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

John Dobak: So we have not started the process. We’re going to be spending in the next few weeks to really kind of scope out what that job description looks like and figure out how we’re going to source candidates. Like I said, we don’t want this to be rushed. We’re announcing it now. So it gives us the time, and we don’t feel like it’s rushed sometime in the future. And we’ll build out that description for the ideal candidate. But I think we have a huge opportunity with the melanoma test. And clearly, somebody who has brought that kind of scale to commercial opportunity like we have is going to be important, along with public company experience and things like that. So those are some of the things. But we’ll scope that out in the coming weeks, and we’ll get started on it and work through it. I’ll be here. I’m not looking to leave until that person is identified, and we’ll take as long as it takes to get it done.

Unidentified Participant: Got it. That makes perfect sense. And then maybe — I mean I understand the cadence of reimbursement timing is hard to predict. And I want to ask you to give a specific impact. But I mean, just from the comments on the call, like the small regional payer wins and the TRICARE win over the last few weeks. It was mentioned that this kind of addition to covered lives is similar to adding the second largest national payer. And then it was also mentioned that adding a national payer would have a meaningful impact to ASPs. So I mean is it reasonable to think that ASPs can potentially reverse course in maybe second half 2023 or early in the 2024?

John Dobak: Look, I think we’re already seeing it. That’s why we talk about it. If you look at the intra-quarter ASP for the up-to-date accruals for the fourth quarter, it was — almost $240. And that’s our peak, I think, in the prior quarter is around $250, $255. So I think it’s already happening. Now we need to see. We need to really confirm that and we could still see some erosion with non-contracted payers. But I like what we’re seeing now. I think the worst of it is behind us. The low ASP is just because we have all those prior period write-downs. We believe we flushed the majority of those through, but we’ll have to see. We just got to see what’s happening. That’s why we don’t want to give guidance because we’ve got to see what’s happening to make sure things have stabilized. We believe that’s happening, and we’ll know more in the next quarter.

Unidentified Participant: Okay. Got it. Thank you for the update.

Operator: Thank you. Our next question comes from Andrew Brackmann with William Blair.

Andrew Brackmann: Hi, guys. Thanks for sneaking me in. John, certainly, I’ve got the sentiment here on what you’ve built on. A lot has been asked, but John, I think you called out in your script the NCCN improvement sort of building throughout 2022. Can you sort of just level set us on that specifically and how you’re — how that’s helping you in the field? Thanks.

John Dobak: Well, I mean, the NCCN has continued to improve that guideline they issued several years ago. What they did this year is they said that our test was useful in dermoscopically suspicious lesions. We think that’s an important improvement because if you read some policies out there, where they have a negative or an ENI-type policy, they’ll say, “Well, we’re not sure how much the DermTech melanoma test adds over dermoscopy”. But NCCN now is basically saying that this does help even in a dermoscopically suspicious lesions. So we think that’s a good addition and a good improvement to the language of our NCCN guidance. It’s a 2A recommendation. That means it’s a unanimous by the 21 members on the panel unanimously are approving that language. There’s only one rung higher, which is a one. Very few technologies get a one. So we’re very pleased with the progress we’ve made with the NCCN and the continued endorsement of the test.