DermTech Goes Public Through Reverse Merger
Sep 5, 2019
DermTech has gained a Nasdaq listing through a reverse merger with Constellation Alpha Capital. The deal gives San Diego’s DermTech access to public investors as the company scales its scalpel-free test for skin cancer. DermTech’s skin patch captures genetic material. The company can then say whether a mole is benign or if a biopsy would be warranted, what’s billed as precision dermatology. The merger, which closed Aug. 30, provided the combined company with $29 million in capital. Investors included RTW Investments, HLM Venture Partners, and Qualcomm co-founder Irwin Jacobs. San Diego-based DermTech took over Constellation’s public stock listing – now trading as “DMTK” and “DMTKW” on Nasdaq – and the management of the business. The deal involved a one-for-two stock split. “Approximately 3.5 million pigmented lesions are assessed for melanoma each year by surgical biopsy. Our platform has the potential to greatly enhance this assessment by helping to find melanoma at earlier stages without requiring surgical incisions,” said DermTech CEO John Dobak in a statement. Dobak recently spoke at Biocom’s Devicefest and Digital Health Conference about warming up insurers and regulators to new technologies. Besides detecting skin cancer, Dermtech said it’s in the business of assessing inflammatory diseases and customizing drug treatment. The merger combined Constellation shares, proceeds from the private sale of Constellation stock and remaining Constellation cash. “The molecular diagnostics sector has meaningfully outperformed the traditional pathology sector over the last two years,” said Constellation CEO Rajiv Sarman Shukla in a statement. As another reason for supporting the merger, he cited DermTech’s flagship product, Pigmented Lesion Assay, or PLA which launched in 2016. DermTech noted a 2018 study published in Melanoma Research that found its PLA test was highly accurate and reduced unnecessary surgical procedures ten-fold. Although it recently became a public company, DermTech flirted with the idea a while back. In 2014, the company scrapped plans for a $25 million initial public offering.