Page 1

DermTech DermTech Reports Third Quarter 2021 Financial Results November 9 , 2021 LA JOLLA , Calif .-- ( BUSINESS WIRE ) -- Nov . 9 , 2021-- Derm Tech , 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 September 30 , 2021 . Third Quarter 2021 Highlights • Billable sample volume of approximately 11,720 for the third quarter of 2021 , a 75 % increase compared to approximately 6,700 recorded for the third quarter of 2020 and flat sequentially compared to the second quarter of 2021 . • Assay revenue of $ 3.0 million for the third quarter of 2021 , a 140 % increase compared to the third quarter of 2020 and a 2 % sequential increase over the second quarter of 2021 . • Total revenue of $ 3.0 million for the third quarter of 2021 , a 122 % increase compared to the third quarter of 2020 and a 3 % sequential decrease compared to the second quarter of 2021 . • Published results of the TRUST study which supports that evaluation of genomic atypia with DermTech's Pigmented Lesion Assay increases both the real - world negative predictive value ( NPV ) and positive predictive value ( PPV ) of the melanoma diagnostic pathway and reduces biopsy burden , relative to the current visual assessment and histopathology pathway . • Announced expansion plans to support continued growth in San Diego , with the lease of a 95,997 square - foot building that will become DermTech's new corporate headquarters and the site of the DermTech Gene Lab . The building will undergo a significant transformation that will include conversion of office space to life science laboratory space . The first portion of the building opened to office staff during the third quarter , and additional portions of the building is slated to open throughout 2022 . • Appointment of Monica Tellado , Senior Vice President , Finance at Gilead Sciences and Nathalie Gerschtein Keraudy , President of the Consumer Products Division of L'Oreal , to its board of directors . • Cash , cash equivalents , restricted cash and short - term marketable securities were $ 252.5 million at the end of the quarter . " I'm proud of how we continued to execute against our growth drivers in the third quarter , despite a challenging macro - environment . We have built out our sales force , successfully completed a pilot with one primary care network and expanded a pilot with another , and we are progressing our pipeline products , Carcinome and Luminate , " said John Dobak , M.D. , chief executive officer of Derm Tech . " With these building blocks in place , we feel well - positioned to continue moving forward with our initiatives and drive revenues as business environments improve . " Third Quarter 2021 Financial Results Assay revenue increased $ 1.7 million , or 140 % , to $ 3.0 million for the three months ended September 30 , 2021 , compared to $ 1.2 million for the same period of 2020. Assay revenues grew $ 5.4 million , or 201 % , to $ 8.1 million for the nine months ended September 30 , 2021 compared to $ 2.7 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 75 % to approximately 11,720 for the three months ended September 30 , 2021 , compared to approximately 6,700 for the same period of 2020. Billable samples increased 109 % to approximately 32,840 for the nine months ended September 30 , 2021 , compared to approximately 15,700 for the same period of 2020. Contract revenue decreased $ 0.1 million , or 41 % , to $ 0.1 million for the three months ended September 30 , 2021 , compared to $ 0.1 million for the same period of 2020. Contract revenue decreased $ 0.5 million , or 43 % , to $ 0.6 million for the nine months ended September 30 , 2021 , compared to $ 1.1 million for the same period in 2020 . Total revenue increased $ 1.7 million , or 122 % , to $ 3.0 million for the three months ended September 30 , 2021 , compared to $ 1.4 million for the same period of 2020. Total revenue increased $ 4.9 million , or 130 % , to $ 8.7 million for the nine months ended September 30 , 2021 , compared to $ 3.8 million for the same period of 2020 . Gross margin for the three months ended September 30 , 2021 was 4 % , compared to negative 18 % for the same period of 2020. Gross margin for the nine months ended September 30 , 2021 was 13 % , compared to negative 13 % 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 September 30 , 2021 was 3 % , compared to negative 29 % for the same period of 2020. Assay gross margin for the nine months ended September 30 , 2021 was 7 % , compared to negative 56 % 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 September 30 , 2021 were $ 9.8 million , an increase of 114 % , compared to $ 4.6 million for the same period of 2020. Sales and marketing expenses for the nine months ended September 30 , 2021 were $ 24.2 million , an increase of 121 % , compared to $ 11.0 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 September 30 , 2021 were $ 4.4 million , an increase of 175 % , compared to $ 1.6 million for the same period of 2020. Research and development expenses for the nine months ended September 30 , 2021 were $ 10.3 million , an increase of 204 % , compared to $ 3.4 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 , increased consulting , software and travel expenses and increased spend on laboratory supplies to support new product development . General and administrative expenses for the three months ended September 30 , 2021 were $ 6.2 million , an increase of 111 % , compared to $ 2.9