NEW YORK — DermTech said after the close of the markets on Wednesday that it is cutting around 15 percent of its workforce as it restructures to focus on its flagship noninvasive melanoma DNA test.
The molecular diagnostic firm said the layoffs would affect around 40 employees, primarily in sales, marketing, and general and administrative roles. The reduction in force is expected to save $25 million to $30 million annually once completed and result in a one-time charge of about $2 million in the second quarter of this year.
DermTech said it is also suspending all of its pipeline programs, which include tests to detect non-melanoma skin cancers and to identify UV skin damage.
The San Diego-based company currently markets the DermTech Melanoma Test, which uses a sticker to collect skin cells from pigmented lesions that are analyzed using RT-PCR and, optionally, DNA sequencing for genetic markers of melanoma.
Since its introduction, the test has garnered insurance coverage for approximately 126 million covered lives in the US, including 68 million under Medicare and another 58 million served by commercial and governmental payors. Most recently, DermTech signed an agreement with a Blues plan payor in Hawaii.
DermTech said that, following a review of its operations and growth opportunities, it decided to focus substantially all of its resources on growing the number of reimbursed billable samples for its melanoma test — which grew 24 percent year over year to 17,800 in the first quarter of 2023 — and expanding payor coverage.
"After a rigorous assessment of our entire business, we've made the tough decision to realign our organizational footprint and capital deployment," DermTech CEO Bret Christensen, who joined the company in May, said in a statement. "By focusing on our mission and taking these steps today, we're better positioned to lead the genomic revolution in dermatology."
At the end of March, DermTech had cash, cash equivalents, restricted cash, and marketable securities totaling $108.4 million, which the company said is sufficient to fund its planned operations into the first quarter of 2025.
During early morning trading on the Nasdaq Thursday, shares of DermTech jumped about 17 percent to $2.63.