Cover Page
Cover Page | 9 Months Ended |
Sep. 30, 2019 | |
Cover [Abstract] | |
Document Type | S-1 |
Amendment Flag | false |
Entity Registrant Name | DermTech, Inc. |
Entity Central Index Key | 0001651944 |
Document Period End Date | Sep. 30, 2019 |
Entity Filer Category | Accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||
Cash and cash equivalents | $ 21,437 | $ 4,753 | $ 1,242 |
Accounts receivable, net | 814 | 580 | 361 |
Inventory | 44 | 40 | 47 |
Prepaid expenses and other current assets | 1,399 | 26 | 87 |
Total current assets | 23,694 | 5,399 | 1,737 |
Property and equipment, net | 210 | 215 | 280 |
Other assets | 84 | 50 | 50 |
Total assets | 23,988 | 5,664 | 2,067 |
Current liabilities: | |||
Accounts payable | 1,004 | 286 | 402 |
Accrued compensation | 1,099 | 480 | 508 |
Accrued liabilities | 171 | 286 | 134 |
Deferred revenue | 1,457 | 1,552 | 1,312 |
Deferred underwriting fees | 1,363 | ||
Convertible notes payable, net | 5,019 | ||
Derivative liability | 2,880 | ||
Total current liabilities | 5,094 | 10,503 | 2,356 |
Notes payable, noncurrent | 516 | 516 | |
Total liabilities | 5,094 | 11,019 | 2,872 |
Commitments and contingencies | |||
Stockholders' equity (deficit): | |||
Common stock value | 1 | 1 | 1 |
Additional paid-in capital | 104,889 | 66,021 | 60,567 |
Accumulated deficit | (85,996) | (71,377) | (61,373) |
Total stockholders' equity (deficit) | 18,894 | (5,355) | (805) |
Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 23,988 | 5,664 | 2,067 |
Series A Convertible Preferred Stock | |||
Current liabilities: | |||
Convertible preferred stock | |||
Series C Convertible Preferred Stock | |||
Current liabilities: | |||
Convertible preferred stock |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | |
Convertible preferred stock, shares authorized | 5,000,000 | 1,626,106 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 15,099,554 | 15,099,554 |
Common stock, shares issued | 11,964,329 | 4,411,567 | 4,410,841 |
Common stock, shares outstanding | 11,964,329 | 4,411,567 | 4,410,841 |
Series A Convertible Preferred Stock | |||
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | |
Convertible preferred stock, shares authorized | 5,000,000 | 0 | |
Convertible preferred stock, shares issued | 1,231 | 0 | |
Convertible preferred stock, shares outstanding | 1,231 | 0 | |
Convertible preferred stock, liquidation preference | $ 6.9 | $ 0 | |
Series C Convertible Preferred Stock | |||
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized | 0 | 1,626,106 | 1,626,106 |
Convertible preferred stock, shares issued | 0 | 1,524,122 | 1,017,583 |
Convertible preferred stock, shares outstanding | 0 | 1,524,122 | 1,017,583 |
Convertible preferred stock, liquidation preference | $ 0 | $ 14.5 | $ 9.7 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | ||||||
Total revenues | $ 565 | $ 641 | $ 1,775 | $ 1,813 | $ 2,442 | $ 1,718 |
Cost of revenues | 779 | 687 | 2,100 | 2,038 | 2,627 | 2,571 |
Gross loss | (214) | (46) | (325) | (225) | (185) | (853) |
Operating expenses: | ||||||
Sales and marketing | 1,976 | 675 | 3,872 | 2,173 | 2,806 | 2,858 |
Research and development | 757 | 549 | 1,847 | 1,616 | 2,054 | 1,997 |
General and administrative | 3,212 | 840 | 6,446 | 2,622 | 3,515 | 2,643 |
Total operating expenses | 5,945 | 2,064 | 12,165 | 6,411 | 8,375 | 7,498 |
Loss from operations | (6,159) | (2,110) | (12,490) | (6,636) | (8,560) | (8,351) |
Other income (expense): | ||||||
Gain on debt extinguishment | 928 | 928 | ||||
Interest expense, net | (364) | (100) | (2,657) | (108) | (1,093) | (18) |
Other expense | (131) | (355) | (351) | |||
Total other income (expense) | 433 | (100) | (2,084) | (108) | (1,444) | (18) |
Net loss and comprehensive loss | $ (5,726) | $ (2,210) | $ (14,574) | $ (6,744) | $ (10,004) | $ (8,369) |
Weighted average shares outstanding used in computing net loss per share, basic and diluted | 7,134,642 | 4,411,255 | 5,331,876 | 4,410,789 | 4,410,913 | 4,407,103 |
Net loss per common share outstanding, basic and diluted | $ (0.80) | $ (0.50) | $ (2.73) | $ (1.53) | $ (2.27) | $ (1.90) |
Assay Revenue | ||||||
Revenues: | ||||||
Total revenues | $ 385 | $ 321 | $ 905 | $ 853 | $ 1,281 | $ 1,051 |
Contract Revenue | ||||||
Revenues: | ||||||
Total revenues | $ 180 | $ 320 | $ 870 | $ 960 | $ 1,161 | $ 667 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Convertible notes | Private placement | Series C convertible preferred stock | Series A convertible preferred stock | Common stock | Common stockConvertible notes | Common stockPrivate placement | Additional paid-in capital | Additional paid-in capitalConvertible notes | Additional paid-in capitalPrivate placement | Accumulated deficit |
Balance at Dec. 31, 2016 | $ 2,045 | $ 1 | $ 55,048 | $ (53,004) | ||||||||
Balance, Shares at Dec. 31, 2016 | 457,734 | 4,394,689 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 559,849 | |||||||||||
Exercise of stock options | 15 | 15 | ||||||||||
Exercise of stock options, Shares | 14,108 | |||||||||||
Exercise of common stock warrants | 18 | 18 | ||||||||||
Exercise of common stock warrants, Shares | 2,044 | |||||||||||
Issuance of common stock warrants, net of issuance costs | 4,934 | 4,934 | ||||||||||
Stock-based compensation | 552 | 552 | ||||||||||
Net loss | (8,369) | (8,369) | ||||||||||
Balance at Dec. 31, 2017 | (805) | $ 1 | 60,567 | (61,373) | ||||||||
Balance, Shares at Dec. 31, 2017 | 1,017,583 | 4,410,841 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 473,216 | |||||||||||
Issuance of common stock warrants, net of issuance costs | 4,319 | 4,319 | ||||||||||
Stock-based compensation | 226 | 226 | ||||||||||
Net loss | (2,281) | (2,281) | ||||||||||
Balance at Mar. 31, 2018 | 1,459 | $ 1 | 65,112 | (63,654) | ||||||||
Balance, Shares at Mar. 31, 2018 | 1,490,799 | 4,410,841 | ||||||||||
Balance at Dec. 31, 2017 | (805) | $ 1 | 60,567 | (61,373) | ||||||||
Balance, Shares at Dec. 31, 2017 | 1,017,583 | 4,410,841 | ||||||||||
Net loss | (6,744) | |||||||||||
Balance at Sep. 30, 2018 | (2,285) | $ 1 | 65,831 | (68,117) | ||||||||
Balance, Shares at Sep. 30, 2018 | 1,524,122 | 4,411,567 | ||||||||||
Balance at Dec. 31, 2017 | (805) | $ 1 | 60,567 | (61,373) | ||||||||
Balance, Shares at Dec. 31, 2017 | 1,017,583 | 4,410,841 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 506,539 | |||||||||||
Exercise of stock options | 5 | 5 | ||||||||||
Exercise of stock options, Shares | 726 | |||||||||||
Issuance of common stock warrants, net of issuance costs | 4,537 | 4,537 | ||||||||||
Stock-based compensation | 912 | 912 | ||||||||||
Net loss | (10,004) | (10,004) | ||||||||||
Balance at Dec. 31, 2018 | (5,355) | $ 1 | 66,021 | (71,377) | ||||||||
Balance, Shares at Dec. 31, 2018 | 1,524,122 | 4,411,567 | ||||||||||
Balance at Mar. 31, 2018 | 1,459 | $ 1 | 65,112 | (63,654) | ||||||||
Balance, Shares at Mar. 31, 2018 | 1,490,799 | 4,410,841 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 33,323 | |||||||||||
Issuance of common stock warrants, net of issuance costs | 218 | 218 | ||||||||||
Stock-based compensation | 250 | 250 | ||||||||||
Net loss | (2,253) | (2,253) | ||||||||||
Balance at Jun. 30, 2018 | (326) | $ 1 | 65,580 | (65,907) | ||||||||
Balance, Shares at Jun. 30, 2018 | 1,524,122 | 4,410,841 | ||||||||||
Issuance of stock, net of issuance costs | 5 | 5 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 726 | |||||||||||
Stock-based compensation | 246 | 246 | ||||||||||
Net loss | (2,210) | (2,210) | ||||||||||
Balance at Sep. 30, 2018 | (2,285) | $ 1 | 65,831 | (68,117) | ||||||||
Balance, Shares at Sep. 30, 2018 | 1,524,122 | 4,411,567 | ||||||||||
Balance at Dec. 31, 2018 | (5,355) | $ 1 | 66,021 | (71,377) | ||||||||
Balance, Shares at Dec. 31, 2018 | 1,524,122 | 4,411,567 | ||||||||||
Cumulative effect adjustment of accounting method change | (45) | (45) | ||||||||||
Stock-based compensation | 258 | 258 | ||||||||||
Net loss | (5,156) | (5,156) | ||||||||||
Balance at Mar. 31, 2019 | (10,298) | $ 1 | 66,279 | (76,578) | ||||||||
Balance, Shares at Mar. 31, 2019 | 1,524,122 | 4,411,567 | ||||||||||
Balance at Dec. 31, 2018 | (5,355) | $ 1 | 66,021 | (71,377) | ||||||||
Balance, Shares at Dec. 31, 2018 | 1,524,122 | 4,411,567 | ||||||||||
Net loss | (14,574) | |||||||||||
Balance at Sep. 30, 2019 | 18,894 | $ 1 | 104,889 | (85,996) | ||||||||
Balance, Shares at Sep. 30, 2019 | 1,231 | 11,964,329 | ||||||||||
Balance at Mar. 31, 2019 | (10,298) | $ 1 | 66,279 | (76,578) | ||||||||
Balance, Shares at Mar. 31, 2019 | 1,524,122 | 4,411,567 | ||||||||||
Issuance of stock, net of issuance costs | 41 | 41 | ||||||||||
Issuance of stock, net of issuance costs, Shares | 37,264 | |||||||||||
Stock-based compensation | 258 | 258 | ||||||||||
Net loss | (3,692) | (3,692) | ||||||||||
Balance at Jun. 30, 2019 | (13,691) | $ 1 | 66,578 | (80,270) | ||||||||
Balance, Shares at Jun. 30, 2019 | 1,524,122 | 4,448,831 | ||||||||||
Issuance of stock, net of issuance costs | 718 | $ 19,802 | 718 | $ 19,802 | ||||||||
Issuance of stock, net of issuance costs, Shares | 1,231 | 647,411 | 3,076,923 | |||||||||
Issuance of common stock through conversion | $ 12,687 | $ 12,687 | ||||||||||
Issuance of common stock through conversion, Shares | (1,524,122) | 1,524,122 | 2,267,042 | |||||||||
Additional paid in capital assumed in Business Combination | 420 | 420 | ||||||||||
Issuance of Series A preferred stock at $3,250 per share | 4,000 | 4,000 | ||||||||||
Stock-based compensation | 684 | 684 | ||||||||||
Net loss | (5,726) | (5,726) | ||||||||||
Balance at Sep. 30, 2019 | $ 18,894 | $ 1 | $ 104,889 | $ (85,996) | ||||||||
Balance, Shares at Sep. 30, 2019 | 1,231 | 11,964,329 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Common stock | |||||
Issuance price per share | $ 6.50 | ||||
Issuance costs | $ 200,000 | ||||
Series C convertible preferred stock | |||||
Issuance price per share | $ 9.54 | $ 9.54 | $ 9.54 | $ 9.54 | |
Issuance costs | $ 100,000 | $ 200,000 | $ 294,647 | $ 406,872 | |
Series A convertible preferred stock | |||||
Issuance price per share | $ 3,250 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||||
Net loss | $ (14,574) | $ (6,744) | $ (10,004) | $ (8,369) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation | 58 | 57 | 76 | 51 |
Stock-based compensation | 1,200 | 722 | 912 | 552 |
Amortization of debt discount and issuance costs | 1,983 | 81 | 963 | |
Change in fair value of derivative liability | 355 | 351 | ||
Gain on extinguishment of convertible notes | (928) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (235) | (81) | (219) | (53) |
Inventory | (4) | 4 | 8 | (15) |
Prepaid expenses and other current assets | (1,407) | (13) | 60 | (66) |
Accounts payable and accrued compensation | 1,330 | (58) | (145) | 343 |
Accrued liabilities and deferred revenue | 511 | (128) | 393 | 1,362 |
Net cash used in operating activities | (11,711) | (6,160) | (7,605) | (6,195) |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (53) | (12) | (12) | (123) |
Net cash used in investing activities | (53) | (12) | (12) | (123) |
Cash flows from financing activities: | ||||
Proceeds from convertible notes payable | 2,600 | 1,500 | 6,800 | |
Payments of debt issuance costs | (110) | (215) | ||
Payments of notes payable | (516) | (65) | ||
Proceeds from issuance of Series A Convertible Preferred Stock | 4,000 | |||
Proceeds received from close of Business Combination | 1,802 | |||
Proceeds from issuance of common stock | 19,803 | 18 | ||
Proceeds from sale of convertible preferred stock and common stock warrants, net of issuance costs | 4,538 | 4,538 | 4,934 | |
Proceeds from exercise of stock options | 759 | 5 | 5 | 15 |
Net cash provided by financing activities | 28,448 | 5,933 | 11,128 | 4,902 |
Net increase/(decrease) in cash and cash equivalents | 16,684 | (239) | 3,511 | (1,416) |
Cash and cash equivalents, beginning of period | 4,753 | 1,242 | 1,242 | 2,658 |
Cash and cash equivalents, end of period | 21,437 | 1,003 | 4,753 | 1,242 |
Supplemental cash flow information: | ||||
Income taxes paid | 1 | 1 | ||
Purchases of property and equipment recorded in accounts payable | 10 | $ 57 | ||
Non-cash investing and financing activities | ||||
Debt discount and derivative liability at issuance of convertible notes payable | $ 270 | $ 364 | $ 2,529 |
The Company and a Summary of it
The Company and a Summary of its Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
The Company and a Summary of its Significant Accounting Policies | 1. The Company and a Summary of its Significant Accounting Policies (a) Nature of Operations On August 29, 2019, DermTech, Inc., formerly known as Constellation Alpha Capital Corp, (“the Company”), and DermTech Operations, Inc., formerly known as DermTech, Inc., (“DermTech Operations”), consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of May 29, 2019, by and among the Company, DT Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and DermTech Operations. We refer to this agreement, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of August 1, 2019, as the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into DermTech Operations, with DermTech Operations surviving as a wholly-owned subsidiary of the Company. We refer to this transaction as the Business Combination. In connection with and two days prior to the completion of the Business Combination, the Company domesticated from the British Virgin Islands to Delaware. DermTech Operations changed its name from DermTech, Inc. to DermTech Operations, Inc. shortly before the completion of the Business Combination. On August 29, 2019, immediately following the completion of the Business Combination, the Company changed its name from Constellation Alpha Capital Corp. to DermTech, Inc., and then effected a one-for-two reverse The Company is an emerging growth molecular diagnostic company developing and marketing its Clinical Laboratory Improvement Amendments of 1988, (“CLIA”), laboratory services including molecular pathology tests to facilitate the diagnosis of dermatologic conditions including melanoma. The Company has developed a proprietary, non-invasive (b) Basis of Presentation, Reverse Stock Split and Going Concern These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, (“U.S. GAAP”), which contemplate continuation of the Company as a going concern, for interim financial information and with the instructions to Form 10-Q S-X. The Company has incurred net losses since the Company’s formation and has an accumulated deficit of $86.0 million and a negative operating cash flow of $11.7 million as of September 30, 2019 and does not have adequate cash on hand to fund operations for the next year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the Reverse Stock Split for all periods presented. The Company has evaluated the expected cash requirements for a 12-month (c) Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the amounts of revenues and expenses reported during the period. On an ongoing basis, management evaluates these estimates and judgments, including those related to assay revenue, stock-based compensation, accounts receivable, derivative liability, the realization of deferred tax assets, and common and preferred stock valuations. Actual results may differ from those estimates. (d) Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. (e) Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from two to five years. Leasehold improvements are depreciated over the shorter of the remaining term of the lease or the useful life of the asset. The Company recorded depreciation expense of $20,000 and $19,000 for the three months ended September 30, 2019 and 2018, respectively, and $0.1 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. No property or equipment was disposed of during the three and nine months ended September 30, 2019 and 2018. The Company assesses its long-lived assets, consisting primarily of property and equipment, for impairment when material events or changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment losses for the three and nine months ended September 30, 2019 and 2018. (f) Research and Development Costs incurred in connection with research and development (“R&D”) activities are expensed as incurred. R&D expenses consist of (i) employee-related expenses, including salaries, benefits, travel and stock compensation expense; (ii) facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and laboratory and other supplies. The Company expenses all costs as incurred in connection with patent applications (including direct application fees and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. (g) Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains $21.2 million in a bank deposit account that is in excess of the $250,000 insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts. (h) Income Taxes The Company provides for federal and state income taxes on the asset and liability approach which requires deferred tax assets and liabilities to be recognized based on temporary differences between the condensed consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s valuation allowance is based on available evidence, including its current year and prior year operating losses, evaluation of positive and negative evidence with respect to certain specific deferred tax assets including evaluation sources of future taxable income to support the realization of the deferred tax assets. The Company has established a full valuation allowance on the deferred tax assets as of September 30, 2019 and December 31, 2018. Current and deferred tax assets and liabilities are recognized based on the tax positions taken or expected to be taken in the Company’s income tax returns. U.S. GAAP requires that the tax benefits of an uncertain tax position can only be recognized when it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authority. Tax benefits related to tax positions that do not meet this criterion are not recognized in the condensed consolidated financial statements. The Company recognizes interest and penalties related to income tax matters in income tax expense. (i) Revenue Recognition The Company’s revenue is generated from two revenue streams, contract revenue and assay revenue. The Company accounts for revenue in accordance with Accounting Standards Codification (“ ASC ASC 606 The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method and elected to utilize Practical Expedient 1 to apply the modified retrospective method to only contracts which were open as of January 1, 2019. Application of the modified retrospective method for the Company’s contract revenue did require a cumulative effect adjustment upon adoption, which resulted in an adjustment of $45,000 to increase accumulated deficit and deferred revenue. Application of the modified retrospective method for the Company’s assay revenue does not materially impact amounts previously reported by the Company, nor does it require a cumulative effect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilized immediately prior to adoption. Accordingly, there is no need for the Company to disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes. The Company recognizes revenue from its contract and assay goods and service in accordance with the core principles and key aspects considered by the Company. These considerations are described in detail below, first for Contract Revenue and then for Assay Revenue. Contract Revenue Contract revenue is generated from the sale of laboratory services and adhesive sample collection kits to third party companies through contract research agreements. Laboratory revenues result from providing gene expression tests to facilitate the development of drugs designed to treat dermatologic conditions. The provision of gene expression services may include sample collection using the Company’s patented adhesive patch biopsy devices, assay development for research partners, ribonucleic acid (“ RNA Contracts As part of the Company’s contract revenue, the Company has established agreements and work orders with the Company’s pharmaceutical partners that fall under the scope of ASC 606. Performance Obligations ASC 606 requires an entity to assess the goods or services promised in a contract and identify as a performance obligation each promise to transfer to the customer either a good or service (or a bundle of goods or services) that is distinct, or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. Based upon review of existing contracts, a majority of the Company’s contract revenue agreements contain three performance obligations: (1) Adhesive patch kits (2) RNA extractions and analysis (3) Certain project management fees Many of the Company’s contract revenue agreements contain promises such as start-up activities Transaction Price The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in an agreement with a customer may include fixed amounts, variable amounts, or both. The transaction prices of the Company’s performance obligations are listed in its agreements on a per unit basis and are fixed for adhesive patch kits and RNA extractions and analysis. The project management fees are assessed based on a monthly service fee which range within the agreements depending on certain factors which include length of the project and the amount of kits or RNA extractions and analysis promised within the agreement. The fixed and variable rates are materially consistent within the Company’s agreements. Therefore, the Company utilizes the prices listed in our agreements as the transaction price for each performance obligation. In determining the transaction price, ASC 606 requires an entity to adjust the promised amount of consideration for the effects of the time value of money if the agreement contains a significant financing component. The Company’s agreements state fixed transaction prices for each deliverable associated with the agreement and do not qualify for the significant financing component of ASC 606. Allocate the Transaction Price The Company’s contracts have a directly observable transaction price pertaining to each promised good or service. Those prices are consistent across agreements for adhesive patch kits and RNA extractions and analysis, with the exception of the Company’s project management fees, which the Company’s believes encompass a sufficiently narrow range of prices that are dictated upon factors of each agreement previously discussed above. Therefore, the Company’s relies on those transaction prices as the basis to allocate the stand-alone selling prices to the performance obligations of the agreement. Most of the Company’s agreements contain a discount that is allocated to items within the agreement, whether they are performance obligations or not. Those items that are not performance obligations (e.g. quality system setup and start up fees) have the associated discount allocated to the transaction prices of the performance obligations evenly. Recognize Revenue An entity should recognize revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when (or as) the customer obtains control of that good or service. The adhesive patch kits are recognized at a point in time when shipped to the customer. The RNA extraction and analysis are recognized at a point in time when the extraction and analysis process is complete and the results are sent to the customer. The Company provides its project management service over the life of the agreement, providing equal benefit to the customer throughout the life of the project or study. Therefore, the revenue related to the Company’s project management fees is recognized straight-line over the life agreement. Deferred Revenue and Remaining Performance Obligations The Company records a deferred revenue liability if a customer pays consideration before the Company transfers a good or service to the customer. Deferred revenue primarily represents upfront milestone payments, for which consideration is received prior to goods/services are completed or delivered. Deferred revenue at September 30, 2019 and December 31, 2018 was $1.5 million and $1.6 million, respectively. Remaining performance obligations include deferred revenue and amounts the Company expects to receive for goods and services that have not yet been delivered or provided under existing agreements. For agreements that have an original duration of one year or less, the Company has elected the practical expedient applicable to such agreements and does not disclose the remaining performance obligations at the end of each reporting period and when the Company expects to recognize this revenue. As of September 30, 2019, the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied for executed agreements with an original duration of one year or more was approximately $1.7 million. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two to three years. Assay Revenue The Company generates revenues from its Pigmented Lesion Assay (“PLA”) and Nevome services it provides to dermatologists in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides prescribing dermatologists with its adhesive sample collection kits to perform non-invasive skin Contracts The Company’s customer is the patient. However, the Company does not enter into a formal reimbursement agreement with a patient, as formal reimbursement agreements are more commonly established with insurance payers. Accordingly, the Company establishes an agreement with a patient in accordance with other customary business practices. • Approval of an agreement is established by the use of the Company’s adhesive patch kit on a patient by an ordering physician, which is then sent to the Company’s central lab for testing. • The Company is obligated to perform the Company’s laboratory services upon receipt of a sample from a physician, and the patient and/or applicable payer are obligated to reimburse us for services rendered based on the patient’s insurance benefits. • Payment terms are a function of a patient’s existing insurance benefits. • Once the Company delivers a patient’s test result to the ordering physician, the Company is legally able to collect payment and bill an insurer and/or patient, depending on payer agreement status or patient insurance benefit status. • The Company’s consideration is deemed to be variable, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. Performance Obligations A performance obligation is a promise in an agreement to transfer a distinct good or service (or a bundle of goods or services) to the customer. The customer is able to order a PLA test. However, a Nevome test cannot be ordered separately from the PLA test and it is contingent on being run only when a PLA test comes back positive on a sample. The Nevome test would not qualify as a distinct service. Therefore, the PLA test is recognized as a single performance obligation and the Nevome test, if rendered, is bundled with the single PLA performance obligation. Transaction Price The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration expected from an agreement with a customer may include fixed amounts, variable amounts, or both. The consideration derived from the Company’s agreements is deemed to be variable, though the variability is not explicitly stated in any agreement. Rather, the implied variability is due to several factors, such as the amount of contractual adjustments, any patient co-payments, deductibles The Company estimates the amount of variable consideration using the expected value method, which represents the sum of probability-weighted amounts in a range of possible consideration amounts. When estimating the amount of variable consideration, the Company considers several factors, such as historical collections experience, patient insurance eligibility and payer reimbursement agreements. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in the estimate of variable consideration and are included in the period in which such revisions are made. Revenue recognized from changes in transaction prices was not material for the three and nine months ended September 30, 2019 and 2018, respectively. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more consideration than it originally estimated for an agreement with a patient, it will account for the change as an increase in the estimate of the transaction price (i.e., an upward revenue adjustment) in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price (i.e., a downward revenue adjustment), provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of a patient’s test result to the ordering physician, with recognition, generally occurring at the date of cash receipt. Allocate the Transaction Price The entire transaction price is allocated entirely to the single performance obligation contained within the agreement with a patient. Recognize Revenue The Company’s single performance obligation is satisfied at a point in time, and that point in time is defined as the date a patient’s successful test result is delivered to the patient’s ordering physician. The Company considers this date to be the time at which the patient obtains control of the final results of the promised test service. If a Nevome test service is ordered and completed in conjunction with the Company’s PLA service, then the Company will recognize revenue upon the delivery of both final reports to the physician. The delivery of the Company’s Nevome test results is typically after the Company’s PLA results are delivered due to the circumstances of how the Company processes the Nevome test. However, this length in time is determined to not materially impact the final overall revenue recognition timing. (c) Disaggregation of Revenue The following tables present the Company’s revenues disaggregated by revenue source during the three months ended September 30, 2019 and 2018, respectively, and during the nine months ended September 30, 2019 and 2018, respectively (in thousands): Three Months Ended 2019 2018 Assay Revenue PLA Test $ 385 $ 321 Contract Revenue Adhesive Patch kits 101 103 RNA Extractions — 144 Project Management Fees 79 55 Other — 18 Total Revenue $ 565 $ 641 Nine Months Ended 2019 2018 Assay Revenue PLA Test $ 905 $ 853 Contract Revenue Adhesive Patch kits 436 323 RNA Extractions 200 396 Project Management Fees 232 154 Other 2 87 Total Revenue $ 1,775 $ 1,813 (d) Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets. Generally, contract revenue has a majority of agreements in which the Company receives a substantial up-front payment Deferred revenue balances are presented on the Company’s condensed consolidated balance sheets and were $1.5 million and $1.6 million as of September 30, 2019 and December 31, 2018, respectively. (j) Accounts Receivable Contract Accounts Receivable Contract accounts receivable are recorded at the net invoice value and are not interest bearing. The Company reserves specific receivables if collectability is no longer reasonably assured, and as of September 30, 2019, the Company did not maintain any reserve over contract receivables as they deal with large established credit worthy customers. The Company re-evaluates Assay Accounts Receivable Due to the nature of the Company’s assay revenue, it can take a significant amount of time to collect upon billed PLA services. The Company prepares an analysis on reimbursement collections and data obtained for each financial reporting period to determine the amount of receivables to be recorded relating to PLA services performed in the applicable period. The Company accrues an allowance for doubtful accounts against its accounts receivable when it is probable that an account is not collectible, based on write off history, credit risk of specific accounts, aging analysis and other information available on specific accounts. The Company generally does not perform evaluations of customers’ financial condition and generally does not require collateral. Accounts receivable are written off when all efforts to collect the balance have been exhausted. Historically, the Company’s bad debt expense has not been significant. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for doubtful accounts. The Company recorded $0.4 million and $0.3 million of gross assay accounts receivable as of September 30, 2019 and December 31, 2018, respectively. In addition, the Company established an allowance for doubtful accounts of $0.1 million and $0.1 million as of September 30, 2019 and December 31, 2018, respectively. (k) Freight and Shipping Costs The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues. (l) Comprehensive Income (Loss) Comprehensive income/(loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner (m) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. (n) Net Loss Per Share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average common shares outstanding during the period. Because there is a net loss attributable to common shareholders during the three and nine months ended September 30, 2019 and 2018, the outstanding common stock warrants, stock options, restricted stock units and preferred stock have been excluded from the calculation of diluted loss per common share because their effect would be anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted loss per share are the same. Diluted net loss per common share for the three and nine months ended September 30, 2019 excludes the effect of anti-dilutive equity instruments including 615,385 shares of common stock issuable upon conversion of the Company’s preferred stock, 4,226,785 shares of common stock issuable upon the exercise of outstanding common stock warrants and 964,995 shares of common stock issuable upon the exercise stock options and release of restricted stock units. Diluted net loss per common share for the three months ended September 30, 2018 excludes the effect of anti-dilutive equity instruments including 1,524,122 shares of common stock issuable upon conversion of the Company’s preferred stock, 1,435,315 shares of common stock issuable upon the exercise of outstanding warrants and 982,760 shares of common stock issuable upon the exercise stock options and release of restricted stock units. The Company did not consider a two-class (o) Stock-Based Compensation Compensation costs associated with stock option awards and other forms of equity compensation are measured at the grant-date fair value of the awards and recognized over the requisite service period of the awards on a straight-line basis. The Company grants stock options to purchase common stock to employees with exercise prices equal to the fair market value of the underlying stock, as determined by the board of directors, management and outside valuation experts prior to the Business Combination. The board of directors and outside valuation experts determine the fair value of the underlying stock by considering a number of factors, including historical and projected financial results, the risks the Company faced at the time, the preferences of the Company’s debt holders and preferred stockholders, and the lack of liquidity of the Company’s common stock. Subsequent to the close of the Business Combination, the fair market value of stock options is based on the closing stock price on the grant date. The fair value of each stock option award is estimated using the Black-Scholes-Merton valuation model. Such value is recognized as expense over the requisite service period, net of estimated forfeitures, using the straight-line method. The expected term of options is based on the simplified method which defines the expected term as the average of the contractual term of the options and the weighted average vesting period for all option tranches. The expected volatility of stock options is based upon the historical volatility of a number of related publicly traded companies in similar stages of development. The risk-free interest rate is based on the average yield of U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The Company accounts for stock options to non-employees non-employees re-measured non-forfeitable Restricted stock units (“RSUs”), are considered restricted stock. The fair value of restricted stock is equal to the fair market value of the underlying stock, as determined by the board of directors, management and input from outside valuation experts prior to the Business Combination. Subsequent to the close of the Business Combination, the fair market value of RSUs is based on the closing stock price on the grant date. The Company recognizes stock-based compensation expense based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration estimated forfeitures. RSUs that are granted to employees have a requisite service period between two and four years. The fair value of each option for employees was estimated on the date of grant using the following assumptions: Three Months Ended Nine Months Ended September 30, 2019 2018 2019 2018 Assumed risk-free interest rate 1.68% 2.77% 1.68% - 2.50% 2.46% - 2.94% Assumed volatility 73.50% 77.27% 73.20% - 73.50% 77.27% - 78.25% Expected option term 6.02 years 6.02 years 6.02 - 6.08 years 5.76 - 6.04 years Expected dividend yield — — — — The Company recorded stock-based compensation expense for employee options, RSUs, common stock warrants, and consultant options of $0.7 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively and $1.2 million and $0.7 million for the nine months ended September 30, 2019 and 2018, respectively. The total compensation cost related to non-vested (p) Derivative Liability From time-to-time, (q) Fair Value Measurements The Company uses a three-tier fair value hierarchy to prioritize the inputs used in the Company’s fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. There were no other assets or liabilities that were measured at fair value on a recurring basis as of September 30, 2019. The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 The fair value of the derivative liability was determined based on a probability weighted valuation model of the various embedded features of the Company’s outstanding convertible debt. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding estimates of timing and the probability of each embedded conversion feature occurring. An initial fair value valuation was performed at each date of issuance of the outstanding convertible debt and subsequently remeasured as of August 29, 2019, which was the date the convertible debt converted to common stock. The accumulated change in fair value between measurement dates was determined to be a $0.1 million and $0.4 million loss for the three and nine months ended September 30, 2019, respectively, which was recognized as Other expense within the condensed consolidated Statement of Operations and Comprehensive Loss. As the convertible debt converted to common stock, this conversion eliminated the derivative liability on August 29, 2019. Changes in these assumptions can materially | (1) The Company and a Summary of its Significant Accounting Policies (a) Nature of Operations DermTech, Inc. (the Company) was incorporated in California on December 28, 1995 as DermTech, International, and re-incorporated non-invasive (b) Basis of Presentation and Going Concern These financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP), which contemplate continuation of the Company as a going concern. The Company has incurred net losses since the Company’s formation and has an accumulated deficit of $71.4 million and a net capital deficiency of $5.1 million as of December 31, 2018 and does not have adequate cash on hand to fund operations for the next year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has evaluated the expected cash requirements for a 12 month period from the issuance date of the financial statements through March 2020. Management intends to pursue additional equity and debt financings. They believe this will be sufficient to provide the Company with the ability to continue, to support its planned operations and to continue developing and commercializing gene expression tests. There can be no assurances as to the availability of additional financing or the terms upon which additional financing may be available to the Company. If the Company is unable to obtain sufficient funding at acceptable terms, it may be forced to significantly curtail its operations, and the lack of sufficient funding may have a material adverse impact on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. (c) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported during the period. On an ongoing basis, management evaluates these estimates and judgments, including those related to assay revenue, stock-based compensation, accounts receivable, derivative liability, the realization of deferred tax assets, and common and preferred stock valuations. Actual results may differ from those estimates. (d) Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. (e) Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line (f) Research and Development Costs incurred in connection with research and development activities are expensed as incurred. Research and development expenses consist of (i) employee-related The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. (g) Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains $4.5 million in a bank deposit account that is in excess of the $250,000 insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts. (h) Income Taxes The Company provides for federal and state income taxes on the asset and liability approach which requires deferred tax assets and liabilities to be recognized based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s valuation allowance is based on available evidence, including its current year and prior year operating losses, evaluation of positive and negative evidence with respect to certain specific deferred tax assets including evaluation sources of future taxable income to support the realization of the deferred tax assets. The Company has established a full valuation allowance on the deferred tax assets as of December 31, 2018 and 2017. Current and deferred tax assets and liabilities are recognized based on the tax positions taken or expected to be taken in the Company’s income tax returns. U.S. GAAP requires that the tax benefits of an uncertain tax position can only be recognized when it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authority. Tax benefits related to tax positions that do not meet this criterion are not recognized in the financial statements. The Company recognizes interest and penalties related to income tax matters in income tax expense. (i) Revenue Recognition Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable based on the nature of the fee charged for the products or services delivered and whether there are existing contractual arrangements. Revenues are deferred for payments received before the earnings process is complete. Contract Revenue Contract revenue is generated from the sale of laboratory services and adhesive sample collection kits to third party companies through contract research agreements. L revenues result from providing gene expression tests to facilitate the development of drugs designed to treat dermatologic conditions. The provision of gene expression services may include sample collection using the Company’s patented adhesive patch biopsy devices, assay development for research partners, ribonucleic acid (RNA) isolation, expression, amplification and detection, including data analysis and reporting. The Company has multiple element arrangements for contract research collaborations that include sales of biopsy kits, laboratory processing and set up procedures. The Company accounts for these revenues as separate units of accounting. To qualify as a separate unit of accounting, the delivered item must have value to the customer on a standalone basis. The Company has concluded that their biopsy kits have standalone value as they are routinely sold separately. In addition, the Company’s laboratory processing fees have standalone value and can be sold separately. The timing of the delivery of adhesive patch biopsy devices and performance of RNA analysis varies significantly by each contract. Revenue is recognized when adhesive patch biopsy devices are shipped and when RNA extraction data is summarized and delivered to the customer. Project initiation and set up milestones include project management and control, quality systems set up, procurement and receiving inspection, revisions to standard operating procedures and other items. These items are recognized as revenue pro ratably over completion of the standalone products and/or services of the contract. The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on their relative selling price. The Company determined the relative selling price for each deliverable using the best estimate of selling price (BESP) for the deliverable. The Company determines the BESP for each deliverable primarily by considering the historical selling price of these deliverables in similar transactions as well as other factors, including, but not limited to review of stand-alone sales and current pricing practices. Assay Revenue The Company generates revenues from their Pigmented Lesion Assay (PLA) and Nevome services it provides to dermatologists in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides participating dermatologists with its adhesive sample collection kits to perform non-invasive For many PLA and Nevome services performed within the United States, the payment the Company ultimately receives depends upon the rate of reimbursement from commercial third-party third-party third-party third-party third-party case-by-case third-party Due to the significant time it can take to collect upon billed PLA and Nevome services, a detailed analysis is performed based upon historical reimbursement data for each significant third-party (j) Accounts Receivable Contract Accounts Receivable Contract accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the contractual payment terms which range from 30 to 60 days. The Company reserves specific receivables if collectability is no longer reasonably assured, and as of December 31, 2018, the Company did not maintain any reserve over contract receivables as they deal with large established credit worthy customers. The Company re-evaluates Assay Accounts Receivable Due to the nature of the Company’s assay revenue, it can take a significant amount of time to collect upon billed PLA services. The Company prepares an analysis on reimbursement collections and data obtained as of each year-end (k) Freight and Shipping Costs The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues. (l) Comprehensive Income (Loss) Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner (m) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenues have been generated in the United States and all assets are held in the United States. (n) Net Loss Per Share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average common shares outstanding during the period. Because there is a net loss attributable to common shareholders for the years ended December 31, 2018 and 2017, the outstanding common stock warrants, stock options, restricted stock units and preferred stock have been excluded from the calculation of diluted loss per common share because their effect would be anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted loss per share are the same. Diluted net loss per common share for 2018 excludes the effect of anti-dilutive equity instruments including 1,524,122 shares of common stock issuable upon conversion of our preferred stock, 1,177,486 shares of common stock issuable upon the exercise of outstanding common stock warrants and 1,000,587 shares of common stock issuable upon the exercise stock options and release of restricted stock units. Diluted net loss per common share for 2017 excludes the effect of anti-dilutive equity instruments including 1,017,583 shares of common stock issuable upon conversion of our preferred stock, 1,625,030 shares of common stock issuable upon the exercise of outstanding warrants and 723,384 shares of common stock issuable upon the exercise stock options and release of restricted stock units. The Company did not consider a two class method of earnings (loss) per share given that the Company’s convertible participating securities do not participate in losses. (o) Stock-Based Compensation Compensation costs associated with stock option awards and other forms of equity compensation are measured at the grant-date straight-line The Company grants stock options to purchase common stock to employees with exercise prices equal to the fair market value of the underlying stock, as determined by the board of directors, management and outside valuation experts. The board of directors and outside valuation experts determine the fair value of the underlying stock by considering a number of factors, including historical and projected financial results, the risks the Company faced at the time, the preferences of the Company’s debt holders and preferred stockholders, and the lack of liquidity of the Company’s common stock. The fair value of each stock option award is estimated using the Black-Scholes-Merton risk-free The Company accounts for stock options to non-employees Black-Scholes-Merton non-employees re-measured non-forfeitable Restricted stock units (RSU) are considered restricted stock. The fair value of restricted stock is equal to the fair market value of the underlying stock, as determined by the board of directors, management and input from outside valuation experts. The Company recognizes stock-based compensation expense based on the fair value on a straight-line The fair value of each option for employees was estimated on the date of grant using the following assumptions: Year ended December 31 2018 2017 Assumed risk-free interest rate 2.46%–3.00% 1.92%–2.08% Assumed volatility 72.30%–78.25% 59.95%–64.47% Expected option term 5.76–6.04 years 5.95–6.06 years Expected dividend yield — — The Company recorded stock-based compensation expense for employee options, RSUs, common stock warrants, and consultant options of $0.9 million and $0.6 million for the years ended December 31, 2018 and 2017, respectively. The total compensation cost related to non-vested straight-line (p) Fair Value Measurements The Company uses a three-tier Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Observable (Level 2) Significant Unobservable (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 The fair value of the derivative liability was determined based on a probability weighted valuation model of the various embedded features of the Company’s outstanding convertible debt. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding estimates of timing and the probability of each embedded conversion feature occurring. An initial fair value valuation was performed at each date of issuance of the outstanding convertible debt and subsequently remeasured as of December 31, 2018. The accumulated change in fair value between the measurement dates was determined to be a $0.4 million loss, which was recognized as Other expense within the Statement of Operations. Changes in these assumptions can materially affect the fair value. There were no other assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2018 and 2017. The Company believes the carrying amount of cash and cash equivalents, accounts payable and accrued expenses approximate their estimated fair values due to the short-term (q) Derivative Liability From time-to-time, (r) Accounting Pronouncement Recently Adopted In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-09, (s) Accounting Pronouncements Issued But Not Yet Effective In May 2014, the FASB issued ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12, Narrow-Scope ASU 2016-20, We have substantially completed our assessment of the new standard, which we will adopt on January 1, 2019. The Company anticipates that the standard will not have a material impact on our financial statements. We will utilize the modified retrospective approach upon full adoption of Topic 606. In February 2016, the FASB issued ASU 2016-02, right-of-use 2018-10, 2018-11, 2018-20, In August 2018, the FASB issued ASU 2018-13, |
Balance Sheet Details
Balance Sheet Details | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Balance Sheet Details | 2. Balance Sheet Details Condensed consolidated balance sheet details are as follows (in thousands): September 30, 2019 December 31, 2018 Prepaid expenses and other current assets: Prepaid insurance $ 1,281 $ 2 Prepaid trade shows 94 19 Other current assets 24 5 Total prepaid expenses and other current assets $ 1,399 $ 26 Property and equipment, gross: Laboratory equipment $ 343 $ 314 Computer equipment 9 3 Furniture and fixtures 34 34 Leasehold improvements 32 14 Total property and equipment, gross 418 365 Less accumulated depreciation (208 ) (150 ) Total property and equipment, net $ 210 $ 215 September 30, 2019 December 31, 2018 Accrued liabilities: Accrued consulting services $ 40 $ 23 Accrued interest — 164 Deferred rent 85 85 Other accrued expenses 46 14 Total accrued liabilities $ 171 $ 286 Accrued compensation: Accrued paid time off $ 350 $ 234 Accrued bonus and deferred compensation 471 246 Accrued severance 278 — Total accrued compensation $ 1,099 $ 480 | (2) Balance Sheet Details Balance sheet details are as follows (in thousands): December 31 , 2018 2017 Prepaid expenses and other current assets: Prepaid insurance $ 2 $ 40 Prepaid trade shows 19 42 Other current assets 5 5 $ 26 $ 87 Property and equipment, gross: Laboratory equipment $ 314 $ 305 Computer equipment and software 3 — Furniture and fixtures 34 34 Leasehold improvements 14 15 365 354 Less accumulated depreciation (150 ) (74 ) $ 215 $ 280 December 31 , 2018 2017 Accrued liabilities: Accrued consulting services $ 23 $ 25 Accrued legal services — 3 Accrued interest 164 33 Deferred rent 85 54 Other accrued expenses 14 19 $ 286 $ 134 Accrued compensation: Accrued paid time off $ 234 $ 216 Accrued bonus and deferred compensation 246 292 $ 480 $ 508 |
Debt
Debt | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Debt | 3. Debt Wilson, Sonsini, Goodrich & Rosati Note On January 7, 2016, DermTech Operations converted $0.6 million of its accounts payable due to Wilson, Sonsini, Goodrich & Rosati (DermTech Operations’ general legal counsel) into a three-year promissory note bearing 3% interest and maturing on January 7, 2019, or earlier under certain circumstances. There were no principal payments due until the note reached maturity. On October 25, 2017, DermTech Operations amended and restated its promissory note with Wilson, Sonsini, Goodrich & Rosati by paying down $0.1 million on the principal balance of the note while extending its maturity date to January 7, 2020, or earlier under certain circumstances, at a continued interest rate of 3%. The Company recorded $3,000 and $4,000 of interest expense relating to this note payable during the three months ended September 30, 2019 and 2018, respectively, and $11,000 and $12,000 for the nine months ended September 30, 2019 and 2018, respectively. On September 16, 2019, the Company paid all outstanding principal and accrued interest in the amount of $0.6 million on this note payable. 2018 Convertible Bridge Notes From August to November 2018, DermTech Operations issued $6.8 million aggregate principal amount of convertible bridge notes (“2018 Bridge Notes”), resulting in $6.6 million in net proceeds. The 2018 Bridge Notes carried a 10% interest rate and matured on March 31, 2019. Since the 2018 Bridge Notes were not paid or converted by March 31, 2019, the interest rate increased to 15%. The 2018 Bridge Notes were subject to automatic conversion into equity securities of DermTech Operations at the closing of a single capital raising transaction or series of related capital raising transactions in which DermTech Operations issued equity securities with aggregate gross proceeds to DermTech Operations of at least $20 million (“Qualified Financing”) that occurred on or prior to the maturity date. Upon automatic conversion of these 2018 Bridge Notes, the note holders were entitled to receive shares of DermTech Operations’ equity securities equal to the quotient obtained by dividing the unpaid principal amount of these 2018 Bridge Notes plus interest accrued but unpaid by the lesser of: 1) the lowest price per share of the new stock paid in the Qualified Financing by investors multiplied by 70%. 2) the price per share obtained by dividing $45 million by DermTech Operations’ fully-diluted capitalization immediately prior to such Qualified Financing assuming exercise or conversion of all outstanding options and issuance of all outstanding restricted stock unit awards, including all shares of common stock reserved and available for future grant under any equity incentive plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing, but excluding any shares issuable upon exercise of the DermTech Operations’ outstanding common stock warrants or conversion of the 2018 Bridge Notes. In the event DermTech Operations consummated, on or before the maturity date, an equity financing pursuant to which it sold shares of equity in a transaction that did not constitute a Qualified Financing, then the note holders had the option, but not the obligation, to elect to treat such equity financing as a Qualified Financing on the same terms set forth in these 2018 Bridge Notes. In addition, the note holders could have elected to convert at any time all of the outstanding principal balance under these 2018 Bridge Notes, together with any accrued but unpaid interest, into shares of the DermTech Operations’ Series C Preferred Stock (“Optional Conversion”). Upon Optional Conversion of these notes, the note holders were entitled to receive a number of shares of DermTech Operations’ Series C Preferred Stock equal to the quotient obtained by dividing the unpaid principal amount of these notes plus interest accrued but unpaid by $9.54, subject to adjustment upon certain events. The note holders would have also received common stock warrants, in substantially the same form as the common stock warrants issued to any purchasers of DermTech Operations’ Convertible Series C Preferred Stock. In the event of a Change of Control (as defined in the 2018 Bridge Note agreements) transaction prior to the payment in full or conversion of these 2018 Bridge Notes, then the note holders could have elected to either: 1) effect the Optional Conversion feature, as discussed above, or 2) demand payment of the outstanding principal amount and the current accrued but unpaid interest of these 2018 Bridge Notes (“Base Amount”) plus an amount equal to the Base Amount multiplied by a specified percentage. Several of the embedded features of the 2018 Bridge Notes were identified as meeting the criteria of a derivative and ultimately bifurcated from the host contract. DermTech Operations accounted for this by separating the derivative component of the 2018 Bridge Notes as a derivative liability on the condensed consolidated balance sheet. DermTech Operations assigned a value to the debt component of the 2018 Bridge Notes equal to the difference between the estimated fair value of the 2018 Bridge Notes with and without the conversion features, which resulted in DermTech Operations recording the 2018 Bridge Notes at a discount. The total debt discount amount as of the respective date of issuance of the 2018 Bridge Notes was determined to be $2.5 million. DermTech Operations amortized the debt discount over the contractual life (i.e., March 31, 2019) of the 2018 Bridge Notes as additional non-cash On May 23, 2019, DermTech Operations and the various convertible 2018 Bridge Note holders agreed to amend the outstanding convertible notes that were issued in the last half of 2018. As part of the amendment, the maturity dates of the notes were extended to the earliest of (i) September 24, 2019; (ii) the occurrence of an Event of Default (as defined in the 2018 Bridge Notes); (iii) the consummation of a liquidation or dissolution of DermTech Operations (iv) a Liquidation Transaction (as defined in the 2018 Bridge Notes); or (v) the consummation of a merger with or into the Company or any of its subsidiaries. In addition, immediately prior to the consummation of a DermTech Operations merger with or into the Company or any of its subsidiaries substantially on the terms contemplated as of the date of the amendment to the outstanding convertible notes on or before September 24, 2019 (a “Qualifying Merger”), the outstanding principal amount of and all accrued but unpaid interest on each of the convertible notes would automatically be converted into shares of the DermTech Operations’ common stock at a price per share equal to 70% of the Merger Consideration. For purposes of the preceding sentence, the “Merger Consideration” means (i) the lesser of $6.46 and (ii) the offering price per share of the private investment in public equity (“PIPE”) transaction to be consummated concurrently with the consummation of the Qualifying Merger multiplied by the Conversion Ratio. For the purposes of the preceding sentence, the “Conversion Ratio” means the quotient resulting from dividing 8,000,000 by the number of fully diluted shares of the Company as of immediately after the conversion of the notes. This new embedded Qualifying Merger feature of the 2018 Bridge Notes was identified as meeting the criteria of a derivative and ultimately bifurcated from the host contract with the previously identified embedded features that met the criteria of being a derivative. In addition, this amendment was accounted for as a debt modification of the existing 2018 Bridge Notes. 2019 Convertible Bridge Notes Between June 5 th th 2019 Bridge Notes The unpaid principal amount of these convertible bridge notes together with any interest accrued but unpaid thereon, would automatically be converted into shares of DermTech Operations’ common stock immediately prior to the consummation of a Qualifying Merger. Upon the conversion of these notes, the note holders were entitled to receive a number of shares of DermTech Operations’ common stock equal to the quotient obtained by dividing (i) the unpaid principal amount of these notes plus interest accrued but unpaid thereon, by (1) if the Qualifying Merger consummates prior to the maturity date, the lesser of (x) $5.80 and (y) 90% of the Merger Consideration (as defined below), or (2) if the Qualifying Merger consummates on or after the maturity date, the lesser of (x) $4.51 and (y) 70% of the Merger Consideration. For purposes of the preceding sentence, the “Merger Consideration” means the offering price per share of the PIPE transaction between Constellation and the investors thereto, consummated substantially concurrently with the consummation of the Qualifying Merger, multiplied by the Conversion Ratio (as defined below). For purposes of the preceding sentence, the “Conversion Ratio” means the quotient resulting from dividing 8,000,000 by the number of the Company’s fully diluted shares immediately prior to the consummation of the Qualifying Merger, assuming exercise of all outstanding options, issuance of all common stock underlying outstanding restricted stock unit awards, exercise of all outstanding warrants, and conversion of all outstanding convertible promissory notes, including these notes and any other note of substantially the same form, but excluding all shares of DermTech Operations’ common stock reserved and available for future grant under any equity incentive or similar plan of DermTech Operations, and in each case as adjusted for stock splits, combinations and similar transactions, all calculated in accordance with the final allocation schedule delivered in connection with the Qualifying Merger. In addition to the Qualifying Merger feature, the 2019 Bridge Notes were issued with the same embedded features as the 2018 Bridge Notes, as discussed above, prior to the May 23, 2019 amendment. Several of the embedded features of the 2019 Bridge Notes were identified as meeting the criteria of a derivative and ultimately bifurcated from the host contract. DermTech Operations accounted for this by separating the derivative component of the 2019 Bridge Notes as a derivative liability on the condensed consolidated balance sheet. The Company assigned a value to the debt component of the 2019 Bridge Notes equal to the difference between the estimated fair value of the 2019 Bridge Notes with and without the conversion features, which resulted in DermTech Operations recording the 2019 Bridge Notes at a discount. The total debt discount amount as of the respective date of issuance of the 2019 Bridge Notes was determined to be $0.3 million. DermTech Operations amortized the debt discount over the contractual life (i.e., September 25, 2019) of the 2019 Bridge Notes as additional non-cash interest Exchange of Convertible Debt for Common Shares On August 29, 2019, immediately prior to the completion of the Business Combination, all unpaid principal and interest on the 2019 Bridge Notes and the 2018 Bridge Notes (collectively, the “Bridge Notes”) was converted into 2,267,042 common shares of DermTech Operations. The conversion of the Bridge Notes debt for common shares of DermTech Operations was accounted for as an extinguishment of the Bridge Notes. The conversion resulted in DermTech Operations having legally settled the debt obligations. DermTech Operations’ equity was increased by the settlement-date fair value of the common shares issued. Certain bifurcated embedded derivative instruments also were settled as part of the transaction. The net carrying amounts of the Bridge Notes, including remaining unamortized debt discount and issuance costs, and the bifurcated embedded derivative liability were extinguished on the date of the Business Combination. A gain on debt extinguishment of $0.9 million was recognized, which represented the unamortized debt discounts and issuance costs remaining at the time of the debt extinguishment. The following table summarizes information about the liability components the Company’s 2018 Bridge Notes (in thousands): 2018 Bridge Notes September 30, 2019 December 31, 2018 Principal amount outstanding $ — $ 6,800 Unamortized discount and issuance costs — (1,781 ) Total current convertible notes payable, net $ — $ 5,019 There was no liability balance for the Company’s 2019 Bridge Notes as of September 30, 2019 and December 31, 2018. | (3) Debt Wilson, Sonsini, Goodrich & Rosati Note On January 7, 2016, the Company converted $0.6 million of its accounts payable due to Wilson, Sonsini, Goodrich & Rosati (the Company’s general legal counsel) into a three year promissory note bearing 3% interest and maturing on January 7, 2019, or earlier under certain circumstances. There are no principal payments due until the note reaches maturity. On October 25, 2017, the Company amended and restated its promissory note with Wilson, Sonsini, Goodrich & Rosati by paying down $0.1 million on the principal balance of the note while extending its maturity date to January 7, 2020, or earlier under certain circumstances at a continued interest rate of 3%. The Company recorded $15,000 and $17,000 of interest expense relating to this note payable during the year ended December 31, 2018 and 2017, respectively. 2018 Convertible Bridge Notes From August to November 2018, the Company issued $6.8 million aggregate principal amount of convertible bridge notes (Bridge Notes), resulting in $6.6 million in net proceeds. The Bridge Notes carry a 10% interest rate and mature on March 31, 2019. If the Bridge Notes are not paid or converted by March 31, 2019 then the interest rate increases to 15%. The Company intends to let these Bridge Notes accrue at 15% interest until they are converted by one of the methods discussed below. The Bridge Notes are subject to automatic conversion into equity securities of the Company at the closing of a single or series of related capital raising transactions in which the Company issues equity securities with aggregate gross proceeds to the Company of at least $20 million (Qualified Financing) that occurs on or prior to the maturity date. Upon automatic conversion of these Bridge Notes, the note holders shall be entitled to receive shares of the Company’s equity securities equal to the quotient obtained by dividing the unpaid principal amount of these Bridge Notes plus interest accrued but unpaid by the lesser of: 1) the lowest price per share of the new stock paid in the Qualified Financing by investors multiplied by 70%. 2) the price per share obtained by dividing $45 million by the Company’s fully-diluted capitalization immediately prior to such Qualified Financing assuming exercise or conversion of all outstanding options and issuance of all outstanding restricted stock unit awards, including all shares of common stock reserved and available for future grant under any equity incentive plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing, but excluding any shares issuable upon exercise of the Company’s outstanding common stock warrants or conversion of the Bridge Notes. In the event the Company consummates, on or before the Maturity Date, an equity financing pursuant to which it sells shares of equity in a transaction that does not constitute a Qualified Financing, then the note holders shall have the option, but not the obligation, to elect to treat such equity financing as a Qualified Financing on the same terms set forth. In addition, the note holders may elect to convert at any time all of the outstanding principal balance under these Bridge Notes, together with any accrued but unpaid interest into shares of the Company’s Series C Preferred Stock (Optional Conversion). Upon Optional Conversion of these notes, the note holders shall be entitled to receive a number of shares of the Company’s Series C Preferred Stock equal to the quotient obtained by dividing the unpaid principal amount of these notes plus interest accrued but unpaid by $9.54, subject to adjustment upon certain events. The note holders will also receive common stock warrants, in substantially the same form as the common stock warrants issued to any purchasers of the Company’s Convertible Series C Preferred Stock. In the event of a Change of Control (as defined in the Bridge Note agreements) transaction prior to the payment in full or conversion of these Bridge Notes, then the note holders may elect to either: 1) effect the Optional Conversion feature, as discussed above. 2) demand payment of the outstanding principal amount and the current accrued but unpaid interest of these Bridge Notes (Base Amount) plus an amount equal to the Base Amount multiplied by a specified percentage, Several of the embedded features of the Bridge Notes were identified as meeting the criteria of a derivative and ultimately bifurcated from the host contract. The Company accounted for this by separating the derivative component of the Bridge Notes as a derivative liability on the balance sheet. The Company assigned a value to the debt component of the Bridge Notes equal to the difference between the estimated fair value of the Bridge Notes with and without the conversion features, which resulted in the Company recording the Bridge Notes at a discount. The total debt discount amount as of the respective date of issuance of the Bridge Notes was determined to be $2.5 million. The Company is amortizing the debt discount over the life of the Bridge Notes as additional non-cash The following table summarizes information about the liability components the Company’s financing arrangement (in thousands): Bridge Notes December 31, 2018 December 31, 2017 Principal amount outstanding $ 6,800 $ — Unamortized discount and issuance costs (1,781 ) — Total current convertible notes payable, net $ 5,019 $ — |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | ||
Stockholders' Equity | 4. Stockholders’ Equity (a) Classes of Stock The Company’s amended and restated certificate of incorporation authorizes it to issue 50,000,000 shares of common stock and 5,000,000 shares of preferred stock. Both classes of stock have a par value of $0.0001 per share. Pursuant to the Business Combination, the Company issued shares of its common stock to DermTech Operations common stockholders, at an exchange ratio of approximately 1.16 shares of the Company’s common stock for each share of DermTech Operations common stock. In connection with and immediately following the Business Combination, the Company filed a certificate of amendment to its amended and restated certificate of incorporation to affect a one-for-two (b) Series C Convertible Preferred Stock Financing In an effort to raise additional capital, DermTech Operations conducted a Series C Convertible Preferred Stock private offering in August of 2016 for a total offering amount of $15 million at a price per share of $9.54. During 2017, 559,849 shares of Series C Convertible Preferred Stock were issued for gross cash proceeds of $5.3 million, reduced by issuance costs of $0.4 million. In addition, 102,740 common stock warrants were issued with this offering, exclusive of compensatory warrants issued to the placement agent. During 2018, 506,538 shares of Series C Convertible Preferred Stock were issued for gross cash proceeds of $4.8 million, reduced by issuance costs of $0.3 million. On May 23, 2019, DermTech Operations agreed to an amendment with the Series C Convertible Preferred Stockholders that immediately prior the consummation of a merger with or into the Company or any of its subsidiaries on or before September 24, 2019, the outstanding Series C Convertible Preferred Stock would convert into common stock at a one to one ratio in accordance with DermTech Operations’ amended and restated certificate of incorporation. Immediately prior to the completion of the Business Combination, each share of Series C Convertible Preferred Stock of DermTech Operations outstanding as of such time was automatically converted into one share of common stock of DermTech Operations. The following were the features of the Series C Convertible Preferred Stock of DermTech Operations immediately prior to the close of the Business Combination: Preferred Dividends Holders of Series C Convertible Preferred Stock were entitled to non-cumulative Preferred Liquidation Preference Series C Convertible Preferred Stock was entitled to a per share liquidation preference equal to the initial purchase price plus declared but unpaid dividends. In the event of a liquidation transaction, holders of Series C Convertible Preferred Stock were entitled to receive prior and in preference to any distribution to common stock shareholders. Redemption Series C Convertible Preferred Stock did not contain any mandatory redemption features. The Company’s convertible preferred stock had been classified as temporary equity in the accompanying condensed consolidated balance sheets in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption is based upon certain change in control events outside of the Company’s control, including liquidation, sale or transfer of control of the Company. The Company had determined not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty, at the time such convertible preferred stock was outstanding, as to whether or when such events would occur. Conversion Series C Convertible Preferred Stock was convertible into common stock at a rate calculated by dividing the initial purchase price by the conversion price. The initial conversion price was equal to the initial purchase price. Under this conversion feature, each share of Series C Convertible Preferred Stock was convertible at the option of the holder or automatically into fully paid, non-assessable Voting Rights Each holder of common stock is entitled to one vote per share held. Each holder of Series C Convertible Preferred Stock was entitled to the number of votes equal to the number of common shares into which their holdings could be converted. Pursuant to the terms of a voting agreement, preferred and common stockholders voted together as a single class on an as-if-converted (c) Series A Convertible Preferred Stock Financing In connection with the PIPE transaction and on August 29, 2019, immediately following the completion of the Business Combination, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for the Company’s Series A Convertible Preferred Stock. An aggregate of 1,231 shares of Series A Convertible Preferred Stock for an aggregate purchase price of $4.0 million was issued to certain accredited investors. Preferred Dividends Holders of Series A Convertible Preferred Stock are entitled to receive dividends on an as-converted Preferred Liquidation Preference Holders of Series A Convertible Preferred Stock will participate pari passu with the holders of the Company’s common stock on an as-converted Redemption Series A Convertible Preferred Stock does not contain any mandatory redemption features. The Company’s convertible preferred stock has been classified as temporary equity in the accompanying condensed consolidated balance sheets in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption is based upon certain change in beneficial ownership events outside of the Company’s control. The Company has determined not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such events would occur. Conversion Each share of the Company’s Series A Convertible Preferred Stock is convertible into shares of the Company’s common stock at a conversion price per share equal to $6.50, provided that in no event may any shares of the Company’s Series A Convertible Preferred Stock be convertible if the conversion would result in the holder beneficially owning more than 9.99% of the Company’s then-outstanding shares of common stock. Voting Rights The shares of the Company’s Series A Convertible Preferred Stock have no voting rights, except with respect to certain protective provisions set forth in the Series A Certificate of Designation relating to the powers, preferences and rights of such shares. (d) Accelerated Vesting in Association with Business Combination On January 4, 2019, in contemplation of the Business Combination (refer to Note 8), DermTech Operations modified certain provisions of its stock-based compensation awards to all employees and certain non-employees In connection with the modifications, the incremental fair value of certain unvested stock option grants was measured at the date of the modification. For any options in which the fair value immediately after the modification was lower than the fair value immediately prior to the modification, no additional compensation expense was or will be recognized. For options in which the fair value increased as a result of the modification and the award was not fully vested, the incremental fair value will be recognized as an expense over the remaining service period. For options that were modified and became fully vested as a result of the accelerated vesting, the Company recognized an expense for the remaining unrecognized grant date fair value. As a result of the accelerated vesting, the Company recognized stock-based compensation expense of $0.4 million related to this modification. (e) Warrants Public Warrants The Company previously issued 14,936,250 warrants to purchase common stock in public and private placement offerings which were consummated on June 23, 2017 (the “Public Warrants”). The Public Warrants have a five four Series C Warrants In connection with DermTech Operations’ Series C Preferred Stock financing, investors that purchased at least $1 million of Series C Convertible Preferred Stock in a single closing received a three-year warrant to purchase common shares at an exercise price of $9.54 in the amount equal to 20% of shares of Series C Preferred Stock purchased. Outstanding Series C warrants totaled 229,222 and 292,119 at September 30, 2019 and December 31, 2018, respectively. Placement Agent Warrants In connection with several of DermTech Operations’ financings that took place between 2015 and 2018, DermTech Operations engaged a registered placement agent to assist in marketing and selling of common and preferred units. From 2015 to 2016, 168,522 seven-year warrants were issued to purchase one common share at an exercise price of $8.68. From 2016 to 2018, 72,695 seven-year warrants were issued to purchase one common share at an exercise price of $9.54. Outstanding placement agent warrants totaled 241,180 at both September 30, 2019 and December 31, 2018. (f) Stock-Based Compensation In connection with the Business Combination, the Company adopted DermTech Operations’ Amended and Restated 2010 Stock Option Plan (the “Plan”), which provides for the granting of incentive and non-statutory non-statutory non-employee Management Warrants Warrants to purchase DermTech Operations common stock were issued to executive officers of DermTech Operations in lieu of issuing certain stock options (the “Management Warrants”). The Management Warrants were assumed by the Company in connection with the Business Combination. The Management Warrants have a ten Common Stock Reserved for Future Issuance Common stock reserved for future issuance consists of the following at September 30, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Warrants to purchase common stock 493 1,177 Public Warrants to purchase common stock* 3,734 3,734 Stock options issued and outstanding 499 535 Restricted stock units issued and outstanding 465 466 Authorized for future option grants 18 689 Total common stock reserved for future issuance 5,209 6,601 * Public Warrants are presented as four Public Warrants are needed to purchase one share of common stock. | (4) Stockholders’ Equity (a) Classes of Stock The Company amended its Delaware certificate of incorporation in August 2016 authorizing the Company to issue 16,725,660 shares in two classes, common and preferred. The Company can issue up to 15,099,554 shares of common stock and 1,626,106 shares of preferred stock. The Company’s Series C Convertible Preferred Stock is the only preferred stock that is currently outstanding. Both classes of stock have a par value of $0.000 1 per share. (b) Series C Convertible Preferred Stock Financing In an effort to raise additional capital, the Company set forth a Series C Convertible Preferred Stock private offering in August of 2016 for a total offering amount of $ 15 three Preferred Dividends Preferred Series C shareholders are entitled to non-cumulative Preferred Liquidation Preference Series C Convertible Preferred Stock is entitled to a per share liquidation preference equal to the initial purchase price plus declared but unpaid dividends. In the event of a liquidation transaction, Preferred Series C shareholders shall be entitled to receive prior and in preference to any distribution to common stock shareholders. Redemption Series C Convertible Preferred Stock does not contain any mandatory redemption features. The Company’s convertible preferred stock has been classified as temporary equity in the accompanying balance sheets in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption is based upon certain change in control events outside of the Company’s control, including liquidation, sale or transfer of control of the Company. The Company has determined not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such events would occur. Conversion Series C Convertible Preferred Stock is convertible into common stock at a rate calculated by dividing the initial purchase price by the conversion price. The initial conversion price is equal to the initial purchase price. Under this conversion feature, each share of Series C Convertible Preferred Stock is convertible at the option of the holder or shall automatically be converted into fully paid, non-assessable For any future issuances of Series C Convertible Preferred Stock, the conversion price will be adjusted if the Series C Convertible Preferred Stock is issued under certain circumstances at a per share consideration less than the conversion price. The new conversion price shall be determined by multiplying the conversion price then in effect by a fraction, the numerator of which shall be the number of shares of common stock outstanding immediately prior to such issuance plus the number of shares of common stock that the aggregate consideration received by the Company for such issuance would purchase at such conversion price; and the denominator of which shall be the number of shares of outstanding common stock plus the number of shares of such additional stock. Voting Rights Each holder of common stock is entitled to one vote per share held. Each holder of Series C Convertible Preferred Stock is entitled to the number of votes equal to the number of common shares into which their holdings could be converted. Pursuant to the terms of a voting agreement, preferred and common stockholders shall vote together as a single class on an as-if-converted (c) Stock-Based Compensation The Company adopted the DermTech, Inc. 2010 Stock Option Plan (the Plan) in 2010, which provides for the granting of incentive and non-statutory non-statutory non-employee The following table summarizes stock option transactions for the year ended December 31, 2018: Total Weighted Weighted Aggregate Outstanding at December 31, 2017 480,816 $ 3.20 7.44 $ 756,848 Granted 109,199 3.98 Exercised (726 ) 6.94 Forfeited (54,262 ) 4.10 Outstanding at December 31, 2018 535,027 $ 3.25 6.86 $ 8,188 Options vested and expected to vest as of December 31, 2018 525,057 $ 3.24 6.82 $ 8,188 Options exercisable as of December 31, 2018 373,162 $ 2.79 6.08 $ 8,149 The following table summarizes RSU transactions for the year ended December 31, 2018: Total Weighted Outstanding at December 31, 2017 242,568 $ 4.32 Granted 228,014 3.98 Forfeited (5,022 ) 4.32 Outstanding at December 31, 2018 465,560 $ 4.15 RSUs vested and expected to vest as of December 31, 2018 459,362 $ 4.15 RSUs vested, but not yet issued as of December 31, 2018 236,141 $ 4.24 In 2018 and 2017, the Company granted options to consultants for 44,000 and 6,000 shares of common stock, respectively. Warrants to purchase common stock were issued to executive officers in lieu of certain stock options. The common stock warrants have a ten year life and are exercisable at $1.08 per common share. The common stock warrants vest monthly over a four Common Stock Reserved for Future Issuance Common stock reserved for future issuance consists of the following at December 31, 2018 and 2017: December 31 , 2018 2017 Warrants to purchase common stock 1,177,486 1,625,029 Stock options issued and outstanding 535,027 480,816 Restricted stock units issued and outstanding 465,560 242,568 Authorized for future option grants 689,406 763,346 2,867,479 3,111,759 |
Income Taxes
Income Taxes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | 5. Income Taxes The Company has reported net losses since inception and therefore, the minimum provision for state income taxes has been recorded. The federal statutory rate was 21% at September 30, 2019 and December 31, 2018, respectively, and the effective income tax rate for the Company’s provision for income taxes was 0% at September 30, 2019, and December 31, 2018, respectively. The utilization of NOL and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, (“IRC”), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change The Company conducts intensive research and experimentation activities, generating research tax credits for federal and state purposes under IRC Section 41. The Company has not performed a formal study validating these credits claimed in the tax returns. Once a study is prepared, the amount of R&D, tax credits available could vary from what was originally claimed on the tax returns. During 2018 and 2019, DermTech Operations issued convertible bridge notes that required bifurcation of embedded derivatives for financial statement purposes. As such deferred taxes were established for both the host instrument and the bifurcated embedded derivatives. Although the deferred tax balances offset at issuance, they will differ as the bifurcated embedded derivatives will be marked to fair value on an ongoing basis while the debt discount will be accounted for under the effective interest method. Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination for all years since inception. Business Combination Tax Implications In connection with the Business Combination, the Company changed its jurisdiction of incorporation from the British Virgin Islands to the State of Delaware. This reincorporation constituted a tax-free For federal income tax purposes, the Business Combination qualified as a reverse triangular merger within the meaning IRC Sections 368(a) and 368(a)(2)(E). Additionally, the Company, Merger Sub, and DermTech Operations are all parties to the reorganization under IRC Section 368(b). As the transaction qualifies as reorganization under IRC Section 368(a), there are no tax consequences to either DermTech Operations or the Company and all tax attributes retain carryover basis. | (5) Income Taxes The Company has reported net losses since inception and therefore, the minimum provision for state income taxes has been recorded. The following table provides a reconciliation between income taxes computed at the federal statutory rate of 21% and 34% at December 31, 2018 and 2017, respectively, and the Company’s provision for income taxes. Year ended , 2018 2017 Income tax at statutory rate 21.0 % 34.0 % Change in tax rate for 2017 Jobs Act — (81.4 ) Permanent items (1.2 ) (1.1 ) Tax credits 0.7 0.4 Valuation allowance (decrease) increase (20.5 ) 48.1 Income tax expense — % — % Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes as of December 31 are shown below (in thousands): 2018 2017 Deferred tax assets: Stock options right and net operation loss $ 15,431 $ 13,316 Research and development credits 1,473 1,237 Depreciation and amortization 112 111 Stock based compensation 114 62 Derivative liability 735 — Accruals and other 86 117 17,951 14,843 Less valuation allowance (17,523 ) (14,843 ) Total deferred tax assets 428 — Deferred tax liabilities: Debt discount (428 ) — Net deferred tax assets $ — $ — The Company has established a valuation allowance to offset the deferred tax assets as realization of such assets is not likely. At December 31, 2018 and 2017, the Company had federal tax net operating loss (NOL) carryforwards of approximately $59.4 million and $51.3 million, respectively, as well as state tax net operating loss carryforwards at December 31, 2018 and 2017 of approximately $45.6 million and $38.7 million, respectively. The Company also had federal income tax research and development and other tax credit carryforwards at December 31, 2018 and 2017 of approximately $0.7 million and $0.7 million, respectively, and state income tax research and development and other tax credits totaling $0.9 million and $0.7 million at December 31, 2018 and 2017, respectively. The federal tax loss carryforwards will begin to expire in 2019, while the state tax loss carryforwards will begin to expire in 2028. The federal credit carryforwards will begin to expire in 2021 and the state credit carryforwards do not expire. The utilization of NOL and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code (IRC), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change three-year The Company conducts intensive research and experimentation activities, generating research tax credits for federal and state purposes under IRC Section 41. The Company has not performed a formal study validating these credits claimed in the tax returns. Once a study is prepared, the amount of research and development (R&D) tax credits available could vary from what was originally claimed on the tax returns. During the year, the Company issued convertible bridge notes that required bifurcation of embedded derivatives for financial statement purposes. As such deferred taxes were established for both the host instrument and the bifurcated embedded derivatives. Although the deferred tax balances offset at issuance, they will differ as the bifurcated embedded derivatives will be marked to fair value on an ongoing basis while the debt discount will be accounted for under the effective interest method. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (Tax Act). The legislation significantly changed U.S. tax law by, among other things, reducing the US federal corporate tax from 35% to 21%. We have re-measured Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination for all years since inception. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | 6. Commitments and Contingencies Operating Leases In January 2013, DermTech Operations entered into a non-cancelable Rent and associated common area maintenance expense totaled $0.2 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.5 million and $0.5 million for the nine months ended September 30, 2019 and 2018, respectively. Future minimum operating lease payments for the operating facilities as of September 30, 2019 were (in thousands): Remainder of 2019 $ 142 2020 582 2021 599 2022 153 Total future minimum lease payments $ 1,476 Deferred Underwriting Fees In connection with the execution of the Merger Agreement, the Company, DermTech Operations and Cowen and Company, LLC (“Cowen”) entered into a letter agreement, dated May 29, 2019, (the “Deferred Underwriting Fee Assignment Agreement”), pursuant to which the Company agreed to assign to DermTech Operations, and DermTech Operations agreed to assume, the Company’s obligations under the Underwriting Agreement, dated as of June 19, 2017 (the “Underwriting Agreement”), by and among the Company and Cowen. On September 4, 2019, the Company, DermTech Operations and Cowen amended the Deferred Underwriting Fee Assignment Agreement, pursuant to which the Company paid Cowen $0.8 million for the reduction of the balance owed by the Company to Cowen under the Underwriting Agreement to $1.4 million. Pursuant to the terms of the Deferred Underwriting Fee Assignment Agreement, as amended, if the Company raises at least $15.0 million in proceeds received from equity financings consummated prior to the one-year one-year one-year one-year Legal Proceedings The Company is not currently party to any material legal proceedings. | (6) Commitments and Contingencies Operating Leases In January 2013, the Company entered into a non-cancelable Rent and associated common area maintenance expense totaled $0.6 million and $0.6 million for the years ended December 31, 2018 and 2017, respectively. Future minimum lease payments for the operating leases for the operating facilities as of December 31, 2018 are (in thousands): 2019 $ 402 2020 414 2021 426 2022 109 $ 1,351 Legal Proceedings The Company is not involved in any legal proceedings. |
Retirement Plan
Retirement Plan | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Retirement Plan | 7. Retirement Plan The Company has an IRC Section 401(k) retirement plan, covering all employees. The Company does not offer a contribution percentage match. | (7) Retirement Plan The Company has a Section 401(k) retirement plan (the Plan) covering all employees. The Company does not offer a contribution percentage match. |
Business Combination with DermT
Business Combination with DermTech Operations | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combination with DermTech Operations | 8. Business Combination with DermTech Operations On August 29, 2019, the Company completed the Business Combination with DermTech Operations. Upon the closing of the Business Combination, DermTech Operations became a wholly-owned subsidiary of the Company. The Business Combination was accounted for as a reverse acquisition in accordance with ASC 805-40, paid-in |
Related Party Transactions
Related Party Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | 9. Related Party Transactions During 2019, the Company engaged EVERSANA Life Science Services, LLC, or EVERSANA, to provide certain marketing services to the Company. Leana Wood, the spouse of Todd Wood, the Company’s Chief Commercial Offer, is an employee of EVERSANA. The Company incurred $0.2 million in costs for both the three and nine months ended September 30, 2019. There were no other related party transactions identified in 2019 or 2018. | (8) Related Party Transactions During 2018, we compensated a director $30,000 for consulting services that he provided to our sales and marketing department. There were no other related party transactions identified in 2018 or 2017. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 10. Subsequent Events The Company considered subsequent events through November 7, 2019, the date the condensed consolidated financial statements were available to be issued. | (9) Subsequent Events Constellation Alpha Merger On March 15, 2019, Constellation Alpha Capital Corp. (NASDAQ: CNAC) (Constellation), a special purpose acquisition company, announced that it has executed a non-binding The Company considered subsequent events through April 22, 2019, the date the financial statements were available to be issued, except for the consummation of the as On August 29, 2019, DermTech, Inc., formerly known as Constellation Alpha Capital Corp, and DermTech Operations, Inc., formerly known as DermTech, Inc., (“DermTech Operations”), consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of May 29, 2019, by and among the Company, DT Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and DermTech Operations. We refer to this agreement, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of August 1, 2019, as the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into DermTech Operations, with DermTech Operations surviving as a wholly-owned subsidiary of the Company. The Company s On August 29, 2019, immediately following the completion of the Business Combination, the Company changed its name from Constellation Alpha Capital Corp. to DermTech, Inc., and then effected a one-for-two |
The Company and a Summary of _2
The Company and a Summary of its Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Nature of Operations | (a) Nature of Operations On August 29, 2019, DermTech, Inc., formerly known as Constellation Alpha Capital Corp, (“the Company”), and DermTech Operations, Inc., formerly known as DermTech, Inc., (“DermTech Operations”), consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of May 29, 2019, by and among the Company, DT Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and DermTech Operations. We refer to this agreement, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of August 1, 2019, as the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into DermTech Operations, with DermTech Operations surviving as a wholly-owned subsidiary of the Company. We refer to this transaction as the Business Combination. In connection with and two days prior to the completion of the Business Combination, the Company domesticated from the British Virgin Islands to Delaware. DermTech Operations changed its name from DermTech, Inc. to DermTech Operations, Inc. shortly before the completion of the Business Combination. On August 29, 2019, immediately following the completion of the Business Combination, the Company changed its name from Constellation Alpha Capital Corp. to DermTech, Inc., and then effected a one-for-two reverse The Company is an emerging growth molecular diagnostic company developing and marketing its Clinical Laboratory Improvement Amendments of 1988, (“CLIA”), laboratory services including molecular pathology tests to facilitate the diagnosis of dermatologic conditions including melanoma. The Company has developed a proprietary, non-invasive | (a) Nature of Operations DermTech, Inc. (the Company) was incorporated in California on December 28, 1995 as DermTech, International, and re-incorporated non-invasive |
Basis of Presentation, Reverse Stock Split and Going Concern | (b) Basis of Presentation, Reverse Stock Split and Going Concern These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, (“U.S. GAAP”), which contemplate continuation of the Company as a going concern, for interim financial information and with the instructions to Form 10-Q S-X. The Company has incurred net losses since the Company’s formation and has an accumulated deficit of $86.0 million and a negative operating cash flow of $11.7 million as of September 30, 2019 and does not have adequate cash on hand to fund operations for the next year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the Reverse Stock Split for all periods presented. The Company has evaluated the expected cash requirements for a 12-month | (b) Basis of Presentation and Going Concern These financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP), which contemplate continuation of the Company as a going concern. The Company has incurred net losses since the Company’s formation and has an accumulated deficit of $71.4 million and a net capital deficiency of $5.1 million as of December 31, 2018 and does not have adequate cash on hand to fund operations for the next year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has evaluated the expected cash requirements for a 12 month period from the issuance date of the financial statements through March 2020. Management intends to pursue additional equity and debt financings. They believe this will be sufficient to provide the Company with the ability to continue, to support its planned operations and to continue developing and commercializing gene expression tests. There can be no assurances as to the availability of additional financing or the terms upon which additional financing may be available to the Company. If the Company is unable to obtain sufficient funding at acceptable terms, it may be forced to significantly curtail its operations, and the lack of sufficient funding may have a material adverse impact on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Use of Estimates | (c) Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the amounts of revenues and expenses reported during the period. On an ongoing basis, management evaluates these estimates and judgments, including those related to assay revenue, stock-based compensation, accounts receivable, derivative liability, the realization of deferred tax assets, and common and preferred stock valuations. Actual results may differ from those estimates. | (c) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported during the period. On an ongoing basis, management evaluates these estimates and judgments, including those related to assay revenue, stock-based compensation, accounts receivable, derivative liability, the realization of deferred tax assets, and common and preferred stock valuations. Actual results may differ from those estimates. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. | (d) Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. |
Property and Equipment | (e) Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from two to five years. Leasehold improvements are depreciated over the shorter of the remaining term of the lease or the useful life of the asset. The Company recorded depreciation expense of $20,000 and $19,000 for the three months ended September 30, 2019 and 2018, respectively, and $0.1 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. No property or equipment was disposed of during the three and nine months ended September 30, 2019 and 2018. The Company assesses its long-lived assets, consisting primarily of property and equipment, for impairment when material events or changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment losses for the three and nine months ended September 30, 2019 and 2018. | (e) Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line |
Research and Development | (f) Research and Development Costs incurred in connection with research and development (“R&D”) activities are expensed as incurred. R&D expenses consist of (i) employee-related expenses, including salaries, benefits, travel and stock compensation expense; (ii) facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and laboratory and other supplies. The Company expenses all costs as incurred in connection with patent applications (including direct application fees and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. | (f) Research and Development Costs incurred in connection with research and development activities are expensed as incurred. Research and development expenses consist of (i) employee-related The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. |
Concentration of Credit Risk | (g) Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains $21.2 million in a bank deposit account that is in excess of the $250,000 insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts. | (g) Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains $4.5 million in a bank deposit account that is in excess of the $250,000 insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts. |
Income Taxes | (h) Income Taxes The Company provides for federal and state income taxes on the asset and liability approach which requires deferred tax assets and liabilities to be recognized based on temporary differences between the condensed consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s valuation allowance is based on available evidence, including its current year and prior year operating losses, evaluation of positive and negative evidence with respect to certain specific deferred tax assets including evaluation sources of future taxable income to support the realization of the deferred tax assets. The Company has established a full valuation allowance on the deferred tax assets as of September 30, 2019 and December 31, 2018. Current and deferred tax assets and liabilities are recognized based on the tax positions taken or expected to be taken in the Company’s income tax returns. U.S. GAAP requires that the tax benefits of an uncertain tax position can only be recognized when it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authority. Tax benefits related to tax positions that do not meet this criterion are not recognized in the condensed consolidated financial statements. The Company recognizes interest and penalties related to income tax matters in income tax expense. | (h) Income Taxes The Company provides for federal and state income taxes on the asset and liability approach which requires deferred tax assets and liabilities to be recognized based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s valuation allowance is based on available evidence, including its current year and prior year operating losses, evaluation of positive and negative evidence with respect to certain specific deferred tax assets including evaluation sources of future taxable income to support the realization of the deferred tax assets. The Company has established a full valuation allowance on the deferred tax assets as of December 31, 2018 and 2017. Current and deferred tax assets and liabilities are recognized based on the tax positions taken or expected to be taken in the Company’s income tax returns. U.S. GAAP requires that the tax benefits of an uncertain tax position can only be recognized when it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authority. Tax benefits related to tax positions that do not meet this criterion are not recognized in the financial statements. The Company recognizes interest and penalties related to income tax matters in income tax expense. |
Revenue Recognition | (i) Revenue Recognition The Company’s revenue is generated from two revenue streams, contract revenue and assay revenue. The Company accounts for revenue in accordance with Accounting Standards Codification (“ ASC ASC 606 The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method and elected to utilize Practical Expedient 1 to apply the modified retrospective method to only contracts which were open as of January 1, 2019. Application of the modified retrospective method for the Company’s contract revenue did require a cumulative effect adjustment upon adoption, which resulted in an adjustment of $45,000 to increase accumulated deficit and deferred revenue. Application of the modified retrospective method for the Company’s assay revenue does not materially impact amounts previously reported by the Company, nor does it require a cumulative effect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilized immediately prior to adoption. Accordingly, there is no need for the Company to disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes. The Company recognizes revenue from its contract and assay goods and service in accordance with the core principles and key aspects considered by the Company. These considerations are described in detail below, first for Contract Revenue and then for Assay Revenue. Contract Revenue Contract revenue is generated from the sale of laboratory services and adhesive sample collection kits to third party companies through contract research agreements. Laboratory revenues result from providing gene expression tests to facilitate the development of drugs designed to treat dermatologic conditions. The provision of gene expression services may include sample collection using the Company’s patented adhesive patch biopsy devices, assay development for research partners, ribonucleic acid (“ RNA Contracts As part of the Company’s contract revenue, the Company has established agreements and work orders with the Company’s pharmaceutical partners that fall under the scope of ASC 606. Performance Obligations ASC 606 requires an entity to assess the goods or services promised in a contract and identify as a performance obligation each promise to transfer to the customer either a good or service (or a bundle of goods or services) that is distinct, or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. Based upon review of existing contracts, a majority of the Company’s contract revenue agreements contain three performance obligations: (1) Adhesive patch kits (2) RNA extractions and analysis (3) Certain project management fees Many of the Company’s contract revenue agreements contain promises such as start-up activities Transaction Price The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in an agreement with a customer may include fixed amounts, variable amounts, or both. The transaction prices of the Company’s performance obligations are listed in its agreements on a per unit basis and are fixed for adhesive patch kits and RNA extractions and analysis. The project management fees are assessed based on a monthly service fee which range within the agreements depending on certain factors which include length of the project and the amount of kits or RNA extractions and analysis promised within the agreement. The fixed and variable rates are materially consistent within the Company’s agreements. Therefore, the Company utilizes the prices listed in our agreements as the transaction price for each performance obligation. In determining the transaction price, ASC 606 requires an entity to adjust the promised amount of consideration for the effects of the time value of money if the agreement contains a significant financing component. The Company’s agreements state fixed transaction prices for each deliverable associated with the agreement and do not qualify for the significant financing component of ASC 606. Allocate the Transaction Price The Company’s contracts have a directly observable transaction price pertaining to each promised good or service. Those prices are consistent across agreements for adhesive patch kits and RNA extractions and analysis, with the exception of the Company’s project management fees, which the Company’s believes encompass a sufficiently narrow range of prices that are dictated upon factors of each agreement previously discussed above. Therefore, the Company’s relies on those transaction prices as the basis to allocate the stand-alone selling prices to the performance obligations of the agreement. Most of the Company’s agreements contain a discount that is allocated to items within the agreement, whether they are performance obligations or not. Those items that are not performance obligations (e.g. quality system setup and start up fees) have the associated discount allocated to the transaction prices of the performance obligations evenly. Recognize Revenue An entity should recognize revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when (or as) the customer obtains control of that good or service. The adhesive patch kits are recognized at a point in time when shipped to the customer. The RNA extraction and analysis are recognized at a point in time when the extraction and analysis process is complete and the results are sent to the customer. The Company provides its project management service over the life of the agreement, providing equal benefit to the customer throughout the life of the project or study. Therefore, the revenue related to the Company’s project management fees is recognized straight-line over the life agreement. Deferred Revenue and Remaining Performance Obligations The Company records a deferred revenue liability if a customer pays consideration before the Company transfers a good or service to the customer. Deferred revenue primarily represents upfront milestone payments, for which consideration is received prior to goods/services are completed or delivered. Deferred revenue at September 30, 2019 and December 31, 2018 was $1.5 million and $1.6 million, respectively. Remaining performance obligations include deferred revenue and amounts the Company expects to receive for goods and services that have not yet been delivered or provided under existing agreements. For agreements that have an original duration of one year or less, the Company has elected the practical expedient applicable to such agreements and does not disclose the remaining performance obligations at the end of each reporting period and when the Company expects to recognize this revenue. As of September 30, 2019, the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied for executed agreements with an original duration of one year or more was approximately $1.7 million. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two to three years. Assay Revenue The Company generates revenues from its Pigmented Lesion Assay (“PLA”) and Nevome services it provides to dermatologists in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides prescribing dermatologists with its adhesive sample collection kits to perform non-invasive skin Contracts The Company’s customer is the patient. However, the Company does not enter into a formal reimbursement agreement with a patient, as formal reimbursement agreements are more commonly established with insurance payers. Accordingly, the Company establishes an agreement with a patient in accordance with other customary business practices. • Approval of an agreement is established by the use of the Company’s adhesive patch kit on a patient by an ordering physician, which is then sent to the Company’s central lab for testing. • The Company is obligated to perform the Company’s laboratory services upon receipt of a sample from a physician, and the patient and/or applicable payer are obligated to reimburse us for services rendered based on the patient’s insurance benefits. • Payment terms are a function of a patient’s existing insurance benefits. • Once the Company delivers a patient’s test result to the ordering physician, the Company is legally able to collect payment and bill an insurer and/or patient, depending on payer agreement status or patient insurance benefit status. • The Company’s consideration is deemed to be variable, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. Performance Obligations A performance obligation is a promise in an agreement to transfer a distinct good or service (or a bundle of goods or services) to the customer. The customer is able to order a PLA test. However, a Nevome test cannot be ordered separately from the PLA test and it is contingent on being run only when a PLA test comes back positive on a sample. The Nevome test would not qualify as a distinct service. Therefore, the PLA test is recognized as a single performance obligation and the Nevome test, if rendered, is bundled with the single PLA performance obligation. Transaction Price The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration expected from an agreement with a customer may include fixed amounts, variable amounts, or both. The consideration derived from the Company’s agreements is deemed to be variable, though the variability is not explicitly stated in any agreement. Rather, the implied variability is due to several factors, such as the amount of contractual adjustments, any patient co-payments, deductibles The Company estimates the amount of variable consideration using the expected value method, which represents the sum of probability-weighted amounts in a range of possible consideration amounts. When estimating the amount of variable consideration, the Company considers several factors, such as historical collections experience, patient insurance eligibility and payer reimbursement agreements. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in the estimate of variable consideration and are included in the period in which such revisions are made. Revenue recognized from changes in transaction prices was not material for the three and nine months ended September 30, 2019 and 2018, respectively. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more consideration than it originally estimated for an agreement with a patient, it will account for the change as an increase in the estimate of the transaction price (i.e., an upward revenue adjustment) in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price (i.e., a downward revenue adjustment), provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of a patient’s test result to the ordering physician, with recognition, generally occurring at the date of cash receipt. Allocate the Transaction Price The entire transaction price is allocated entirely to the single performance obligation contained within the agreement with a patient. Recognize Revenue The Company’s single performance obligation is satisfied at a point in time, and that point in time is defined as the date a patient’s successful test result is delivered to the patient’s ordering physician. The Company considers this date to be the time at which the patient obtains control of the final results of the promised test service. If a Nevome test service is ordered and completed in conjunction with the Company’s PLA service, then the Company will recognize revenue upon the delivery of both final reports to the physician. The delivery of the Company’s Nevome test results is typically after the Company’s PLA results are delivered due to the circumstances of how the Company processes the Nevome test. However, this length in time is determined to not materially impact the final overall revenue recognition timing. (c) Disaggregation of Revenue The following tables present the Company’s revenues disaggregated by revenue source during the three months ended September 30, 2019 and 2018, respectively, and during the nine months ended September 30, 2019 and 2018, respectively (in thousands): Three Months Ended 2019 2018 Assay Revenue PLA Test $ 385 $ 321 Contract Revenue Adhesive Patch kits 101 103 RNA Extractions — 144 Project Management Fees 79 55 Other — 18 Total Revenue $ 565 $ 641 Nine Months Ended 2019 2018 Assay Revenue PLA Test $ 905 $ 853 Contract Revenue Adhesive Patch kits 436 323 RNA Extractions 200 396 Project Management Fees 232 154 Other 2 87 Total Revenue $ 1,775 $ 1,813 (d) Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets. Generally, contract revenue has a majority of agreements in which the Company receives a substantial up-front payment Deferred revenue balances are presented on the Company’s condensed consolidated balance sheets and were $1.5 million and $1.6 million as of September 30, 2019 and December 31, 2018, respectively. | (i) Revenue Recognition Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable based on the nature of the fee charged for the products or services delivered and whether there are existing contractual arrangements. Revenues are deferred for payments received before the earnings process is complete. Contract Revenue Contract revenue is generated from the sale of laboratory services and adhesive sample collection kits to third party companies through contract research agreements. L revenues result from providing gene expression tests to facilitate the development of drugs designed to treat dermatologic conditions. The provision of gene expression services may include sample collection using the Company’s patented adhesive patch biopsy devices, assay development for research partners, ribonucleic acid (RNA) isolation, expression, amplification and detection, including data analysis and reporting. The Company has multiple element arrangements for contract research collaborations that include sales of biopsy kits, laboratory processing and set up procedures. The Company accounts for these revenues as separate units of accounting. To qualify as a separate unit of accounting, the delivered item must have value to the customer on a standalone basis. The Company has concluded that their biopsy kits have standalone value as they are routinely sold separately. In addition, the Company’s laboratory processing fees have standalone value and can be sold separately. The timing of the delivery of adhesive patch biopsy devices and performance of RNA analysis varies significantly by each contract. Revenue is recognized when adhesive patch biopsy devices are shipped and when RNA extraction data is summarized and delivered to the customer. Project initiation and set up milestones include project management and control, quality systems set up, procurement and receiving inspection, revisions to standard operating procedures and other items. These items are recognized as revenue pro ratably over completion of the standalone products and/or services of the contract. The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on their relative selling price. The Company determined the relative selling price for each deliverable using the best estimate of selling price (BESP) for the deliverable. The Company determines the BESP for each deliverable primarily by considering the historical selling price of these deliverables in similar transactions as well as other factors, including, but not limited to review of stand-alone sales and current pricing practices. Assay Revenue The Company generates revenues from their Pigmented Lesion Assay (PLA) and Nevome services it provides to dermatologists in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides participating dermatologists with its adhesive sample collection kits to perform non-invasive For many PLA and Nevome services performed within the United States, the payment the Company ultimately receives depends upon the rate of reimbursement from commercial third-party third-party third-party third-party third-party case-by-case third-party Due to the significant time it can take to collect upon billed PLA and Nevome services, a detailed analysis is performed based upon historical reimbursement data for each significant third-party |
Accounts Receivable | (j) Accounts Receivable Contract Accounts Receivable Contract accounts receivable are recorded at the net invoice value and are not interest bearing. The Company reserves specific receivables if collectability is no longer reasonably assured, and as of September 30, 2019, the Company did not maintain any reserve over contract receivables as they deal with large established credit worthy customers. The Company re-evaluates Assay Accounts Receivable Due to the nature of the Company’s assay revenue, it can take a significant amount of time to collect upon billed PLA services. The Company prepares an analysis on reimbursement collections and data obtained for each financial reporting period to determine the amount of receivables to be recorded relating to PLA services performed in the applicable period. The Company accrues an allowance for doubtful accounts against its accounts receivable when it is probable that an account is not collectible, based on write off history, credit risk of specific accounts, aging analysis and other information available on specific accounts. The Company generally does not perform evaluations of customers’ financial condition and generally does not require collateral. Accounts receivable are written off when all efforts to collect the balance have been exhausted. Historically, the Company’s bad debt expense has not been significant. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for doubtful accounts. The Company recorded $0.4 million and $0.3 million of gross assay accounts receivable as of September 30, 2019 and December 31, 2018, respectively. In addition, the Company established an allowance for doubtful accounts of $0.1 million and $0.1 million as of September 30, 2019 and December 31, 2018, respectively. | (j) Accounts Receivable Contract Accounts Receivable Contract accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the contractual payment terms which range from 30 to 60 days. The Company reserves specific receivables if collectability is no longer reasonably assured, and as of December 31, 2018, the Company did not maintain any reserve over contract receivables as they deal with large established credit worthy customers. The Company re-evaluates Assay Accounts Receivable Due to the nature of the Company’s assay revenue, it can take a significant amount of time to collect upon billed PLA services. The Company prepares an analysis on reimbursement collections and data obtained as of each year-end |
Freight and Shipping Costs | (k) Freight and Shipping Costs The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues. | (k) Freight and Shipping Costs The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues. |
Comprehensive Income (Loss) | (l) Comprehensive Income (Loss) Comprehensive income/(loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner | (l) Comprehensive Income (Loss) Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner |
Segment Reporting | (m) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. | (m) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenues have been generated in the United States and all assets are held in the United States. |
Net Loss Per Share | (n) Net Loss Per Share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average common shares outstanding during the period. Because there is a net loss attributable to common shareholders during the three and nine months ended September 30, 2019 and 2018, the outstanding common stock warrants, stock options, restricted stock units and preferred stock have been excluded from the calculation of diluted loss per common share because their effect would be anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted loss per share are the same. Diluted net loss per common share for the three and nine months ended September 30, 2019 excludes the effect of anti-dilutive equity instruments including 615,385 shares of common stock issuable upon conversion of the Company’s preferred stock, 4,226,785 shares of common stock issuable upon the exercise of outstanding common stock warrants and 964,995 shares of common stock issuable upon the exercise stock options and release of restricted stock units. Diluted net loss per common share for the three months ended September 30, 2018 excludes the effect of anti-dilutive equity instruments including 1,524,122 shares of common stock issuable upon conversion of the Company’s preferred stock, 1,435,315 shares of common stock issuable upon the exercise of outstanding warrants and 982,760 shares of common stock issuable upon the exercise stock options and release of restricted stock units. The Company did not consider a two-class | (n) Net Loss Per Share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average common shares outstanding during the period. Because there is a net loss attributable to common shareholders for the years ended December 31, 2018 and 2017, the outstanding common stock warrants, stock options, restricted stock units and preferred stock have been excluded from the calculation of diluted loss per common share because their effect would be anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted loss per share are the same. Diluted net loss per common share for 2018 excludes the effect of anti-dilutive equity instruments including 1,524,122 shares of common stock issuable upon conversion of our preferred stock, 1,177,486 shares of common stock issuable upon the exercise of outstanding common stock warrants and 1,000,587 shares of common stock issuable upon the exercise stock options and release of restricted stock units. Diluted net loss per common share for 2017 excludes the effect of anti-dilutive equity instruments including 1,017,583 shares of common stock issuable upon conversion of our preferred stock, 1,625,030 shares of common stock issuable upon the exercise of outstanding warrants and 723,384 shares of common stock issuable upon the exercise stock options and release of restricted stock units. The Company did not consider a two class method of earnings (loss) per share given that the Company’s convertible participating securities do not participate in losses. |
Stock-Based Compensation | (o) Stock-Based Compensation Compensation costs associated with stock option awards and other forms of equity compensation are measured at the grant-date fair value of the awards and recognized over the requisite service period of the awards on a straight-line basis. The Company grants stock options to purchase common stock to employees with exercise prices equal to the fair market value of the underlying stock, as determined by the board of directors, management and outside valuation experts prior to the Business Combination. The board of directors and outside valuation experts determine the fair value of the underlying stock by considering a number of factors, including historical and projected financial results, the risks the Company faced at the time, the preferences of the Company’s debt holders and preferred stockholders, and the lack of liquidity of the Company’s common stock. Subsequent to the close of the Business Combination, the fair market value of stock options is based on the closing stock price on the grant date. The fair value of each stock option award is estimated using the Black-Scholes-Merton valuation model. Such value is recognized as expense over the requisite service period, net of estimated forfeitures, using the straight-line method. The expected term of options is based on the simplified method which defines the expected term as the average of the contractual term of the options and the weighted average vesting period for all option tranches. The expected volatility of stock options is based upon the historical volatility of a number of related publicly traded companies in similar stages of development. The risk-free interest rate is based on the average yield of U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The Company accounts for stock options to non-employees non-employees re-measured non-forfeitable Restricted stock units (“RSUs”), are considered restricted stock. The fair value of restricted stock is equal to the fair market value of the underlying stock, as determined by the board of directors, management and input from outside valuation experts prior to the Business Combination. Subsequent to the close of the Business Combination, the fair market value of RSUs is based on the closing stock price on the grant date. The Company recognizes stock-based compensation expense based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration estimated forfeitures. RSUs that are granted to employees have a requisite service period between two and four years. The fair value of each option for employees was estimated on the date of grant using the following assumptions: Three Months Ended Nine Months Ended September 30, 2019 2018 2019 2018 Assumed risk-free interest rate 1.68% 2.77% 1.68% - 2.50% 2.46% - 2.94% Assumed volatility 73.50% 77.27% 73.20% - 73.50% 77.27% - 78.25% Expected option term 6.02 years 6.02 years 6.02 - 6.08 years 5.76 - 6.04 years Expected dividend yield — — — — The Company recorded stock-based compensation expense for employee options, RSUs, common stock warrants, and consultant options of $0.7 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively and $1.2 million and $0.7 million for the nine months ended September 30, 2019 and 2018, respectively. The total compensation cost related to non-vested | (o) Stock-Based Compensation Compensation costs associated with stock option awards and other forms of equity compensation are measured at the grant-date straight-line The Company grants stock options to purchase common stock to employees with exercise prices equal to the fair market value of the underlying stock, as determined by the board of directors, management and outside valuation experts. The board of directors and outside valuation experts determine the fair value of the underlying stock by considering a number of factors, including historical and projected financial results, the risks the Company faced at the time, the preferences of the Company’s debt holders and preferred stockholders, and the lack of liquidity of the Company’s common stock. The fair value of each stock option award is estimated using the Black-Scholes-Merton risk-free The Company accounts for stock options to non-employees Black-Scholes-Merton non-employees re-measured non-forfeitable Restricted stock units (RSU) are considered restricted stock. The fair value of restricted stock is equal to the fair market value of the underlying stock, as determined by the board of directors, management and input from outside valuation experts. The Company recognizes stock-based compensation expense based on the fair value on a straight-line The fair value of each option for employees was estimated on the date of grant using the following assumptions: Year ended December 31 2018 2017 Assumed risk-free interest rate 2.46%–3.00% 1.92%–2.08% Assumed volatility 72.30%–78.25% 59.95%–64.47% Expected option term 5.76–6.04 years 5.95–6.06 years Expected dividend yield — — The Company recorded stock-based compensation expense for employee options, RSUs, common stock warrants, and consultant options of $0.9 million and $0.6 million for the years ended December 31, 2018 and 2017, respectively. The total compensation cost related to non-vested straight-line |
Derivative Liability | (p) Derivative Liability From time-to-time, | (q) Derivative Liability From time-to-time, |
Fair Value Measurements | (q) Fair Value Measurements The Company uses a three-tier fair value hierarchy to prioritize the inputs used in the Company’s fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. There were no other assets or liabilities that were measured at fair value on a recurring basis as of September 30, 2019. The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 The fair value of the derivative liability was determined based on a probability weighted valuation model of the various embedded features of the Company’s outstanding convertible debt. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding estimates of timing and the probability of each embedded conversion feature occurring. An initial fair value valuation was performed at each date of issuance of the outstanding convertible debt and subsequently remeasured as of August 29, 2019, which was the date the convertible debt converted to common stock. The accumulated change in fair value between measurement dates was determined to be a $0.1 million and $0.4 million loss for the three and nine months ended September 30, 2019, respectively, which was recognized as Other expense within the condensed consolidated Statement of Operations and Comprehensive Loss. As the convertible debt converted to common stock, this conversion eliminated the derivative liability on August 29, 2019. Changes in these assumptions can materially affect the fair value. There were no other assets or liabilities that were measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. The Company believes the carrying amount of cash and cash equivalents, accounts payable and accrued expenses approximate their estimated fair values due to the short-term nature of these accounts. | (p) Fair Value Measurements The Company uses a three-tier Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Observable (Level 2) Significant Unobservable (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 The fair value of the derivative liability was determined based on a probability weighted valuation model of the various embedded features of the Company’s outstanding convertible debt. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding estimates of timing and the probability of each embedded conversion feature occurring. An initial fair value valuation was performed at each date of issuance of the outstanding convertible debt and subsequently remeasured as of December 31, 2018. The accumulated change in fair value between the measurement dates was determined to be a $0.4 million loss, which was recognized as Other expense within the Statement of Operations. Changes in these assumptions can materially affect the fair value. There were no other assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2018 and 2017. The Company believes the carrying amount of cash and cash equivalents, accounts payable and accrued expenses approximate their estimated fair values due to the short-term |
Accounting Pronouncement Recently Adopted | (r) Accounting Pronouncement Recently Adopted In May 2014, the FASB issued ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20, The Company adopted the standard as of January 1, 2019 utilizing the modified retrospective approach. Further information regarding the standard is discussed in Note 1(i) Revenue Recognition. As a result of adoption, the Company made a $45,000 adjustment to accumulated deficit to account for prior year contract revenue amounts being lower under ASC 606. The Company noted no material impact associated with the adoption of ASC 606 on assay revenue. | (r) Accounting Pronouncement Recently Adopted In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-09, |
Accounting Pronouncements Issued But Not Yet Effective | (s) Accounting Pronouncements Issued But Not Yet Effective In February 2016, the FASB issued ASU 2016-02, right-of-use 2018-10, ASU 2018-11, ASU 2018-20, 2019-01, In June 2019, the FASB issued ASU 2018-07, In August 2018, the FASB issued ASU 2018-13, | (s) Accounting Pronouncements Issued But Not Yet Effective In May 2014, the FASB issued ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12, Narrow-Scope ASU 2016-20, We have substantially completed our assessment of the new standard, which we will adopt on January 1, 2019. The Company anticipates that the standard will not have a material impact on our financial statements. We will utilize the modified retrospective approach upon full adoption of Topic 606. In February 2016, the FASB issued ASU 2016-02, right-of-use 2018-10, 2018-11, 2018-20, In August 2018, the FASB issued ASU 2018-13, |
The Company and a Summary of _3
The Company and a Summary of its Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Schedule of Revenues Disaggregated by Revenue Source | The following tables present the Company’s revenues disaggregated by revenue source during the three months ended September 30, 2019 and 2018, respectively, and during the nine months ended September 30, 2019 and 2018, respectively (in thousands): Three Months Ended 2019 2018 Assay Revenue PLA Test $ 385 $ 321 Contract Revenue Adhesive Patch kits 101 103 RNA Extractions — 144 Project Management Fees 79 55 Other — 18 Total Revenue $ 565 $ 641 Nine Months Ended 2019 2018 Assay Revenue PLA Test $ 905 $ 853 Contract Revenue Adhesive Patch kits 436 323 RNA Extractions 200 396 Project Management Fees 232 154 Other 2 87 Total Revenue $ 1,775 $ 1,813 | |
Assumptions Used to Estimate Fair Value of Each Option for Employees on Date of Grant | The fair value of each option for employees was estimated on the date of grant using the following assumptions: Three Months Ended Nine Months Ended September 30, 2019 2018 2019 2018 Assumed risk-free interest rate 1.68% 2.77% 1.68% - 2.50% 2.46% - 2.94% Assumed volatility 73.50% 77.27% 73.20% - 73.50% 77.27% - 78.25% Expected option term 6.02 years 6.02 years 6.02 - 6.08 years 5.76 - 6.04 years Expected dividend yield — — — — | The fair value of each option for employees was estimated on the date of grant using the following assumptions: Year ended December 31 2018 2017 Assumed risk-free interest rate 2.46%–3.00% 1.92%–2.08% Assumed volatility 72.30%–78.25% 59.95%–64.47% Expected option term 5.76–6.04 years 5.95–6.06 years Expected dividend yield — — |
Summary of Assets and Liabilities Measured at Fair Value On Recurring Basis | The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 (in thousands): December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 | The following table provide a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 (in thousands): Quoted Prices in Significant Observable (Level 2) Significant Unobservable (Level 3) Total Liabilities: Derivative liability $ — $ — $ 2,880 $ 2,880 Total liabilities $ — $ — $ 2,880 $ 2,880 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Schedule of Condensed Consolidated Balance Sheet Details | Condensed consolidated balance sheet details are as follows (in thousands): September 30, 2019 December 31, 2018 Prepaid expenses and other current assets: Prepaid insurance $ 1,281 $ 2 Prepaid trade shows 94 19 Other current assets 24 5 Total prepaid expenses and other current assets $ 1,399 $ 26 Property and equipment, gross: Laboratory equipment $ 343 $ 314 Computer equipment 9 3 Furniture and fixtures 34 34 Leasehold improvements 32 14 Total property and equipment, gross 418 365 Less accumulated depreciation (208 ) (150 ) Total property and equipment, net $ 210 $ 215 September 30, 2019 December 31, 2018 Accrued liabilities: Accrued consulting services $ 40 $ 23 Accrued interest — 164 Deferred rent 85 85 Other accrued expenses 46 14 Total accrued liabilities $ 171 $ 286 Accrued compensation: Accrued paid time off $ 350 $ 234 Accrued bonus and deferred compensation 471 246 Accrued severance 278 — Total accrued compensation $ 1,099 $ 480 | Balance sheet details are as follows (in thousands): December 31 , 2018 2017 Prepaid expenses and other current assets: Prepaid insurance $ 2 $ 40 Prepaid trade shows 19 42 Other current assets 5 5 $ 26 $ 87 Property and equipment, gross: Laboratory equipment $ 314 $ 305 Computer equipment and software 3 — Furniture and fixtures 34 34 Leasehold improvements 14 15 365 354 Less accumulated depreciation (150 ) (74 ) $ 215 $ 280 December 31 , 2018 2017 Accrued liabilities: Accrued consulting services $ 23 $ 25 Accrued legal services — 3 Accrued interest 164 33 Deferred rent 85 54 Other accrued expenses 14 19 $ 286 $ 134 Accrued compensation: Accrued paid time off $ 234 $ 216 Accrued bonus and deferred compensation 246 292 $ 480 $ 508 |
Debt (Tables)
Debt (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
2018 Convertible Bridge Notes | ||
Summary of Liability Components Company's Bridge Notes | The following table summarizes information about the liability components the Company’s 2018 Bridge Notes (in thousands): 2018 Bridge Notes September 30, 2019 December 31, 2018 Principal amount outstanding $ — $ 6,800 Unamortized discount and issuance costs — (1,781 ) Total current convertible notes payable, net $ — $ 5,019 | The following table summarizes information about the liability components the Company’s financing arrangement (in thousands): Bridge Notes December 31, 2018 December 31, 2017 Principal amount outstanding $ 6,800 $ — Unamortized discount and issuance costs (1,781 ) — Total current convertible notes payable, net $ 5,019 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | ||
Summary of Common Stock Reserved for Future Issuance | Common stock reserved for future issuance consists of the following at September 30, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Warrants to purchase common stock 493 1,177 Public Warrants to purchase common stock* 3,734 3,734 Stock options issued and outstanding 499 535 Restricted stock units issued and outstanding 465 466 Authorized for future option grants 18 689 Total common stock reserved for future issuance 5,209 6,601 * Public Warrants are presented as four Public Warrants are needed to purchase one share of common stock. | Common stock reserved for future issuance consists of the following at December 31, 2018 and 2017: December 31 2018 2017 Warrants to purchase common stock 1,177,486 1,625,029 Stock options issued and outstanding 535,027 480,816 Restricted stock units issued and outstanding 465,560 242,568 Authorized for future option grants 689,406 763,346 2,867,479 3,111,759 |
Summary of Stock Options transactions | The following table summarizes stock option transactions for the year ended December 31, 2018: Total Weighted Weighted Aggregate Outstanding at December 31, 2017 480,816 $ 3.20 7.44 $ 756,848 Granted 109,199 3.98 Exercised (726 ) 6.94 Forfeited (54,262 ) 4.10 Outstanding at December 31, 2018 535,027 $ 3.25 6.86 $ 8,188 Options vested and expected to vest as of December 31, 2018 525,057 $ 3.24 6.82 $ 8,188 Options exercisable as of December 31, 2018 373,162 $ 2.79 6.08 $ 8,149 | |
Summary of restricted stock units award transactions | The following table summarizes RSU transactions for the year ended December 31, 2018: Total Weighted Outstanding at December 31, 2017 242,568 $ 4.32 Granted 228,014 3.98 Forfeited (5,022 ) 4.32 Outstanding at December 31, 2018 465,560 $ 4.15 RSUs vested and expected to vest as of December 31, 2018 459,362 $ 4.15 RSUs vested, but not yet issued as of December 31, 2018 236,141 $ 4.24 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of income tax rate | The following table provides a reconciliation between income taxes computed at the federal statutory rate of 21% and 34% at December 31, 2018 and 2017, respectively, and the Company’s provision for income taxes. Year ended , 2018 2017 Income tax at statutory rate 21.0 % 34.0 % Change in tax rate for 2017 Jobs Act — (81.4 ) Permanent items (1.2 ) (1.1 ) Tax credits 0.7 0.4 Valuation allowance (decrease) increase (20.5 ) 48.1 Income tax expense — % — % |
Schedule of deferred tax assets and liabilities from federal and state income taxes | Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes as of December 31 are shown below (in thousands): 2018 2017 Deferred tax assets: Stock options right and net operation loss $ 15,431 $ 13,316 Research and development credits 1,473 1,237 Depreciation and amortization 112 111 Stock based compensation 114 62 Derivative liability 735 — Accruals and other 86 117 17,951 14,843 Less valuation allowance (17,523 ) (14,843 ) Total deferred tax assets 428 — Deferred tax liabilities: Debt discount (428 ) — Net deferred tax assets $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of Future Minimum Operating Lease Payments for Operating Facilities | Future minimum operating lease payments for the operating facilities as of September 30, 2019 were (in thousands): Remainder of 2019 $ 142 2020 582 2021 599 2022 153 Total future minimum lease payments $ 1,476 | Future minimum lease payments for the operating leases for the operating facilities as of December 31, 2018 are (in thousands): 2019 $ 402 2020 414 2021 426 2022 109 $ 1,351 |
The Company and a Summary of _4
The Company and a Summary of its Significant Accounting Policies - Additional Information (Details) | Aug. 29, 2019 | Jan. 01, 2019USD ($) | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2019USD ($)Revenue_StreamSegmentshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares |
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Conversion ratio of reverse stock split | 0.5 | 0.5 | ||||||
Capital deficiency | $ 5,100,000 | |||||||
Description of reverse stock split of common stock | one-for-two | |||||||
Accumulated deficit | $ 85,996,000 | $ 85,996,000 | 71,377,000 | $ 61,373,000 | ||||
Negative operating cash flow | 11,700,000 | |||||||
Depreciation expense | 20,000 | $ 19,000 | 58,000 | $ 57,000 | 76,000 | 51,000 | ||
Disposal of plant or equipment | 0 | 0 | 0 | 0 | 0 | 21,000 | ||
Impairment losses | 0 | 0 | 0 | 0 | ||||
Bank deposits | 21,200,000 | 21,200,000 | 4,500,000 | |||||
Insured amount by FDIC | 250,000 | $ 250,000 | 250,000 | |||||
Number of revenue streams | Revenue_Stream | 2 | |||||||
Deferred revenue | 1,457,000 | $ 1,457,000 | 1,552,000 | 1,312,000 | ||||
Revenue practical expedient remaining performance obligation | true | |||||||
Accounts receivable, net | 814,000 | $ 814,000 | 580,000 | 361,000 | ||||
Number of operating segments | Segment | 1 | |||||||
Stock-based compensation expense | 700,000 | $ 200,000 | $ 1,200,000 | $ 700,000 | 900,000 | 600,000 | ||
Compensation cost related to non-vested awards not yet recognized | 500,000 | $ 500,000 | $ 1,100,000 | $ 900,000 | ||||
Weighted average term expected to be recognized | 2 years 5 months 19 days | 1 year 4 months 24 days | 1 year 1 month 17 days | |||||
Fair value other assets measured on recurring basis | 0 | $ 0 | ||||||
Fair value liabilities measured on recurring basis | 0 | 0 | $ 0 | $ 0 | ||||
Accumulated change in fair value between the measurement dates | $ 100,000 | $ 400,000 | $ 400,000 | |||||
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Liability, Gain (Loss), Statement of Income [Extensible List] | us-gaap:OtherNonoperatingIncomeExpense | us-gaap:OtherNonoperatingIncomeExpense | ||||||
Stock Options | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Requisite service period | 4 years | |||||||
Conversion of Preferred Stock | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Anti-dilutive equity instruments excluded from diluted net loss per common share | shares | 615,385 | 1,524,122 | 615,385 | 1,524,122 | 1,017,583 | |||
Common Stock Warrants | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Anti-dilutive equity instruments excluded from diluted net loss per common share | shares | 4,226,785 | 1,435,315 | 4,226,785 | 1,177,486 | 1,625,030 | |||
Stock Options and Restricted Stock Units | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Anti-dilutive equity instruments excluded from diluted net loss per common share | shares | 964,995 | 982,760 | 964,995 | 1,000,587 | 723,384 | |||
Contract Revenue | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Accounts receivable, net | $ 500,000 | $ 500,000 | $ 300,000 | $ 100,000 | ||||
Assay Revenue | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Accounts receivable gross | 400,000 | 400,000 | 300,000 | 300,000 | ||||
Allowance for doubtful accounts | $ 100,000 | $ 100,000 | $ 100,000 | $ 21,000 | ||||
ASC 606 | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Increase in accumulated deficit | $ 45,000 | |||||||
Increase in deferred revenue | 45,000 | |||||||
Adjustment to accumulated deficit to account for prior year | $ 45,000 | |||||||
Minimum | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Useful life of the assets | 2 years | |||||||
Minimum | Restricted Stock Units | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Requisite service period | 2 years | 2 years | ||||||
Maximum | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Useful life of the assets | 5 years | |||||||
Maximum | Restricted Stock Units | ||||||||
The Company and Summary of its Significant Accounting Policies [Line Items] | ||||||||
Requisite service period | 4 years | 4 years |
The Company and a Summary of _5
The Company and a Summary of its Significant Accounting Policies - Additional Information (Details 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01 $ in Millions | Sep. 30, 2019USD ($) |
The Company and Summary of its Significant Accounting Policies [Line Items] | |
Remaining performance obligation, estimated revenue expected to be recognized | $ 1.7 |
Minimum | |
The Company and Summary of its Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 2 years |
Maximum | |
The Company and Summary of its Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years |
The Company and a Summary of _6
The Company and a Summary of its Significant Accounting Policies - Schedule of Revenues Disaggregated by Revenue Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | $ 565 | $ 641 | $ 1,775 | $ 1,813 |
Assay Revenue, PLA Test | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | 385 | 321 | 905 | 853 |
Contract Revenue, Adhesive Patch kits | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | 101 | 103 | 436 | 323 |
Contract Revenue, RNA Extractions | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | 144 | 200 | 396 | |
Contract Revenue, Project Management Fees | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | $ 79 | 55 | 232 | 154 |
Contract Revenue, Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total Revenue | $ 18 | $ 2 | $ 87 |
The Company and a Summary of _7
The Company and a Summary of its Significant Accounting Policies - Assumptions Used to Estimate Fair Value of Each Option for Employees on Date of Grant (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Assumed risk-free interest rate | 1.68% | 2.77% | ||||
Assumed risk-free interest rate,minimum | 1.68% | 2.46% | 2.46% | 1.92% | ||
Assumed risk-free interest rate,maximum | 2.50% | 2.94% | 3.00% | 2.08% | ||
Assumed volatility | 73.50% | 77.27% | ||||
Assumed volatility,minimum | 73.20% | 77.27% | 72.30% | 59.95% | ||
Assumed volatility,maximum | 73.50% | 78.25% | 78.25% | 64.47% | ||
Expected option term | 6 years 7 days | 6 years 7 days | ||||
Minimum | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Expected option term | 6 years 7 days | 5 years 9 months 3 days | 5 years 9 months 3 days | 5 years 11 months 12 days | ||
Maximum | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Expected option term | 6 years 29 days | 6 years 14 days | 6 years 14 days | 6 years 21 days |
The Company and a Summary of _8
The Company and a Summary of its Significant Accounting Policies - Summary of Assets and Liabilities Measured at Fair Value On Recurring Basis (Details) - Fair Value, Recurring $ in Thousands | Dec. 31, 2018USD ($) |
Liabilities: | |
Derivative liability | $ 2,880 |
Total liabilities | 2,880 |
Significant Unobservable Inputs (Level 3) | |
Liabilities: | |
Derivative liability | 2,880 |
Total liabilities | $ 2,880 |
Balance Sheet Details - Schedul
Balance Sheet Details - Schedule of Condensed Consolidated Balance Sheet Details (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Prepaid expenses and other current assets: | |||
Prepaid insurance | $ 1,281 | $ 2 | $ 40 |
Prepaid trade shows | 94 | 19 | 42 |
Other current assets | 24 | 5 | 5 |
Total prepaid expenses and other current assets | 1,399 | 26 | 87 |
Property and equipment, gross: | |||
Laboratory equipment | 343 | 314 | 305 |
Computer equipment | 9 | 3 | |
Computer equipment and software | 3 | ||
Furniture and fixtures | 34 | 34 | 34 |
Leasehold improvements | 32 | 14 | 15 |
Total property and equipment, gross | 418 | 365 | 354 |
Less accumulated depreciation | (208) | (150) | (74) |
Total property and equipment, net | 210 | 215 | 280 |
Accrued liabilities: | |||
Accrued consulting services | 40 | 23 | 25 |
Accrued legal services | 3 | ||
Accrued interest | 164 | 33 | |
Deferred rent | 85 | 85 | 54 |
Other accrued expenses | 46 | 14 | 19 |
Total accrued liabilities | 171 | 286 | 134 |
Accrued compensation: | |||
Accrued paid time off | 350 | 234 | 216 |
Accrued bonus and deferred compensation | 471 | 246 | 292 |
Accrued severance | 278 | ||
Total accrued compensation | $ 1,099 | $ 480 | $ 508 |
Debt - Additional Information (
Debt - Additional Information (Details) | Sep. 24, 2019$ / shares | Sep. 23, 2019USD ($)$ / shares | Sep. 16, 2019USD ($) | Aug. 29, 2019USD ($)shares | Jun. 10, 2019USD ($) | Nov. 30, 2018USD ($) | Oct. 25, 2017USD ($) | Jan. 07, 2016USD ($) | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||||||||
Interest expense to note payable | $ 15,000 | $ 17,000 | ||||||||||||
Payment of outstanding principal and accrued interest | $ 516,000 | 65,000 | ||||||||||||
Gross proceeds from issuance of equity securities | 19,803,000 | $ 18,000 | ||||||||||||
Proceeds from issuance of convertible note | 2,600,000 | $ 1,500,000 | 6,800,000 | |||||||||||
Convertible debt converted in to common shares | shares | 2,267,042 | |||||||||||||
Gain on debt extinguishment | $ 900,000 | $ 928,000 | 928,000 | |||||||||||
Liability balance | $ 5,019,000 | |||||||||||||
Wilson, Sonsini, Goodrich & Rosati Note | Promissory Note | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt carrying amount | $ 600,000 | |||||||||||||
Promissory note term | 3 years | |||||||||||||
Debt instrument, interest rate | 3.00% | 3.00% | ||||||||||||
Principal amount outstanding | $ 0 | |||||||||||||
Debt maturity date | Jan. 7, 2020 | Jan. 7, 2019 | ||||||||||||
Principal amount paid | $ 100,000 | |||||||||||||
Interest expense to note payable | 3,000 | $ 4,000 | $ 11,000 | 12,000 | ||||||||||
Payment of outstanding principal and accrued interest | $ 600,000 | |||||||||||||
2018 Convertible Bridge Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, interest rate | 10.00% | 15.00% | ||||||||||||
Debt maturity date | Mar. 31, 2019 | |||||||||||||
Convertible note, principal amount | $ 6,800,000 | |||||||||||||
Proceeds from issuance of convertible note | $ 6,600,000 | |||||||||||||
Increase in interest rate if bridge notes not paid or converted | 15.00% | 15.00% | ||||||||||||
Percentage of multiplier on price per share of new stock paid in qualified financing by investors | 70.00% | 70.00% | ||||||||||||
Denominator for calculating capitalization value for price per share | $ 45,000,000 | $ 45,000,000 | $ 45,000,000 | |||||||||||
Conversion price subject to adjustment upon certain events | $ / shares | $ 9.54 | $ 9.54 | $ 9.54 | |||||||||||
Debt discount | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||||||||||
Maturity date, description | As part of the amendment, the maturity dates of the notes were extended to the earliest of (i) September 24, 2019; (ii) the occurrence of an Event of Default (as defined in the 2018 Bridge Notes); (iii) the consummation of a liquidation or dissolution of DermTech Operations (iv) a Liquidation Transaction (as defined in the 2018 Bridge Notes); or (v) the consummation of a merger with or into the Company or any of its subsidiaries. | |||||||||||||
Convertible notes conversion ratio | 0.70 | |||||||||||||
Description of merger consideration | “Merger Consideration” means (i) the lesser of $6.46 and (ii) the offering price per share of the private investment in public equity (“PIPE”) transaction to be consummated concurrently with the consummation of the Qualifying Merger multiplied by the Conversion Ratio. | |||||||||||||
Merger consideration maximum price per share | $ / shares | $ 6.46 | |||||||||||||
Debt Conversion Ratio Number Used As Numerator to Derive Quotient | $ 8,000,000 | |||||||||||||
2018 Convertible Bridge Notes | Other Expense | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Loss on change in fair value of derivative liability | 100,000 | 0 | $ 400,000 | 0 | 400,000 | |||||||||
2018 Convertible Bridge Notes | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Gross proceeds from issuance of equity securities | 20,000,000 | 20,000,000 | ||||||||||||
2019 Convertible Bridge Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||
Debt discount | 300,000 | $ 300,000 | ||||||||||||
Maturity date, description | These convertible bridge notes carried an interest rate of 10% and matured after the earliest to occur of: (i) September 25, 2019; (ii) the occurrence of an Event of Default; (iii) the consummation of a liquidation or dissolution of DermTech Operations; (iv) a Liquidation Transaction; or (v) the consummation of a merger of DermTech Operations with Merger Sub, a subsidiary of the Company, in accordance with the Merger Agreement. | |||||||||||||
Debt Conversion Ratio Number Used As Numerator to Derive Quotient | $ 8,000,000 | |||||||||||||
Proceeds from issuance of convertible note | $ 2,600,000 | |||||||||||||
Debt conversion feature | Upon the conversion of these notes, the note holders were entitled to receive a number of shares of DermTech Operations’ common stock equal to the quotient obtained by dividing (i) the unpaid principal amount of these notes plus interest accrued but unpaid thereon, by (1) if the Qualifying Merger consummates prior to the maturity date, the lesser of (x) $5.80 and (y) 90% of the Merger Consideration (as defined below), or (2) if the Qualifying Merger consummates on or after the maturity date, the lesser of (x) $4.51 and (y) 70% of the Merger Consideration. | |||||||||||||
Liability balance | 0 | $ 0 | $ 0 | |||||||||||
2019 Convertible Bridge Notes | Other Expense | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Loss on change in fair value of derivative liability | $ 11,000 | $ 14,000 | $ 0 | $ 0 | ||||||||||
2019 Convertible Bridge Notes | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Convertible notes conversion ratio | 0.70 | 0.90 | ||||||||||||
Convertible notes conversion price | $ / shares | $ 4.51 | $ 5.80 |
Debt - Summary of Liability Com
Debt - Summary of Liability Components Company's Bridge Notes (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | |
Total current convertible notes payable, net | $ 5,019 |
Bridge Notes | 2018 Convertible Bridge Notes | |
Debt Instrument [Line Items] | |
Principal amount outstanding | 6,800 |
Unamortized discount and issuance costs | (1,781) |
Total current convertible notes payable, net | $ 5,019 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) | Sep. 24, 2019 | Aug. 29, 2019USD ($)shares | Jan. 04, 2019USD ($) | Jun. 23, 2017shares | Aug. 31, 2016USD ($)$ / shares | Sep. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2019USD ($)shares | Sep. 30, 2018USD ($)shares | Jun. 30, 2018$ / sharesshares | Mar. 31, 2018$ / sharesshares | Sep. 30, 2019USD ($)Warrant$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016$ / sharesshares | Dec. 31, 2018$ / sharesshares | May 29, 2019shares |
Class of Stock [Line Items] | ||||||||||||||||
Number of shares authorized | 16,725,660 | 16,725,660 | ||||||||||||||
Common stock, shares authorized | 50,000,000 | 50,000,000 | 15,099,554 | 15,099,554 | 15,099,554 | |||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 1,626,106 | 1,626,106 | ||||||||||||
Common stock, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Preferred stock, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Business combination shares issued for each share of common stock | 1.16 | |||||||||||||||
Conversion ratio of reverse stock split | 0.5 | 0.5 | ||||||||||||||
Gross cash proceeds from issuance of preferred stock | $ | $ 4,000,000 | |||||||||||||||
Common stock warrants issued | 100,145 | 102,740 | ||||||||||||||
Proceeds from issuance of common stock | $ | $ 19,803,000 | $ 18,000 | ||||||||||||||
Voting rights of common stock holder | Each holder of common stock is entitled to one vote per share held. | Each holder of common stock is entitled to one vote per share held. | ||||||||||||||
Issuance of preferred stock, total offering amount | $ | $ 718,000 | $ 41,000 | $ 5,000 | |||||||||||||
Stock-based compensation expense recognized as a result of accelerated vesting | $ | $ 400,000 | |||||||||||||||
2010 Stock Option Plan | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Common stock initially reserved for issuance | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||
Increase in number of shares reserved for issuance | 203,263 | 255,415 | ||||||||||||||
Contractual term of options granted | 10 years | |||||||||||||||
Options remain available for future grant | 18,197 | 18,197 | 700,000 | 800,000 | 700,000 | |||||||||||
2010 Stock Option Plan | Incentive Stock Options | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Options granted to shareholder, percentage | 0.10% | |||||||||||||||
Public Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Warrants issued to purchase common stock | 14,936,250 | |||||||||||||||
Warrants expiration period | 5 years | 5 years | ||||||||||||||
Number of warrants entitle holder to purchase one share | Warrant | 4 | |||||||||||||||
Warrants outstanding | 14,936,250 | 14,936,250 | 14,936,250 | 14,936,250 | ||||||||||||
Series C Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Warrants expiration period | 3 years | 3 years | 3 years | 3 years | ||||||||||||
Warrants outstanding | 229,222 | 229,222 | 292,119 | 292,119 | ||||||||||||
Placement Agent Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Warrants issued to purchase common stock | 168,522 | 72,695 | ||||||||||||||
Warrants expiration period | 7 years | 7 years | 7 years | |||||||||||||
Warrants outstanding | 241,180 | 241,180 | 241,180 | |||||||||||||
Management Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Warrants expiration period | 10 years | 10 years | ||||||||||||||
Warrants outstanding | 22,320 | 22,320 | 22,320 | 22,320 | ||||||||||||
Minimum | 2010 Stock Option Plan | Incentive and Non-statutory Stock Options | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Options granted, exercise price expressed as a percentage of fair market value | 100.00% | 100.00% | ||||||||||||||
Minimum | 2010 Stock Option Plan | Incentive Stock Options | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Options granted, exercise price expressed as a percentage of fair market value | 110.00% | 110.00% | ||||||||||||||
Common Stock | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Preferred stock, shares issued during period | 647,411 | 37,264 | 726 | |||||||||||||
Issuance price per share | $ / shares | $ 6.50 | $ 6.50 | ||||||||||||||
Warrants outstanding | 22,000 | 22,000 | 22,000 | |||||||||||||
Common Stock | Public Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Number of shares issued for each warrant | 0.25 | 0.25 | ||||||||||||||
Exercise price of warrant | $ / shares | $ 23 | $ 23 | ||||||||||||||
Common Stock | Series C Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Exercise price of warrant | $ / shares | 9.54 | 9.54 | ||||||||||||||
Common Stock | Placement Agent Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Number of shares issued for each warrant | 1 | 1 | 1 | |||||||||||||
Exercise price of warrant | $ / shares | $ 9.54 | $ 8.68 | $ 9.54 | |||||||||||||
Common Stock | Management Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Exercise price of warrant | $ / shares | $ 1.08 | $ 1.08 | $ 1.08 | $ 1.08 | ||||||||||||
Warrants vesting period | 4 years | 4 years | ||||||||||||||
Series C Convertible Preferred Stock | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Preferred stock, shares authorized | 0 | 0 | 1,626,106 | 1,626,106 | 1,626,106 | |||||||||||
Preferred stock, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Issuance of preferred stock, total offering amount | $ | $ 15,000,000 | $ 15,000,000 | ||||||||||||||
Issuance of preferred stock, price per share | $ / shares | $ 9.54 | $ 9.54 | 9.54 | |||||||||||||
Preferred stock, shares issued during period | 33,323 | 473,216 | 506,539 | 559,849 | ||||||||||||
Gross cash proceeds from issuance of preferred stock | $ | $ 4,800,000 | $ 5,300,000 | ||||||||||||||
Preferred stock, issuance costs | $ | $ 300,000 | $ 400,000 | ||||||||||||||
Preferred stock, non-cumulative dividend rate | 6.00% | 6.00% | ||||||||||||||
Issuance price per share | $ / shares | $ 9.54 | $ 9.54 | $ 9.54 | $ 9.54 | 9.54 | |||||||||||
Voting rights of preferred stock holder | Each holder of Series C Convertible Preferred Stock is entitled to the number of votes equal to the number of common shares into which their holdings could be converted. | Each holder of Series C Convertible Preferred Stock is entitled to the number of votes equal to the number of common shares into which their holdings could be converted. | ||||||||||||||
Series C Convertible Preferred Stock | Series C Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Percentage of warrants issued in connection with preferred stock purchased | 20.00% | 20.00% | ||||||||||||||
Series C Convertible Preferred Stock | Minimum | Series C Warrants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Preferred stock value of shares purchased in single closing | $ | $ 1,000,000 | $ 1,000,000 | ||||||||||||||
Series C Convertible Preferred Stock | Minimum | Public Offering | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Proceeds from issuance of common stock | $ | $ 15,000,000 | $ 15,000,000 | ||||||||||||||
Issuance price per share | $ / shares | $ 19.08 | $ 19.08 | $ 19.08 | $ 19.08 | ||||||||||||
Series C Convertible Preferred Stock | Common Stock | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Series c convertible preferred stock convert into common stock shares, conversion ratio | 1 | |||||||||||||||
Outstanding convertible preferred stock converted into shares of common stock | 1 | |||||||||||||||
Series A Convertible Preferred Stock | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 0 | 0 | ||||||||||||
Preferred stock, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock, shares issued during period | 1,231 | 1,231 | ||||||||||||||
Issuance price per share | $ / shares | $ 3,250 | $ 3,250 | ||||||||||||||
Voting rights of preferred stock holder | The shares of the Company’s Series A Convertible Preferred Stock have no voting rights, except with respect to certain protective provisions set forth in the Series A Certificate of Designation relating to the powers, preferences and rights of such shares. | |||||||||||||||
Issuance of preferred stock, total offering amount | $ | $ 4,000,000 | |||||||||||||||
Convertible preferred stock convertible into shares of common stock, conversion price per share | $ / shares | $ 6.50 | |||||||||||||||
Event of convertible preferred stock be convertible if holder beneficially owning outstanding shares of common stock percentage | 9.99% | |||||||||||||||
Consultants | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Number of options granted | 44,000 | 6,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Common Stock Reserved for Future Issuance (Detail) - shares | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 5,209,000 | 6,601,000 | 3,111,759 |
Warrants to Purchase Common Stock | |||
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 493,000 | 1,177,000 | 1,625,029 |
Public Warrants to Purchase Common Stock | |||
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 3,734,000 | 3,734,000 | |
Stock Options | |||
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 499,000 | 535,000 | 480,816 |
Restricted Stock Units | |||
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 465,000 | 466,000 | 242,568 |
Authorized for Future Option Grants | |||
Class of Stock [Line Items] | |||
Common stock reserved for future issuance | 18,000 | 689,000 | 763,346 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Common Stock Reserved for Future Issuance (Parenthetical) (Details) - Public Warrants | 9 Months Ended |
Sep. 30, 2019Warrantshares | |
Class of Stock [Line Items] | |
Number of warrants entitle holder to purchase one share | Warrant | 4 |
Common Stock | |
Class of Stock [Line Items] | |
Number of shares issued for each warrant | shares | 0.25 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Stock Options transactions (Details) - Stock Option [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance | 480,816 | |
Granted | 109,199 | |
Exercised | (726) | |
Forfeited | (54,262) | |
Ending balance | 535,027 | 480,816 |
Options vested and expected to vest | 525,057 | |
Options exercisable | 373,162 | |
Weighted average exercise, Beginning balance | $ 3.20 | |
Weighted average exercise Granted | 3.98 | |
Weighted average exercise, Exercised | 6.94 | |
Weighted average exercise, Forfeited | 4.10 | |
Weighted average exercise, Ending balance | 3.25 | $ 3.20 |
Options vested and expected to vest, Weighted average exercise price | 3.24 | |
Options exercisable, Weighted average exercise price | $ 2.79 | |
Weighted average remaining contractual term (in years) | 6 years 10 months 9 days | 7 years 5 months 8 days |
Options vested and expected to vest, Weighted average remaining contractual term (in years) | 6 years 9 months 25 days | |
Options exercisable, Weighted average remaining contractual term (in years) | 6 years 29 days | |
Aggregate intrinsic value, outstanding | $ 8,188 | $ 756,848 |
Options vested and expected to vest, Aggregate intrinsic value | 8,188 | |
Options exercisable, Aggregate intrinsic value | $ 8,149 |
Stockholders' Equity - Summar_4
Stockholders' Equity - Summary of restricted stock units award transactions (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Beginning balance | shares | 242,568 |
Granted | shares | 228,014 |
Forfeited | shares | (5,022) |
Ending balance | shares | 465,560 |
RSUs vested and expected to vest | shares | 459,362 |
RSUs vested, but not yet issued | shares | 236,141 |
Beginning balance, Weighted average grant date fair value per share | $ / shares | $ 4.32 |
Granted, Weighted average grant date fair value per share | $ / shares | 3.98 |
Forfeited, Weighted average grant date fair value per share | $ / shares | 4.32 |
Ending balance, Weighted average grant date fair value per share | $ / shares | 4.15 |
RSUs vested and expected to vest, Weighted average grant date fair value per share | $ / shares | 4.15 |
RSUs vested, but not yet issued, Weighted average grant date fair value per share | $ / shares | $ 4.24 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | Dec. 22, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Operating Loss Carryforwards [Line Items] | ||||
Federal statutory rate | 35.00% | 21.00% | 21.00% | 34.00% |
Effective income tax rate | 0.00% | 0.00% | 0.00% | |
Minimum | ||||
Operating Loss Carryforwards [Line Items] | ||||
Ownership interest | 50.00% | 50.00% | ||
Domestic tax authority | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | $ 59.4 | $ 51.3 | ||
Tax credit carryforwards | 0.7 | $ 0.7 | ||
Description of remeasurement of deferred tax assets and liabilities | 21% plus state and local tax | |||
Increase decrease in deferred tax | $ 6.8 | |||
State and local jurisdiction | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 45.6 | 38.7 | ||
Tax credit carryforwards | $ 0.9 | $ 0.7 |
Income Taxes - Schedule of reco
Income Taxes - Schedule of reconciliation of income tax rate (Details) | Dec. 22, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Income tax at statutory rate | 35.00% | 21.00% | 21.00% | 34.00% |
Change in tax rate for 2017 Jobs Act | 0 | (81.4) | ||
Permanent items | (1.20%) | (1.10%) | ||
Tax credits | 0.70% | 0.40% | ||
Valuation allowance (decrease) increase | (20.50%) | 48.10% | ||
Income tax expense | 0.00% | 0.00% | 0.00% |
Income Taxes - Schedule of defe
Income Taxes - Schedule of deferred tax assets and liabilities from federal and state income taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Stock options right and net operation loss | $ 15,431 | $ 13,316 |
Research and development credits | 1,473 | 1,237 |
Depreciation and amortization | 112 | 111 |
Stock based compensation | 114 | 62 |
Derivative liability | 735 | 0 |
Accruals and other | 86 | 117 |
Deferred tax assets gross | 17,951 | 14,843 |
Less valuation allowance | (17,523) | (14,843) |
Total deferred tax assets | 428 | 0 |
Deferred tax liabilities: | ||
Debt discount | (428) | 0 |
Net deferred tax assets | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Sep. 04, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Commitments And Contingencies [Line Items] | |||||||
Operating leases, description | In January 2013, DermTech Operations entered into a non-cancelable lease agreement for its operating facilities. In January 2014, DermTech Operations signed an amendment to the lease to extend the term through January 2017. In November 2016, DermTech Operations signed a second amendment to the lease to extend the term through March 2022. In August 2019, DermTech Operations signed a third amendment to the lease to add additional space, and in September 2019, the Company signed a fourth amendment to the lease to add additional space. In connection with the Business Combination, the Company assumed all obligations under the lease, as amended, from DermTech Operations. | ||||||
Rent and common area maintenance expense | $ 200 | $ 200 | $ 500 | $ 500 | $ 600 | $ 600 | |
Underwriting fees | 1,363 | 1,363 | |||||
Cowen | |||||||
Commitments And Contingencies [Line Items] | |||||||
Payments for deferred underwriting fees | $ 800 | ||||||
Underwriting fees | $ 1,400 | 1,400 | 1,400 | ||||
Proceeds from equity financing | 15,000 | ||||||
Deferred underwriting fees payable if equity financing limit not raised | 700 | 700 | |||||
Deferred underwriting fees payable if equity financing limit not raised balance amount | 700 | 700 | |||||
Deferred underwriting fee equity payable if equity financing limit not raised | $ 700 | $ 700 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Future Minimum Operating Lease Payments for Operating Facilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2019 | $ 142 | |
2019 | $ 402 | |
2020 | 582 | 414 |
2021 | 599 | 426 |
2022 | 153 | 109 |
Total future minimum lease payments | $ 1,476 | $ 1,351 |
Business Combination with Der_2
Business Combination with DermTech Operations - Additional Information (Details) - DermTech Operations $ in Millions | Aug. 29, 2019USD ($) |
Business Acquisition [Line Items] | |
Effective date of acquisition | Aug. 29, 2019 |
Printer fees related to business combination | $ 0.2 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Related party certain marketing cost | $ 30,000 | ||
Related party transaction, other | $ 0 | ||
EVERSANA | Leana Wood | |||
Related Party Transaction [Line Items] | |||
Related party certain marketing cost | $ 200,000 | $ 200,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ in Millions | Mar. 15, 2019USD ($) |
Subsequent Events [Abstract] | |
Closing cash of definitive agreement | $ 15 |