Dive Brief:
- Dermtech will lay off about 100 employees, or 56% of its workforce, to preserve cash. The San Diego-based company, which makes a skin patch to test for melanoma, is also exploring strategic alternatives, it said Thursday in a regulatory filing.
- Strategic alternatives that may be considered include an acquisition or a sale of assets. The staff reduction is part of a broader effort to “significantly reduce” operating expenses and maximize shareholder value, Dermtech said.
- As a result of the announcement, the company said it will not hold a first-quarter earnings conference call.
Dive Insight:
Dermtech posted a net loss of $100.9 million in fiscal 2023 and reported its billable sample volumes fell 11% in the fourth quarter. It had cash and equivalents, restricted cash and short-term marketable securities of $59.3 million as of Dec. 31.
The company’s noninvasive test, which collects cellular material from the skin’s surface, is designed to detect genomic markers associated with melanoma and differentiate benign lesions from those at higher risk.
The test has a 99% negative predictive value, according to the company, which means that with a negative test result, there is a 99% probability that the lesion is not melanoma. The laboratory-developed test is not reviewed or approved by the FDA.
The company’s board of directors approved the restructuring plan on Thursday. The workforce reduction is expected to be completed by the end of the second quarter.
Dermtech will record one-time charges in the second quarter of about $1.6 million related to the job cuts, including severance payments, employee benefits, outplacement services and other costs.
A special committee of the board hired TD Cowen to conduct the strategic review process, and AlixPartners has been hired as a restructuring adviser.
On April 15, Dermtech received a written warning from Nasdaq that the company could be delisted from the stock index for falling below the required minimum of $1 per share.