NEW YORK – Skin cancer diagnostic firm DermTech said Thursday afternoon that it will lay off approximately 100 employees, or about 56 percent of its workforce, as part of a restructuring to reduce operating expenses.
The firm expects to incur a one-time charge of about $1.6 million in the second quarter in connection with the workforce reduction.
DermTech also said it has employed TD Cowen to explore potential strategic alternatives, including an acquisition, merger, reverse merger, business combination, sale of assets, licensing, or other action. It has engaged AlixPartners as a restructuring adviser.
The firm intends to continue laboratory operations during the strategic review and said it believes it has sufficient capacity to process orders for the DermTech Melanoma Test.
As a result of the restructuring news, investment bank BTIG downgraded DermTech from a Buy rating to a Neutral rating. Analyst Mark Massaro wrote in a note to investors that he believes the restructuring decision was "almost entirely driven by the current extremely difficult capital markets environment for micro-cap companies."
He added that DermTech indicated that it "pursued a wide range of capital markets transactions and ran into various difficulties consummating any capital markets transaction."
"We think other labs are likely to show strategic interest in DermTech, particularly those who have commercial call points to dermatologists, and we would also not rule out interest from labs with large primary care sales forces, of which there are many," Massaro noted.
Earlier this week, the company received a delisting warning from the Nasdaq because its common stock bid price had closed below the required minimum of $1.00 per share for the last 30 consecutive business days. DermTech has 180 days, or until Oct. 14, to regain compliance with the requirement.
In January, the firm laid off 30 employees after letting go another 40 staff members last summer.
As a result of the restructuring and strategic review, DermTech will not hold a conference call to discuss its first quarter financial results.
In morning trading on the Nasdaq, DermTech's shares were up 3 percent at $.61.