DermTech Cuts 100, Seeks Strategic Alternatives

Dermtech, a San Deigo, CA-based company that makes a skin patch to test for melanoma, recently announced it will lay off about 100 employees — 56% of its workforce — to “significantly reduce expenses associated with its current operations to preserve cash,” according to the company press release.

The workforce reduction is expected to be completed by the end of Q224 and will result in an estimated $1.6 million in one-time charges related to the cuts, including severance payments, employee payments, and outplacement services.

In tandem with the layoffs, DermTech also reported that it is exploring strategic alternatives for the business, including a potential “acquisition, merger, reverse merger, business combination, sale of assets, licensing or other transaction involving the company,” the company said.

Debuting on the public market in 2019 through a reverse merger, the company’s flagship product, its melanoma test, uses a non-invasive approach to detecting skin cancer by relying on a smart sticker that is placed on a mole or dark skin patch. The stick gathers samples from areas such as the neck, face, and chest. Those samples are then sent to be processed. FDA has not approved the commercial test, but DermTech has obtained insurance coverage through Medicare, Veterans Affairs, and certain commercial insurers.

Posted on Feb.29, the company recorded revenue of $15.2 million, a 5% increase, in 2023 — mostly coming from its melanoma test. It saw a net loss of $100.9 million in fiscal 2023 and an 11% decrease in its billable sample volumes in Q4. Additionally, as of Dec. 31, 2023, Dermtech had cash and equivalents, restricted cash, and short-term marketable securities of $59.3 million.

This isn’t DermTech’s first foray into company restructuring. In fact, the company has implemented three restructuring plans since June 2023, including job cuts and the discontinuation of certain programs after leadership changed. In February, a 15% reduction in employee headcount was executed.

As a result of the recent announcement, the company will not be hosting a Q124 earnings conference call.

Nasdaq, only days before the layoff announcement, also gave DermTech notice its stock does not meet the requirements of $1 per share and had been trading below $1 per share for 30 consecutive days.

Dermtech did not respond to MD+DI’s request for comment.