DermTech, Inc.

Good day and thank you for standing by and welcome to DermTech's first quarter 2022 financial results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you will need to press star 1 on your telephone keypad. And if you require further assistance, you may press star 0. And I will now hand the call over to Mr. Steve Consebo. Please go ahead.

Thank you, Operator. Welcome to Dermtech's first quarter 2022 earnings call. Joining me on the call today are Dr. John Doback, our President and Chief Executive Officer, and Kevin Sun, our Chief Financial Officer. Our call today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact are considered forward-looking statements. Forward-looking statements made during this call, including projections of future performance, are based on management expectations as of today and are subject to various factors, assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those described in such statements. Several factors that may contribute to or cause such differences are described in today's press release and our most recent filings with the SEC. including our annual report on Form 10-K for the year ended December 31st, 2021, and our quarterly report on Form 10-Q for the quarter ended March 31st, 2022. We undertake no obligation to update these statements except as required by applicable law. Our first quarter 2022 earnings press release and FCC filings are available on our Best of Relations website. A recording of today's call will also be available on our website later today. With that, let me turn it over to John.

Thank you, Steve, and thank you everyone for joining us today. At the end of March, we attended the American Academy of Dermatology, or AAD, annual conference, which was in person for the first time since the pandemic started. For me, it provided another data point that indicates we are breaking through and that genomics and dermatology continues to gain heightened awareness. An important transition for any company is to have its customers and industry experts begin to carry the message independently of the company's efforts. We saw this at the AAD conference with our DermTech melanoma test, or DMT, being referenced or discussed in numerous clinical and scientific sessions that we did not organize. We want to change the status quo of early melanoma detection through our non-invasive genomics platform enabled by our smart sticker, and numerous independent clinicians are now joining our efforts. Also, our booth had meaningfully greater traffic than past meetings and led to approximately 300 sales leads. Our consumer awareness push around the meeting also spurred approximately 100,000 site visits and over 33,000 find-a-specialist searches. we continue to increase the number of specialists in the database who are familiar with the DMT and now have over 650 locations or an 89% increase from Q1 of 2021. Yesterday was Melanoma Monday and the start of Melanoma Awareness Month, and the DMT was presented on the Today Show. The DMT will also be discussed in additional magazines and national news segments today. and we've engaged with melanoma survivor influencers to increase awareness of the need for skin checks and the availability of the DMT. We will continue this significant marketing push through the month of May and are renewing our commitment to donate to skin cancer-focused nonprofits when people make a pledge to get a skin check. Q1 2022 was a record quarter for our core commercial metrics, despite a soft start in January due to Omicron. We finished Q1 with approximately 14,370 billable samples, a 22 percent increase from the prior record just set in Q4. Assay revenue also increased to a record of 3.5 million, or an 18 percent increase from the prior Q4 record. We believe the large commercial scale-up we implemented last fall that significantly redrew territories and sales reporting structure is now resulting in the growth we expected. April was a strong month and continued the growth trajectory we saw in the second half of Q1 after Omicron subsided. We continue our efforts to expand into primary care networks and our team is actively engaging with a variety of networks around the country. We have resumed training of physicians in the Florida network following the Omicron wave delay and have now trained about half of the approximately 300 clinicians. We have deployed a sales rep into this network to drive more adoption and utilization is improving. We are also expanding our pilot with the Midwest Network and have trained several new offices. In addition, we are negotiating an agreement to pilot direct selling to primary care with a small contract sales team of approximately 15 to 20 inside and outside sales representatives. This group will call on primary care offices that we have identified to have a modest dermatology practice based on an insurance claims lookalike analysis. The purpose of this selling pilot is to determine utilization metrics in primary care and the investment required to appropriately target this channel. Turning now to our progress with payers, during Q1, we added a payer contract with approximately 1 million covered lives, bringing our total covered lives to approximately 91 million. This plan has a high concentration of covered lives in the southwest region. so we should be able to monetize some of the existing healthy sample volumes in that region. We have ongoing engagement with large regional and national payers and continue to hear that the supporting data for the DMT is compelling. We are also increasing our visibility with payers through advocacy with professional societies, physicians, and patients. We've spent the last 24 months developing strong relationships with groups such as the Melanoma Research Foundation, the Melanoma Research Alliance, and the AAD Spot Skin Cancer Program, and we recently received an endorsement from the Melanoma Research Alliance. We are working to leverage these relationships to help drive policy and contract decisions with payers. With the publication of the Optum Health Economic Study in Skin, which was published by the National Society for Cucaneous Medicine, we received a very strong editorial endorsement from the members of the Society's Leadership Board, which includes key dermatology opinion leaders and several former AAD presidents. This endorsement summarized the clinical value proposition of the DMT, and they concluded, and I quote, creating broad access and coverage to transformative diagnostic technologies such as the 2GEP, which is how they refer to our DMT, is in the best interest of our colleagues, the healthcare system, and most importantly, our patients. With this advocacy momentum building, we remain optimistic that we will achieve coverage in 2022 from at least one nationally recognized payer. Turning to telehealth, we continue to expand DermTech Connect, which is now available in 44 states that represent 95% of the United States population. DermTech Connect is a longer-term strategic initiative that we plan to invest in over time to raise awareness among potential patients. We believe this offering to be an important step toward improving patient access to skin cancer assessments through a network of independent dermatology clinicians. Now moving to our pipeline initiatives, we continue to prepare to launch Luminate later this year. With the hiring of our new VP of consumer products in the first quarter, we've completed additional consumer research that underscores product positioning as a non-melanoma pre-cancer risk assessment tool. This product will detect acquired mutations in normal appearing sun exposed skin. Educating consumers on skin cancers other than melanoma and then offering a test to evaluate their pre-cancer risk and cancer risk will allow us to have a unique and differentiated product offering. Much of 2022 will be spent educating consumers and testing key messages, content and digital promotion tactics and pricing. We don't expect meaningful 2022 revenue contribution as these educational and testing activities could take place through early 2023. Our carcinoma pipeline product is intended to facilitate the assessment of basal and squamous cell skin cancers. We have identified a classifier for basal cell cancers and are now working on the final validation. Assuming this validation cohort confirms the assay performance, we will look to begin generating utility data as soon as possible. We continue to refine the squamous cell classifier and are demonstrating improvements to the overall performance. However, we have not yet locked down a final classifier that is ready for validation testing and subsequent utility studies. And finally, we continue the expansion of DermTech Stratum to provide research and development services to the pharma and academic research communities. DermTech Stratum includes services such as biomarker identification, new target identification, patient segmentation, and bioinformatic support. We are pleased to have seen an increase in engagement with pharma collaborators during the last couple of quarters and signed approximately $400,000 in new contracts during Q1. We are seeing a pickup in clinical tri-activity and interest in our stratum offerings, though activity is still below pre-pandemic levels. In addition, we have identified a research-use-only product to differentiate atopic dermatitis from psoriasis with a high degree of accuracy and have initiated marketing of this assay through Stratum. We believe this product will have utility in confirming the diagnosis of psoriasis or atopic dermatitis for patient enrollment into drug development studies for the treatment of these two conditions since up to 20% of patients in these development programs may be enrolled with an incorrect diagnosis. We'll also evaluate this product to determine if it may have utility as a clinical diagnostic test. In summary, 2022 is off to a solid start, hitting various all-time records. We expect to further realize the benefits of our scaled commercial organization with continued traction in the dermatology channel, which will drive the vast majority of our revenue growth in 2022. Nonetheless, we will continue to make investments to expand our commercial channels into primary care, the DermTech Luminate Consumer Channel, the DermTech Connect Telehealth Channel, and our DermTech Stratum Research Channel. With that, I'll turn the call over to Kevin.