EX-99.1 2 dmtk-2022q4earnings8xkxexx.htm EX-99.1 Document
Exhibit 99.1
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DERMTECH REPORTS FOURTH-QUARTER AND FULL-YEAR 2022 FINANCIAL RESULTS; COMPANY ANNOUNCES CEO TRANSITION
PLAN

- Covered lives increased from 91 million to 124 million and cash runway through the
third quarter of 2024
- Dr. John Dobak will continue to serve as CEO until a successor is appointed
- Board initiates comprehensive CEO search

LA JOLLA, Calif. – March 2, 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 fourth-quarter and full-year 2022 financial results. The Company also announced that Dr. John Dobak expects to step away from his role as president, chief executive officer and director under a planned transition.

“We’re off to a great start in 2023, as we’ve grown covered lives from 91 million to 124 million during the last few months,” said John Dobak, M.D., CEO, DermTech. “A nice mix of regional commercial and governmental payers have recognized the clinical and economic value of the DermTech Melanoma Test (DMT). We continue to have positive discussions with payers and believe a recent improvement to the DMT’s NCCN recommendation and support from patient advocacy groups will strengthen our case for coverage.”

Dr. Dobak continued, “We expect to grow DMT volume this year despite the ongoing friction attributable to non-contracted commercial payers and will continue to anchor our effort around monetizing our already significant demand. This focus on steadily improving average selling price (ASP) and generating covered tests is beginning to show positive signs. Our normalized fourth-quarter ASP of $239 was sequentially higher, but we still expect variability going forward. In addition, we believe that payer friction has started to slowly ease, and based on the trends we’ve observed to begin the year, we expect mid-single digit sequential growth in test volumes for the first quarter.”

Dr. Dobak concluded, “We’re guided by strong operating discipline and continue to evaluate ways to adjust expenses as we look ahead to potential catalysts. Considering our revised operating plan and ability to access capital, we now expect our cash runway to take us through the third quarter of 2024.”


Fourth-Quarter 2022 Financial Results

•Billable sample volume grew 48 percent from the fourth quarter of 2021 to approximately 17,460.
•Assay revenue was $2.7 million, down 9 percent from the fourth quarter of 2021,primarily due to changes in collection estimates for tests run in prior periods.
•Total revenue was $3.0 million, a 5 percent decrease from the fourth quarter of 2021, driven by lower assay revenue.
•Cost of assay revenue was $3.3 million, a 9 percent increase from the fourth quarter of 2021, yielding an assay gross margin of negative 22 percent, compared to negative 1 percent for the fourth quarter of 2021.
•Sales and marketing expenses were $13.6 million, a 2 percent increase from the fourth quarter of 2021. The increase was primarily attributable to higher employee-related costs and marketing expenditures.
•Research and development expenses were $5.1 million, a 15 percent decrease from the fourth quarter of 2021, largely due to lower lab and clinical study costs.
•General and administrative expenses were $9.8 million, a 37 percent increase from the fourth quarter of 2021. The increase was driven by higher infrastructure costs due to the Company’s new facility and higher employee-related expenses.
•Net loss was $28.2 million, or ($0.93) per share, which included $5.3 million of non-cash stock-based compensation expense, as compared to $26.1 million, or ($0.88) per share, for the fourth quarter of 2021, which included $3.8 million of non-cash stock-based compensation expense.
•Cash, cash equivalents, restricted cash and short-term marketable securities were $129.8 million as of December 31, 2022. DermTech believes it has sufficient cash and the ability to access capital to fund its current operating plan through the third quarter of 2024.

Full-Year 2022 Financial Results

•Billable sample volume grew 53 percent versus the full-year 2021 to approximately 68,230.
•Assay revenue was $13.8 million, up 25 percent percent from the full-year 2021, primarily due to higher billable sample volume.
•Total revenue was $14.5 million, a 23 percent increase from the full-year 2021, driven by higher assay revenue.
•Cost of assay revenue was $13.7 million, a 31 percent increase from the full-year 2021, yielding an assay gross margin of 1 percent, compared to 5 percent for the full-year 2021.
•Sales and marketing expenses were $58.7 million, a 56 percent increase from the full-year 2021. The increase was primarily attributable to higher employee-related costs from increased headcount and marketing expenditures.


•Research and development expenses were $24.1 million, a 48 percent increase from the full-year 2021, largely due to higher employee-related and lab costs.
•General and administrative expenses were $36.1 million, a 45 percent increase from the full-year 2021. The increase was driven by higher employee-related and infrastructure costs.
•Net loss was $116.7 million, or ($3.88) per share, which included $18.9 million of non-cash stock-based compensation expense, as compared to $78.3 million, or ($2.71) per share, for the full-year 2021, which included $13.3 million of non-cash stock-based compensation expense.

CEO Transition Plan

Dr. John Dobak will continue to serve as president, chief executive officer and director until the earlier of the date the Board appoints a successor and September 30, 2023. The Board has initiated a comprehensive search to identify Dr. Dobak’s replacement.

“I’m extremely proud of what we’ve accomplished during my 11-year tenure as CEO having built a strong foundation for DermTech,” said John Dobak, M.D., CEO, DermTech. “We’ve achieved widespread product adoption, secured broad payer coverage and scaled the organization for the future. I’m looking forward to finding a successor that will carry my vision forward and bring the genomic revolution to dermatologic care. I’d like to thank my team and the board for their dedication and perseverance. I’m excited about DermTech’s bright future.”

“On behalf of the board, I want to thank John for his valuable contributions to DermTech over the past eleven years,” said Matt Posard, DermTech’s chairman. “We are grateful to have John’s continuing leadership and support during the CEO transition.”
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, November 3, 2022. 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 maintain or improve its operating efficiency and reduce operating expenses, the sufficiency of DermTech’s cash 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.
Consolidated Statements of Operations
(in thousands, except share and per share data)

Three Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Revenues:
Assay revenue$2,692 $2,969 $13,790 $11,023 
Contract revenue302 196 728 815 
Total revenues2,994 3,165 14,518 11,838 
Cost of revenues:  
Cost of assay revenue3,292 3,013 13,702 10,464 
Cost of contract revenue58 27 169 100 
Total cost of revenues3,350 3,040 13,871 10,564 
Gross (loss) profit(356)125 647 1,274 
Operating expenses:  
Sales and marketing13,598 13,330 58,674 37,575 
Research and development5,097 5,990 24,052 16,261 
General and administrative9,828 7,164 36,086 24,836 
Total operating expenses28,523 26,484 118,812 78,672 
Loss from operations(28,879)(26,359)(118,165)(77,398)
Other income/(expense):  
Interest income, net641 44 1,341 151 
Change in fair value of warrant liability15 262 141 (1,088)
Total other income/(expense)656 306 1,482 (937)
Net loss$(28,223)$(26,053)$(116,683)$(78,335)
Weighted average shares outstanding used in computing net loss per share, basic and diluted30,245,264 29,732,059 30,038,959 28,884,874 
Net loss per share of common stock outstanding, basic and diluted$(0.93)$(0.88)$(3.88)$(2.71)


DERMTECH, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)

December 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$77,757 $176,882 
Short-term marketable securities48,411 48,449 
Accounts receivable4,172 3,847 
Inventory1,757 480 
Prepaid expenses and other current assets3,940 3,166 
Total current assets136,037 232,824 
Property and equipment, net6,375 4,549 
Operating lease right-of-use assets56,007 7,744 
Restricted cash3,488 3,025 
Other assets168 167 
Total assets$202,075 $248,309 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$2,419 $2,880 
Accrued compensation7,894 5,120 
Accrued liabilities3,464 1,227 
Short-term deferred revenue109 1,380 
Current portion of operating lease liabilities1,634 1,453 
Current portion of finance lease obligations116 121 
Total current liabilities15,636 12,181 
Warrant liability5 146 
Long-term finance lease obligations, less current portion53 136 
Operating lease liabilities, long-term54,028 6,148 
Total liabilities69,722 18,611 
Stockholders’ equity:
Common stock, $0.0001 par value per share; 50,000,000 shares authorized as of December 31, 2022 and 2021; 30,297,408 and 29,772,922 shares issued and outstanding at December 31, 2022 and 2021, respectively3 3 
Additional paid-in capital456,171 436,183 
Accumulated other comprehensive loss(774)(124)
Accumulated deficit(323,047)(206,364)
Total stockholders’ equity132,353 229,698 
Total liabilities and stockholders’ equity$202,075 $248,309