DermTech reports first quarter 2021 financial results

DermTech, Inc. a leader in precision dermatology enabled by a non-invasive skin genomics platform, today reported financial results for the quarter ended March 31, 2021.

First Quarter 2021 Highlights

• Billable sample volume of approximately 9,400 for the first quarter of 2021, a 62% increase compared to approximately 5,800 recorded for the first quarter of 2020 and a 13% sequential increase over the fourth quarter of 2020.
• Assay revenue of $2.2 million for the first quarter of 2021, a 175% increase compared to the first quarter of 2020 and a 40% sequential increase over the fourth quarter of 2020.
• Total revenue of $2.5 million for the first quarter of 2021, a 62% increase compared to the first quarter of 2020 and a 19% sequential increase over the fourth quarter of 2020.
• Achieved first full quarter with positive assay gross margin of 10% compared to negative 46% for the same period of 2020.
• Non-invasive genomic patch testing for melanoma, like DermTech’s Pigmented Lesion Assay (“PLA”), received a 2A recommendation from the National Comprehensive Cancer Network® (“NCCN”) indicating uniform NCCN consensus that the intervention is appropriate and has been included in the NCCN Clinical Practice Guidelines in Oncology (the “NCCN Guidelines®”).
• Published results of a large registry study that reported lesions biopsied based on genomic atypia criteria identified by the PLA were associated with a nearly five-fold enrichment of melanoma compared to those biopsied solely on visual assessment criteria.
• Commercial payor contracts with Blue Shield of California, Blue Cross Blue Shield of Illinois and Blue Cross Blue Shield of Texas became effective, contributing to average selling price improvement.
• Raised approximately $213 million in total gross proceeds from a follow-on public offering of common stock and the exercise of previously outstanding warrants.
• Cash, cash equivalents and short-term marketable securities were $258.2 million at the end of the quarter.

“Q1 was a very busy quarter for DermTech with the closing of our follow-on public offering, the addition of non-invasive genomic patch testing, like the PLA, to the NCCN guidelines, and the effectiveness of our new contracts with major Blues plans in California, Texas and Illinois, which fueled strong assay revenue growth even during the height of the pandemic,” said John Dobak, M.D., chief executive officer of DermTech. “Data from the Optum economic study further confirms the cost saving potential of our technology, and we are optimistic that it will help in our efforts with commercial payors. Access to physician offices continues to be challenging but we are starting to see some improvements, and we believe the recent launch of our PLAplus will help drive adoption.”

First Quarter 2021 Financial Results
Assay revenue increased $1.4 million, or 175%, to $2.2 million for the three months ended March 31, 2021, compared to $0.8 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 61% to approximately 9,400 for the three months ended March 31, 2021, compared to approximately 5,800 for the same period of 2020. Contract revenue decreased $0.4 million, or 56%, to $0.3 million for the three months ended March 31, 2021, compared to $0.8 million for the same period of 2020. Total revenue increased $1.0 million, or 62%, to $2.5 million for the three months ended March 31, 2021, compared to $1.6 million for the same period of 2020.

Gross margin for the three months ended March 31, 2021 was 21%, compared to 23% for the same period of 2020. The decrease in gross margin was largely attributable to decreased contract revenue in the current period, which generally has higher gross margins than assay revenue. Assay gross margin for the three months ended March 31, 2021 was 10%, compared to negative 46% for the same period of 2020. The improvement in assay gross margin was due to improved ASP, and better utilization of current capacity to reduce the per test cost.

Sales and marketing expenses for the three months ended March 31, 2021 were $6.5 million, an increase of 121%, compared to $2.9 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 our Pigmented Lesion Assay.

Research and development expenses for the three months ended March 31, 2021 were $2.3 million, an increase of 151%, compared to $0.9 million for the same period of 2020. The increase was due to higher compensation costs of expanding the research and development team, increased clinical trial costs, and increased spend on laboratory supplies to support new product development.

General and administrative expenses for the three months ended March 31, 2021 were $5.2 million, an increase of 47%, compared to $3.5 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, information technology and legal resources.

Net loss for the three months ended March 31, 2021 was $15.1 million, or $0.55 per share, which included $2.2 million of non-cash stock-based compensation and $1.7 million loss related to non-cash change in fair value of warrant liability, compared to a net loss of $6.9 million, or $0.53 per share, for the same period of 2020, which included $1.0 million of non-cash stock-based compensation, offset by a $0.1 million gain related to non-cash change in fair value of warrant liability.

Cash, cash equivalents, and short-term marketable securities totaled $258.2 million as of March 31, 2021.

Second Quarter 2021 Guidance
Management estimates that second quarter 2021 assay revenue will be between $2.4 million and $2.8 million.

DermTech will not provide financial guidance for the fiscal year 2021 at this time. Management anticipates providing fiscal year 2021 revenue guidance at the time of its second quarter earnings announcement, to the extent practicable, based on available information at that time. Business Wire