DermTech, Inc. (NASDAQ:DMTK) Q4 2022 Earnings Call Transcript

Stephanie Yan: Hi. This is Stephanie on for Max. Thanks for taking my question, and congrats, John, on the long tenure as CEO. So for my first question, I was just curious on your Q3 call, you indicated that you had updated Medicare code edit that was implemented at the beginning of October and was back dated to early 2020 when the Medicare LCD went effective. So I just wanted to make sure, have all your Medicare challenges been resolved at this point? And were you able to appeal and recapture any of the commercial payer revenues that were also affected by the code edit?

Kevin Sun: Yes. I’d say many of the Medicare challenges have been resolved with the code edit, if there is a claim that comes in with three or more samples on the same date of service, the entire claim is still denied. We do have to appeal that claim. And we do still have a very good track record of overturning those appeals when we got medical records. It just extends our runway of the cash coming in the door. In terms of the commercial payers, we still haven’t seen a lot of benefit from that code edit in terms of being able to appeal prior claims that had more than the one body site being denied. So it’s something that we continue to work on.

Stephanie Yan: Got it. Thanks for that clarification. And then any update you can provide on your progress in conversations with national commercial payers? So I know you recently secured payer wins with some Blue Cross Blue Shield plans that are part of the Avalon lab benefit manager, which also has a partnership with Optum. Is this in any way help your conversations with national commercial payers?

John Dobak: Yes. We — look, we’ve had very comprehensive meetings and submitted full dossiers to all the national payers in the last three to four months. They’ve all committed to giving us a comprehensive review this year. We try to pin them down on exactly when that review is going to occur. They don’t really give us the exact date. But we do feel like we’re in the best shape ever to try to get a national payer in here. We like the way the conversations have been going, the tone of those conversations. I think we’ve gotten through all the steps of what does this technology do, does it really solve a problem, do I have a problem that needs to be solved, all those things. I think we put behind us, they recognize that this is really a valuable technology.

And so we’re looking forward to some success on that front this year. I just — we just don’t know the exact timing because they never tell you exactly when they’re going to pick it up, unfortunately. We try to get it out then, but we have submitted them, had very thorough discussions, multiple champions within different payers to try to drive success of those national payers. So I feel like we’re teed up as best as we could for the year going forward.

Stephanie Yan: Got it. Understood. Thanks for that color. And then if I can squeeze in one more quick one. So you now estimate that you have cash on the way through Q3 2024. Can you just remind us what are some of the changes to the operational efficiencies that you’re making to extend the runway? Is there like any specific initiatives that have changed since last quarter that allows you to extend your cash runway?

Kevin Sun: Yes. We just continue to look for ways to reduce discretionary spend categories. We’ve delayed many planned hires, and we are working to sublease extra space in our new headquarters building, since we haven’t grown as quickly as originally thought two years ago when we first were identifying the building. And we also continue to only make limited targeted investments in our pipeline. We don’t expect to move forward with broad commercialization activity for any new products until we see improvement in our ISP for melanoma test.

Stephanie Yan: Got it. Understood. Thanks so much for taking all my questions.

John Dobak: Thank you.

Operator: Thank you. Our next question comes from Mark Massaro with BTIG. You may proceed.