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DermTech: Game-Changing Skin Cancer Detection
DermTech is a healthcare disruptor that’s created a new product to detect skin cancer that is cheaper, more accurate, and less invasive than the current solutions. $DMTK could be in the early stages of enormous growth.
DermTech is a healthcare disruptor that’s created a new product to detect skin cancer that is cheaper, more accurate, and less invasive than the current solutions. $DMTK could be in the early stages of enormous growth.
The healthcare sector is a good place to look for potential multi-baggers. There is the opportunity for innovative companies to come up with new products that are major improvements over current offerings and that become the industry standard in markets worth billions of dollars.
$DMTK’s skin cancer detection smart patches may be an example of such a product. Traditionally, doctors screen for skin cancer by examining a mole. If the doctor is concerned, they will order a biopsy where a piece of the mole will be sliced off and sent to a lab for testing.
Slicing may soon be a relic of the past. $DMTK offers a non-invasive genomics smart patch that provides more accurate and less invasive detection. A doctor puts the patch on the mole, the patch captures DNA and RNA, and doctor sends the patch to $DMTK’s lab for analysis.
Speed, cost, and accuracy: $DMTK completes its genetic analysis in 72 hours and sends the doctor a report. While current testing can miss melanoma 17% of the time, $DMTK misses less than 1% of the time. And $DMTK’s testing costs ~25% less than current testing.
Enormous opportunity: Skin cancer is the most common cancer in the US, but it’s very treatable if detected early. To that end, there are about 4M biopsies in the US each year, but ~90% come back negative. $DMTK offers a less invasive and more accurate way to do this testing.
$DMTK’s current product – the Pigmented Lesion Assay – detects melanoma, which is one of the three main forms of skin cancer. $DMTK is currently developing products to detect other forms of skin cancer. Management estimates the total market opportunity for its products is ~$10B.
$DMTK’s products go hand in hand with telehealth trends. Currently, a doctor applies the smart patch in person, but it is easy to imagine patients being sent the smart patch directly, applying it during video meeting with their doctor, and sending it to the lab from their home.
$DMTK is spending heavily on sales, marketing, and research. In 3Q20, S&M expenses increased y/y to $4.6M from $2M and R&D expenses increased to $1.6M from $757K. These investments should help $DMTK grow revenue as it brings products to market.
