dmtk-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________

FORM 10-Q

________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38118

________________________

DERMTECH, INC.

(Exact Name of Registrant as Specified in its Charter)

________________________


Delaware			84-2870849
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

12340 El Camino Real, San Diego ,CA			92130
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (858) 450-4222

________________________

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	DMTK	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 27, 2023, the registrant had 34,243,022 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 5 .	Other Information	29
Item 6.	Exhibits	30
	Signatures	31

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DERMTECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	37,230	$	77,757
Short-term marketable securities	30,970		48,411
Accounts receivable	3,605		4,172
Inventory	1,196		1,757
Prepaid expenses and other current assets	2,928		3,940
Total current assets	75,929		136,037
Property and equipment, net	5,611		6,375
Operating lease right-of-use assets	52,889		56,007
Restricted cash	3,467		3,488
Other assets	—		168
Total assets	$	137,896	$	202,075
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,703	$	2,419
Accrued compensation	5,773		7,894
Accrued liabilities	1,946		3,464
Short-term deferred revenue	236		109
Current portion of operating lease liabilities	2,941		1,634
Current portion of finance lease obligations	37		116
Total current liabilities	12,636		15,636
Warrant liability	1		5

Long-term finance lease obligations, less current portion	42		53
Operating lease liabilities, long-term	52,153		54,028
Total liabilities	64,832		69,722
Stockholders’ equity:
Common stock, $0.0001 par value per share; 100,000,000 and 50,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 34,241,523 and 30,297,408 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	3		3
Additional paid-in capital	477,778		456,171
Accumulated other comprehensive income/(loss)	127		(774)
Accumulated deficit	(404,844)		(323,047)
Total stockholders’ equity	73,064		132,353
Total liabilities and stockholders’ equity	$	137,896	$	202,075

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DERMTECH, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues:
Test revenue	$	3,692	$	3,433	$	10,682	$	11,098
Contract revenue	223		140		690		426
Total revenues	3,915		3,573		11,372		11,524
Cost of revenues:
Cost of test revenue	3,661		3,644		11,361		10,410
Cost of contract revenue	82		50		175		111
Total cost of revenues	3,743		3,694		11,536		10,521
Gross profit/(loss)	172		(121)		(164)		1,003
Operating expenses:
Sales and marketing	8,123		14,632		36,573		45,076
Research and development	3,595		5,702		11,891		18,955
General and administrative	8,264		8,806		35,359		26,258
Total operating expenses	19,982		29,140		83,823		90,289
Loss from operations	(19,810)		(29,261)		(83,987)		(89,286)
Other income:
Interest income, net	641		485		2,186		700
Change in fair value of warrant liability	5		4		4		126
Total other income	646		489		2,190		826
Net loss	$	(19,164)	$	(28,772)	$	(81,797)	$	(88,460)
Weighted average shares outstanding used in computing net loss per share, basic and diluted	33,835,370		30,096,261		32,073,448		29,969,435
Net loss per share of common stock outstanding, basic and diluted	$	(0.57)	$	(0.96)	$	(2.55)	$	(2.95)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DERMTECH, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(19,164)	$	(28,772)	$	(81,797)	$	(88,460)
Unrealized net gain/(loss) on marketable securities and cash equivalents	228		(230)		901		(971)
Comprehensive loss	$	(18,936)	$	(29,002)	$	(80,896)	$	(89,431)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DERMTECH, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(Unaudited)


	Common stock			Additional paid-in capital		Accumulated other comprehensive (loss) income		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, December 31, 2022	30,297,408	$	3	$	456,171	$	(774)	$	(323,047)	$	132,353
Issuance of common stock at a weighted average price of $3.68 through at-the-market offering, net of $0.1 million issuance costs	107,451	—		270		—		—		270
Issuance of common stock from option exercises and RSU releases	510,027	—		92		—		—		92

Issuance of common stock from Employee Stock Purchase Plan	174,025	—		576		—		—		576
Unrealized net gain on available-for-sale marketable securities and cash equivalents	—	—		—		485		—		485
Stock-based compensation	—	—		4,736		—		—		4,736
Net loss	—	—		—		—		(31,270)		(31,270)
Balance, March 31, 2023	31,088,911	$	3	$	461,845	$	(289)	$	(354,317)	$	107,242
Issuance of common stock at a weighted average price of $2.62 through at-the-market offering, net of $0.1 million in issuance costs	1,759,210	—		4,495		—		—		4,495
Issuance of common stock from RSU releases	560,689	—		—		—		—		—

Unrealized net gain on available-for-sale marketable securities and cash equivalents	—	—		—		188		—		188
Stock-based compensation	—	—		7,515		—		—		7,515
Net loss	—	—		—		—		(31,363)		(31,363)
Balance, June 30, 2023	33,408,810	$	3	$	473,855	$	(101)	$	(385,680)	$	88,077
Issuance of common stock at a weighted average price of $2.55 through at-the-market offering, net of $0.3 million in issuance costs	302,598	—		483		—		—		483
Issuance of common stock from RSU releases	371,448	—		(34)		—		—		(34)

Issuance of common stock from Employee Stock Purchase Plan	158,667	—		311		—		—		311
Unrealized net gain on available-for-sale marketable securities and cash equivalents	—	—		—		228		—		228
Stock-based compensation	—	—		3,163		—		—		3,163
Net loss	—	—				—		(19,164)		(19,164)
Balance, September 30, 2023	34,241,523	$	3	$	477,778	$	127	$	(404,844)	$	73,064

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DERMTECH, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(Unaudited)


	Common stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, December 31, 2021	29,772,922	$	3	$	436,183	$	(124)	$	(206,364)	$	229,698
Issuance of common stock from option exercises and RSU releases	109,275	—		40		—		—		40
Issuance of common stock from warrant exercises	11,101	—		12		—		—		12
Issuance of common stock from Employee Stock Purchase Plan	47,339	—		515		—		—		515
Unrealized net loss on available-for-sale marketable securities	—	—		—		(570)		—		(570)
Stock-based compensation	—	—		3,894		—		—		3,894
Net loss	—	—		—		—		(30,108)		(30,108)
Balance, March 31, 2022	29,940,637	$	3	$	440,644	$	(694)	$	(236,472)	$	203,481
Issuance of common stock from option exercises and RSU releases	88,591	—		—		—		—		—
Issuance of common stock from warrant exercises	9,219	—		10		—		—		10
Unrealized net loss on available-for-sale marketable securities	—	—		—		(171)		—		(171)
Stock-based compensation	—	—		4,837		—		—		4,837
Net loss	—	—		—		—		(29,580)		(29,580)
Balance, June 30, 2022	30,038,447	$	3	$	445,491	$	(865)	$	(266,052)	$	178,577
Issuance of common stock from option exercises and RSU releases	74,010	—		—		—		—		—
Issuance of common stock from warrant exercises	—	—		—		—		—

SEC Form 10-Q filed by DermTech Inc.