Maker of melanoma skin patch files for Chapter 11 bankruptcy
Maker of melanoma skin patch files for Chapter 11 bankruptcy
Author: Natallie Rocha
Published on: 2024-06-19 01:39:15
Source: Technology – San Diego Union-Tribune
Disclaimer:All rights are owned by the respective creators. No copyright infringement is intended.
San Diego-based DermTech, a company that developed a noninvasive sticker to detect skin cancer, filed for bankruptcy protection Tuesday to restructure its debt and sell its assets.
The company has made multiple attempts to straighten out its finances in the past year amid a tough financing environment for venture capital and public markets. Last summer, DermTech shook up its leadership structure and conducted multiple layoffs — the most recent round in April cut the workforce in half — trimming its headcount to roughly 75 employees.
On Tuesday, DermTech said in documents filed with the Securities and Exchange Commission that it would lay off 20 percent of its workforce, or 15 employees, with the possibility of more cuts in the future.
DermTech, which went public in 2019, developed a noninvasive genomic approach to detecting skin cancer that relies on a smart sticker placed on a mole or dark skin patch. Rather than using a scalpel to collect skin tissue, the sophisticated sticker gathers samples from sensitive areas such as the neck, face and chest.
But while its melanoma test has gained insurance coverage with many groups, including Medicare, it has not been reviewed or approved by the U.S. Food and Drug Administration.
In the meantime, it was facing a cash crunch.
In its most recent quarterly report, DermTech warned that the company’s future relies on raising more capital to support operations.
“There is substantial doubt about our ability to continue as a going concern,” the company wrote in its May 15 SEC filing. “We will need to raise additional capital, which may not be available on acceptable terms, if at all, to fund our existing operations, commercialize our products, and expand our operations. If we are unable to raise additional capital when and as needed, we may be required to further curtail our operations, liquidate or otherwise dispose of assets, wind-down or cease operations entirely. In these circumstances, investors may not receive full value, or any value, for their investment.”
The local biotech sought help from financial firm TD Cowen to examine its strategic options including “an acquisition, merger, reverse merger, business combination, sale of assets, licensing or other transaction involving” DermTech.
The company filed for voluntary Chapter 11 bankruptcy protection in Delaware — where it is incorporated — as it seeks “to continue its laboratory operations and processing orders for the DermTech Melanoma Test, while simultaneously conducting a process to sell substantially all of its assets.”
The company’s largest outstanding financial commitment, according to court records, are to its office landlord, Kilroy Realty LP, for lease obligations of $1,323,413.
Prior to filing for bankruptcy protection, DermTech was already contending with a lawsuit for failing to pay its rent. The company reported to the Securities and Exchange Commission in May that its landlord was suing the company for unpaid rent of $661,706.34.
DermTech leases the entire 110,000 square foot Del Mar Heights office building at 12340 El Camino Real. According to SEC filings, DermTech signed an initial lease for about 96,000 square feet in July 2021 for a term of 10 years and six months.
The company has about 1,000 to 5,000 creditors, which are people and entities owed money by DermTech, according to the bankruptcy records.
The company reports in the bankruptcy filing it has total assets worth about $98 million and total debts of $63 million as of April 30.
DermTech did not respond to the Union-Tribune’s request for comment.
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