market beta testing of our telemedicine solution, DermTech ConnectTM, and the initiation of a couple of integrated primary network pilots, enables additional adoption of the DermTech Melanoma Test and lays the commercial foundation for future products and channel expansion.”

Second Quarter 2021 Financial Results

Assay revenue increased $2.3 million, or 349%, to $2.9 million for the three months ended June 30, 2021, compared to $0.6 million for the same period of 2020. Assay revenues grew $3.7 million, or 253%, to $5.1 million for the six months ended June 30, 2021 compared to $1.4 million for the same period of 2020. The increase in assay revenue was primarily due to higher billable sample volume and improved average selling price (“ASP”) resulting from better cash collections. Billable sample volume increased 267% to approximately 11,750 for the three months ended June 30, 2021, compared to approximately 3,200 for the same period of 2020. Billable samples increased 135% to approximately 21,150 for the six months ended June 30, 2021, compared to approximately 9,000 for the same period of 2020. Contract revenue increased $14,000, or 7%, to $0.2 million for the three months ended June 30, 2021, compared to $0.2 million for the same period of 2020. Contract revenue decreased $0.4 million, or 43%, to $0.5 million for the six months ended June 30, 2021, compared to $1.0 million for the same period in 2020. Total revenue increased $2.3 million, or 269%, to $3.1 million for the three months ended June 30, 2021, compared to $0.8 million for the same period of 2020. Total revenue increased $3.2 million, or 135%, to $5.6 million for the six months ended June 30, 2021, compared to $2.4 million for the same period of 2020.

Gross margin for the three months ended June 30, 2021 was 16%, compared to negative 71% for the same period of 2020. Gross margin for the six months ended June 30, 2021 was 18%, compared to negative 10% for the same period of 2020. The improvement in gross margin was largely driven by increased assay revenue in the current period. Assay gross margin for the three months ended June 30, 2021 was 11%, compared to negative 118% for the same period of 2020. Assay gross margin for the six months ended June 30, 2021 was 10%, compared to negative 78% for the same period of 2020. The increase in assay gross margin was due to higher billable sample volume, improved ASP, and better utilization of current capacity to reduce the per test cost.

Sales and marketing expenses for the three months ended June 30, 2021 were $7.9 million, an increase of 130%, compared to $3.4 million for the same period of 2020. Sales and marketing expenses for the six months ended June 30, 2021 were $14.4 million, an increase of 126%, compared to $6.4 million for the same period of 2020. The increase was primarily attributable higher compensation costs related to the expansion of our sales force, marketing, and payor access teams as well as additional marketing investments to increase awareness of the DermTech Melanoma Test.

Research and development expenses for the three months ended June 30, 2021 were $3.6 million, an increase of 316%, compared to $0.9 million for the same period of 2020. Research and development expenses for the six months ended June 30, 2021 were $5.8 million, an increase of 232%, compared to $1.8 million for the same period of 2020. The increase was due to higher compensation costs of expanding the research and development team, including the addition of a new Chief Scientific Officer and Chief Medical Officer, increased clinical trial costs, and increased spend on laboratory supplies to support new product development.

General and administrative expenses for the three months ended June 30, 2021 were $6.3 million, an increase of 39%, compared to $4.5 million for the same period of 2020. General and administrative expenses for the six months ended June 30, 2021 were $11.5 million, an increase of 43%, compared to $8.0 million for the same period of 2020. The increase was primarily due to higher payroll-related costs and stock-based compensation as we continue to add additional infrastructure such as human resources, billing, information technology and legal resources.

Net loss for the three months ended June 30, 2021 was $17.1 million, or $0.59 per share, which included $3.5 million of non-cash stock-based compensation, partially offset by $0.2 million gain related to non-cash change in fair value of warrant liability, compared to a net loss of $9.6 million, or $0.59 per share, for the same period of 2020, which included $1.1 million of non-cash stock-based compensation and $0.2 million loss related to non-cash change in fair value of warrant liability. Net loss for the six months ended June 30, 2021 was $32.2 million, or $1.15 per share, which included $5.7 million of non-cash stock-based compensation and $1.5 million loss related to non-cash change in fair value of warrant liability, compared to a net loss of $16.5 million, or $1.13 per share, for the same period of 2020, which included $2.1 million of non-cash stock-based compensation and $0.1 million loss related to non-cash change in fair value of warrant liability.

Cash, cash equivalents, and short-term marketable securities totaled $268.3 million as of June 30, 2021.

Full Year 2021 Guidance

Management estimates that full year 2021 assay revenue will be between $11.5 million and $13.5 million, which represents 171% to 218% growth over full year 2020 assay revenue and considers the uncertainly regarding the pandemic.

Conference Call and Webcast Information

DermTech will host a conference call and webcast to discuss the second quarter financial results on Wednesday, August 4, 2021 at 1:30 p.m. Pacific time / 4:30 p.m. Eastern time. The conference call can be accessed live over the phone by dialing (844) 467-7114 for U.S. callers or (409) 231-2086 for international callers, using conference ID: 9781109. The live webcast can be accessed at investors.dermtech.com.

About DermTech:

DermTech is the leading genomics company in dermatology and is creating a new category of medicine, precision dermatology, enabled by our non-invasive skin genomics platform. DermTech’s mission is to transform dermatology with our non-invasive skin genomics platform, to democratize access to high quality dermatology care, and to improve the lives of millions. DermTech provides genomic analysis of skin samples collected non-invasively using an adhesive patch rather than a scalpel. 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 on DermTech, please visit DermTech’s investor relations site at: 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,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, expectations with respect to: the performance, patient benefits, cost-effectiveness, commercialization and adoption of DermTech’s products and the market opportunity therefor, DermTech’s negotiations with private payors, and DermTech’s ability to expand its product offerings. 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 and private payors; (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; (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 (x) 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 (y) other documents filed or to be filed by DermTech with the SEC. 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 Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

229,609

 

 

$

24,248

 

Short-term marketable securities

 

 

38,644

 

 

 

39,529

 

Accounts receivable

 

 

2,185

 

 

 

1,480

 

Inventory

 

 

497

 

 

 

104

 

Prepaid expenses and other current assets

 

 

1,313

 

 

 

1,521

 

Total current assets

 

 

272,248

 

 

 

66,882

 

Property and equipment, net

 

 

3,285

 

 

 

2,731

 

Other assets

 

 

167

 

 

 

167

 

Total assets

 

$

275,700

 

 

$

69,780

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,104

 

 

$

1,573

 

Accrued compensation

 

 

3,167

 

 

 

2,075

 

Accrued liabilities

 

 

887

 

 

 

763

 

Short-term deferred revenue

 

 

1,372

 

 

 

905

 

Current portion of capital lease obligations

 

 

112

 

 

 

109

 

Total current liabilities

 

 

7,642

 

 

 

5,425

 

Warrant liability

 

 

577

 

 

 

1,650

 

Long-term deferred revenue

 

 

2

 

 

 

639

 

Long-term capital lease obligations, less current portion

 

 

170

 

 

 

226

 

Total liabilities

 

 

8,391

 

 

 

7,940

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value per share; 50,000,000 shares

authorized as of June 30, 2021 and December 31, 2020;

29,607,394 and 20,740,413 shares issued and outstanding at

June 30, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

2

 

Additional paid-in capital

 

 

427,503

 

 

 

189,868

 

Accumulated other comprehensive income/(loss)

 

 

2

 

 

 

(1

)

Accumulated deficit

 

 

(160,199

)

 

 

(128,029

)

Total stockholders’ equity

 

 

267,309

 

 

 

61,840

 

Total liabilities and stockholders’ equity

 

$

275,700

 

 

$

69,780

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assay revenue

 

$

2,910

 

 

$

648

 

 

$

5,100

 

 

$

1,445

 

Contract revenue

 

 

209

 

 

 

196

 

 

 

543

 

 

 

956

 

Total revenues

 

 

3,119

 

 

 

844

 

 

 

5,643

 

 

 

2,401

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of assay revenue

 

 

2,604

 

 

 

1,416

 

 

 

4,575

 

 

 

2,578

 

Cost of contract revenue

 

 

20

 

 

 

29

 

 

 

51

 

 

 

70

 

Total cost of revenues

 

 

2,624

 

 

 

1,445

 

 

 

4,626

 

 

 

2,648

 

Gross profit/(loss)

 

 

495

 

 

 

(601

)

 

 

1,017

 

 

 

(247

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

7,907

 

 

 

3,433

 

 

 

14,419

 

 

 

6,377

 

Research and development

 

 

3,594

 

 

 

864

 

 

 

5,845

 

 

 

1,761

 

General and administrative

 

 

6,301

 

 

 

4,529

 

 

 

11,473

 

 

 

8,043

 

Total operating expenses

 

 

17,802

 

 

 

8,826

 

 

 

31,737

 

 

 

16,181

 

Loss from operations

 

 

(17,307

)

 

 

(9,427

)

 

 

(30,720

)

 

 

(16,428

)

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

35

 

 

 

10

 

 

 

69

 

 

 

10

 

Change in fair value of warrant liability

 

 

170

 

 

 

(180

)

 

 

(1,519

)

 

 

(76

)

Total other income/(expense)

 

 

205

 

 

 

(170

)

 

 

(1,450

)

 

 

(66

)

Net loss

 

$

(17,102

)

 

$

(9,597

)

 

$

(32,170

)

 

$

(16,494

)

Weighted average shares outstanding used in

computing net loss per share, basic and diluted

 

 

28,979,148

 

 

 

16,149,496

 

 

 

28,070,539

 

 

 

14,625,069

 

Net loss per share of common stock outstanding,

basic and diluted

 

$

(0.59

)

 

$

(0.59

)

 

$

(1.15

)

 

$

(1.13

)

 

Contacts

Press and Media:

Sarah Dion

sdion@dermtech.com
(858) 450-4222

Investors:

Westwicke Partners

Caroline Corner, PhD

caroline.corner@westwicke.com
(415) 202-5678