DermTech Reports First Quarter 2021 Financial Results

Rhea-AI Summary

DermTech (NASDAQ: DMTK) reported Q1 2021 results highlighting a 175% increase in assay revenue to $2.2 million and a 62% total revenue increase to $2.5 million. Billable sample volume rose 62% to approximately 9,400. For the first time, the company achieved a positive assay gross margin of 10%, significantly up from -46% in Q1 2020. Despite these gains, a net loss of $15.1 million was reported, reflecting increased operational expenses. Management forecasts Q2 2021 assay revenue between $2.4 million and $2.8 million.

Positive

• Assay revenue increased 175% year-over-year to $2.2 million.
• Total revenue rose 62% year-over-year to $2.5 million.
• Billable sample volume increased by 62% to approximately 9,400.
• Achieved positive assay gross margin of 10%, up from -46% year-over-year.
• New commercial contracts expected to improve average selling prices.

Negative

• Net loss increased to $15.1 million from $6.9 million year-over-year.
• Sales and marketing expenses rose 121% to $6.5 million.
• R&D expenses surged 151% to $2.3 million due to expanded team and clinical trials.
• General and administrative expenses grew 47% to $5.2 million.

DermTech, Inc. (NASDAQ: DMTK) (“DermTech”), 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.

Conference Call and Webcast Information

DermTech will host a conference call and webcast to discuss the first quarter financial results on Thursday, May 13, 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: 1463529. 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,” “be

FAQ

What were DermTech's total revenues for Q1 2021?

DermTech reported total revenues of $2.5 million for Q1 2021, a 62% increase from Q1 2020.

How much did DermTech's assay revenue increase in Q1 2021?

Assay revenue increased by 175% year-over-year to $2.2 million in Q1 2021.

What was DermTech's net loss for Q1 2021?

The net loss for DermTech in Q1 2021 was $15.1 million, compared to $6.9 million in Q1 2020.

What is the guidance for DermTech's Q2 2021 assay revenue?

DermTech estimates that Q2 2021 assay revenue will be between $2.4 million and $2.8 million.

What is the status of DermTech's assay gross margin?

DermTech achieved a positive assay gross margin of 10% in Q1 2021, a notable improvement from -46% in Q1 2020.