INVESTOR PRESENTATION q1 2020 Exhibit 99.1
This presentation includes forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “continues,” “could,” “seeks,” “estimates,” “targets,” “guidance,” “expects,” “intends,” “may,” “ongoing,” “plans,” “potential,” “predicts,” “prospects,” “projects,” “should,” “will,” “would,” or similar expressions intended to identify statements about the future and the negatives of those terms, although not all forward-looking statements contain these identifying words. These statements are based on management’s current beliefs and expectations. These statements, including, but not limited to, statements regarding clinical utility tests, regulatory action, third-party payer reimbursement, and demand for our test, are subject to substantial known and unknown risks, certainties, and other factors that could cause actual results to differ materially from those suggested or implied by these forward-looking statements. These factors include, but are not limited to, the following: regulatory action with respect to our Pigmented Lesion Assay and adhesive biopsy (together, the “Test”); the commercial launch and future sales of the Test or any other of our future products or tests; our ability to achieve favorable pricing for the Test; third-party payor reimbursement for the Test; the accuracy of our estimates regarding anticipated capital requirements and our needs for additional financing; market size and market adoption of the Test by dermatologists; the timing, cost and other aspects of the commercial launch of the Test; the timing and cost of clinical utility tests for the Test, including whether such tests will be conducted at all; our ability to develop and commercialize additional tests and products; and our ability to enter into necessary transactions for licensing, acquisitions and strategic operations, as applicable. DermTech may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on DermTech’s forward-looking statements. The risks and uncertainties that may cause actual results to differ materially from DermTech’s current expectations are more fully described in DermTech’s reports filed with the Securities and Exchange Commission (the “SEC”). You may obtain these reports for free by visiting EDGAR on the SEC website at www.sec.gov. DermTech assumes no obligation to update any forward-looking statements after the date of this presentation or to conform any forward-looking statements to actual results, and has no intention of doing so except to the extent required by applicable law. You should, therefore, not rely on the forward-looking statements in this presentation as representing DermTech’s views as of any date subsequent to the date of this presentation. Disclaimer
DermTech, Inc. (NASDAQ: DMTK) is a leader in precision dermatology enabled by a non-invasive skin genomics platform. DERMTECH Mission: To bring precision to the practice of dermatology through non-invasive genomic assessment of the skin. We address very large market opportunities in skin cancer and inflammatory disease We operate a CLIA licensed and CAP certified commercial laboratory in San Diego, CA that is licensed in all 50 states We are commercial stage and currently offer the Pigmented Lesion Assay (PLA) for early melanoma detection We are commencing scale up around our recent Medicare coverage policy and new CPT Code (0089U) with favorable reimbursement
DermTech: Defining a New Category & Paradigm Shift A Better Diagnostic Solution for Dermatology Subjective Visual Assessment Surgical Biopsy Subjective Histopathology Adhesive Patch Sample Collection Genomic Analysis CLIA/CAP Commercial Lab Physician Report (within 72 hrs.) SUBJECTIVE LOW ACCURACY INVASIVE HIGH COST OBJECTIVE HIGH ACCURACY NON-INVASIVE LOW COST Current Practice: More Art Than Science The Future: Non-invasive Skin Genomics CAP: College of American Pathologists; CLIA: Clinical Laboratory Improvement Amendments.
Genomic Innovations Are Less Invasive, More accurate, and less expensive CANCER COMPANY OLD STANDARD OF CARE NEW-GEN DIAGNOSTIC Breast Colorectal Thyroid Heart Lung Skin
Leadership Team John Dobak, MD Chief Executive Officer Todd Wood Chief Commercial Officer Kevin Sun, MS, MBA Chief Financial Officer Zuxu Yao, PhD Chief Scientific Officer Burkhard Jansen, MD Chief Medical Officer Claudia Ibarra Chief Operating Officer Founder & Chairman, 10xBio (aesthetic medicine drugs) Chairman, Pantherics (anti-inflammatory drugs) MD, UCSD, Bachelors, UCLA Allergan, VP US Sales, Dermatology, Ophthalmology, Aesthetics Dexcom, VP Finance, Corporate Controller and Treasury, Interim CFO Biosite, FP&A, SEC Reporting, SOX Compliance MBA, MS, Kelley School of Business at Indiana University Senior roles at Nexogen, Advance, Celula, Nanogen Post-doctoral, UCSD PhD, Memorial University of Newfoundland Dermatologist FDA Consultant Post-doctoral, University of Minnesota; MD, University of Graz Exagen, Sr. VP Lab Operations Genoptix, Director Lab Operations Daniel Visage, MBA Sr. VP, Payer Access Progenity, VP Payer Access OPKO/BRL, VP Managed Markets LabCorp Florida Blue, Kaiser, Carecentrix
Board of Directors Matt Posard Chairman Former Head of Global Sales and General Management Illumina, Biosite, Genprobe Cynthia Collins Board Member CEO Editas Medicine, Clariant, Human Longevity, GE Healthcare Enrico Picozza Board Member Partner HLM, Applied Biosystems, RubiconMD, Spinal Kinetics Herm Rosenman Board Member CFO-Natera, Genprobe; BOD member of Vivus, Natera, Oxford Immunotech Scott Pancoast Board Member President and Chief Executive Officer of Zylo, Lpath Inc.; Partner Western States Investments Gary Jacobs Board Member Board member since June 2006; Senior Executive Qualcomm; active life science investor Gene Salkind Board Member Practicing Neurosurgeon; Professorships at University of Pennsylvania Medical School and Albert Einstein Medical Center; life science investor and board member John Dobak, MD Board Member
Skin Cancer Melanoma, Basal Cell, and Squamous Cell Carcinoma More people are diagnosed with skin cancer than all other cancers combined and 1 in 5 Americans will develop skin cancer by the age of 70 A Snapshot of the Skin Cancer Market Annual cost of treatment is estimated to be $8.1 billion, $4.8 billion for non-melanoma and $3.3 billion for melanoma ~4.5 million cases of basal cell and squamous cell diagnosed per year in the US, with ~20,000 deaths ~180,000 new cases of melanoma were reported in 2018, with ~10,000 deaths Source: Cancer Facts & Figures 2018. American Cancer Society. Copyright © 2019 DermTech. All Rights Reserved.
Significant Market Opportunity Within Dermatologic Cancer US melanoma diagnoses increased 53% from 2008 to 2018 US non-melanoma skin cancer diagnoses increased 77% from 1994 to 2014 ~4.0 Million Melanoma Biopsies ~11 Million Nonmelanoma Biopsies 15+ Million Total Biopsies ~15+ Million Total Biopsies $400* Average Reimbursement $6+ Billion US Market Only + x = = *Blended estimated average sales price for melanoma and non-melanoma skin cancer Source: IQVIA Skin Cancer Claims and Procedures Study, Top Decile Dermatology Providers
Guy GP, et al. MMWR, 2015; 64:591 Anderson A, et al., JAMA Dermatology, 2018, 154(5):569 2020 Clinical Laboratory Fee Schedule: https://www.cms.gov/medicaremedicare-fee-service-paymentclinicallabfeeschedclinical-laboratory-fee-schedule-files/20clabq1 Gould LJ et al., RIMED, 2016; February Webpage, 34 LCD: Local Coverage Determination Significant Opportunity in Medicare for Melanoma Early Detection DermTech received final LCD ~2.0 Million Total Biopsies2 ~$1.52 Billion $760 Reimbursement3 Medicare patients ideal population for non-invasive approach Poorer wound healing4 Anticoagulated4 Greater infection risk4
Early Detection of Melanoma Is Critical to Patient Survival When Diagnosed at the Local Stage 98% When Diagnosed at the Regional Stage 64% When Diagnosed at the Distant Stage 23% 1. Cancer Facts & Figures 2018. American Cancer Society. 2. Hanke CW, Carcinoma and Keratoses, 1:2 2019 Not Skin Cancer Skin Cancer Not Skin Cancer Skin Cancer 5-Year Relative Survival Rate1 Early Detection Visually Is Extremely Difficult Unmet Need: Melanoma’s Challenging Diagnostic Pathway Only 1% to 2% of lesion tissue is sampled during dermatopathology2
Subjective Pathology Assessment Unmet Need: Melanoma’s Challenging Diagnostic Pathway (cont’d) Diagnostic Inaccuracy and Unnecessary Surgery Anderson A, et al., JAMA Dermatology, 2018; doi:10.1001/jamadermatol.2018.0212 Elmore JG, et al. BMJ. 2017;357:j2813. Strazzula L, et al. Journal of the American Academy of Dermatology, 2014; 71:1071-6 Most Biopsies Are NOT Melanoma ~4.0 million biopsies annually to identify 180k cases 1 Leads to ~25 surgical biopsies performed per melanoma found1 Leads to 58% early stage melanomas diagnostic misinterpretation2 Leads to high proportion (>20%) unnecessary wide excisions3 Subjective Clinical Visual Assessment
Genomic Material Purified from Patch Enhanced Early Melanoma Detection: Non-invasive Gene Expression Test 1 Dermtech’s pigmented lesion assay (pla) Non-invasive adhesive patch collection Avoids unnecessary surgery Improved patient care Highly accurate Low probability of missed melanoma (<1%) 100% of lesion sampled Uses the precision of genomics Earliest detection Detects genomic drivers of cancer Genomic changes can precede visual changes 1. Gerami P, et al., JAAD 2017, 76:114
DermTech’s PLA Performance Metrics Performance Metric Biopsy & Histology PLA Test Improvement Probability Of Missed Melanoma1 17% 1% 17x Biopsies Per Melanoma2 25 2.7 10x Wide Excisions Per Melanoma2,3 5.2 1.6 3x Cost Per Lesion Tested4 ~$1,000 $760 -$240 Fewer biopsies while missing fewer melanomas A long term follow-up confirms the high NPV and high utility of the PLA in helping guide the management of pigmented lesions5 91% sensitivity2 >99% negative predictive value (NPV) VS 83% NPV OF CURRENT pathway1,2 HIGHLY VALIDATED WITH PR VEN CLINICAL UTILITY Clinicians follow the guidance of the test in over 98% of cases2,5 Enhance early detection of melanoma by identifying lesions with genomic atypia Validated in 14 peer reviewed publications Elmore JG, et al. BMJ. 2017; 357:j2813 & Malvehy J, et al. BJD, 2014; 177:1099-1107 Ferris L, et al. JAMA Dermatol, 2018; 154(10):1229-1230 & Gerami P, et al., JAAD 2017, 76:114-120e Strazzula L, et al. JAAD, 2014; 71:1071-6 & Ferris L, et al. Melanoma Research, 2018 1:DOI10.1097 Hornberger J and Siegel D. JAMA Dermatol, 2018 154(9):1-8 Ferris L, et al. DOJ, 2019, 25(5)1-8
Benefits Across the Value Chain PAYERS Fewer surgical costs and surveillance costs Earlier detection and avoidance of missed melanoma avoids costlier later-stage diagnosis Cost reduction over current standard of care for biopsy and histopathology PHYSICIANS Enhances early detection, lowers probability of missed melanoma Opportunity to enhance practice visibility Improved patient satisfaction by avoiding surgery and scarring Improved patient flow and throughput PATIENTS Less painful and less invasive than surgical biopsy Feels like removing scotch tape No risk of scarring Fewer “inconclusive” results, which leads to fewer wide excisions
PLA Test: Significant Clinical Validation MILESTONE STATUS SAMPLE SIZE Analytical Validation ✔ Complete 125 Clinical Validation – pathology ✔ Complete 555 Clinical Validation – mutation ✔ Complete 626 Clinical Utility ✔ Complete 45 Derms Real-World Utility ✔ Complete 381 1-Year Follow-up ✔ Complete 734 Real-World Utility Registry Ongoing 3418 Adhesive Biopsy Validation ✔ Complete N/A Health Economic ✔ Complete 326 CPT Codes ✔ Complete N/A CPT: Current Procedural Terminology; N/A: not applicable. Publications available at www.dermtech.com
RNA=ribonucleic acid. Patent Protection Broad methods covering RNA analysis of adhesive patch collected skin: 7,183,057 Method of detection of biological factors in epidermis: 6,720,145 Broad claims for melanoma gene classifier: 9,057,109 Broad claims for melanoma gene classifier: 10,407,729 Issued US patents provide broad protection for melanoma product through 2034 Multiple European countries, Canada, Japan, and Australia Patents issued in select worldwide countries Low quantity, poor quality sample material Custom automation Trade secrets and technical know-how
Cancer Detection Breakthrough Case Study Background DermTech Results 28-year-old female Family history of melanoma Complained of bug bite Refused surgical biopsy PLA test was positive Histopathology revealed 0.5-mm melanoma Curative wide excision performed Case study published in JAMA Dermatology1 1. Childs MV. JAMA Dermatol, 2018, 154(2):223
COMMERCIAL ACTIVITIES
Commercial Lab Operations CLIA-licensed laboratory in all 50 states CAP certified ~9000-square-foot commercial lab space Current capacity 50,000 tests per year Adding automation to increase to 100k+/year Expansion preparation to 500k/year PLA assay turnaround time is ~72 hours
Commercial Growth Strategy 1 Establish broad payer coverage Leverage new Medicare coverage to Medicare Advantage plans and commercial payers 2 Create consistent core clinician message and position to accelerate impact Improved and tested professional campaign Actively educate and engage the patient New digital consumer campaign in development 4 Expand sales force to up to ~50 reps in 12-24 months Optimize call reach and frequency Drive target performance 175-200 samples/month/rep 3 Historical “good” sales rep 5
PLA Test Dermatopathology VS Samples the entire lesion Provides additional objective genomic information Measures malignant changes that cannot be seen visually Samples less than 1-2% of a potentially partial surgical biopsy Relies on subjective visual criteria Morphologic changes must be present and in the field of observation 01 02 03 Establish CORE Clinician positioning and messaging
Mobilize the Patient Actively Educate and Mobilize the Patient Voice Engage patients to amplify our story
CMS: Centers for Medicare & Medicaid Services CPT: Current Procedural Terminology Establishing 2019 to 2021 Expansion Roadmap 2019 Expansion 2020-to-2021 Expansion Roadmap Creating territory valuation model based on key procedure and practice inputs Medicare and Commercial CPT codes (weight CMS) Diagnosis data: Skin cancer diagnostic procedure volume Optimize sales force size based on model Achieve ~80% minimum coverage of target accounts Evaluate primary care partners 16 reps added for total of 23 Current Territories Prioritized for Medicare Procedure Volume
Source: Market Profile of US Dermatologists, Cegedim 2015. The Dermatology Call-Point Favors Adoption HIGHLY FRAGMENTED HIGHLY DEPENDENT ON GOVERNMENT PAYERS EXCEEDINGLY BUSY OPEN TO MEETING SALES REPRESENTATIVES
PIPELINE
LINC: Long Intergenic Non-protein Coding RNA 518; PCR: Polymerase Chain Reaction; Mut: Mutation; PRAME: Preferentially Expressed Antigen in Melanoma; R/O: Rule Out; Tx: Treatment; TERT: Telomerase Reverse Transcriptase DermTech Product Pipeline Product Test Purpose Assay Type Gene Targets Stage Pigmented Lesion Assay (PLA) Melanoma R/O PCR LINC, PRAME Market, 2017 Nevome PLA Next Gen Melanoma R/O Mut/PCR LINC, PRAME, TERT Market, Q1 2020 Luminate Non-melanoma Skin Cancer Risk Mut Not Disclosed Development Carcinome Basal & Squamous Cell R/O PCR Not Disclosed Development ResponseAD Atopic Dermatitis Tx Response PCR Th2 Development Same Sample Collection Method for All Products Leverage Laboratory and Genomics Analysis Capabilities
Research Partners Strong Collaborations With Big Pharma ~$9.5 million in research programs booked to date Robust pipeline of opportunities and pending contracts Independent performance development Expansion to late-stage trials (phase ll, lll) Indication* Pilot Phase 1 Phase 2 Phase 3 Pemphigus Vulgaris Hidradenitis Suppurativa Psoriasis Mantle Cell Lymphoma Follicular Lymphoma Lupus Vitiligo Atopic Dermatitis Chronic Spontaneous Urticaria Indications With Partners and Stage of Program
Financial Highlights
Source: DermTech, Inc., Capital IQ, Bloomberg. Medicare Coverage A Significant Milestone for Test Unit and Revenue Growth DermTech Quarterly Billable Sample Volume, 2019 Company Test CMS Approval Pre-Approval Revenue (MM) Year 1 Revenue (MM) Year 1 Gross Margin Year 1 Opex % Rev Exact Sciences Cologuard 10/9/2014 $1.8 $39.4 38% 441% Veracyte Afirma 1/9/2012 $2.7 $11.6 35% 198% Genomic Health OncotypeDX 1/13/2006 $5.2 $29.2 66% 172% Q4 2019 Milestones Medicare Final 23 Sales Reps
Financial Strategy Longer-Term Initiatives (2022 and beyond) Near-Term Initiatives (2020 and 2021) Increase proportion of Medicare in payer mix Leverage Medicare pricing for commercial payer negotiations Optimize gross margin opportunities via automation and expansion location Prioritize and accelerate new product development Expand clinical partnerships with Pharma Expand reach into primary care physicians, potentially through distribution partnerships Increase patient and consumer marketing channels Expand to markets outside of the US
DermTech Summary Unique non-invasive skin genomics platform with virgin call point in dermatology Creates new category and paradigm shift in dermatology Multiple large market opportunities leveraging the same sample collection platform and sales and clinical laboratory infrastructure Commercial stage with expanding sales effort across the US Recent favorable Medicare final coverage policy for first product for early melanoma detection Products offer better care at a lower cost for payers