10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to                       

Commission File Number: 001-38118

DERMTECH, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-2870849
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
11099 N. Torrey Pines Road, Suite 100 La Jolla, CA	92037
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (858) 450-4222

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	DMTK	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☒

As of July 30, 2021, the registrant had 29,610,337 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
	Signatures	39

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DERMTECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

	June 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	229,609		$	24,248
Short-term marketable securities		38,644			39,529
Accounts receivable		2,185			1,480
Inventory		497			104
Prepaid expenses and other current assets		1,313			1,521
Total current assets		272,248			66,882
Property and equipment, net		3,285			2,731
Other assets		167			167
Total assets	$	275,700		$	69,780
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,104		$	1,573
Accrued compensation		3,167			2,075
Accrued liabilities		887			763
Short-term deferred revenue		1,372			905
Current portion of capital lease obligations		112			109
Total current liabilities		7,642			5,425
Warrant liability		577			1,650
Long-term deferred revenue		2			639
Long-term capital lease obligations, less current portion		170			226
Total liabilities		8,391			7,940
Stockholders’ equity:
Common stock, $0.0001 par value per share; 50,000,000 shares authorized    as of June 30, 2021 and December 31, 2020; 29,607,394 and 20,740,413 shares    issued and outstanding at June 30, 2021 and December 31, 2020, respectively		3			2
Additional paid-in capital		427,503			189,868
Accumulated other comprehensive income/(loss)		2			(1	)
Accumulated deficit		(160,199	)		(128,029	)
Total stockholders’ equity		267,309			61,840
Total liabilities and stockholders’ equity	$	275,700		$	69,780

See accompanying notes to unaudited condensed consolidated financial statements.

1

DERMTECH, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Assay revenue	$	2,910		$	648		$	5,100		$	1,445
Contract revenue		209			196			543			956
Total revenues		3,119			844			5,643			2,401
Cost of revenues:
Cost of assay revenue		2,604			1,416			4,575			2,578
Cost of contract revenue		20			29			51			70
Total cost of revenues		2,624			1,445			4,626			2,648
Gross profit/(loss)		495			(601	)		1,017			(247	)
Operating expenses:
Sales and marketing		7,907			3,433			14,419			6,377
Research and development		3,594			864			5,845			1,761
General and administrative		6,301			4,529			11,473			8,043
Total operating expenses		17,802			8,826			31,737			16,181
Loss from operations		(17,307	)		(9,427	)		(30,720	)		(16,428	)
Other income/(expense):
Interest income, net		35			10			69			10
Change in fair value of warrant liability		170			(180	)		(1,519	)		(76	)
Total other income/(expense)		205			(170	)		(1,450	)		(66	)
Net loss	$	(17,102	)	$	(9,597	)	$	(32,170	)	$	(16,494	)
Weighted average shares outstanding used in computing net    loss per share, basic and diluted		28,979,148			16,149,496			28,070,539			14,625,069
Net loss per share of common stock outstanding, basic and    diluted	$	(0.59	)	$	(0.59	)	$	(1.15	)	$	(1.13	)

See accompanying notes to unaudited condensed consolidated financial statements.

2

DERMTECH, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(17,102	)	$	(9,597	)	$	(32,170	)	$	(16,494	)
Unrealized gain/(loss) on available-for-sale marketable securities		(6	)		—			3			—
Comprehensive loss	$	(17,108	)	$	(9,597	)	$	(32,167	)	$	(16,494	)

See accompanying notes to unaudited condensed consolidated financial statements.

3

DERMTECH, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

(in thousands, except share and per share data)

(Unaudited)

	Series A convertible preferred stock				Series B-1 convertible preferred stock					Series B-2 convertible preferred stock				Common stock				Additional paid-in			Accumulated			Total stockholders’
	Shares		Amount		Shares			Amount		Shares		Amount		Shares		Amount		capital			deficit			equity
Balance, December 31, 2019		1,231	$	—		—		$	—		—	$	—		12,344,818	$	1	$	103,412		$	(91,552	)	$	11,861
Issuance of common stock    at $10.50 per share, net    of $2.0 million in    issuance costs		—		—		—			—		—		—		2,467,724		—		23,891			—			23,891
Issuance of Series B-1 convertible    preferred stock at $10,500 per    share, net of $2.6 million in    issuance costs		—		—		3,199			—		—		—		—		—		30,971			—			30,971
Issuance of Series B-2 convertible    preferred stock at $10,500 per    share, net of $0.4 million in    issuance costs		—		—		—			—		524		—		—		—		5,071			—			5,071
Issuance of common stock    from option exercises		—		—					—				—		85,061		—		253			—			253
Issuance of common stock    from warrant exercises		—		—		—			—		—		—		2,098		—		11			—			11
Issuance costs in connection    with Form S-1 registration    statement		—		—		—			—		—		—		—		—		(77	)		—			(77	)
Stock-based compensation		—		—		—			—		—		—		—		—		1,022			—			1,022
Net loss		—		—		—			—		—		—		—		—		—			(6,897	)		(6,897	)
Balance, March 31, 2020		1,231	$	—		3,199		$	—		524	$	—		14,899,701	$	1	$	164,554		$	(98,449	)	$	66,106
Conversion of Series B-1 convertible    preferred stock to common stock		—		—		(3,199	)		—		—		—		3,198,949		1		—			—			1
Issuance of common stock    from option exercises and RSU releases		—		—					—				—		81,277		—		123			—			123
Issuance of common stock    from warrant exercises		—		—		—			—		—		—		49,437		—		471			—			471
Issuance costs in connection    with Form S-1 registration    statement		—		—		—			—		—		—		—		—		(5	)		—			(5	)
Stock-based compensation		—		—		—			—		—		—		—		—		1,125			—			1,125
Net loss		—		—		—			—		—		—		—		—		—			(9,597	)		(9,597	)
Balance, June 30, 2020		1,231	$	—		—		$	—		524	$	—		18,229,364	$	2	$	166,268		$	(108,046	)	$	58,224

See accompanying notes to unaudited condensed consolidated financial statements.

4

DERMTECH, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(Unaudited)

	Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income/(loss)			deficit			equity
Balance, December 31, 2020		20,740,413	$	2	$	189,868	$	(1	)	$	(128,029	)	$	61,840
Issuance of common stock at a price of $29.50,    net of $9.1 million in issuance costs		4,872,881		1		134,581		—			—			134,582
Issuance of common stock from option exercises    and RSU releases		176,673		—	408			—			—			408
Issuance of common stock from warrant exercises		3,089,325		—		72,081		—			—			72,081
Issuance of common stock from Employee Stock    Purchase Plan		39,960		—		392		—			—			392
Unrealized gain on available-for-sale marketable    securities		—		—		—		9			—			9
Stock-based compensation		—		—		2,172		—			—			2,172
Reclassification of warrant liability due to Private    SPAC Warrants not held by original holder		—		—		411		—			—			411
Net loss		—		—		—		—			(15,068	)		(15,068	)
Balance, March 31, 2021		28,919,252	$	3	$	399,913	$	8		$	(143,097	)	$	256,827
Issuance of common stock from option exercises    and RSU releases		157,277		—	188			—			—			188
Issuance of common stock at a weighted average    price of $46.33 through at-the-market offering,    net of $0.7 million in issuance costs		530,551		—		23,836		—			—			23,836
Issuance of common stock from warrant exercises		314		—		5		—			—			5
Unrealized loss on available-for-sale marketable    securities		—		—		—		(6	)		—			(6	)
Stock-based compensation		—		—		3,538		—			—			3,538
Reclassification of warrant liability due to Private    SPAC Warrants not held by original holder		—		—		23		—			—			23
Net loss		—		—		—		—			(17,102	)		(17,102	)
Balance, June 30, 2021		29,607,394	$	3	$	427,503	$	2		$	(160,199	)	$	267,309

See accompanying notes to unaudited condensed consolidated financial statements.

5

DERMTECH, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(32,170	)	$	(16,494	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		401			148
Change in fair value of warrant liability		1,519			76
Stock-based compensation		5,710			2,147
Amortization of premiums, net of accretion of discounts on marketable securities		337			—
Loss on disposal of equipment		13			—
Changes in operating assets and liabilities:
Accounts receivable		(705	)		(42	)
Inventory		(393	)		(48	)
Prepaid expenses and other current assets		152			432
Accounts payable and accrued compensation		1,599			(712	)
Accrued liabilities and deferred revenue		10			713
Net cash used in operating activities		(23,527	)		(13,780	)
Cash flows from investing activities:
Purchases of marketable securities		(4,899	)		—
Maturities of marketable securities		5,450			—
Purchases of property and equipment		(944	)		(1,201	)
Net cash used in investing activities		(393	)		(1,201	)
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with private placement offering, net		—			23,889
Proceeds from issuance of common stock in connection with public follow-on offering, net		134,582			—
Proceeds from issuance of Series B-1 Convertible Preferred Stock, net		—			30,968
Proceeds from issuance of Series B-2 Convertible Preferred Stock, net		—			5,071
Payments of issuance costs in connection with Form S-1 registration statement		—			(77	)
Proceeds from issuance of common stock in connection with at-the-market offering, net		23,836			—
Proceeds from exercise of common stock warrants		69,928			482
Proceeds from exercise of stock options		596			376
Proceeds from contributions to the employee stock purchase plan		392			—
Principal repayments of capital lease obligations		(53	)		—
Net cash provided by financing activities		229,281			60,709
Net increase in cash and cash equivalents		205,361			45,728
Cash and cash equivalents, beginning of period		24,248			15,374
Cash and cash equivalents, end of period	$	229,609		$	61,102
Supplemental cash flow information:
Cash paid for interest on capital lease obligations	$	8		$	—
Supplemental disclosure of noncash investing and financing activities:
Purchases of property and equipment recorded in accounts payable	$	24		$	39
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder	$	434		$	—
Cashless exercise of common stock warrants	$	2,158		$	—
Change in unrealized gain on available-for-sale marketable securities	$	3		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

6

DERMTECH, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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. The Company refers 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 refers 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 stock split of its common stock (“Reverse Stock Split”).

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 technique for sampling the surface layers of the skin using an adhesive patch called the DermTech Smart Sticker™ (the “Smart Sticker”) in order to collect individual biological information for commercial applications in the medical diagnostic field.

From the end of the first quarter of 2020 and through the second quarter of 2021, there has been a widespread worldwide impact from the COVID-19 pandemic. The Company is considered an essential business due to the importance of early melanoma detection, which has allowed the Company’s CLIA laboratory to remain fully operational. The Company has implemented additional safety measures and in accordance with Centers for Disease Control and Prevention (“CDC”), Occupational Safety and Health Administration (“OSHA”) and other guidance within its CLIA laboratory operations and has transitioned administrative functions to predominantly remote work. Beginning in March 2020 and continuing through the second quarter of 2021, the ongoing COVID-19 pandemic has reduced patient access to clinician offices for in-person testing and reduced access by the Company’s sales force for in-office sales calls, which has resulted in a reduced volume of billable samples received during the second quarter of 2021 relative to the Company’s pre-pandemic expectations. The Company expects the ongoing COVID-19 pandemic to continue to adversely impact billable sample volume until patient access to in-person testing fully resumes, in-office access by the Company’s sales force returns to pre-pandemic levels, or telemedicine options are more widely adopted. Additionally, the ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect the Company’s pharmaceutical customers’ clinical trials. The extent of such effect on the Company’s future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on the Company’s pharmaceutical customers’ clinical trials.

(b) Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, (“SEC”), Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.

(c) Revision to Prior Period Financial Statements  

As discussed under the heading “Revision to Prior Period Financial Statements” in Note 1 of the Company’s Quarterly Report on Form 10-Q filed on May 13, 2021, during the course of preparing the quarterly report Form 10-Q for the three months ended March 31, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). The SEC Statement highlighted challenges associated with the accounting for complex financial instruments that may be common in SPACs, specifically accounting for warrants issued in connection with a SPAC’s formation and initial registered offering. In the SEC Statement, the SEC Staff expressed its view that certain terms and

7

conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity.

The Company previously issued warrants to purchase common stock in public and private placement offerings consummated on June 23, 2017 (the “SPAC Warrants”), which were originally classified as equity in the Company’s financial statements. As part of the aforementioned public offering, the Company issued 14,375,000 warrants (the “Public SPAC Warrants”) and as part of the aforementioned private placement offering, the Company issued 561,250 warrants (the “Private SPAC Warrants”). The SPAC Warrants have a five-year life from the date the Business Combination was consummated and every four SPAC Warrants entitle the holder to purchase one whole share of common stock at an exercise price of $23.00 per whole share. The Company’s SPAC Warrants were accounted for as equity within the Company’s previously reported consolidated balance sheets.

The Private SPAC Warrants are identical to the Public SPAC Warrants but they (i) are exercisable either for cash or on a cashless basis at the holder’s option, (ii) are not redeemable by the Company as long as such warrants are held by the initial purchasers or their affiliates and permitted transferees, and (iii) may be subject to the limitations on exercise as specified in the warrant agreement.

Historically, the Private SPAC Warrants were recorded as a component of equity as opposed to liabilities on the Company’s consolidated balance sheets and the Company’s consolidated statements of operations did not include the subsequent non-cash changes in estimated fair value of the Private SPAC Warrants, based on our application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”). The views expressed in the recent SEC Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for SPAC Warrants issued on June 23, 2017, in light of the SEC Staff’s published views. After discussion and evaluation, the Company concluded that, as a result of these differences in features between the Public SPAC Warrants and Private SPAC Warrants, the Private SPAC Warrants should be classified as liabilities, if still held by the original Private SPAC Warrant holder, with subsequent changes in fair value reported in the Company’s consolidated statement of operations.

In addition, the Company analyzed the impact of the aforementioned adjustments on its previously issued audited consolidated financial statements for the years ended December 31, 2020 and 2019 and previously issued unaudited consolidated financial statements for the periods ended September 30, 2020 and 2019, June 30, 2020, and March 31, 2020 (such years and periods, the “Affected Periods”). The Company concluded the adjustments are not material to any individual period prior to the period ended March 31, 2021, taking into account the requirements of ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 270, Interim Financial Reporting, ASC Topic 250-S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. In accordance with the authoritative guidance, management evaluated the materiality of the adjustments from a quantitative and qualitative perspective. Based on such evaluation, the Company concluded that the effects of these adjustments were not material individually or in the aggregate to the Affected Periods and had no effect on the trend of financial results. While management concluded the adjustment was not material to any prior periods, individually or in the aggregate, based on our qualitative and quantitative analysis, management opted to make the adjustment by revising the respective amounts that were previously reported in the Affected Period. Accordingly, the Company has revised the prior period interim and annual financial information for the Affected Periods to reflect these adjustments.

8

The Company’s accounting for the Private SPAC Warrants as components of liabilities instead of as equity did not have any effect on the Company’s previously reported operating expenses, total cash flows from operating activities, investing activities, and financing activities, cash or total assets. The impact on the individual line items of the Company’s condensed consolidated balance sheets for each period presented from the adjustment was as follows (in thousands):

	As Previously Reported			Adjustments			As Revised
Condensed Consolidated Balance Sheet as of December 31, 2019
Long term liabilities:
Warrant liability		—			628			628
Total liabilities		5,722			628			6,350
Stockholders’ equity:
Additional paid-in capital		103,599			(187	)		103,412
Accumulated deficit		(91,111	)		(441	)		(91,552	)
Total stockholders’ equity		12,489			(628	)		11,861
Condensed Consolidated Balance Sheet as of June 30, 2020
Long term liabilities:
Warrant liability		—			704			704
Total liabilities		5,762			704			6,466
Stockholders’ equity:
Additional paid in capital		166,455			(187	)		166,268
Accumulated deficit		(107,529	)		(517	)		(108,046	)
Total stockholders’ equity		58,928			(704	)		58,224
Condensed Consolidated Balance Sheet as of December 31, 2020
Long term liabilities:
Warrant liability		—			1,650			1,650
Total liabilities		6,290			1,650			7,940
Stockholders’ equity:
Additional paid-in capital		189,849			19			189,868
Accumulated deficit		(126,360	)		(1,669	)		(128,029	)
Total stockholders’ equity		63,490			(1,650	)		61,840

9

The impact on the individual line items of the Company’s condensed consolidated statements of operations for the periods presented from the adjustment was as follows (in thousands):

	Year Ended December 31, 2019									Year Ended December 31, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(441	)	$	(441	)	$	—		$	(1,228	)	$	(1,228	)
Total other expense		(2,084	)		(441	)		(2,525	)		40			(1,228	)		(1,188	)
Net loss	$	(19,689	)	$	(441	)	$	(20,130	)	$	(35,249	)	$	(1,228	)	$	(36,477	)
Net loss per share of common stock outstanding, basic and diluted	$	(2.81	)	$	(0.06	)	$	(2.87	)	$	(2.08	)	$	(0.07	)	$	(2.15	)
	Three Months Ended June 30, 2020									Six Months Ended June 30, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(180	)	$	(180	)	$	—		$	(76	)	$	(76	)
Total other income/(expense)		10			(180	)		(170	)		10			(76	)		(66	)
Net loss	$	(9,417	)	$	(180	)	$	(9,597	)	$	(16,418	)	$	(76	)	$	(16,494	)
Net loss per share of common stock outstanding, basic and diluted	$	(0.58	)	$	(0.01	)	$	(0.59	)	$	(1.12	)	$	(0.01	)	$	(1.13	)

The condensed consolidated statements of cash flow are not presented because there is no impact on total cash flows from operating activities, investing activities, or financing activities. Certain components of net cash used in operating activities changed, as caused by the revision, such as incorporating the non-cash item from the change in fair value of warrant liability in the adjustments to reconcile net loss to net cash used in operating activities, but the net change amounted to zero for the Affected Periods.

(d) 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 but not limited to those related to assay revenue, stock-based compensation, short-term marketable securities, accounts receivable, accrued bonus, warrant liability and the realization of deferred tax assets. Actual results may differ from those estimates.

(e) 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 Federal Deposit Insurance Corporation legal limit. The Company maintains cash balances that may, at times, exceed this insured limit.

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(f) Marketable Securities

The Company considers securities with original maturities of greater than 90 days to be marketable securities. The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months. Accordingly, such marketable securities are classified as current assets on the accompanying condensed consolidated balance sheets even if they have contractual maturities greater than one year from the date of purchase. The Company’s marketable securities consist of U.S. Treasury and agency securities, commercial paper, and corporate debt securities. Marketable securities are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive income/(loss). The estimated fair value of the marketable securities is determined based on quoted market prices or rates for similar instruments. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are other than temporary. Realized gains and losses are calculated using the specific identification method and recorded as interest income or expense. The Company has determined that there were no other-than-temporary declines in fair values of its investments as of June 30, 2021.

(g) Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation. Property and equipment consists of mainly assets such as leasehold improvements, office, computer and laboratory equipment, including laboratory equipment acquired under capital lease arrangements. 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 $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $17,000 and zero for the three months ended June 30, 2021 and 2020, respectively. The Company recorded depreciation expense of $0.4 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $34,000 and zero for the six months ended June 30, 2021 and 2020, respectively.

Amortization of assets that are recorded under capital leases in depreciation expense is included in cost of revenues on the condensed consolidated statement of operations. Gross assets recorded under capital leases were $0.3 million as of June 30, 2021 and December 31, 2020. Accumulated amortization associated with capital leases was $44,000 and $10,000 as of June 30, 2021 and December 31, 2020, respectively. Maintenance and repairs are expensed as incurred, and material improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized. There were no disposal of equipment for the three months ended June 30, 2021 and 2020. The Company disposed of $0.1 million and zero of equipment for the six months ended June 30, 2021 and 2020, respectively. 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 or six months ended June 30, 2021 and 2020.

(h) 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-based compensation expense; (ii) and 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.

(i) Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of June 30, 2021, the Company maintained $100.0 million in a sweep account, which maintains cash balances throughout various interest bearing bank accounts under the $250,000 insurance limit provided by the Federal Deposit Insurance Corporation for one federally insured financial institution. Approximately $129.3 million was held in excess of the Federal Deposit Insurance Corporation insured limit as of June 30, 2021. The Company has not experienced any losses in such accounts.

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(j) 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 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 June 30, 2021.

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, of which there are none.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

(k) 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 Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, and accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”). The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

Assay Revenue

The Company generates revenues from its Pigmented Lesion Assay (“PLA”) and PLAplus tests it provides to healthcare clinicians in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides prescribing clinicians with its Smart Sticker adhesive sample collection kits to perform non-invasive skin biopsies of clinically ambiguous pigmented skin lesions on patients. The Company also offers clinicians a telemedicine solution where they can request the Smart Sticker collection kit be sent to the patient’s home for a clinician-guided remote collection on ambiguous pigmented skin lesions. Once the sample is collected by the healthcare clinician or the patient via the telemedicine solution, it is returned to the Company’s CLIA laboratory for analysis. The patient’s ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) are extracted from the Smart Sticker collection kit and analyzed using gene expression technology to determine if the pigmented skin lesion contains certain genomic features indicative of melanoma. Upon completion of the gene expression analysis, a final report is drafted and provided to the dermatologists detailing the test results for the pigmented skin lesion indicating whether the sample collected is indicative of melanoma or not.

Contract Revenue

Contract revenue is generated from the sale of laboratory services and Smart Sticker collection kits to third-party companies through contract research agreements. Revenues are generated 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 Smart Sticker adhesive patch collection kits, assay development for research partners, RNA extraction, isolation, expression, amplification and detection, including data analysis and reporting.

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(a) Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by revenue source during the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assay Revenue
PLA and PLAplus tests	$	2,910	$	648	$	5,100	$	1,445
Contract Revenue
Adhesive patch kits		125		24		314		38
RNA extractions		35		94		139		764
Project management fees		49		78		90		154
Total revenues	$	3,119	$	844	$	5,643	$	2,401

The following table sets forth the percentages of total revenue or accounts receivable for the Company’s third-party payors and pharmaceutical customers that represent 10% or more of the respective amounts for the periods shown:

	Total Revenue												Accounts Receivable
	Three Months Ended June 30,						Six Months Ended June 30,						As of June 30,
	2021			2020			2021			2020			2021			2020
Assay Revenue
Payor A		36	%		37	%		34	%		25	%		26	%		31	%
Payor B	*				15	%	*				11	%		13	%		26	%
Contract Revenue
Customer A	*				23	%	*				33	%	*			*

* Less than 10%

There were no other third-party payors or customers that individually accounted for more than 10% of the Company’s total revenue or accounts receivable for the periods shown in the table above.

(b) Deferred Revenue and Remaining Performance Obligations

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets.

In a majority of agreements that produce contract revenue, the Company receives a substantial up-front payment and additional payments upon the achievement of various milestones over the life of the agreement. This results in deferred revenue and is relieved upon delivery of the applicable Smart Sticker adhesive patch kits or RNA extraction results. Changes in accounts receivable and deferred revenue were not materially impacted by any other factors.

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 when goods/services are completed or delivered. Upfront fees that are estimated to be recognized as revenue more than one year from the date of collection are classified as long-term deferred revenue. Short-term deferred revenue as of June 30, 2021 and December 31, 2020 was $1.4 million and $0.9 million, respectively. Long-term deferred revenue as of June 30, 2021 and December 31, 2020 was $2,000 and $0.6 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. As of June 30, 2021, 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 $0.5 million. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two to three years.

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(l) Accounts Receivable

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 and PLAplus tests. 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 and PLAplus tests performed in the applicable period. 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. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the measurement of the accounts receivable balances. The Company recorded $2.1 million and $1.0 million of gross assay accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

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 June 30, 2021, the Company did not maintain any reserve over contract receivables as they relate to large established credit worthy customers. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve. The Company recorded $0.1 million and $0.5 million of contract accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

(m) Freight and Shipping Costs

The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues.

(n) Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. We report net loss and the components of other comprehensive loss, including unrealized gains and losses on marketable securities, net of their related tax effect to arrive at total comprehensive loss.

(o) 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.

(p) Net Loss Per Share

Basic and diluted net loss per share of common stock is determined by dividing net loss applicable to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Because there is a net loss attributable to holders of common stock during the three and six months ended June 30, 2021 and 2020, the outstanding common stock warrants, stock options, restricted stock units (“RSUs”) and preferred stock have been excluded from the calculation of diluted loss per share of common stock 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 share of common stock for the three and six months ended June 30, 2021 excludes the effect of anti-dilutive equity instruments including 749,210 shares of common stock issuable upon the exercise of outstanding common stock warrants and 2,469,816 shares of common stock issuable upon the exercise of stock options and release of RSUs. Diluted net loss per share of common stock for the three and six months ended June 30, 2020 excludes the effect of anti-dilutive equity instruments including 1,139,194 shares of common stock then issuable upon conversion of the Company’s preferred stock, 4,153,631 shares of common stock then issuable upon the exercise of outstanding warrants and 1,798,900 shares of common stock then issuable upon the exercise of stock options and release of RSUs. The Company did not consider a two-class method of loss per share given that the Company’s convertible participating securities do not participate in losses.

(q) 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 ratable basis.

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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 determined 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 using the ratable 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 as well as the volatility of the Company’s common stock. 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 using the fair value approach. The fair value of these options is measured using the Black-Scholes-Merton option pricing model, reflecting the same assumptions applied to employee options, other than expected life, which is assumed to be the remaining contractual life of the award. Options that are granted to employees generally have a requisite service period of three to four years.

RSUs are considered restricted stock. 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 ratable basis over the requisite service periods of the awards. RSUs that are granted to employees have a requisite service period typically between two and four years.

All stock options and RSUs granted prior to January 1, 2020 will maintain the estimated forfeiture approach and will be recognized over the requisite service period using the straight-line method.

The following table sets forth assumptions used to determine the fair value of each option on the date of grant issued under the 2020 Equity Incentive Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	1.03% - 1.07%		0.43% - 0.44%		0.52% - 1.13%		0.43% - 1.69%
Assumed volatility	77.69%		68.34%		74.88% - 77.69%		64.03% - 68.34%
Expected option term	6.08 years		5.55 - 6.25 years		6.08 years		5.04 - 6.25 years
Expected dividend yield		—		—		—		—

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the 2020 Employee Stock Purchase Plan:

	Three Months Ended June 30,			Six Months Ended June 30,
	2021		2020	2021		2020
Assumed risk-free interest rate	0.10%		Not applicable	0.10% - 0.18%		Not applicable
Assumed volatility	69.34%		Not applicable	68.44% - 69.34%		Not applicable
Expected option term	0.50 years		Not applicable	0.49 - 0.50 years		Not applicable
Expected dividend yield		—	Not applicable		—	Not applicable

The Company recorded stock-based compensation expense for employee options, RSUs, ESPP contributions, and consultant options of $3.5 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $5.7 million and $2.1 million for the six months ended June 30, 2021 and 2020, respectively. The total compensation cost related to non-vested awards not yet recognized as of June 30, 2021 was $34.8 million, which is expected to be recognized over a weighted average term of 2.90 years. 

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(r) Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants classified as liabilities and are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a component of other income/(expense) in the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes-Merton valuation model. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of its warrants. At that time, the portion of the warrant liability related to the Company’s warrants will be reclassified to additional paid-in capital.

The following assumptions were used to calculate the fair value of the Company’s warrant liability using the Black-Scholes-Merton valuation model:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	0.46%		0.24%		0.46% - 0.64%		0.24% - 0.33%
Assumed volatility	88.28%		69.79%		85.85% - 88.28%		69.79% - 73.73%
Expected term	3.17 years		4.17 years		3.17 - 3.42 years		4.17 - 4.42 years
Expected dividend yield		—		—		—		—

(s) Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. 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. The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	1,320	$	—	$	—	$	1,320
Marketable securities, available for sale:
Corporate debt		—		6,889		—		6,889
Municipal securities		—		5,495		—		5,495
U.S. government debt securities		—		26,260		—		26,260
Total marketable securities, available for sale		—		38,644		—		38,644
Total assets measured at fair value on a recurring basis	$	1,320	$	38,644	$	—	$	39,964
Liabilities:
Warrant liability	$	—	$	—	$	577	$	577
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	577	$	577

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	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	448	$	—	$	—	$	448
Marketable securities, available for sale:
Corporate debt		—		8,940		—		8,940
Municipal securities		—		7,324		—		7,324
U.S. government debt securities		—		23,265		—		23,265
Total marketable securities, available for sale		—		39,529		—		39,529
Total assets measured at fair value on a recurring basis	$	448	$	39,529	$	—	$	39,977
Liabilities:
Warrant liability	$	—	$	—	$	1,650	$	1,650
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	1,650	$	1,650

The Company’s marketable debt securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active. The Company has classified marketable securities with original maturities of greater than one year as short-term investments based upon the Company’s ability to use all of those marketable securities to satisfy the liquidity needs of the Company’s current operations.

The fair value of the Private SPAC Warrants was determined using the Black-Scholes-Merton valuation model and included a significant unobservable input: expected volatility. Expected volatility is considered by the Company to be a significant unobservable input and is calculated using a weighted average of historical volatilities of a combination of the Company and peer companies, due to the lack of sufficient historical data of the Company’s own stock price. The model also incorporated several observable assumptions at each valuation date including: the price of the Company’s common stock on the date of valuation, the remaining contractual term of the warrant and the risk-free interest rate over the remaining term.

The following table summarizes the changes in the fair value of the Company’s Level 3 liabilities (in thousands):

Balance as of December 31, 2020	$	1,650
Derecognition of warrant liability from exercise of Private SPAC Warrants		(2,158	)
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(411	)
Change in fair value of warrant liability		1,689
Balance as of March 31, 2021		770
Derecognition of warrant liability from exercise of Private SPAC Warrants		—
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(23	)
Change in fair value of warrant liability		(170	)
Balance as of June 30, 2021	$	577

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.

(t) Accounting Pronouncements Issued But Not Yet Effective

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases (“Topic 840”), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12

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months or less will be accounted for similar to existing guidance for operating leases. For companies that are not emerging growth companies (‘‘EGCs’’), ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. For EGCs, the ASU was to be effective for fiscal years beginning after December 15, 2019. However, in November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates (“ASU 2019-10”), which included a one-year deferral of the effective date of ASU 2016-02 for certain entities. In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities (“ASU 2020-05”), which further defers the effective date for certain entities. As a result, the ASU is now effective for EGCs for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2020-05 will not apply and the Company is required to adopt the standard during the fourth quarter of 2021. The Company is currently assessing the impact of the adoption of this guidance on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. For non-EGCs, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For EGCs, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt ASU 2019-12 during the fourth quarter of 2021. The Company is currently evaluating the impact of ASU 2019-12 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. This standard covers the Company’s financial instruments, such as debt securities that are available for sale. Previously, when credit losses were measured under U.S. GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new guidance requires companies to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for financial instruments, using information such as historical experience and current economic conditions, plus the use of reasonable supportable forecast information. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses, which included an amendment of the effective date for nonpublic entities. For non-EGCs, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. For EGCs, ASU 2016-13 was to be effective for fiscal years beginning after December 15, 2021. However, in November 2019, the FASB issued ASU 2019-10, which included a one-year deferral of the effective date of ASU 2016-13 for certain entities. As a result, ASU is now effective for EGCs for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, and the standard is adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2019-10 will not apply and the Company is required to adopt ASU 2016-13 during the fourth quarter of 2021. We are currently evaluating the impact the adoption of this standard will have on the Company’s condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the effects, if any, of the adoption of ASU 2021-04 guidance on the Company’s condensed consolidated financial statements.

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2. Balance Sheet Details

Short-Term Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of June 30, 2021 were as follows (in thousands):

	June 30, 2021
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	6,895	$	—	$	(6	)	$	6,889
Municipal securities		5,494		2		(1	)		5,495
U.S. government debt securities		26,253		7		—			26,260
Total short-term marketable securities,    available-for-sale	$	38,642	$	9	$	(7	)	$	38,644

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of December 31, 2020 were as follows (in thousands):

	December 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	8,946	$	—	$	(6	)	$	8,940
Municipal securities		7,325		1		(2	)		7,324
U.S. government debt securities		23,259		6		—			23,265
Total short-term marketable securities,    available-for-sale	$	39,530	$	7	$	(8	)	$	39,529

As of June 30, 2021, the estimated market value of debt securities with contractual maturities of less than twelve months was $36.9 million; the remaining debt securities that we held at that date had an estimated market value of $1.8 million and contractual maturities of up to 14 months. As of December 31, 2020, the estimated market value of debt securities with contractual maturities of less than twelve months was $37.3 million; the remaining debt securities that we held at that date had an estimated market value of $2.3 million and contractual maturities of up to 14 months.

Prepaid Expenses and PP&E

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021			December 31, 2020
Prepaid expenses and other current assets:
Prepaid insurance	$	376		$	1,172
Prepaid trade shows		43			—
Prepaid software fees		760			214
Deferred issuance costs		—			56
Other current assets		134			79
Total prepaid expenses and other current assets	$	1,313		$	1,521
Property and equipment, gross:
Laboratory equipment	$	3,404		$	2,544
Computer equipment		97			38
Furniture and fixtures		92			109
Leasehold improvements		727			727
Total property and equipment, gross		4,320			3,418
Less accumulated depreciation		(1,035	)		(687	)
Total property and equipment, net	$	3,285		$	2,731

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Accrued Compensation and Accrued Liabilities

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021		December 31, 2020
Accrued compensation:
Accrued paid time off	$	905	$	606
Accrued bonus and deferred compensation		2,262		1,469
Total accrued compensation	$	3,167	$	2,075
Accrued liabilities:
Accrued consulting services	$	254	$	285
Deferred rent		254		300
Other accrued expenses		379		178
Total accrued liabilities	$	887	$	763

3. Convertible Preferred Stock and 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.

(b) Series A Convertible Preferred Stock Financing

In connection with the 2019 private placement of equity securities of the Company 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 (the “Series A Certificate of Designation”). An aggregate of 1,231 shares of Series A Convertible Preferred Stock for an aggregate purchase price of $4.0 million were issued to certain accredited investors. On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C. converted an aggregate of 1,231 shares of Series A Preferred Stock into 615,385 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series A Convertible Preferred Stock.

(c) 2020 PIPE Financing

On February 28, 2020, the Company entered into a securities purchase agreement with certain institutional investors for a private placement of the Company’s equity securities (the “2020 PIPE Financing”). Cowen and Company, LLC served as lead placement agent for the 2020 PIPE Financing, with William Blair & Company, L.L.C. acting as joint placement agent. Lake Street Capital Markets, LLC acted as co-placement agent. The 2020 PIPE Financing closed on March 4, 2020.

The 2020 PIPE Financing consisted of 2,467,724 shares of common stock at a price of $10.50 per share, 3,199 shares of Series B-1 Convertible Preferred Stock (the “Series B-1 Shares”) at a price of $10,500 per share, and 524 shares of Series B-2 Convertible Preferred Stock (the “Series B-2 Shares”) at a price of $10,500 per share, for aggregate gross proceeds of approximately $65.0 million, reduced by $5.1 million in issuance costs.

Prior to the closing of the 2020 PIPE Financing, the Company designated (i) 3,200 shares of its authorized and unissued preferred stock as Series B-1 Convertible Preferred Stock by filing the Series B-1 Certificate of Designation with the Delaware Secretary of State and (ii) 525 shares of its authorized and unissued preferred stock as Series B-2 Convertible Preferred Stock by filing the Series B-2 Certificate of Designation with the Delaware Secretary of State.

(d) Series B-1 Convertible Preferred Stock Issued in Connection with 2020 PIPE Financing

In connection with the 2020 PIPE Financing transaction and on March 2, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for the Company’s Series B-1 Convertible Preferred Stock (the “Series B-1 Certificate of Designation”). An aggregate of 3,199 shares of Series B-1 Convertible Preferred Stock for an aggregate purchase price of $33.6 million were issued to certain accredited investors.

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At the Company’s annual meeting held on May 26, 2020, the Company’s stockholders voted to approve the 2020 PIPE Financing. As a result, on May 27, 2020 the 3,199 outstanding shares of Series B‑1 Convertible Preferred Stock were automatically converted into an aggregate of 3,198,949 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series B-1 Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series B-1 Convertible Preferred Stock.

(e) Series B-2 Convertible Preferred Stock Issued in Connection with 2020 PIPE Financing

In connection with the 2020 PIPE Financing transaction and on March 2, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for the Company’s Series B-2 Convertible Preferred Stock (the “Series B-2 Certificate of Designation”). An aggregate of 524 shares of Series B-2 Convertible Preferred Stock for an aggregate purchase price of $5.5 million were issued to certain accredited investors. On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C. converted an aggregate of 524 shares of Series B‑2 Preferred Stock into 523,814 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series B-2 Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series B-2 Convertible Preferred Stock.

(f) At-The Market Offering

On November 10, 2020, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC relating to the sale of shares of the Company’s common stock from time to time with an aggregate offering price of up to $50.0 million. During 2020, the Company issued an aggregate of 951,792 shares of common stock pursuant to the Sales Agreement at a weighted average purchase price of $20.97 resulting in aggregate gross proceeds of approximately $20.0 million, reduced by $0.9 million in issuance costs, resulting in net proceeds to the Company of approximately $19.1 million. For the three and six months ended June 30, 2021, the Company issued an aggregate of 530,551 shares of common stock pursuant to the Sales Agreement at a weighted average purchase price of $46.33 resulting in aggregate gross proceeds of approximately $24.6 million, reduced by $0.7 million in issuance costs, resulting in net proceeds to the Company of approximately $23.8 million.

(g) 2021 Underwritten Public Offering  

On January 6, 2021, the Company entered into an Underwriting Agreement with Cowen and Company, LLC and William Blair & Company, L.L.C. as representatives of several underwriters (“the Underwriters”). The Company agreed to issue and sell up to 4,237,288 shares of its common stock including up to 635,593 shares that could be purchased by the Underwriters pursuant to a 30-day option granted to the Underwriters by the Company. On January 11, 2021, the Company closed the underwritten public offering of 4,872,881 shares of its common stock, which included the exercise in full by the Underwriters of their option to purchase up to 635,593 additional shares, at a price to the public of $29.50 per share. The Company received aggregate gross proceeds of approximately $143.7 million, and net proceeds of approximately $134.6 million, after deducting underwriting discounts and commissions and other offering expenses.

(h) Warrants

SPAC Warrants

The Company previously issued a total of 14,936,250 SPAC Warrants to purchase common stock in public and private placement offerings which were consummated on June 23, 2017. As part of the public offering, the Company issued 14,375,000 Public SPAC Warrants and as part of the private placement offering, the Company issued 561,250 Private SPAC Warrants. The SPAC Warrants have a five-year life from the date the Business Combination was consummated and every four SPAC Warrants entitle the holder to purchase one whole share of common stock at an exercise price of $23.00 per whole share.

The Private SPAC Warrants are identical to the Public SPAC Warrants, but they (i) are exercisable either for cash or on a cashless basis at the holder’s option, (ii) are not redeemable by the Company as long as such warrants are held by the initial purchasers or their affiliates and permitted transferees, and (iii) may be subject to the limitations on exercise as specified in the warrant agreement. As a result of these difference in features between the Public SPAC Warrants and Private SPAC Warrants, the Company concluded that the Private SPAC Warrants should be classified as a liability, if still held by the original Private SPAC Warrant holder, and marked to market each financial reporting period in the Company’s statement of operations.

Between January 1, 2021 and June 30, 2021, a total of 12,060,871 SPAC Warrants were exercised, resulting in the Company’s issuance of 3,015,211 shares of common stock and the receipt of $69.4 million in gross proceeds. Outstanding SPAC Warrants totaled 2,875,379 and 14,936,250 as of June 30, 2021 and December 31, 2020, respectively. Private SPAC Warrants that were still owned by the original holder totaled 80,350 and 323,500 as of June 30, 2021 and December 31, 2020, respectively.

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Series C Warrants

In connection with DermTech Operations’ Series C Preferred Stock financing that took place between 2016 and 2018, each investor that purchased at least $1 million of Series C Convertible Preferred Stock in a single closing received a three-year warrant to purchase shares of common stock at an exercise price of $9.54 per share in the amount equal to 20% of shares of Series C Preferred Stock purchased. Outstanding Series C warrants totaled zero and 97,563 as of June 30, 2021 and December 31, 2020, 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, DermTech Operations issued 168,522 seven-year warrants to purchase one share of common stock each at an exercise price of $8.68 per share. From 2016 to 2018, DermTech Operations issued 72,658 seven-year warrants to purchase one share of common stock at an exercise price of $9.54 per share. In 2020, the Company issued 15,724 seven-year warrants to purchase one share of common stock at an exercise price of $9.54 per share in connection with the Company’s 2018 bridge note financing. Outstanding placement agent warrants totaled 10,039 and 31,365 as of June 30, 2021 and December 31, 2020, respectively.

(i) Stock-Based Compensation

2010 Stock Plan

In connection with the Business Combination, the Company assumed the DermTech Operations’ Amended and Restated 2010 Stock Plan (the “2010 Plan”), which provided for the granting of incentive and non-statutory stock options and restricted stock purchase rights and bonus awards. Under the 2010 Plan, incentive and non-statutory stock options were granted at not less than 100% of the fair market value of the Company’s common stock on the date of grant. For incentive stock options granted to a ten percent shareholder under the 2010 Plan, the exercise price was not less than 110% of the fair market value of a share of stock on the effective date of grant. DermTech Operations initially reserved 1.0 million shares of common stock for issuance to its employees, non-employee directors and consultants. The 2010 Plan included a provision which annually increased the amount of common stock reserved for issuance under the 2010 Plan. The contractual term of options granted under the 2010 Plan was ten years. Vesting provisions varied based on the specific terms of the individual option awards. At the Company’s annual meeting held on May 26, 2020, the Company’s shareholders voted to approve the DermTech, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which terminated the 2010 Plan. No additional awards will be granted under the 2010 Plan, however, all outstanding awards under the 2010 Plan remain in effect. No shares remained available for issuance pursuant to future grants under the 2010 Plan as of June 30, 2021 and December 31, 2020, respectively.

2020 Equity Incentive Plan

On May 26, 2020, the Company’s stockholders approved the adoption of the 2020 Plan, which provides for the granting of incentive and non-qualified stock options, restricted stock and stock-based awards. Under the 2020 Plan, incentive and non-qualified stock options may be granted at not less than 100% of the fair market value of the Company’s common stock on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the combined voting power of all classes of the Company’s capital stock, the exercise price may not be less than 110% of the fair market value of the Company’s common stock on the date of grant and the term of the option may not be longer than five years.  

The 2020 Plan authorizes the Company to issue up to 1,900,000 shares of the Company’s common stock pursuant to awards granted under the 2020 Plan, plus the number of shares underlying any stock option and other stock-based awards previously granted under the 2010 Plan that are forfeited, canceled, or terminated (other than by exercise) on or after May 26, 2020; provided that no more than 1,400,000 shares may be added to the 2020 Plan pursuant to such forfeitures, cancellations and terminations. In addition, the number of shares available for issuance under the 2020 Plan will automatically increase on the first day of each fiscal year beginning in fiscal year 2021 and ending on the second day of fiscal year 2025, by an amount equal to the smaller of (i) 3.5% of the number of shares of common stock outstanding on such date and (ii) an amount determined by the administrator of the 2020 Plan. The 2020 Plan will expire on April 12, 2030 or an earlier date approved by a vote of the Company’s stockholders or board of directors. The contractual term of options granted under the 2020 Plan is not more than ten years. Vesting provisions vary based on the specific terms of the individual option awards. 969,666 shares remained available for future grant under the 2020 Plan as of June 30, 2021.

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2020 Employee Stock Purchase Plan

On May 26, 2020, the Company’s stockholders approved the adoption of the Company’s 2020 Employee Stock Purchase Plan (the “ESPP”), which allows for full-time and certain part-time employees of the Company to purchase shares of common stock at a discount to fair market value. Eligible employees enroll in a six-month offering period during the open enrollment period prior to the start of that offering period. A new offering period begins approximately every March 1 and September 1. At the end of each offering period, the accumulated contributions are used to purchase shares of the Company’s common stock. Shares are purchased at a price equal to 85% of the lower of: (i) the fair market value of the Company’s common stock on the first business day of an offering period or (ii) the fair market value of the Company’s common stock on the last business day of an offering period.

The ESPP authorizes the Company to issue up to 400,000 shares of the Company’s common stock. In addition, the number of shares available for issuance under the ESPP will automatically increase on the first day of each of the Company’s fiscal years beginning in 2021 and ending on the first day of 2030, in an amount equal to the lesser of (i) 300,000 shares, (ii) 1% of the shares of Company common stock outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares as is determined by the Board of Directors, subject to adjustment upon changes in capitalization of the Company. On February 28, 2021, the Company issued 39,960 shares of its common stock pursuant to scheduled purchases under the ESPP. As of December 31, 2020, 400,000 shares of common stock were reserved for future issuance under the ESPP. On January 1, 2021, an additional 207,404 shares became available under the ESPP pursuant to an automatic annual increase. 567,444 shares remained available for future grant under the ESPP as of June 30, 2021.

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-year life and are exercisable for Company common stock at $1.08 per share. The Management Warrants vested monthly over a four-year period. Outstanding Management Warrants totaled 20,320 and 22,320 as of June 30, 2021 and December 31, 2020, respectively.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021		December 31, 2020
Warrants to purchase common stock		31		151
SPAC Warrants to purchase common stock*		719		3,734
Stock options issued and outstanding		1,746		1,552
Restricted stock units issued and outstanding		724		560
Authorized for future equity grants		970		935
Authorized for future ESPP purchases		567		400
Total common stock reserved for future issuance		4,757		7,332

* Four SPAC Warrants are needed to purchase one share of common stock. The numbers presented above reflect the amount of shares of common stock underlying SPAC Warrants.

4. 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% as of June 30, 2021 and December 31, 2020, respectively, and the effective income tax rate for the Company’s provision for income taxes was 0% as of June 30, 2021 and December 31, 2020, respectively.

The utilization of net operating losses (“NOLs”) 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 NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has not completed a formal study to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. If an ownership change

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has occurred, the Company’s ability to use its NOLs or tax credit carryforwards may be restricted, which could require the Company to pay federal or state income taxes earlier than would be required if such limitations were not in effect.

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.

Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination for all years since inception.

5. Leases, Commitments and Contingencies

Capital Leases

Certain laboratory equipment has been acquired under a capital lease. The Company determined the interest rate implicit in the lease arrangement for the purpose of calculating the interest and principal components of each lease payment was 5.54%. Total capital lease interest expense was approximately $4,000 and zero for the three months ended June 30, 2021 and 2020, respectively, and $8,000 and zero for the six months ended June 30, 2021 and 2020, respectively, and is included within interest income, net on the condensed consolidated statements of operations. Long-term capital lease obligations are as follows (in thousands):

	June 30, 2021			December 31, 2020
Gross capital lease obligations	$	301		$	362
Less imputed interest		(19	)		(27	)
Present value of net minimum lease payments		282			335
Less current portion of capital lease obligations		(112	)		(109	)
Total long-term capital lease obligations	$	170		$	226

Operating Leases

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 February 2020, the Company signed a fifth 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. As part of the fifth amendment, the Company was entitled to a tenant improvement allowance for certain costs incurred while performing these improvements in the amount of $0.3 million, which amount may be increased by up to $0.1 million at the Company’s election and subject to a corresponding increase in rent. The Company records rent expense on a straight-line basis over the life of the lease and the difference between the average rent expense and cash payments for rent is recorded as deferred rent and is included in accrued liabilities on the condensed consolidated balance sheet.

Rent and associated common area maintenance expense totaled $0.5 million and $0.6 million for the three months ended June 30, 2021 and 2020, respectively and $1.0 million and $0.8 million for the six months ended June 30, 2021 and 2020, respectively.  

Future minimum operating lease and capital lease payments for the operating facilities and laboratory equipment as of June 30, 2021 were (in thousands):

	2021		2022		2023		Total
Operating lease obligations	$	690	$	1,411	$	478	$	2,579
Capital lease obligations, including interest		63		124		114		301
Total future minimum lease payments	$	753	$	1,535	$	592	$	2,880

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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 were to raise at least $15.0 million in proceeds received from equity financings consummated prior to the one-year anniversary of the Business Combination, excluding the proceeds received from any financing consummated prior to or simultaneous with the Business Combination, then the Company would pay to the underwriters $1.4 million within one week of the one-year anniversary of the Business Combination. In connection with the Company’s 2020 PIPE Financing, the Company raised $65.0 million in gross proceeds, which satisfied this condition of the Deferred Underwriting Fee Assignment Agreement. On September 2, 2020, the Company paid the underwriters $1.4 million in satisfaction of the Company’s obligation of the deferred underwriting fees in full. No further payment will be required of the Company in connection with the deferred underwriting fees.

Legal Proceedings

From time to time, the Company may be subject to legal proceedings and claims arising in the ordinary course of business. Management does not believe that the outcome of any of these matters will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

6. Retirement Plan

The Company has an IRC Section 401(k) retirement plan, covering all employees. The Company does not currently offer a contribution percentage match.

7. Related Party Transactions

During 2020 and 2021, the Company engaged EVERSANA Life Science Services, LLC (“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 $0.5 million and $0.3 million in costs for the three months ended June 30, 2021 and 2020, respectively, and $0.9 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively.

On October 1, 2019, the Company entered into a consulting agreement with Michael Dobak pursuant to which the Company will compensate Michael Dobak, in an amount not to exceed $100,000, for certain public relations and marketing services. On July 28, 2020, the Company and Michael Dobak entered into an amendment to such consulting agreement to modify the terms of Michael Dobak’s compensation. The amended consulting agreement compensated Michael Dobak $15,000 per month for the period May 11, 2020 through September 30, 2020 and also granted him a restricted stock unit award that fully vested in a single installment on August 31, 2020 and represented the contingent right to receive 5,000 shares of common stock on January 2, 2021. On November 11, 2020, the Company and Michael Dobak entered into an amendment to such consulting agreement to extend the term through December 31, 2020 with a continued monthly payment of $15,000. On February 26, 2021, the Company and Michael Dobak agreed to extend his agreement through April 30, 2021 with a revised monthly payment of $20,000. Michael Dobak is the brother of Dr. John Dobak, the Company’s Chief Executive Officer. The Company incurred $20,000 and $47,000 in costs for the three months ended June 30, 2021 and 2020, respectively, and $0.1 million for each of the six months ended June 30, 2021 and 2020.  

There were no other related party transactions identified during the six months ended June 30, 2021 and 2020.

8. Subsequent Events

New Principal Office Lease

On July 1, 2021, the Company entered into an Office Lease (the “Lease”) with Kilroy Realty, L.P. (the “Landlord”), with respect to an aggregate of 95,997 rentable square feet consisting of the entire building located at 12340 El Camino Real, San

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Diego, California 92130 (the “Entire Premises”). The Entire Premises covered by the Lease will serve as the Company’s new principal office.

The Lease provides for a tenant improvement allowance of $125.00 per rentable square foot of the Entire Premises for a total of $12.0 million, that the Landlord will use to fund the installation and/or construction of certain improvements to the Entire Premises in four phases, with each phase pertaining to a specified portion of the Entire Premises. The initial term of the Lease is ten years and six months beginning on the earlier to occur of (i) January 1, 2023 and (ii) the date that Landlord tenders possession of the Phase III Premises (as defined in the Lease) to the Company following the substantial completion of the improvements to the Phase III Premises required by the Lease (the “Lease Commencement Date”). The Company has the option to extend the term of the Lease for two additional five-year periods, subject to the terms of the Lease.

As the Landlord tenders possession of each portion of the Entire Premises for which the applicable improvements required by the Lease are substantially complete, the Company will be obligated to make monthly payments of base rent with respect to such portion of the Entire Premises as set forth on Schedule 1 to the Lease. In the event the Company exercises its option to extend the Lease term, the Lease provides for monthly rent payments during the additional five-year periods at the then-current market rent as determined in accordance with the Lease. In addition to rent, the Lease requires the Company to pay additional rent amounts for taxes, insurance, maintenance and other expenses.

Concurrently with the execution of the Lease, the Company delivered to the Landlord a security deposit in the amount of $3.0 million in the form of a letter of credit (the “Letter of Credit”). Such Letter of Credit shall be reduced to $2.0 million on the third anniversary of the Lease Commencement Date and reduced to $1.0 million on the fifth anniversary of the Lease Commencement Date.

Pursuant to the Lease, the Company also has a right of first refusal to lease additional space in another building owned by the Landlord and located at 12390 El Camino Real, San Diego, California on certain terms and conditions set forth in the Lease.

The Company considered subsequent events through August 4, 2021, the date the condensed consolidated financial statements were available to be issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Discussion and Analysis of Financial Condition and Results of Operations of DermTech, Inc. (together with its subsidiaries, “DermTech,” “we,” “us,” “our” or the “Company”) should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited condensed consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 5, 2021.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are intended to be covered by the “safe harbor” created by those sections. All statements, other than statements of historical facts, contained in this report, including statements regarding DermTech’s or its management’s intentions, beliefs, expectations and strategies for the future, are forward looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “potential” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements are made as of the date of this report, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward-looking statements. The risks and uncertainties that could cause actual results to differ materially are more fully described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC. We assume no obligation to update any of the forward-looking statements after the date of this report or to conform these forward-looking statements to actual results.

Overview

We are an emerging growth molecular diagnostic company developing and marketing novel non-invasive genomics tests that seek to transform the practice of dermatology and related fields. Our platform may change the diagnostic paradigm in dermatology from one that is subjective, invasive, less accurate and higher-cost to one that is objective, non-invasive, more accurate and lower-cost. Our initial focus is skin cancer. We currently have two clinical commercial tests that enhance the early detection of skin cancer and related conditions. Our scalable genomics platform has been designed to work with a proprietary Smart Sticker adhesive patch sample collection kit that provides a skin sample collected non-invasively. We process our tests in a Clinical Laboratory Improvement Amendments of 1988, or CLIA, certified and College of American Pathologists accredited commercial laboratory located in La Jolla, California that is licensed by the State of California and all states requiring out-of-state licensure. We also provide our technology platform on a contract basis to large pharmaceutical companies who use the technology in their clinical trials to test for the existence of genetic targets of various diseases and to measure the response of new drugs under development. We have a history of net losses since our inception.

Events, Trends and Uncertainties

The Pigmented Lesion Assay, which we refer to as PLA, became eligible for Medicare reimbursement on February 10, 2020. In late October 2019, the American Medical Association, or AMA, provided us with a Proprietary Laboratory Analyses Code, or PLA Code. Pricing of $760 for the PLA Code was published on December 24, 2019 as part of the Centers for Medicare and Medicaid Services Laboratory Fee Schedule, or CLFS, for 2020. The Medicare Final Coverage Decision, or Final LCD, expanded the coverage proposal in the Draft LCD from one to two tests per date of service and it allows clinicians to order our PLA if they have sufficient skill and experience to decide whether a pigmented lesion should be biopsied. Our local Medicare Administrative Contractor, Noridian Healthcare Solutions, LLC, or Noridian, has issued its own Local Coverage Decision, or LCD, announcing coverage of our PLA. Even though the effective date of Noridian’s LCD was June 7, 2020, Noridian began reimbursing us for our PLA as of February 10, 2020. With Medicare coverage granted, we have the opportunity to approach commercial payors and as a result, we believe that the PLA may generate significant revenues in 2021 and 2022.

Despite the grant of Medicare coverage for the PLA, uncertainty surrounds commercial payor reimbursement, including governmental and commercial payors, of any test incorporating new technology, including tests developed using our technologies. Because each payor generally determines for its own enrollees or insured patients whether to cover or otherwise establish a policy to reimburse our tests, seeking payor approvals is a time-consuming and costly process. We cannot be certain that coverage for our current tests and our planned future tests will be provided in the future by additional commercial payors or that existing policy decisions or reimbursement levels will remain in place or be fulfilled under existing terms and provisions. If we cannot obtain or maintain coverage and reimbursement from private and governmental payors such as Medicare and Medicaid for our current tests, or

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new tests or test enhancements that we may develop in the future, our ability to generate revenues could be limited. This may have a material adverse effect on our business, financial condition, results of operation, and cash flows.

Revenue Effects Related to COVID-19 Pandemic

Assay Revenue

Beginning in March 2020 and continuing through the second quarter of 2021, the ongoing COVID-19 pandemic has reduced patient access to clinician offices for in-person testing and reduced access by our sales force for in-office sales calls, which has resulted in a reduced volume of billable samples received relative to our pre-pandemic expectations. April 2020 billable sample volume was down by approximately 80%, commensurate with the closure of dermatology offices, compared to the average monthly billable sample volume for the two months preceding the beginning of the COVID-19 stay-at-home orders. Despite the downturn in billable samples in April 2020, we saw a stabilization of billable sample volume throughout the rest of the second quarter of 2020 and through the second quarter of 2021 as various states and dermatology offices opened throughout the country. Billable sample volume first exceeded pre‑pandemic levels in July 2020 even without all dermatology practices returning to full operations. Billable sample volume for the three months ended June 30, 2021 was 25% higher than billable sample volume for the three months ended March 31, 2021. Billable sample volume for the three months ended June 30, 2021 was 267% higher than billable sample volume for the three months ended June 30, 2020 and 135% higher for the six months ended June 30, 2021 compared to the same period in 2020. Billable sample volumes could continue to be impacted by the ongoing COVID-19 pandemic and further impacted by a resurgence of the virus in the future.

We have made available beginning in late April 2020 a telemedicine option for the PLA, but the telemedicine market is relatively new and unproven, especially within dermatology, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. While the COVID-19 pandemic is ongoing and clinician offices could close again due to the rolling back of reopening plans in various states, or patients could worry about going into the dermatology clinic, we expect that our revenues will depend to an extent on the willingness of clinicians and their patients to use our telemedicine option for the DermTech Melanoma Test (as defined below), as well as on our ability to demonstrate the value of our telemedicine option to health plans and other purchasers of healthcare for beneficiaries. We also expect that the duration and extent of the effects of the ongoing COVID-19 pandemic will continue to adversely affect our revenues by reducing access to clinician offices by patients for in-person testing and by our sales force for in-office sales calls.

Contract Revenue

Contract revenues with major pharmaceutical companies relate to ongoing clinical trial contracts and new contracts. Contract revenue can be highly variable as it is dependent on the pharmaceutical customers’ clinical trial progress which can be difficult to forecast due to variability of patient enrollment, drug safety and efficacy and other factors. Many of our contracts with third parties are structured to contain milestone billing payments, which typically are advance payments on work yet to be performed. These advanced payments are structured to help fund operations and are included in deferred revenue as the work has not yet been performed. These advance payments will remain in deferred revenue until we process the laboratory portion of the contracts allowing us to recognize the revenue.

The ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect our pharmaceutical customers’ clinical trials. The extent of such effect on our future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials.

DermTech PLAplus Launch

During the second quarter of 2021, the Company announced the launch of PLAplus, its next generation test for the enhanced early detection of melanoma. PLAplus delivers objective and actionable information to guide clinical management decisions for skin lesions suspicious of melanoma. The new PLAplus test adds Telomerase Reverse Transcriptase, TERT, promoter DNA driver mutation analyses as a reflex test to the current RNA gene expression PLA test. TERT is individually associated with histopathologic features of aggressiveness and poor survival in melanoma. The combined tests elevate the sensitivity from 91% to 97% and maintain a negative predictive value of >99%, resulting in a less than 1% probability of missing melanoma. We refer to the PLA and the PLAplus collectively as the DermTech Melanoma Test. By combining RNA gene expression and DNA mutation analyses, the DermTech Melanoma Test provides a highly accurate non-invasive genomic test for enhanced early melanoma detection.

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Financial Overview

Revenue

We generate revenue through laboratory services that are billed to Medicare, private medical insurance companies and to pharmaceutical companies who order our laboratory services, which can include sample collection kits, assay development, genomic analysis, data analysis and reporting. Our revenue is generated from two revenue streams: contract revenue and assay revenue. Assay revenue can be highly variable as it is based on payments received by private insurance payors that are and are not under contract and can vary based on patient insurance coverage, deductibles and co-pays. Contract revenue is ordered by customers on projects that may span over several years, which makes this type of revenue highly variable. Segments of these contracts may be increased, delayed or eliminated based on the success of each customers’ clinical trials or other factors.

Operating Expenses

Sales and Marketing Expenses

Sales and marketing expenses are primarily related to our specialty field sales force, market research, reimbursement efforts, trade show attendance, public relations, and general marketing. We expect these expenses to increase significantly as we expand our direct consumer marketing efforts and continue to add to our specialty sales force, marketing and payor access teams throughout 2021.

Research and Development Expenses

Our research and development, or R&D, expenses consist primarily of salaries and fringe benefits, clinical trials, consulting costs, facilities costs, laboratory costs, equipment expense, and depreciation. We also conduct clinical trials to validate the performance characteristics of our tests and to show medical cost benefit in support of our reimbursement efforts. We expect these expenses to increase significantly as we continue to develop new products and expand the use of our existing products.

General and Administrative Expenses

Our general and administrative expenses consist of senior management compensation, consulting, legal, billing and collections, human resources, information technology, accounting, insurance, and general business expenses. We expect our general and administrative expenses, especially employee-related costs, including stock-based compensation, insurance, accounting, and legal fees, to continue to increase due to operating as a publicly traded company.  

Financing Activities

Business Combination

On August 29, 2019, the Company and DermTech Operations, Inc. (formerly known as DermTech, Inc.), or 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., or 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.

Immediately following the completion of the Business Combination, the Company changed its name from Constellation Alpha Capital Corp. to DermTech, Inc. and effected a one-for-two reverse stock split of its common stock, or the Reverse Stock Split. Prior to the closing of the Business Combination, the Company’s stock was listed on the Nasdaq Capital Market under the ticker symbol “CNAC.” On August 30, 2019, the Company’s common stock commenced trading on the Nasdaq Capital Market under the ticker symbol “DMTK.”

2019 PIPE Financing

On August 29, 2019, immediately prior to the completion of the Business Combination, the Company issued to certain accredited investors, in a private placement transaction, or the 2019 PIPE Financing, an aggregate of 3,076,925 shares of common stock and 1,231 shares of Series A Convertible Preferred Stock for aggregate gross proceeds of $24.0 million, or $6.50 per share of common stock on an as-converted basis. The 2019 PIPE Financing was conducted pursuant to the terms of separate Subscription Agreements and Amended and Restated Subscription Agreements, dated between May 22, 2019 and August 1, 2019, entered into by the Company and the investors. After giving effect to the Reverse Stock Split, each share of Series A Convertible Preferred Stock was convertible into 500 shares of the Company’s common stock, subject to conditions and adjustment as provided in the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock.

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On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C., or the Farallon entities, converted an aggregate of 1,231 shares of Series A Preferred Stock into 615,385 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series A Convertible Preferred Stock.

2020 PIPE Financing

On February 28, 2020, the Company entered into a securities purchase agreement with certain institutional investors for a private placement of the Company’s equity securities, or the 2020 PIPE Financing. Cowen and Company, LLC served as lead placement agent for the 2020 PIPE Financing with William Blair & Company, L.L.C. acting as joint placement agent. Lake Street Capital Markets, LLC acted as co-placement agent. The 2020 PIPE Financing closed on March 4, 2020.

Pursuant to the 2020 PIPE Financing, on March 4, 2020 the Company issued an aggregate of 2,467,724 shares of common stock at a purchase price of $10.50 per share, 3,199 shares of Series B-1 Convertible Preferred Stock, or the Series B-1 Shares, at a purchase price of $10.50 per share of common stock issuable upon conversion thereof, which were convertible into an aggregate of up to 3,198,942 shares of common stock, and 524 shares of Series B-2 Convertible Preferred Stock, or the Series B-2 Shares, at a purchase price of $10.50 per share of common stock issuable upon conversion thereof, which are convertible into an aggregate of up to 523,809 shares of common stock, for aggregate gross proceeds of approximately $65.0 million.

At the Company’s annual meeting held on May 26, 2020, the Company’s stockholders voted to approve the 2020 PIPE Financing, which resulted in the automatic conversion of the Series B-1 Shares into 3,198,949 shares of common stock on May 27, 2020. Each Series B-2 Share was convertible into 1,000 shares of the Company’s common stock, subject to conditions and adjustment as provided in the Certificate of Designation of Preferences, Rights and Limitations of Series B-2 Convertible Preferred Stock. On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C., or the Farallon entities, converted an aggregate of 524 shares of Series B‑2 Preferred Stock into 523,814 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series B-1 Convertible Preferred Stock and Certificate of Elimination of Series B-2 Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series B-1 and B-2 Convertible Preferred Stock.

2020 At-The-Market Offering  

On November 10, 2020, the Company entered into a sales agreement with Cowen and Company, LLC relating to the sale of shares of the Company’s common stock from time to time with an aggregate offering price of up to $50.0 million. During 2020, the Company issued an aggregate of 951,792 shares of common stock pursuant to the sales agreement at a weighted average purchase price of $20.97, resulting in aggregate gross proceeds of approximately $20.0 million. For the six months ended June 30, 2021, the Company issued an aggregate of 530,551 shares of common stock pursuant to the sales agreement at a weighted average purchase price of $46.33 resulting in aggregate gross proceeds of approximately $24.6 million, reduced by $0.7 million in issuance costs, resulting in net proceeds to the Company of approximately $23.8 million.

2021 Underwritten Public Offering  

On January 6, 2021, the Company, entered into an Underwriting Agreement with Cowen and Company, LLC and William Blair & Company, L.L.C. as representatives of several underwriters, or the Underwriters. The Company agreed to issue and sell up to 4,237,288 shares of its common stock including up to 635,593 shares that could be purchased by the Underwriters pursuant to a 30-day option granted to the Underwriters by the Company.

On January 11, 2021, the Company closed the underwritten public offering of 4,872,881 shares of its common stock, which included the exercise in full by the Underwriters of their option to purchase up to 635,593 additional shares, at a price to the public of $29.50 per share. The Company’s aggregate gross proceeds from the offering, before deducting underwriting discounts and commissions and other offering expenses, were $143.7 million.

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Results of Operations

Three Months Ended June 30, 2021 and June 30, 2020

Assay Revenue

Assay revenues grew $2.3 million, or 349%, to $2.9 million for the three months ended June 30, 2021 compared to $0.6 million for the three months ended June 30, 2020. Billable samples increased to approximately 11,750 for the three months ended June 30, 2021 compared to approximately 3,200 for the three months ended June 30, 2020. Sample volume is dependent on two major factors: the number of clinicians who order an assay in any given quarter and the number of assays ordered by each clinician during the period. The number of ordering clinicians and the utilization per clinician can vary based on a number of factors including the types of patients presenting skin cancer conditions, clinician reimbursement, office workflow, market awareness, clinician education and other factors. The ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect our assay revenue by, among other things, limiting patient access to clinician offices for in-person testing and limiting access by our sales force for in-office sales calls. Additionally, assay revenue increased due to the effectiveness of our new contracts with Blue Shield of California, Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of Illinois.

Contract Revenue

Contract revenues with major pharmaceutical companies increased $14,000, or 7%, to $0.2 million for the three months ended June 30, 2021, compared to $0.2 million for the three months ended June 30, 2020. Contract revenue can be highly variable as it is dependent on the pharmaceutical customers’ clinical trial progress, which can be difficult to forecast due to variability of patient enrollment, drug safety and efficacy and other factors. The ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect our pharmaceutical customers’ clinical trials. The extent of such effect on our future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials. Many of our contracts with third parties are structured to contain milestone billing payments, which typically are advanced payments on work yet to be performed. These advanced payments are structured to help fund operations and are included in deferred revenue as the work has not yet been performed. As of June 30, 2021, the deferred revenue amount for these contracts, which is the advanced payments minus the value of work performed, was $1.4 million. Approximately $1.4 million was classified as short-term deferred revenue as that portion of deferred revenue is expected to be recognized within 12 months after June 30, 2021. These advanced payments will remain in deferred revenue until we process the laboratory portion of the contracts allowing us to recognize the revenue.

Cost of Revenue

Cost of revenues increased $1.2 million, or 82%, to $2.6 million for the three months ended June 30, 2021 compared to $1.4 million for the three months ended June 30, 2020. The increase was largely attributable to a higher billable sample volume in 2021, and higher consulting, software and equipment costs. As of June 30, 2021, a large portion of the costs of revenue are fixed, and these costs include the CLIA facility, quality assurance, management and supervision and equipment calibration and depreciation. The variable cost of revenue expenses incurred primarily relate to compensation-related costs for our laboratory scientists and technicians, laboratory supplies, shipping costs, equipment maintenance, and utilities. We remain committed to continuing the automation of our laboratory processes in order to become more cost efficient and productive.

Operating Expenses

Sales and Marketing

Sales and marketing expenses increased $4.5 million, or 130%, to $7.9 million for the three months ended June 30, 2021 compared to $3.4 million for the three months ended June 30, 2020. The increase was primarily attributable to higher compensation-related costs from the expansion of the commercial team, increased spending on advertising activities to increase market exposure, and additional consulting and travel expenses. We expect to add to our specialty sales force, marketing and payor access teams throughout 2021 and 2022, and increase spending on direct-to-consumer marketing campaigns, which collectively would significantly increase our sales and marketing expenses.

Research and Development

R&D expenses increased $2.7 million, or 316%, to $3.6 million for the three months ended June 30, 2021 compared to $0.9 million for the three months ended June 30, 2020. The increase was due to higher compensation costs of expanding the R&D team, including the addition of a new Chief Scientific Officer and Chief Medical Officer, increased clinical trial costs, increased spending on laboratory supplies to support new product development, and additional consulting expenses. We expect these expenses to increase as

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we continue to grow the R&D team and focus on the development of our Luminate test, our basal and squamous cell skin cancer assays and other products in our pipeline.

General and Administrative

General and administrative expenses increased $1.8 million, or 39%, to $6.3 million for the three months ended June 30, 2021 compared to $4.5 million for the three months ended June 30, 2020. The increase was primarily due to higher payroll-related costs and stock-based compensation as we continue to add additional infrastructure such as human resources, billing, information technology and legal resources, and higher consulting expenses, audit fees, and insurance, offset by lower loss contingency and legal fees.

Interest Income, net

Interest income, net for the three months ended June 30, 2021 was $35,000 compared to interest income, net of $10,000 for the three months ended June 30, 2020. Interest income, net for the three months ended June 30, 2021 consists primarily of interest earned on our short-term marketable securities.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability for the three months ended June 30, 2021 was a gain of $0.2 million compared to a loss of $0.2 million for the three months ended June 30, 2020. The change in fair value of warrant liability is calculated by adjusting the value of the outstanding Private SPAC Warrants held by original holders to the current market value at each reporting period.

Six Months Ended June 30, 2021 and June 30, 2020

Assay Revenue

Assay revenues grew $3.7 million, or 253%, to $5.1 million for the six months ended June 30, 2021 compared to $1.4 million for the six months ended June 30, 2020. Billable samples increased to approximately 21,150 for the six months ended June 30, 2021 compared to approximately 9,000 for the six months ended June 30, 2020. The increase in assay revenue was primarily due to higher billable sample volume and improved average selling price, or ASP, resulting from better cash collections due to the effectiveness of our new contracts with Blue Shield of California, Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of Illinois. The ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect our assay revenue by, among other things, limiting patient access to clinician offices for in-person testing and limiting access by our sales force for in-office sales calls.

Contract Revenue

Contract revenues decreased $0.4 million, or 43%, to $0.5 million for the six months ended June 30, 2021, compared to $1.0 million for the six months ended June 30, 2020. Contract revenue can be highly variable as it is dependent on the pharmaceutical customers’ clinical trial progress, which can be difficult to forecast due to variability of patient enrollment, drug safety and efficacy and other factors. The ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect our pharmaceutical customers’ clinical trials. The extent of such effect on our future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials.  

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Cost of Revenue

Cost of revenues increased $2.0 million, or 75%, to $4.6 million for the six months ended June 30, 2021 compared to $2.6 million for the six months ended June 30, 2020. The increase was largely attributable to a higher billable sample volume in 2021, and higher consulting, software and equipment costs. As of June 30, 2021, a large portion of the costs of revenue are fixed, and these costs include the CLIA facility, quality assurance, management and supervision and equipment calibration and depreciation. The variable cost of revenue expenses incurred primarily relate to compensation-related costs for our laboratory scientists and technicians, laboratory supplies, shipping costs, equipment maintenance, and utilities. We remain committed to continuing the automation of our laboratory processes in order to become more cost efficient and productive.

Operating Expenses

Sales and Marketing

Sales and marketing expenses increased $8.0 million, or 126%, to $14.4 million for the six months ended June 30, 2021 compared to $6.4 million for the six months ended June 30, 2020. The increase was primarily attributable to higher compensation-related costs from the expansion of the commercial team, increased spending on advertising activities to increase market exposure, and additional consulting and travel expenses. We expect to add to our specialty sales force, marketing and payor access teams throughout 2021 and 2022, and increase spending on direct-to-consumer marketing campaigns, which collectively would significantly increase our sales and marketing expenses.

Research and Development

R&D expenses increased $4.1 million, or 232%, to $5.8 million for the six months ended June 30, 2021 compared to $1.8 million for the six months ended June 30, 2020. The increase was due to higher compensation costs of expanding the R&D team, including the addition of a new Chief Scientific Officer and Chief Medical Officer, increased clinical trial costs, increased consulting expenses, and increased spending on laboratory supplies to support new product development. We expect these expenses to increase as we continue to grow the R&D team and focus on the development of our Luminate test, our basal and squamous cell skin cancer assays and other products in our pipeline.

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General and Administrative

General and administrative expenses increased $3.5 million, or 43%, to $11.5 million for the six months ended June 30, 2021 compared to $8.0 million for the six months ended June 30, 2020. The increase was primarily due to higher payroll-related costs and stock-based compensation as we continue to add additional infrastructure such as human resources, billing, information technology and legal resources, higher insurance, taxes, public company costs, consulting expenses, and facility costs, offset by lower loss contingency and legal fees.

Interest Income, net

Interest income, net for the six months ended June 30, 2021 was $0.1 million compared to interest income, net of $10,000 for the six months ended June 30, 2020. Interest income, net for the six months ended June 30, 2021 consists primarily of interest earned on our short-term marketable securities.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability for the six months ended June 30, 2021 was a loss of $1.5 million compared to a loss of $0.1 million for the six months ended June 30, 2020. The change in fair value of warrant liability is calculated by adjusting the value of the outstanding Private SPAC Warrants held by original holders to the current market value at each reporting period.     

Liquidity and Capital Resources

We have never been profitable and have historically incurred substantial net losses, including net losses of $36.5 million for the twelve months ended December 31, 2020 and $32.2 million for the six months ended June 30, 2021. As of June 30, 2021, our accumulated deficit was $160.2 million. For the six months ended June 30, 2021, we had negative operating cash flow of $23.5 million. We completed the 2020 PIPE Financing in March 2020, which raised a total of $65.0 million in gross proceeds. At the end of 2020 and through June 30, 2021, we raised approximately $44.5 million in gross proceeds facilitated through our At-The-Market Offering. In addition, we completed the 2021 Underwritten Public Offering in January 2021, which raised a total of $143.7 million in gross proceeds. We have historically financed operations through private and public placement equity offerings.

We expect our losses to continue as a result of costs relating to ongoing R&D expenses, increased general and administrative expenses and increased sales and marketing costs for existing and planned products. These losses have had, and will continue to have, an adverse effect on our working capital. Because of the numerous risks and uncertainties associated with our commercialization and development efforts, we are unable to predict when we will become profitable, and we may never become profitable. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.

As of June 30, 2021, our cash and cash equivalents totaled approximately $229.6 million and short-term marketable securities totaled approximately $38.6 million. Based on our current business operations, we believe our current cash and cash equivalents will be sufficient to meet our anticipated cash requirements for at least the next twelve months. While we believe we have enough capital to fund anticipated operating costs for at least the next 12 months, we expect to incur significant additional operating losses over at least the next several years. We anticipate that we will raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements in order to support our planned operations and to continue developing and commercializing genomic tests. We may also consider raising additional capital in the future to expand our business, to pursue strategic investments or to take advantage of financing opportunities. Our present and future funding requirements will depend on many factors, including:

• our revenue growth rate and ability to generate cash flows from operating activities;

• the willingness of clinicians and their patients to use our telemedicine option for the DermTech Melanoma Test and the duration and extent of the effects of the ongoing COVID-19 pandemic in reducing patient access to clinician offices for in-person testing and access by our sales force for in-office sales calls;

• the duration and extent of the effects of the ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials;

• our sales and marketing and R&D activities;

• effects of competing technological and market developments;

• costs of and potential delays in product development;

• changes in regulatory oversight applicable to our tests; and

• timing of and costs related to future international expansion.

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There can be no assurances as to the availability of additional financing or the terms upon which additional financing may be available to us. If we are unable to obtain sufficient funding at acceptable terms, we may be forced to significantly curtail our operations, and the lack of sufficient funding may have a material adverse impact on our ability to continue as a going concern.

Cash Flow Analysis

Six Months Ended June 30, 2021

Net cash used in operating activities for the six months ended June 30, 2021 totaled $23.5 million, primarily driven by the $32.2 million net loss offset partially by non-cash related items, including $5.7 million in stock-based compensation and $1.5 million from the change in fair value of warrant liability. In addition, we had a cash inflow of $1.6 million from the increase in accounts payable and accrued compensation, which was offset by a cash outflow of $0.7 million through the increase of accounts receivables.

Net cash used in investing activities for the six months ended June 30, 2021 totaled $0.4 million, which related to the outflow from the purchase of $4.9 million of marketable securities and $0.9 million from the purchase of equipment offset by the inflow from the maturity of marketable securities of $5.5 million. Additional laboratory equipment investment will be needed to install complex automation systems and other genomic testing equipment needed to expand testing capacity.

Net cash provided by financing activities for the six months ended June 30, 2021 totaled $229.3 million, which was driven by $134.6 million in net proceeds raised from the 2021 Underwritten Public Offering, $23.8 million in net proceeds from the sale of securities under our At-The-Market Offering and $69.9 million in proceeds from the exercise of warrants, predominately from the exercise of 12.1 million of our outstanding SPAC Warrants.

Off-Balance Sheet Arrangements

As of June 30, 2021, we did not have any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Significant Judgments and Estimates

Critical accounting policies, significant judgments, and estimates are those that we believe are most important for the portrayal of the Company’s financial condition and results, and that require management’s most subjective and complex judgments. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and disclosed in Note 1(k) and Note 1(q) of the condensed consolidated financial statements herein.

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or non-public entities, the Company has adopted the new or revised standard at the time non-public entities adopt the new or revised standard. Because the market value of the Company’s common stock held by non-affiliates exceeded $700.0 million as of June 30, 2021, the Company will have been public for more than one year and it has filed at least one annual report, the Company will cease to be an emerging growth company as of December 31, 2021. As a result, beginning with the Company’s Annual Report on Form 10-K for the year ending December 31, 2021, the Company will be subject to certain requirements that apply to other public companies but did not previously apply to the Company due to its status as an emerging growth company, including the provisions of Section 404(b) of the Sarbanes-Oxley Act, which require that the Company’s independent registered public accounting firm provides an attestation report on the effectiveness of the Company’s internal control over financial reporting.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our cash, cash equivalents, and short-term marketable securities are subject to economic risk which could affect our results of operations, financial condition and cash flows. We manage our exposure to this market risk through our regular operating and financing activities.

Interest Rate Risk

The primary objective of our investment activities is capital preservation to fund operations, while at the same time maximizing investment income without significantly increasing investment risk. To achieve these objectives, our investment policy allows for a portfolio of cash equivalents and investments in a variety of securities, including money market funds, U.S. government debt and

35

corporate debt securities. Due to the short-term and conservative nature of our investments, we do not believe that we have a material exposure to interest rate risk. A 100 basis point change in interest rates would not have a significant impact on the total value of our portfolio.

Item 4. Controls and Procedures.

Disclosure controls and procedures enable us to record, process, summarize and report information required to be included in our Exchange Act filings within the required time period. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic reports filed with the SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of June 30, 2021, the Company’s disclosure controls and procedures were not effective, due to the material weakness in our internal control over financial reporting and the immaterial revision discussed in Note 1—The Company and a Summary of its Significant Accounting Policies—Revision to Prior Period Financial Statements within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q.

Material Weakness in Internal Over Financial Reporting

A material weakness in internal control over financial reporting is a deficiency, or combination of deficiencies such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Due to the events that led to the revision of our financial statements, the Company identified a material weakness in its controls over the financial reporting for the Private SPAC Warrants. Management identified the need to reassess the accounting for the Private SPAC Warrants when the SEC Staff issued the SEC Statement that addresses certain accounting and reporting considerations related to similar warrants. This control deficiency resulted in an immaterial error in the Company’s accounting for the Private SPAC Warrants as more fully described in Note 1—The Company and a Summary of its Significant Accounting Policies—Revision to Prior Period Financial Statements within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q.

Plan of Remediation of Material Weakness

To remediate the material weakness in the Company’s internal control over financial reporting, we are improving our processes to identify and evaluate the appropriate accounting technical pronouncements and other literature for significant or unusual transactions so that they are effectively evaluated in the context of the increasingly complex accounting standards. After giving full consideration to the material weakness referenced above, and the additional analyses and other procedures that we performed to ensure that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared in accordance with U.S. GAAP, our management has concluded that our condensed consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP. Other than the changes made to remediate the material weakness described above, there has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2021 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

36

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material legal proceedings.

Item 1A. Risk Factors.

There have not been any material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 other than those disclosed below.

We have identified a material weakness in our internal control over financial reporting. If not remediated, our failure to establish and maintain effective internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.

Following the issuance of the SEC Statement, we concluded that, in light of the SEC Statement, it was appropriate to revise our previously issued audited financial statements and, as described in Item 4. Controls and Procedures, above, we identified a material weakness in our internal control over financial reporting related to the accounting for a significant and unusual transaction related to the Private SPAC Warrants.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020. This control deficiency resulted in an immaterial error in the Company’s accounting for the Private SPAC Warrants as more fully described in Note 1—The Company and a Summary of its Significant Accounting Policies—Revision to Prior Period Financial Statements within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On April 8, 2021, we issued 114 shares of common stock pursuant to the exercise of placement agent warrants. These warrants had exercise prices of $8.68 or $9.54 per share and were exercised for an aggregate exercise price of $997.

The issuances of the shares were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act. The recipients of the shares represented their intention to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the securities.

37

Item 6. Exhibits.

The following documents are filed as part of this Form 10-Q.

Exhibit No.	Description	Filed Herewith	Form	Incorporated by Reference File No.	Date Filed
3.1	Amended and Restated Certificate of Incorporation of the Company, as amended		10-Q	001-38118	11/10/20
10.1*	Resignation Letter, dated June 30, 2021, by and between the Company and Scott Pancoast		8-K	001-38118	7/2/21
10.2*	DermTech, Inc. Change in Control and Severance Plan		8-K	001-38118	4/1/21
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.INS	Inline XBRL Instance Document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 has been formatted in Inline XBRL.	X

* Management contract or compensatory plan or arrangement.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DermTech, Inc.
Date: August 4, 2021	By:	/s/ John Dobak
		John Dobak, M.D.
		Chief Executive Officer (Principal Executive Officer)
Date: August 4, 2021	By:	/s/ Kevin Sun
		Kevin Sun
		Chief Financial Officer (Principal Financial and Accounting Officer)

39

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Dobak, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 of DermTech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2021	By:	/s/ John Dobak
		John Dobak
		Chief Executive Officer
		(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin Sun, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 of DermTech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2021	By:	/s/ Kevin Sun
		Kevin Sun
		Chief Financial Officer
		(principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 of DermTech, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies in his capacity as the specified officer of the Company, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 4, 2021	By:	/s/ John Dobak
		John Dobak
		Chief Executive Officer
		(principal executive officer)
Date: August 4, 2021	By:	/s/ Kevin Sun
		Kevin Sun
		Chief Financial Officer
		(principal financial and accounting officer)

This certification accompanies the Quarterly Report on Form 10-Q to which it relates and shall not be deemed filed with the Securities and Exchange Commission or incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 30, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Registrant Name	DERMTECH, INC.
Entity Central Index Key	0001651944
Current Fiscal Year End Date	--12-31
Entity File Number	001-38118
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-2870849
Entity Address, Address Line One	11099 N. Torrey Pines Road
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	La Jolla
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92037
City Area Code	858
Local Phone Number	450-4222
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		29,610,337
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	DMTK
Security Exchange Name	NASDAQ

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 229,609,000	$ 24,248,000
Short-term marketable securities	38,644,000	39,529,000
Accounts receivable	2,185,000	1,480,000
Inventory	497,000	104,000
Prepaid expenses and other current assets	1,313,000	1,521,000
Total current assets	272,248,000	66,882,000
Property and equipment, net	3,285,000	2,731,000
Other assets	167,000	167,000
Total assets	275,700,000	69,780,000
Current liabilities:
Accounts payable	2,104,000	1,573,000
Accrued compensation	3,167,000	2,075,000
Accrued liabilities	887,000	763,000
Short-term deferred revenue	1,372,000	905,000
Current portion of capital lease obligations	112,000	109,000
Total current liabilities	7,642,000	5,425,000
Warrant liability	577,000	1,650,000
Long-term deferred revenue	2,000	639,000
Long-term capital lease obligations, less current portion	170,000	226,000
Total liabilities	8,391,000	7,940,000
Stockholders’ equity:
Common stock, $0.0001 par value per share; 50,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 29,607,394 and 20,740,413 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	3,000	2,000
Additional paid-in capital	427,503,000	189,868,000
Accumulated other comprehensive income/(loss)	2,000	(1,000)
Accumulated deficit	(160,199,000)	(128,029,000)
Total stockholders’ equity	267,309,000	61,840,000
Total liabilities and stockholders’ equity	$ 275,700,000	$ 69,780,000

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	29,607,394	20,740,413
Common stock, shares outstanding	29,607,394	20,740,413

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues:
Total revenues	$ 3,119	$ 844	$ 5,643	$ 2,401
Cost of revenues:
Total cost of revenues	2,624	1,445	4,626	2,648
Gross profit/(loss)	495	(601)	1,017	(247)
Operating expenses:
Sales and marketing	7,907	3,433	14,419	6,377
Research and development	3,594	864	5,845	1,761
General and administrative	6,301	4,529	11,473	8,043
Total operating expenses	17,802	8,826	31,737	16,181
Loss from operations	(17,307)	(9,427)	(30,720)	(16,428)
Other income/(expense):
Interest income, net	35	10	69	10
Change in fair value of warrant liability	170	(180)	(1,519)	(76)
Total other income/(expense)	205	(170)	(1,450)	(66)
Net loss	$ (17,102)	$ (9,597)	$ (32,170)	$ (16,494)
Weighted average shares outstanding used in computing net loss per share, basic and diluted	28,979,148	16,149,496	28,070,539	14,625,069
Net loss per share of common stock outstanding, basic and diluted	$ (0.59)	$ (0.59)	$ (1.15)	$ (1.13)
Assay Revenue
Revenues:
Total revenues	$ 2,910	$ 648	$ 5,100	$ 1,445
Cost of revenues:
Total cost of revenues	2,604	1,416	4,575	2,578
Contract Revenue
Revenues:
Total revenues	209	196	543	956
Cost of revenues:
Total cost of revenues	$ 20	$ 29	$ 51	$ 70

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Net loss	$ (17,102)	$ (9,597)	$ (32,170)	$ (16,494)
Unrealized gain/(loss) on available-for-sale marketable securities	(6)		3
Comprehensive loss	$ (17,108)	$ (9,597)	$ (32,167)	$ (16,494)

XML

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Private Placement	At-The Market Offering	Series A convertible preferred stock	Series B-1 Convertible Preferred Stock	Series B-2 Convertible Preferred Stock	Common stock	Common stock Private Placement	Common stock At-The Market Offering	Additional paid-in capital	Additional paid-in capital Private Placement	Additional paid-in capital At-The Market Offering	Accumulated deficit	Accumulated other comprehensive income/(loss)
Balance at Dec. 31, 2019	$ 11,861						$ 1			$ 103,412			$ (91,552)
Balance, Shares at Dec. 31, 2019				1,231			12,344,818
Issuance of common stock, net of issuance costs		$ 23,891									$ 23,891
Issuance of common stock, net of issuance costs, Shares					3,199	524		2,467,724
Issuance of Series B-1 convertible preferred stock	30,971									30,971
Issuance of Series B-2 convertible preferred stock	5,071									5,071
Issuance of common stock from option exercises	253									253
Issuance of common stock from option exercises, Shares							85,061
Issuance of common stock from warrant exercises	11									11
Issuance of common stock from warrant exercises, Shares							2,098
Issuance costs in connection with Form S-1 registration statement	(77)									(77)
Stock-based compensation	1,022									1,022
Net loss	(6,897)												(6,897)
Balance at Mar. 31, 2020	66,106						$ 1			164,554			(98,449)
Balance, Shares at Mar. 31, 2020				1,231	3,199	524	14,899,701
Balance at Dec. 31, 2019	11,861						$ 1			103,412			(91,552)
Balance, Shares at Dec. 31, 2019				1,231			12,344,818
Net loss	(16,494)
Balance at Jun. 30, 2020	58,224						$ 2			166,268			(108,046)
Balance, Shares at Jun. 30, 2020				1,231		524	18,229,364
Balance at Dec. 31, 2019	11,861						$ 1			103,412			(91,552)
Balance, Shares at Dec. 31, 2019				1,231			12,344,818
Net loss	(36,477)
Balance at Dec. 31, 2020	61,840						$ 2			189,868			(128,029)	$ (1)
Balance, Shares at Dec. 31, 2020							20,740,413
Balance at Mar. 31, 2020	66,106						$ 1			164,554			(98,449)
Balance, Shares at Mar. 31, 2020				1,231	3,199	524	14,899,701
Issuance of common stock through conversion	1						$ 1
Issuance of common stock through conversion, Shares					(3,199)		3,198,949
Issuance of common stock from option exercises and RSU releases	123									123
Issuance of common stock from option exercises and RSU releases, Shares							81,277
Issuance of common stock from warrant exercises	471									471
Issuance of common stock from warrant exercises, Shares							49,437
Issuance costs in connection with Form S-1 registration statement	(5)									(5)
Stock-based compensation	1,125									1,125
Net loss	(9,597)												(9,597)
Balance at Jun. 30, 2020	58,224						$ 2			166,268			(108,046)
Balance, Shares at Jun. 30, 2020				1,231		524	18,229,364
Balance at Dec. 31, 2020	61,840						$ 2			189,868			(128,029)	(1)
Balance, Shares at Dec. 31, 2020							20,740,413
Issuance of common stock, net of issuance costs	134,582						$ 1			134,581
Issuance of common stock, net of issuance costs, Shares							4,872,881
Issuance of common stock from option exercises and RSU releases	408									408
Issuance of common stock from option exercises and RSU releases, Shares							176,673
Issuance of common stock from warrant exercises	72,081									72,081
Issuance of common stock from warrant exercises, Shares							3,089,325
Issuance of common stock from Employee Stock Purchase Plan	392									392
Issuance of common stock from Employee Stock Purchase Plan, Shares							39,960
Unrealized gain(loss) on available-for-sale marketable securities	9													9
Stock-based compensation	2,172									2,172
Reclassification of warrant liability due to PrivateSPAC Warrants not held by original holder	411									411
Net loss	(15,068)												(15,068)
Balance at Mar. 31, 2021	256,827						$ 3			399,913			(143,097)	8
Balance, Shares at Mar. 31, 2021							28,919,252
Balance at Dec. 31, 2020	61,840						$ 2			189,868			(128,029)	(1)
Balance, Shares at Dec. 31, 2020							20,740,413
Unrealized gain(loss) on available-for-sale marketable securities	3
Reclassification of warrant liability due to PrivateSPAC Warrants not held by original holder	434
Net loss	(32,170)
Balance at Jun. 30, 2021	267,309						$ 3			427,503			(160,199)	2
Balance, Shares at Jun. 30, 2021							29,607,394
Balance at Mar. 31, 2021	256,827						$ 3			399,913			(143,097)	8
Balance, Shares at Mar. 31, 2021							28,919,252
Issuance of common stock, net of issuance costs			$ 23,836									$ 23,836
Issuance of common stock, net of issuance costs, Shares									530,551
Issuance of common stock from option exercises and RSU releases	188									188
Issuance of common stock from option exercises and RSU releases, Shares							157,277
Issuance of common stock from warrant exercises	5									5
Issuance of common stock from warrant exercises, Shares							314
Unrealized gain(loss) on available-for-sale marketable securities	(6)													(6)
Stock-based compensation	3,538									3,538
Reclassification of warrant liability due to PrivateSPAC Warrants not held by original holder	23									23
Net loss	(17,102)												(17,102)
Balance at Jun. 30, 2021	$ 267,309						$ 3			$ 427,503			$ (160,199)	$ 2
Balance, Shares at Jun. 30, 2021							29,607,394

XML

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Mar. 31, 2020
Common Stock
Issuance price per share		$ 29.50	$ 10.50
Issuance costs		$ 9.1	$ 2.0
Common Stock | At-The Market Offering
Issuance costs	$ 0.7
Weighted average purchase price per share	$ 46.33
Series B-1 Convertible Preferred Stock
Issuance price per share			$ 10,500
Issuance costs			$ 2.6
Series B-2 Convertible Preferred Stock
Issuance price per share			$ 10,500
Issuance costs			$ 0.4

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss				$ (32,170)	$ (16,494)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	$ 200		$ 100	401	148
Change in fair value of warrant liability	(170)		180	1,519	76	$ 1,228	$ 441
Stock-based compensation				5,710	2,147
Amortization of premiums, net of accretion of discounts on marketable securities				337
Loss on disposal of equipment				13
Changes in operating assets and liabilities:
Accounts receivable				(705)	(42)
Inventory				(393)	(48)
Prepaid expenses and other current assets				152	432
Accounts payable and accrued compensation				1,599	(712)
Accrued liabilities and deferred revenue				10	713
Net cash used in operating activities				(23,527)	(13,780)
Cash flows from investing activities:
Purchases of marketable securities				(4,899)
Maturities of marketable securities				5,450
Purchases of property and equipment				(944)	(1,201)
Net cash used in investing activities				(393)	(1,201)
Cash flows from financing activities:
Payments of issuance costs in connection with Form S-1 registration statement					(77)
Proceeds from exercise of common stock warrants				69,928	482
Proceeds from exercise of stock options				596	376
Proceeds from contributions to the employee stock purchase plan				392
Principal repayments of capital lease obligations				(53)
Net cash provided by financing activities				229,281	60,709
Net increase in cash and cash equivalents				205,361	45,728
Cash and cash equivalents, beginning of period		$ 24,248		24,248	15,374	15,374
Cash and cash equivalents, end of period	229,609		$ 61,102	229,609	61,102	$ 24,248	$ 15,374
Supplemental cash flow information:
Cash paid for interest on capital lease obligations				8
Supplemental disclosure of noncash investing and financing activities:
Purchases of property and equipment recorded in accounts payable				24	39
Reclassification of warrant liability due to PrivateSPAC Warrants not held by original holder	$ 23	$ 411		434
Cashless exercise of common stock warrants				2,158
Change in unrealized gain on available-for-sale marketable securities				3
Series B-1 Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of Convertible Preferred Stock					30,968
Series B-2 Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of Convertible Preferred Stock					5,071
Private Placement
Cash flows from financing activities:
Proceeds from issuance of common stock					$ 23,889
Public Follow on Offering
Cash flows from financing activities:
Proceeds from issuance of common stock				134,582
At-The Market Offering
Cash flows from financing activities:
Proceeds from issuance of common stock				$ 23,836

XML

The Company and a Summary of its Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

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. The Company refers 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 refers 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 stock split of its common stock (“Reverse Stock Split”).

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 technique for sampling the surface layers of the skin using an adhesive patch called the DermTech Smart Sticker™ (the “Smart Sticker”) in order to collect individual biological information for commercial applications in the medical diagnostic field.

From the end of the first quarter of 2020 and through the second quarter of 2021, there has been a widespread worldwide impact from the COVID-19 pandemic. The Company is considered an essential business due to the importance of early melanoma detection, which has allowed the Company’s CLIA laboratory to remain fully operational. The Company has implemented additional safety measures and in accordance with Centers for Disease Control and Prevention (“CDC”), Occupational Safety and Health Administration (“OSHA”) and other guidance within its CLIA laboratory operations and has transitioned administrative functions to predominantly remote work. Beginning in March 2020 and continuing through the second quarter of 2021, the ongoing COVID-19 pandemic has reduced patient access to clinician offices for in-person testing and reduced access by the Company’s sales force for in-office sales calls, which has resulted in a reduced volume of billable samples received during the second quarter of 2021 relative to the Company’s pre-pandemic expectations. The Company expects the ongoing COVID-19 pandemic to continue to adversely impact billable sample volume until patient access to in-person testing fully resumes, in-office access by the Company’s sales force returns to pre-pandemic levels, or telemedicine options are more widely adopted. Additionally, the ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect the Company’s pharmaceutical customers’ clinical trials. The extent of such effect on the Company’s future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on the Company’s pharmaceutical customers’ clinical trials.

(b) Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, (“SEC”), Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.

(c) Revision to Prior Period Financial Statements  

As discussed under the heading “Revision to Prior Period Financial Statements” in Note 1 of the Company’s Quarterly Report on Form 10-Q filed on May 13, 2021, during the course of preparing the quarterly report Form 10-Q for the three months ended March 31, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). The SEC Statement highlighted challenges associated with the accounting for complex financial instruments that may be common in SPACs, specifically accounting for warrants issued in connection with a SPAC’s formation and initial registered offering. In the SEC Statement, the SEC Staff expressed its view that certain terms and

conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity.

The Company previously issued warrants to purchase common stock in public and private placement offerings consummated on June 23, 2017 (the “SPAC Warrants”), which were originally classified as equity in the Company’s financial statements. As part of the aforementioned public offering, the Company issued 14,375,000 warrants (the “Public SPAC Warrants”) and as part of the aforementioned private placement offering, the Company issued 561,250 warrants (the “Private SPAC Warrants”). The SPAC Warrants have a five-year life from the date the Business Combination was consummated and every four SPAC Warrants entitle the holder to purchase one whole share of common stock at an exercise price of $23.00 per whole share. The Company’s SPAC Warrants were accounted for as equity within the Company’s previously reported consolidated balance sheets.

The Private SPAC Warrants are identical to the Public SPAC Warrants but they (i) are exercisable either for cash or on a cashless basis at the holder’s option, (ii) are not redeemable by the Company as long as such warrants are held by the initial purchasers or their affiliates and permitted transferees, and (iii) may be subject to the limitations on exercise as specified in the warrant agreement.

Historically, the Private SPAC Warrants were recorded as a component of equity as opposed to liabilities on the Company’s consolidated balance sheets and the Company’s consolidated statements of operations did not include the subsequent non-cash changes in estimated fair value of the Private SPAC Warrants, based on our application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”). The views expressed in the recent SEC Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for SPAC Warrants issued on June 23, 2017, in light of the SEC Staff’s published views. After discussion and evaluation, the Company concluded that, as a result of these differences in features between the Public SPAC Warrants and Private SPAC Warrants, the Private SPAC Warrants should be classified as liabilities, if still held by the original Private SPAC Warrant holder, with subsequent changes in fair value reported in the Company’s consolidated statement of operations.

In addition, the Company analyzed the impact of the aforementioned adjustments on its previously issued audited consolidated financial statements for the years ended December 31, 2020 and 2019 and previously issued unaudited consolidated financial statements for the periods ended September 30, 2020 and 2019, June 30, 2020, and March 31, 2020 (such years and periods, the “Affected Periods”). The Company concluded the adjustments are not material to any individual period prior to the period ended March 31, 2021, taking into account the requirements of ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 270, Interim Financial Reporting, ASC Topic 250-S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. In accordance with the authoritative guidance, management evaluated the materiality of the adjustments from a quantitative and qualitative perspective. Based on such evaluation, the Company concluded that the effects of these adjustments were not material individually or in the aggregate to the Affected Periods and had no effect on the trend of financial results. While management concluded the adjustment was not material to any prior periods, individually or in the aggregate, based on our qualitative and quantitative analysis, management opted to make the adjustment by revising the respective amounts that were previously reported in the Affected Period. Accordingly, the Company has revised the prior period interim and annual financial information for the Affected Periods to reflect these adjustments.

The Company’s accounting for the Private SPAC Warrants as components of liabilities instead of as equity did not have any effect on the Company’s previously reported operating expenses, total cash flows from operating activities, investing activities, and financing activities, cash or total assets. The impact on the individual line items of the Company’s condensed consolidated balance sheets for each period presented from the adjustment was as follows (in thousands):

	As Previously Reported			Adjustments			As Revised
Condensed Consolidated Balance Sheet as of December 31, 2019
Long term liabilities:
Warrant liability		—			628			628
Total liabilities		5,722			628			6,350
Stockholders’ equity:
Additional paid-in capital		103,599			(187	)		103,412
Accumulated deficit		(91,111	)		(441	)		(91,552	)
Total stockholders’ equity		12,489			(628	)		11,861
Condensed Consolidated Balance Sheet as of June 30, 2020
Long term liabilities:
Warrant liability		—			704			704
Total liabilities		5,762			704			6,466
Stockholders’ equity:
Additional paid in capital		166,455			(187	)		166,268
Accumulated deficit		(107,529	)		(517	)		(108,046	)
Total stockholders’ equity		58,928			(704	)		58,224
Condensed Consolidated Balance Sheet as of December 31, 2020
Long term liabilities:
Warrant liability		—			1,650			1,650
Total liabilities		6,290			1,650			7,940
Stockholders’ equity:
Additional paid-in capital		189,849			19			189,868
Accumulated deficit		(126,360	)		(1,669	)		(128,029	)
Total stockholders’ equity		63,490			(1,650	)		61,840

The impact on the individual line items of the Company’s condensed consolidated statements of operations for the periods presented from the adjustment was as follows (in thousands):

	Year Ended December 31, 2019									Year Ended December 31, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(441	)	$	(441	)	$	—		$	(1,228	)	$	(1,228	)
Total other expense		(2,084	)		(441	)		(2,525	)		40			(1,228	)		(1,188	)
Net loss	$	(19,689	)	$	(441	)	$	(20,130	)	$	(35,249	)	$	(1,228	)	$	(36,477	)
Net loss per share of common stock outstanding, basic and diluted	$	(2.81	)	$	(0.06	)	$	(2.87	)	$	(2.08	)	$	(0.07	)	$	(2.15	)
	Three Months Ended June 30, 2020									Six Months Ended June 30, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(180	)	$	(180	)	$	—		$	(76	)	$	(76	)
Total other income/(expense)		10			(180	)		(170	)		10			(76	)		(66	)
Net loss	$	(9,417	)	$	(180	)	$	(9,597	)	$	(16,418	)	$	(76	)	$	(16,494	)
Net loss per share of common stock outstanding, basic and diluted	$	(0.58	)	$	(0.01	)	$	(0.59	)	$	(1.12	)	$	(0.01	)	$	(1.13	)

The condensed consolidated statements of cash flow are not presented because there is no impact on total cash flows from operating activities, investing activities, or financing activities. Certain components of net cash used in operating activities changed, as caused by the revision, such as incorporating the non-cash item from the change in fair value of warrant liability in the adjustments to reconcile net loss to net cash used in operating activities, but the net change amounted to zero for the Affected Periods.

(d) 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 but not limited to those related to assay revenue, stock-based compensation, short-term marketable securities, accounts receivable, accrued bonus, warrant liability and the realization of deferred tax assets. Actual results may differ from those estimates.

(e) 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 Federal Deposit Insurance Corporation legal limit. The Company maintains cash balances that may, at times, exceed this insured limit.

(f) Marketable Securities

The Company considers securities with original maturities of greater than 90 days to be marketable securities. The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months. Accordingly, such marketable securities are classified as current assets on the accompanying condensed consolidated balance sheets even if they have contractual maturities greater than one year from the date of purchase. The Company’s marketable securities consist of U.S. Treasury and agency securities, commercial paper, and corporate debt securities. Marketable securities are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive income/(loss). The estimated fair value of the marketable securities is determined based on quoted market prices or rates for similar instruments. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are other than temporary. Realized gains and losses are calculated using the specific identification method and recorded as interest income or expense. The Company has determined that there were no other-than-temporary declines in fair values of its investments as of June 30, 2021.

(g) Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation. Property and equipment consists of mainly assets such as leasehold improvements, office, computer and laboratory equipment, including laboratory equipment acquired under capital lease arrangements. 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 $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $17,000 and zero for the three months ended June 30, 2021 and 2020, respectively. The Company recorded depreciation expense of $0.4 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $34,000 and zero for the six months ended June 30, 2021 and 2020, respectively.

Amortization of assets that are recorded under capital leases in depreciation expense is included in cost of revenues on the condensed consolidated statement of operations. Gross assets recorded under capital leases were $0.3 million as of June 30, 2021 and December 31, 2020. Accumulated amortization associated with capital leases was $44,000 and $10,000 as of June 30, 2021 and December 31, 2020, respectively. Maintenance and repairs are expensed as incurred, and material improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized. There were no disposal of equipment for the three months ended June 30, 2021 and 2020. The Company disposed of $0.1 million and zero of equipment for the six months ended June 30, 2021 and 2020, respectively. 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 or six months ended June 30, 2021 and 2020.

(h) 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-based compensation expense; (ii) and 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.

(i) Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of June 30, 2021, the Company maintained $100.0 million in a sweep account, which maintains cash balances throughout various interest bearing bank accounts under the $250,000 insurance limit provided by the Federal Deposit Insurance Corporation for one federally insured financial institution. Approximately $129.3 million was held in excess of the Federal Deposit Insurance Corporation insured limit as of June 30, 2021. The Company has not experienced any losses in such accounts.

(j) 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 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 June 30, 2021.

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, of which there are none.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

(k) 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 Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, and accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”). The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

Assay Revenue

The Company generates revenues from its Pigmented Lesion Assay (“PLA”) and PLAplus tests it provides to healthcare clinicians in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides prescribing clinicians with its Smart Sticker adhesive sample collection kits to perform non-invasive skin biopsies of clinically ambiguous pigmented skin lesions on patients. The Company also offers clinicians a telemedicine solution where they can request the Smart Sticker collection kit be sent to the patient’s home for a clinician-guided remote collection on ambiguous pigmented skin lesions. Once the sample is collected by the healthcare clinician or the patient via the telemedicine solution, it is returned to the Company’s CLIA laboratory for analysis. The patient’s ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) are extracted from the Smart Sticker collection kit and analyzed using gene expression technology to determine if the pigmented skin lesion contains certain genomic features indicative of melanoma. Upon completion of the gene expression analysis, a final report is drafted and provided to the dermatologists detailing the test results for the pigmented skin lesion indicating whether the sample collected is indicative of melanoma or not.

Contract Revenue

Contract revenue is generated from the sale of laboratory services and Smart Sticker collection kits to third-party companies through contract research agreements. Revenues are generated 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 Smart Sticker adhesive patch collection kits, assay development for research partners, RNA extraction, isolation, expression, amplification and detection, including data analysis and reporting.

(a) Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by revenue source during the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assay Revenue
PLA and PLAplus tests	$	2,910	$	648	$	5,100	$	1,445
Contract Revenue
Adhesive patch kits		125		24		314		38
RNA extractions		35		94		139		764
Project management fees		49		78		90		154
Total revenues	$	3,119	$	844	$	5,643	$	2,401

The following table sets forth the percentages of total revenue or accounts receivable for the Company’s third-party payors and pharmaceutical customers that represent 10% or more of the respective amounts for the periods shown:

	Total Revenue												Accounts Receivable
	Three Months Ended June 30,						Six Months Ended June 30,						As of June 30,
	2021			2020			2021			2020			2021			2020
Assay Revenue
Payor A		36	%		37	%		34	%		25	%		26	%		31	%
Payor B	*				15	%	*				11	%		13	%		26	%
Contract Revenue
Customer A	*				23	%	*				33	%	*			*

* Less than 10%

There were no other third-party payors or customers that individually accounted for more than 10% of the Company’s total revenue or accounts receivable for the periods shown in the table above.

(b) Deferred Revenue and Remaining Performance Obligations

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets.

In a majority of agreements that produce contract revenue, the Company receives a substantial up-front payment and additional payments upon the achievement of various milestones over the life of the agreement. This results in deferred revenue and is relieved upon delivery of the applicable Smart Sticker adhesive patch kits or RNA extraction results. Changes in accounts receivable and deferred revenue were not materially impacted by any other factors.

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 when goods/services are completed or delivered. Upfront fees that are estimated to be recognized as revenue more than one year from the date of collection are classified as long-term deferred revenue. Short-term deferred revenue as of June 30, 2021 and December 31, 2020 was $1.4 million and $0.9 million, respectively. Long-term deferred revenue as of June 30, 2021 and December 31, 2020 was $2,000 and $0.6 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. As of June 30, 2021, 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 $0.5 million. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two to three years.

(l) Accounts Receivable

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 and PLAplus tests. 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 and PLAplus tests performed in the applicable period. 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. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the measurement of the accounts receivable balances. The Company recorded $2.1 million and $1.0 million of gross assay accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

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 June 30, 2021, the Company did not maintain any reserve over contract receivables as they relate to large established credit worthy customers. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve. The Company recorded $0.1 million and $0.5 million of contract accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

(m) Freight and Shipping Costs

The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues.

(n) Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. We report net loss and the components of other comprehensive loss, including unrealized gains and losses on marketable securities, net of their related tax effect to arrive at total comprehensive loss.

(o) 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.

(p) Net Loss Per Share

Basic and diluted net loss per share of common stock is determined by dividing net loss applicable to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Because there is a net loss attributable to holders of common stock during the three and six months ended June 30, 2021 and 2020, the outstanding common stock warrants, stock options, restricted stock units (“RSUs”) and preferred stock have been excluded from the calculation of diluted loss per share of common stock 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 share of common stock for the three and six months ended June 30, 2021 excludes the effect of anti-dilutive equity instruments including 749,210 shares of common stock issuable upon the exercise of outstanding common stock warrants and 2,469,816 shares of common stock issuable upon the exercise of stock options and release of RSUs. Diluted net loss per share of common stock for the three and six months ended June 30, 2020 excludes the effect of anti-dilutive equity instruments including 1,139,194 shares of common stock then issuable upon conversion of the Company’s preferred stock, 4,153,631 shares of common stock then issuable upon the exercise of outstanding warrants and 1,798,900 shares of common stock then issuable upon the exercise of stock options and release of RSUs. The Company did not consider a two-class method of loss per share given that the Company’s convertible participating securities do not participate in losses.

(q) 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 ratable 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 determined 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 using the ratable 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 as well as the volatility of the Company’s common stock. 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 using the fair value approach. The fair value of these options is measured using the Black-Scholes-Merton option pricing model, reflecting the same assumptions applied to employee options, other than expected life, which is assumed to be the remaining contractual life of the award. Options that are granted to employees generally have a requisite service period of three to four years.

RSUs are considered restricted stock. 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 ratable basis over the requisite service periods of the awards. RSUs that are granted to employees have a requisite service period typically between two and four years.

All stock options and RSUs granted prior to January 1, 2020 will maintain the estimated forfeiture approach and will be recognized over the requisite service period using the straight-line method.

The following table sets forth assumptions used to determine the fair value of each option on the date of grant issued under the 2020 Equity Incentive Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	1.03% - 1.07%		0.43% - 0.44%		0.52% - 1.13%		0.43% - 1.69%
Assumed volatility	77.69%		68.34%		74.88% - 77.69%		64.03% - 68.34%
Expected option term	6.08 years		5.55 - 6.25 years		6.08 years		5.04 - 6.25 years
Expected dividend yield		—		—		—		—

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the 2020 Employee Stock Purchase Plan:

	Three Months Ended June 30,			Six Months Ended June 30,
	2021		2020	2021		2020
Assumed risk-free interest rate	0.10%		Not applicable	0.10% - 0.18%		Not applicable
Assumed volatility	69.34%		Not applicable	68.44% - 69.34%		Not applicable
Expected option term	0.50 years		Not applicable	0.49 - 0.50 years		Not applicable
Expected dividend yield		—	Not applicable		—	Not applicable

The Company recorded stock-based compensation expense for employee options, RSUs, ESPP contributions, and consultant options of $3.5 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $5.7 million and $2.1 million for the six months ended June 30, 2021 and 2020, respectively. The total compensation cost related to non-vested awards not yet recognized as of June 30, 2021 was $34.8 million, which is expected to be recognized over a weighted average term of 2.90 years. 

(r) Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants classified as liabilities and are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a component of other income/(expense) in the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes-Merton valuation model. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of its warrants. At that time, the portion of the warrant liability related to the Company’s warrants will be reclassified to additional paid-in capital.

The following assumptions were used to calculate the fair value of the Company’s warrant liability using the Black-Scholes-Merton valuation model:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	0.46%		0.24%		0.46% - 0.64%		0.24% - 0.33%
Assumed volatility	88.28%		69.79%		85.85% - 88.28%		69.79% - 73.73%
Expected term	3.17 years		4.17 years		3.17 - 3.42 years		4.17 - 4.42 years
Expected dividend yield		—		—		—		—

(s) Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. 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. The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	1,320	$	—	$	—	$	1,320
Marketable securities, available for sale:
Corporate debt		—		6,889		—		6,889
Municipal securities		—		5,495		—		5,495
U.S. government debt securities		—		26,260		—		26,260
Total marketable securities, available for sale		—		38,644		—		38,644
Total assets measured at fair value on a recurring basis	$	1,320	$	38,644	$	—	$	39,964
Liabilities:
Warrant liability	$	—	$	—	$	577	$	577
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	577	$	577

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	448	$	—	$	—	$	448
Marketable securities, available for sale:
Corporate debt		—		8,940		—		8,940
Municipal securities		—		7,324		—		7,324
U.S. government debt securities		—		23,265		—		23,265
Total marketable securities, available for sale		—		39,529		—		39,529
Total assets measured at fair value on a recurring basis	$	448	$	39,529	$	—	$	39,977
Liabilities:
Warrant liability	$	—	$	—	$	1,650	$	1,650
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	1,650	$	1,650

The Company’s marketable debt securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active. The Company has classified marketable securities with original maturities of greater than one year as short-term investments based upon the Company’s ability to use all of those marketable securities to satisfy the liquidity needs of the Company’s current operations.

The fair value of the Private SPAC Warrants was determined using the Black-Scholes-Merton valuation model and included a significant unobservable input: expected volatility. Expected volatility is considered by the Company to be a significant unobservable input and is calculated using a weighted average of historical volatilities of a combination of the Company and peer companies, due to the lack of sufficient historical data of the Company’s own stock price. The model also incorporated several observable assumptions at each valuation date including: the price of the Company’s common stock on the date of valuation, the remaining contractual term of the warrant and the risk-free interest rate over the remaining term.

The following table summarizes the changes in the fair value of the Company’s Level 3 liabilities (in thousands):

Balance as of December 31, 2020	$	1,650
Derecognition of warrant liability from exercise of Private SPAC Warrants		(2,158	)
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(411	)
Change in fair value of warrant liability		1,689
Balance as of March 31, 2021		770
Derecognition of warrant liability from exercise of Private SPAC Warrants		—
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(23	)
Change in fair value of warrant liability		(170	)
Balance as of June 30, 2021	$	577

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.

(t) Accounting Pronouncements Issued But Not Yet Effective

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases (“Topic 840”), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12

months or less will be accounted for similar to existing guidance for operating leases. For companies that are not emerging growth companies (‘‘EGCs’’), ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. For EGCs, the ASU was to be effective for fiscal years beginning after December 15, 2019. However, in November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates (“ASU 2019-10”), which included a one-year deferral of the effective date of ASU 2016-02 for certain entities. In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities (“ASU 2020-05”), which further defers the effective date for certain entities. As a result, the ASU is now effective for EGCs for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2020-05 will not apply and the Company is required to adopt the standard during the fourth quarter of 2021. The Company is currently assessing the impact of the adoption of this guidance on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. For non-EGCs, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For EGCs, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt ASU 2019-12 during the fourth quarter of 2021. The Company is currently evaluating the impact of ASU 2019-12 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. This standard covers the Company’s financial instruments, such as debt securities that are available for sale. Previously, when credit losses were measured under U.S. GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new guidance requires companies to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for financial instruments, using information such as historical experience and current economic conditions, plus the use of reasonable supportable forecast information. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses, which included an amendment of the effective date for nonpublic entities. For non-EGCs, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. For EGCs, ASU 2016-13 was to be effective for fiscal years beginning after December 15, 2021. However, in November 2019, the FASB issued ASU 2019-10, which included a one-year deferral of the effective date of ASU 2016-13 for certain entities. As a result, ASU is now effective for EGCs for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, and the standard is adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2019-10 will not apply and the Company is required to adopt ASU 2016-13 during the fourth quarter of 2021. We are currently evaluating the impact the adoption of this standard will have on the Company’s condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the effects, if any, of the adoption of ASU 2021-04 guidance on the Company’s condensed consolidated financial statements.

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Balance Sheet Details

6 Months Ended

Jun. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Balance Sheet Details

2. Balance Sheet Details

Short-Term Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of June 30, 2021 were as follows (in thousands):

	June 30, 2021
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	6,895	$	—	$	(6	)	$	6,889
Municipal securities		5,494		2		(1	)		5,495
U.S. government debt securities		26,253		7		—			26,260
Total short-term marketable securities,    available-for-sale	$	38,642	$	9	$	(7	)	$	38,644

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of December 31, 2020 were as follows (in thousands):

	December 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	8,946	$	—	$	(6	)	$	8,940
Municipal securities		7,325		1		(2	)		7,324
U.S. government debt securities		23,259		6		—			23,265
Total short-term marketable securities,    available-for-sale	$	39,530	$	7	$	(8	)	$	39,529

As of June 30, 2021, the estimated market value of debt securities with contractual maturities of less than twelve months was $36.9 million; the remaining debt securities that we held at that date had an estimated market value of $1.8 million and contractual maturities of up to 14 months. As of December 31, 2020, the estimated market value of debt securities with contractual maturities of less than twelve months was $37.3 million; the remaining debt securities that we held at that date had an estimated market value of $2.3 million and contractual maturities of up to 14 months.

Prepaid Expenses and PP&E

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021			December 31, 2020
Prepaid expenses and other current assets:
Prepaid insurance	$	376		$	1,172
Prepaid trade shows		43			—
Prepaid software fees		760			214
Deferred issuance costs		—			56
Other current assets		134			79
Total prepaid expenses and other current assets	$	1,313		$	1,521
Property and equipment, gross:
Laboratory equipment	$	3,404		$	2,544
Computer equipment		97			38
Furniture and fixtures		92			109
Leasehold improvements		727			727
Total property and equipment, gross		4,320			3,418
Less accumulated depreciation		(1,035	)		(687	)
Total property and equipment, net	$	3,285		$	2,731

Accrued Compensation and Accrued Liabilities

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021		December 31, 2020
Accrued compensation:
Accrued paid time off	$	905	$	606
Accrued bonus and deferred compensation		2,262		1,469
Total accrued compensation	$	3,167	$	2,075
Accrued liabilities:
Accrued consulting services	$	254	$	285
Deferred rent		254		300
Other accrued expenses		379		178
Total accrued liabilities	$	887	$	763

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Convertible Preferred Stock and Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Convertible Preferred Stock and Stockholders' Equity

3. Convertible Preferred Stock and 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.

(b) Series A Convertible Preferred Stock Financing

In connection with the 2019 private placement of equity securities of the Company 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 (the “Series A Certificate of Designation”). An aggregate of 1,231 shares of Series A Convertible Preferred Stock for an aggregate purchase price of $4.0 million were issued to certain accredited investors. On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C. converted an aggregate of 1,231 shares of Series A Preferred Stock into 615,385 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series A Convertible Preferred Stock.

(c) 2020 PIPE Financing

On February 28, 2020, the Company entered into a securities purchase agreement with certain institutional investors for a private placement of the Company’s equity securities (the “2020 PIPE Financing”). Cowen and Company, LLC served as lead placement agent for the 2020 PIPE Financing, with William Blair & Company, L.L.C. acting as joint placement agent. Lake Street Capital Markets, LLC acted as co-placement agent. The 2020 PIPE Financing closed on March 4, 2020.

The 2020 PIPE Financing consisted of 2,467,724 shares of common stock at a price of $10.50 per share, 3,199 shares of Series B-1 Convertible Preferred Stock (the “Series B-1 Shares”) at a price of $10,500 per share, and 524 shares of Series B-2 Convertible Preferred Stock (the “Series B-2 Shares”) at a price of $10,500 per share, for aggregate gross proceeds of approximately $65.0 million, reduced by $5.1 million in issuance costs.

Prior to the closing of the 2020 PIPE Financing, the Company designated (i) 3,200 shares of its authorized and unissued preferred stock as Series B-1 Convertible Preferred Stock by filing the Series B-1 Certificate of Designation with the Delaware Secretary of State and (ii) 525 shares of its authorized and unissued preferred stock as Series B-2 Convertible Preferred Stock by filing the Series B-2 Certificate of Designation with the Delaware Secretary of State.

(d) Series B-1 Convertible Preferred Stock Issued in Connection with 2020 PIPE Financing

In connection with the 2020 PIPE Financing transaction and on March 2, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for the Company’s Series B-1 Convertible Preferred Stock (the “Series B-1 Certificate of Designation”). An aggregate of 3,199 shares of Series B-1 Convertible Preferred Stock for an aggregate purchase price of $33.6 million were issued to certain accredited investors.

At the Company’s annual meeting held on May 26, 2020, the Company’s stockholders voted to approve the 2020 PIPE Financing. As a result, on May 27, 2020 the 3,199 outstanding shares of Series B‑1 Convertible Preferred Stock were automatically converted into an aggregate of 3,198,949 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series B-1 Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series B-1 Convertible Preferred Stock.

(e) Series B-2 Convertible Preferred Stock Issued in Connection with 2020 PIPE Financing

In connection with the 2020 PIPE Financing transaction and on March 2, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for the Company’s Series B-2 Convertible Preferred Stock (the “Series B-2 Certificate of Designation”). An aggregate of 524 shares of Series B-2 Convertible Preferred Stock for an aggregate purchase price of $5.5 million were issued to certain accredited investors. On August 10, 2020, entities affiliated with Farallon Capital Management, L.L.C. converted an aggregate of 524 shares of Series B‑2 Preferred Stock into 523,814 shares of common stock. On September 9, 2020, the Company filed a Certificate of Elimination of Series B-2 Convertible Preferred Stock with the Secretary of State of the State of Delaware to eliminate its Series B-2 Convertible Preferred Stock.

(f) At-The Market Offering

On November 10, 2020, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC relating to the sale of shares of the Company’s common stock from time to time with an aggregate offering price of up to $50.0 million. During 2020, the Company issued an aggregate of 951,792 shares of common stock pursuant to the Sales Agreement at a weighted average purchase price of $20.97 resulting in aggregate gross proceeds of approximately $20.0 million, reduced by $0.9 million in issuance costs, resulting in net proceeds to the Company of approximately $19.1 million. For the three and six months ended June 30, 2021, the Company issued an aggregate of 530,551 shares of common stock pursuant to the Sales Agreement at a weighted average purchase price of $46.33 resulting in aggregate gross proceeds of approximately $24.6 million, reduced by $0.7 million in issuance costs, resulting in net proceeds to the Company of approximately $23.8 million.

(g) 2021 Underwritten Public Offering  

On January 6, 2021, the Company entered into an Underwriting Agreement with Cowen and Company, LLC and William Blair & Company, L.L.C. as representatives of several underwriters (“the Underwriters”). The Company agreed to issue and sell up to 4,237,288 shares of its common stock including up to 635,593 shares that could be purchased by the Underwriters pursuant to a 30-day option granted to the Underwriters by the Company. On January 11, 2021, the Company closed the underwritten public offering of 4,872,881 shares of its common stock, which included the exercise in full by the Underwriters of their option to purchase up to 635,593 additional shares, at a price to the public of $29.50 per share. The Company received aggregate gross proceeds of approximately $143.7 million, and net proceeds of approximately $134.6 million, after deducting underwriting discounts and commissions and other offering expenses.

(h) Warrants

SPAC Warrants

The Company previously issued a total of 14,936,250 SPAC Warrants to purchase common stock in public and private placement offerings which were consummated on June 23, 2017. As part of the public offering, the Company issued 14,375,000 Public SPAC Warrants and as part of the private placement offering, the Company issued 561,250 Private SPAC Warrants. The SPAC Warrants have a five-year life from the date the Business Combination was consummated and every four SPAC Warrants entitle the holder to purchase one whole share of common stock at an exercise price of $23.00 per whole share.

The Private SPAC Warrants are identical to the Public SPAC Warrants, but they (i) are exercisable either for cash or on a cashless basis at the holder’s option, (ii) are not redeemable by the Company as long as such warrants are held by the initial purchasers or their affiliates and permitted transferees, and (iii) may be subject to the limitations on exercise as specified in the warrant agreement. As a result of these difference in features between the Public SPAC Warrants and Private SPAC Warrants, the Company concluded that the Private SPAC Warrants should be classified as a liability, if still held by the original Private SPAC Warrant holder, and marked to market each financial reporting period in the Company’s statement of operations.

Between January 1, 2021 and June 30, 2021, a total of 12,060,871 SPAC Warrants were exercised, resulting in the Company’s issuance of 3,015,211 shares of common stock and the receipt of $69.4 million in gross proceeds. Outstanding SPAC Warrants totaled 2,875,379 and 14,936,250 as of June 30, 2021 and December 31, 2020, respectively. Private SPAC Warrants that were still owned by the original holder totaled 80,350 and 323,500 as of June 30, 2021 and December 31, 2020, respectively.

Series C Warrants

In connection with DermTech Operations’ Series C Preferred Stock financing that took place between 2016 and 2018, each investor that purchased at least $1 million of Series C Convertible Preferred Stock in a single closing received a three-year warrant to purchase shares of common stock at an exercise price of $9.54 per share in the amount equal to 20% of shares of Series C Preferred Stock purchased. Outstanding Series C warrants totaled zero and 97,563 as of June 30, 2021 and December 31, 2020, 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, DermTech Operations issued 168,522 seven-year warrants to purchase one share of common stock each at an exercise price of $8.68 per share. From 2016 to 2018, DermTech Operations issued 72,658 seven-year warrants to purchase one share of common stock at an exercise price of $9.54 per share. In 2020, the Company issued 15,724 seven-year warrants to purchase one share of common stock at an exercise price of $9.54 per share in connection with the Company’s 2018 bridge note financing. Outstanding placement agent warrants totaled 10,039 and 31,365 as of June 30, 2021 and December 31, 2020, respectively.

(i) Stock-Based Compensation

2010 Stock Plan

In connection with the Business Combination, the Company assumed the DermTech Operations’ Amended and Restated 2010 Stock Plan (the “2010 Plan”), which provided for the granting of incentive and non-statutory stock options and restricted stock purchase rights and bonus awards. Under the 2010 Plan, incentive and non-statutory stock options were granted at not less than 100% of the fair market value of the Company’s common stock on the date of grant. For incentive stock options granted to a ten percent shareholder under the 2010 Plan, the exercise price was not less than 110% of the fair market value of a share of stock on the effective date of grant. DermTech Operations initially reserved 1.0 million shares of common stock for issuance to its employees, non-employee directors and consultants. The 2010 Plan included a provision which annually increased the amount of common stock reserved for issuance under the 2010 Plan. The contractual term of options granted under the 2010 Plan was ten years. Vesting provisions varied based on the specific terms of the individual option awards. At the Company’s annual meeting held on May 26, 2020, the Company’s shareholders voted to approve the DermTech, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which terminated the 2010 Plan. No additional awards will be granted under the 2010 Plan, however, all outstanding awards under the 2010 Plan remain in effect. No shares remained available for issuance pursuant to future grants under the 2010 Plan as of June 30, 2021 and December 31, 2020, respectively.

2020 Equity Incentive Plan

On May 26, 2020, the Company’s stockholders approved the adoption of the 2020 Plan, which provides for the granting of incentive and non-qualified stock options, restricted stock and stock-based awards. Under the 2020 Plan, incentive and non-qualified stock options may be granted at not less than 100% of the fair market value of the Company’s common stock on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the combined voting power of all classes of the Company’s capital stock, the exercise price may not be less than 110% of the fair market value of the Company’s common stock on the date of grant and the term of the option may not be longer than five years.  

The 2020 Plan authorizes the Company to issue up to 1,900,000 shares of the Company’s common stock pursuant to awards granted under the 2020 Plan, plus the number of shares underlying any stock option and other stock-based awards previously granted under the 2010 Plan that are forfeited, canceled, or terminated (other than by exercise) on or after May 26, 2020; provided that no more than 1,400,000 shares may be added to the 2020 Plan pursuant to such forfeitures, cancellations and terminations. In addition, the number of shares available for issuance under the 2020 Plan will automatically increase on the first day of each fiscal year beginning in fiscal year 2021 and ending on the second day of fiscal year 2025, by an amount equal to the smaller of (i) 3.5% of the number of shares of common stock outstanding on such date and (ii) an amount determined by the administrator of the 2020 Plan. The 2020 Plan will expire on April 12, 2030 or an earlier date approved by a vote of the Company’s stockholders or board of directors. The contractual term of options granted under the 2020 Plan is not more than ten years. Vesting provisions vary based on the specific terms of the individual option awards. 969,666 shares remained available for future grant under the 2020 Plan as of June 30, 2021.

2020 Employee Stock Purchase Plan

On May 26, 2020, the Company’s stockholders approved the adoption of the Company’s 2020 Employee Stock Purchase Plan (the “ESPP”), which allows for full-time and certain part-time employees of the Company to purchase shares of common stock at a discount to fair market value. Eligible employees enroll in a six-month offering period during the open enrollment period prior to the start of that offering period. A new offering period begins approximately every March 1 and September 1. At the end of each offering period, the accumulated contributions are used to purchase shares of the Company’s common stock. Shares are purchased at a price equal to 85% of the lower of: (i) the fair market value of the Company’s common stock on the first business day of an offering period or (ii) the fair market value of the Company’s common stock on the last business day of an offering period.

The ESPP authorizes the Company to issue up to 400,000 shares of the Company’s common stock. In addition, the number of shares available for issuance under the ESPP will automatically increase on the first day of each of the Company’s fiscal years beginning in 2021 and ending on the first day of 2030, in an amount equal to the lesser of (i) 300,000 shares, (ii) 1% of the shares of Company common stock outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares as is determined by the Board of Directors, subject to adjustment upon changes in capitalization of the Company. On February 28, 2021, the Company issued 39,960 shares of its common stock pursuant to scheduled purchases under the ESPP. As of December 31, 2020, 400,000 shares of common stock were reserved for future issuance under the ESPP. On January 1, 2021, an additional 207,404 shares became available under the ESPP pursuant to an automatic annual increase. 567,444 shares remained available for future grant under the ESPP as of June 30, 2021.

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-year life and are exercisable for Company common stock at $1.08 per share. The Management Warrants vested monthly over a four-year period. Outstanding Management Warrants totaled 20,320 and 22,320 as of June 30, 2021 and December 31, 2020, respectively.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021		December 31, 2020
Warrants to purchase common stock		31		151
SPAC Warrants to purchase common stock*		719		3,734
Stock options issued and outstanding		1,746		1,552
Restricted stock units issued and outstanding		724		560
Authorized for future equity grants		970		935
Authorized for future ESPP purchases		567		400
Total common stock reserved for future issuance		4,757		7,332

* Four SPAC Warrants are needed to purchase one share of common stock. The numbers presented above reflect the amount of shares of common stock underlying SPAC Warrants.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

4. 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% as of June 30, 2021 and December 31, 2020, respectively, and the effective income tax rate for the Company’s provision for income taxes was 0% as of June 30, 2021 and December 31, 2020, respectively.

The utilization of net operating losses (“NOLs”) 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 NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has not completed a formal study to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. If an ownership change

has occurred, the Company’s ability to use its NOLs or tax credit carryforwards may be restricted, which could require the Company to pay federal or state income taxes earlier than would be required if such limitations were not in effect.

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.

Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination for all years since inception.

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Leases, Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Leases, Commitments and Contingencies

5. Leases, Commitments and Contingencies

Capital Leases

Certain laboratory equipment has been acquired under a capital lease. The Company determined the interest rate implicit in the lease arrangement for the purpose of calculating the interest and principal components of each lease payment was 5.54%. Total capital lease interest expense was approximately $4,000 and zero for the three months ended June 30, 2021 and 2020, respectively, and $8,000 and zero for the six months ended June 30, 2021 and 2020, respectively, and is included within interest income, net on the condensed consolidated statements of operations. Long-term capital lease obligations are as follows (in thousands):

	June 30, 2021			December 31, 2020
Gross capital lease obligations	$	301		$	362
Less imputed interest		(19	)		(27	)
Present value of net minimum lease payments		282			335
Less current portion of capital lease obligations		(112	)		(109	)
Total long-term capital lease obligations	$	170		$	226

Operating Leases

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 February 2020, the Company signed a fifth 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. As part of the fifth amendment, the Company was entitled to a tenant improvement allowance for certain costs incurred while performing these improvements in the amount of $0.3 million, which amount may be increased by up to $0.1 million at the Company’s election and subject to a corresponding increase in rent. The Company records rent expense on a straight-line basis over the life of the lease and the difference between the average rent expense and cash payments for rent is recorded as deferred rent and is included in accrued liabilities on the condensed consolidated balance sheet.

Rent and associated common area maintenance expense totaled $0.5 million and $0.6 million for the three months ended June 30, 2021 and 2020, respectively and $1.0 million and $0.8 million for the six months ended June 30, 2021 and 2020, respectively.  

Future minimum operating lease and capital lease payments for the operating facilities and laboratory equipment as of June 30, 2021 were (in thousands):

	2021		2022		2023		Total
Operating lease obligations	$	690	$	1,411	$	478	$	2,579
Capital lease obligations, including interest		63		124		114		301
Total future minimum lease payments	$	753	$	1,535	$	592	$	2,880

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 were to raise at least $15.0 million in proceeds received from equity financings consummated prior to the one-year anniversary of the Business Combination, excluding the proceeds received from any financing consummated prior to or simultaneous with the Business Combination, then the Company would pay to the underwriters $1.4 million within one week of the one-year anniversary of the Business Combination. In connection with the Company’s 2020 PIPE Financing, the Company raised $65.0 million in gross proceeds, which satisfied this condition of the Deferred Underwriting Fee Assignment Agreement. On September 2, 2020, the Company paid the underwriters $1.4 million in satisfaction of the Company’s obligation of the deferred underwriting fees in full. No further payment will be required of the Company in connection with the deferred underwriting fees.

Legal Proceedings

From time to time, the Company may be subject to legal proceedings and claims arising in the ordinary course of business. Management does not believe that the outcome of any of these matters will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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Retirement Plan

6 Months Ended

Jun. 30, 2021

Compensation And Retirement Disclosure [Abstract]

Retirement Plan

6. Retirement Plan

The Company has an IRC Section 401(k) retirement plan, covering all employees. The Company does not currently offer a contribution percentage match.

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Related Party Transactions

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions

7. Related Party Transactions

During 2020 and 2021, the Company engaged EVERSANA Life Science Services, LLC (“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 $0.5 million and $0.3 million in costs for the three months ended June 30, 2021 and 2020, respectively, and $0.9 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively.

On October 1, 2019, the Company entered into a consulting agreement with Michael Dobak pursuant to which the Company will compensate Michael Dobak, in an amount not to exceed $100,000, for certain public relations and marketing services. On July 28, 2020, the Company and Michael Dobak entered into an amendment to such consulting agreement to modify the terms of Michael Dobak’s compensation. The amended consulting agreement compensated Michael Dobak $15,000 per month for the period May 11, 2020 through September 30, 2020 and also granted him a restricted stock unit award that fully vested in a single installment on August 31, 2020 and represented the contingent right to receive 5,000 shares of common stock on January 2, 2021. On November 11, 2020, the Company and Michael Dobak entered into an amendment to such consulting agreement to extend the term through December 31, 2020 with a continued monthly payment of $15,000. On February 26, 2021, the Company and Michael Dobak agreed to extend his agreement through April 30, 2021 with a revised monthly payment of $20,000. Michael Dobak is the brother of Dr. John Dobak, the Company’s Chief Executive Officer. The Company incurred $20,000 and $47,000 in costs for the three months ended June 30, 2021 and 2020, respectively, and $0.1 million for each of the six months ended June 30, 2021 and 2020.  

There were no other related party transactions identified during the six months ended June 30, 2021 and 2020.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

8. Subsequent Events

New Principal Office Lease

On July 1, 2021, the Company entered into an Office Lease (the “Lease”) with Kilroy Realty, L.P. (the “Landlord”), with respect to an aggregate of 95,997 rentable square feet consisting of the entire building located at 12340 El Camino Real, San

Diego, California 92130 (the “Entire Premises”). The Entire Premises covered by the Lease will serve as the Company’s new principal office.

The Lease provides for a tenant improvement allowance of $125.00 per rentable square foot of the Entire Premises for a total of $12.0 million, that the Landlord will use to fund the installation and/or construction of certain improvements to the Entire Premises in four phases, with each phase pertaining to a specified portion of the Entire Premises. The initial term of the Lease is ten years and six months beginning on the earlier to occur of (i) January 1, 2023 and (ii) the date that Landlord tenders possession of the Phase III Premises (as defined in the Lease) to the Company following the substantial completion of the improvements to the Phase III Premises required by the Lease (the “Lease Commencement Date”). The Company has the option to extend the term of the Lease for two additional five-year periods, subject to the terms of the Lease.

As the Landlord tenders possession of each portion of the Entire Premises for which the applicable improvements required by the Lease are substantially complete, the Company will be obligated to make monthly payments of base rent with respect to such portion of the Entire Premises as set forth on Schedule 1 to the Lease. In the event the Company exercises its option to extend the Lease term, the Lease provides for monthly rent payments during the additional five-year periods at the then-current market rent as determined in accordance with the Lease. In addition to rent, the Lease requires the Company to pay additional rent amounts for taxes, insurance, maintenance and other expenses.

Concurrently with the execution of the Lease, the Company delivered to the Landlord a security deposit in the amount of $3.0 million in the form of a letter of credit (the “Letter of Credit”). Such Letter of Credit shall be reduced to $2.0 million on the third anniversary of the Lease Commencement Date and reduced to $1.0 million on the fifth anniversary of the Lease Commencement Date.

Pursuant to the Lease, the Company also has a right of first refusal to lease additional space in another building owned by the Landlord and located at 12390 El Camino Real, San Diego, California on certain terms and conditions set forth in the Lease.

The Company considered subsequent events through August 4, 2021, the date the condensed consolidated financial statements were available to be issued.

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The Company and a Summary of its Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

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. The Company refers 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 refers 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 stock split of its common stock (“Reverse Stock Split”).

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 technique for sampling the surface layers of the skin using an adhesive patch called the DermTech Smart Sticker™ (the “Smart Sticker”) in order to collect individual biological information for commercial applications in the medical diagnostic field.

From the end of the first quarter of 2020 and through the second quarter of 2021, there has been a widespread worldwide impact from the COVID-19 pandemic. The Company is considered an essential business due to the importance of early melanoma detection, which has allowed the Company’s CLIA laboratory to remain fully operational. The Company has implemented additional safety measures and in accordance with Centers for Disease Control and Prevention (“CDC”), Occupational Safety and Health Administration (“OSHA”) and other guidance within its CLIA laboratory operations and has transitioned administrative functions to predominantly remote work. Beginning in March 2020 and continuing through the second quarter of 2021, the ongoing COVID-19 pandemic has reduced patient access to clinician offices for in-person testing and reduced access by the Company’s sales force for in-office sales calls, which has resulted in a reduced volume of billable samples received during the second quarter of 2021 relative to the Company’s pre-pandemic expectations. The Company expects the ongoing COVID-19 pandemic to continue to adversely impact billable sample volume until patient access to in-person testing fully resumes, in-office access by the Company’s sales force returns to pre-pandemic levels, or telemedicine options are more widely adopted. Additionally, the ongoing COVID-19 pandemic has negatively affected and will continue to negatively affect the Company’s pharmaceutical customers’ clinical trials. The extent of such effect on the Company’s future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on the Company’s pharmaceutical customers’ clinical trials.

Basis of Presentation

(b) Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, (“SEC”), Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.

Revision to Prior Period Financial Statements

(c) Revision to Prior Period Financial Statements  

As discussed under the heading “Revision to Prior Period Financial Statements” in Note 1 of the Company’s Quarterly Report on Form 10-Q filed on May 13, 2021, during the course of preparing the quarterly report Form 10-Q for the three months ended March 31, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). The SEC Statement highlighted challenges associated with the accounting for complex financial instruments that may be common in SPACs, specifically accounting for warrants issued in connection with a SPAC’s formation and initial registered offering. In the SEC Statement, the SEC Staff expressed its view that certain terms and

conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity.

The Company previously issued warrants to purchase common stock in public and private placement offerings consummated on June 23, 2017 (the “SPAC Warrants”), which were originally classified as equity in the Company’s financial statements. As part of the aforementioned public offering, the Company issued 14,375,000 warrants (the “Public SPAC Warrants”) and as part of the aforementioned private placement offering, the Company issued 561,250 warrants (the “Private SPAC Warrants”). The SPAC Warrants have a five-year life from the date the Business Combination was consummated and every four SPAC Warrants entitle the holder to purchase one whole share of common stock at an exercise price of $23.00 per whole share. The Company’s SPAC Warrants were accounted for as equity within the Company’s previously reported consolidated balance sheets.

The Private SPAC Warrants are identical to the Public SPAC Warrants but they (i) are exercisable either for cash or on a cashless basis at the holder’s option, (ii) are not redeemable by the Company as long as such warrants are held by the initial purchasers or their affiliates and permitted transferees, and (iii) may be subject to the limitations on exercise as specified in the warrant agreement.

Historically, the Private SPAC Warrants were recorded as a component of equity as opposed to liabilities on the Company’s consolidated balance sheets and the Company’s consolidated statements of operations did not include the subsequent non-cash changes in estimated fair value of the Private SPAC Warrants, based on our application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”). The views expressed in the recent SEC Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for SPAC Warrants issued on June 23, 2017, in light of the SEC Staff’s published views. After discussion and evaluation, the Company concluded that, as a result of these differences in features between the Public SPAC Warrants and Private SPAC Warrants, the Private SPAC Warrants should be classified as liabilities, if still held by the original Private SPAC Warrant holder, with subsequent changes in fair value reported in the Company’s consolidated statement of operations.

In addition, the Company analyzed the impact of the aforementioned adjustments on its previously issued audited consolidated financial statements for the years ended December 31, 2020 and 2019 and previously issued unaudited consolidated financial statements for the periods ended September 30, 2020 and 2019, June 30, 2020, and March 31, 2020 (such years and periods, the “Affected Periods”). The Company concluded the adjustments are not material to any individual period prior to the period ended March 31, 2021, taking into account the requirements of ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 270, Interim Financial Reporting, ASC Topic 250-S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. In accordance with the authoritative guidance, management evaluated the materiality of the adjustments from a quantitative and qualitative perspective. Based on such evaluation, the Company concluded that the effects of these adjustments were not material individually or in the aggregate to the Affected Periods and had no effect on the trend of financial results. While management concluded the adjustment was not material to any prior periods, individually or in the aggregate, based on our qualitative and quantitative analysis, management opted to make the adjustment by revising the respective amounts that were previously reported in the Affected Period. Accordingly, the Company has revised the prior period interim and annual financial information for the Affected Periods to reflect these adjustments.

The Company’s accounting for the Private SPAC Warrants as components of liabilities instead of as equity did not have any effect on the Company’s previously reported operating expenses, total cash flows from operating activities, investing activities, and financing activities, cash or total assets. The impact on the individual line items of the Company’s condensed consolidated balance sheets for each period presented from the adjustment was as follows (in thousands):

	As Previously Reported			Adjustments			As Revised
Condensed Consolidated Balance Sheet as of December 31, 2019
Long term liabilities:
Warrant liability		—			628			628
Total liabilities		5,722			628			6,350
Stockholders’ equity:
Additional paid-in capital		103,599			(187	)		103,412
Accumulated deficit		(91,111	)		(441	)		(91,552	)
Total stockholders’ equity		12,489			(628	)		11,861
Condensed Consolidated Balance Sheet as of June 30, 2020
Long term liabilities:
Warrant liability		—			704			704
Total liabilities		5,762			704			6,466
Stockholders’ equity:
Additional paid in capital		166,455			(187	)		166,268
Accumulated deficit		(107,529	)		(517	)		(108,046	)
Total stockholders’ equity		58,928			(704	)		58,224
Condensed Consolidated Balance Sheet as of December 31, 2020
Long term liabilities:
Warrant liability		—			1,650			1,650
Total liabilities		6,290			1,650			7,940
Stockholders’ equity:
Additional paid-in capital		189,849			19			189,868
Accumulated deficit		(126,360	)		(1,669	)		(128,029	)
Total stockholders’ equity		63,490			(1,650	)		61,840

The impact on the individual line items of the Company’s condensed consolidated statements of operations for the periods presented from the adjustment was as follows (in thousands):

	Year Ended December 31, 2019									Year Ended December 31, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(441	)	$	(441	)	$	—		$	(1,228	)	$	(1,228	)
Total other expense		(2,084	)		(441	)		(2,525	)		40			(1,228	)		(1,188	)
Net loss	$	(19,689	)	$	(441	)	$	(20,130	)	$	(35,249	)	$	(1,228	)	$	(36,477	)
Net loss per share of common stock outstanding, basic and diluted	$	(2.81	)	$	(0.06	)	$	(2.87	)	$	(2.08	)	$	(0.07	)	$	(2.15	)
	Three Months Ended June 30, 2020									Six Months Ended June 30, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(180	)	$	(180	)	$	—		$	(76	)	$	(76	)
Total other income/(expense)		10			(180	)		(170	)		10			(76	)		(66	)
Net loss	$	(9,417	)	$	(180	)	$	(9,597	)	$	(16,418	)	$	(76	)	$	(16,494	)
Net loss per share of common stock outstanding, basic and diluted	$	(0.58	)	$	(0.01	)	$	(0.59	)	$	(1.12	)	$	(0.01	)	$	(1.13	)

The condensed consolidated statements of cash flow are not presented because there is no impact on total cash flows from operating activities, investing activities, or financing activities. Certain components of net cash used in operating activities changed, as caused by the revision, such as incorporating the non-cash item from the change in fair value of warrant liability in the adjustments to reconcile net loss to net cash used in operating activities, but the net change amounted to zero for the Affected Periods.

Use of Estimates

(d) 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 but not limited to those related to assay revenue, stock-based compensation, short-term marketable securities, accounts receivable, accrued bonus, warrant liability and the realization of deferred tax assets. Actual results may differ from those estimates.

Cash and Cash Equivalents

(e) 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 Federal Deposit Insurance Corporation legal limit. The Company maintains cash balances that may, at times, exceed this insured limit.

Marketable Securities

(f) Marketable Securities

The Company considers securities with original maturities of greater than 90 days to be marketable securities. The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months. Accordingly, such marketable securities are classified as current assets on the accompanying condensed consolidated balance sheets even if they have contractual maturities greater than one year from the date of purchase. The Company’s marketable securities consist of U.S. Treasury and agency securities, commercial paper, and corporate debt securities. Marketable securities are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive income/(loss). The estimated fair value of the marketable securities is determined based on quoted market prices or rates for similar instruments. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are other than temporary. Realized gains and losses are calculated using the specific identification method and recorded as interest income or expense. The Company has determined that there were no other-than-temporary declines in fair values of its investments as of June 30, 2021.

Property and Equipment

(g) Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation. Property and equipment consists of mainly assets such as leasehold improvements, office, computer and laboratory equipment, including laboratory equipment acquired under capital lease arrangements. 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 $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $17,000 and zero for the three months ended June 30, 2021 and 2020, respectively. The Company recorded depreciation expense of $0.4 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, which includes amortization of laboratory equipment acquired under capital leases of $34,000 and zero for the six months ended June 30, 2021 and 2020, respectively.

Amortization of assets that are recorded under capital leases in depreciation expense is included in cost of revenues on the condensed consolidated statement of operations. Gross assets recorded under capital leases were $0.3 million as of June 30, 2021 and December 31, 2020. Accumulated amortization associated with capital leases was $44,000 and $10,000 as of June 30, 2021 and December 31, 2020, respectively. Maintenance and repairs are expensed as incurred, and material improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized. There were no disposal of equipment for the three months ended June 30, 2021 and 2020. The Company disposed of $0.1 million and zero of equipment for the six months ended June 30, 2021 and 2020, respectively. 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 or six months ended June 30, 2021 and 2020.

Research and Development

(h) 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-based compensation expense; (ii) and 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.

Concentration of Credit Risk

(i) Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of June 30, 2021, the Company maintained $100.0 million in a sweep account, which maintains cash balances throughout various interest bearing bank accounts under the $250,000 insurance limit provided by the Federal Deposit Insurance Corporation for one federally insured financial institution. Approximately $129.3 million was held in excess of the Federal Deposit Insurance Corporation insured limit as of June 30, 2021. The Company has not experienced any losses in such accounts.

Income Taxes

(j) 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 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 June 30, 2021.

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, of which there are none.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

Revenue Recognition

(k) 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 Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, and accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”). The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

Assay Revenue

The Company generates revenues from its Pigmented Lesion Assay (“PLA”) and PLAplus tests it provides to healthcare clinicians in various states throughout the United States to assist in a clinician’s diagnosis of melanoma. The Company provides prescribing clinicians with its Smart Sticker adhesive sample collection kits to perform non-invasive skin biopsies of clinically ambiguous pigmented skin lesions on patients. The Company also offers clinicians a telemedicine solution where they can request the Smart Sticker collection kit be sent to the patient’s home for a clinician-guided remote collection on ambiguous pigmented skin lesions. Once the sample is collected by the healthcare clinician or the patient via the telemedicine solution, it is returned to the Company’s CLIA laboratory for analysis. The patient’s ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) are extracted from the Smart Sticker collection kit and analyzed using gene expression technology to determine if the pigmented skin lesion contains certain genomic features indicative of melanoma. Upon completion of the gene expression analysis, a final report is drafted and provided to the dermatologists detailing the test results for the pigmented skin lesion indicating whether the sample collected is indicative of melanoma or not.

Contract Revenue

Contract revenue is generated from the sale of laboratory services and Smart Sticker collection kits to third-party companies through contract research agreements. Revenues are generated 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 Smart Sticker adhesive patch collection kits, assay development for research partners, RNA extraction, isolation, expression, amplification and detection, including data analysis and reporting.

(a) Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by revenue source during the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assay Revenue
PLA and PLAplus tests	$	2,910	$	648	$	5,100	$	1,445
Contract Revenue
Adhesive patch kits		125		24		314		38
RNA extractions		35		94		139		764
Project management fees		49		78		90		154
Total revenues	$	3,119	$	844	$	5,643	$	2,401

The following table sets forth the percentages of total revenue or accounts receivable for the Company’s third-party payors and pharmaceutical customers that represent 10% or more of the respective amounts for the periods shown:

	Total Revenue												Accounts Receivable
	Three Months Ended June 30,						Six Months Ended June 30,						As of June 30,
	2021			2020			2021			2020			2021			2020
Assay Revenue
Payor A		36	%		37	%		34	%		25	%		26	%		31	%
Payor B	*				15	%	*				11	%		13	%		26	%
Contract Revenue
Customer A	*				23	%	*				33	%	*			*

* Less than 10%

There were no other third-party payors or customers that individually accounted for more than 10% of the Company’s total revenue or accounts receivable for the periods shown in the table above.

(b) Deferred Revenue and Remaining Performance Obligations

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets.

In a majority of agreements that produce contract revenue, the Company receives a substantial up-front payment and additional payments upon the achievement of various milestones over the life of the agreement. This results in deferred revenue and is relieved upon delivery of the applicable Smart Sticker adhesive patch kits or RNA extraction results. Changes in accounts receivable and deferred revenue were not materially impacted by any other factors.

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 when goods/services are completed or delivered. Upfront fees that are estimated to be recognized as revenue more than one year from the date of collection are classified as long-term deferred revenue. Short-term deferred revenue as of June 30, 2021 and December 31, 2020 was $1.4 million and $0.9 million, respectively. Long-term deferred revenue as of June 30, 2021 and December 31, 2020 was $2,000 and $0.6 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. As of June 30, 2021, 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 $0.5 million. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two to three years.

Accounts Receivable

(l) Accounts Receivable

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 and PLAplus tests. 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 and PLAplus tests performed in the applicable period. 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. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the measurement of the accounts receivable balances. The Company recorded $2.1 million and $1.0 million of gross assay accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

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 June 30, 2021, the Company did not maintain any reserve over contract receivables as they relate to large established credit worthy customers. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve. The Company recorded $0.1 million and $0.5 million of contract accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

Freight and Shipping Costs

(m) Freight and Shipping Costs

The Company records outbound freight and shipping costs for its contract and assay revenues in cost of revenues.

Comprehensive Loss

(n) Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. We report net loss and the components of other comprehensive loss, including unrealized gains and losses on marketable securities, net of their related tax effect to arrive at total comprehensive loss.

Segment Reporting

(o) 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.

Net Loss Per Share

(p) Net Loss Per Share

Basic and diluted net loss per share of common stock is determined by dividing net loss applicable to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Because there is a net loss attributable to holders of common stock during the three and six months ended June 30, 2021 and 2020, the outstanding common stock warrants, stock options, restricted stock units (“RSUs”) and preferred stock have been excluded from the calculation of diluted loss per share of common stock 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 share of common stock for the three and six months ended June 30, 2021 excludes the effect of anti-dilutive equity instruments including 749,210 shares of common stock issuable upon the exercise of outstanding common stock warrants and 2,469,816 shares of common stock issuable upon the exercise of stock options and release of RSUs. Diluted net loss per share of common stock for the three and six months ended June 30, 2020 excludes the effect of anti-dilutive equity instruments including 1,139,194 shares of common stock then issuable upon conversion of the Company’s preferred stock, 4,153,631 shares of common stock then issuable upon the exercise of outstanding warrants and 1,798,900 shares of common stock then issuable upon the exercise of stock options and release of RSUs. The Company did not consider a two-class method of loss per share given that the Company’s convertible participating securities do not participate in losses.

Stock-Based Compensation

(q) 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 ratable 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 determined 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 using the ratable 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 as well as the volatility of the Company’s common stock. 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 using the fair value approach. The fair value of these options is measured using the Black-Scholes-Merton option pricing model, reflecting the same assumptions applied to employee options, other than expected life, which is assumed to be the remaining contractual life of the award. Options that are granted to employees generally have a requisite service period of three to four years.

RSUs are considered restricted stock. 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 ratable basis over the requisite service periods of the awards. RSUs that are granted to employees have a requisite service period typically between two and four years.

All stock options and RSUs granted prior to January 1, 2020 will maintain the estimated forfeiture approach and will be recognized over the requisite service period using the straight-line method.

The following table sets forth assumptions used to determine the fair value of each option on the date of grant issued under the 2020 Equity Incentive Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	1.03% - 1.07%		0.43% - 0.44%		0.52% - 1.13%		0.43% - 1.69%
Assumed volatility	77.69%		68.34%		74.88% - 77.69%		64.03% - 68.34%
Expected option term	6.08 years		5.55 - 6.25 years		6.08 years		5.04 - 6.25 years
Expected dividend yield		—		—		—		—

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the 2020 Employee Stock Purchase Plan:

	Three Months Ended June 30,			Six Months Ended June 30,
	2021		2020	2021		2020
Assumed risk-free interest rate	0.10%		Not applicable	0.10% - 0.18%		Not applicable
Assumed volatility	69.34%		Not applicable	68.44% - 69.34%		Not applicable
Expected option term	0.50 years		Not applicable	0.49 - 0.50 years		Not applicable
Expected dividend yield		—	Not applicable		—	Not applicable

The Company recorded stock-based compensation expense for employee options, RSUs, ESPP contributions, and consultant options of $3.5 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $5.7 million and $2.1 million for the six months ended June 30, 2021 and 2020, respectively. The total compensation cost related to non-vested awards not yet recognized as of June 30, 2021 was $34.8 million, which is expected to be recognized over a weighted average term of 2.90 years. 

Warrant Liability

(r) Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants classified as liabilities and are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a component of other income/(expense) in the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes-Merton valuation model. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of its warrants. At that time, the portion of the warrant liability related to the Company’s warrants will be reclassified to additional paid-in capital.

The following assumptions were used to calculate the fair value of the Company’s warrant liability using the Black-Scholes-Merton valuation model:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	0.46%		0.24%		0.46% - 0.64%		0.24% - 0.33%
Assumed volatility	88.28%		69.79%		85.85% - 88.28%		69.79% - 73.73%
Expected term	3.17 years		4.17 years		3.17 - 3.42 years		4.17 - 4.42 years
Expected dividend yield		—		—		—		—

Fair Value Measurements

(s) Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. 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. The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	1,320	$	—	$	—	$	1,320
Marketable securities, available for sale:
Corporate debt		—		6,889		—		6,889
Municipal securities		—		5,495		—		5,495
U.S. government debt securities		—		26,260		—		26,260
Total marketable securities, available for sale		—		38,644		—		38,644
Total assets measured at fair value on a recurring basis	$	1,320	$	38,644	$	—	$	39,964
Liabilities:
Warrant liability	$	—	$	—	$	577	$	577
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	577	$	577

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	448	$	—	$	—	$	448
Marketable securities, available for sale:
Corporate debt		—		8,940		—		8,940
Municipal securities		—		7,324		—		7,324
U.S. government debt securities		—		23,265		—		23,265
Total marketable securities, available for sale		—		39,529		—		39,529
Total assets measured at fair value on a recurring basis	$	448	$	39,529	$	—	$	39,977
Liabilities:
Warrant liability	$	—	$	—	$	1,650	$	1,650
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	1,650	$	1,650

The Company’s marketable debt securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active. The Company has classified marketable securities with original maturities of greater than one year as short-term investments based upon the Company’s ability to use all of those marketable securities to satisfy the liquidity needs of the Company’s current operations.

The fair value of the Private SPAC Warrants was determined using the Black-Scholes-Merton valuation model and included a significant unobservable input: expected volatility. Expected volatility is considered by the Company to be a significant unobservable input and is calculated using a weighted average of historical volatilities of a combination of the Company and peer companies, due to the lack of sufficient historical data of the Company’s own stock price. The model also incorporated several observable assumptions at each valuation date including: the price of the Company’s common stock on the date of valuation, the remaining contractual term of the warrant and the risk-free interest rate over the remaining term.

The following table summarizes the changes in the fair value of the Company’s Level 3 liabilities (in thousands):

Balance as of December 31, 2020	$	1,650
Derecognition of warrant liability from exercise of Private SPAC Warrants		(2,158	)
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(411	)
Change in fair value of warrant liability		1,689
Balance as of March 31, 2021		770
Derecognition of warrant liability from exercise of Private SPAC Warrants		—
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(23	)
Change in fair value of warrant liability		(170	)
Balance as of June 30, 2021	$	577

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.

Accounting Pronouncements Issued But Not Yet Effective

(t) Accounting Pronouncements Issued But Not Yet Effective

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases (“Topic 840”), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12

months or less will be accounted for similar to existing guidance for operating leases. For companies that are not emerging growth companies (‘‘EGCs’’), ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. For EGCs, the ASU was to be effective for fiscal years beginning after December 15, 2019. However, in November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates (“ASU 2019-10”), which included a one-year deferral of the effective date of ASU 2016-02 for certain entities. In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities (“ASU 2020-05”), which further defers the effective date for certain entities. As a result, the ASU is now effective for EGCs for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2020-05 will not apply and the Company is required to adopt the standard during the fourth quarter of 2021. The Company is currently assessing the impact of the adoption of this guidance on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. For non-EGCs, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For EGCs, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt ASU 2019-12 during the fourth quarter of 2021. The Company is currently evaluating the impact of ASU 2019-12 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. This standard covers the Company’s financial instruments, such as debt securities that are available for sale. Previously, when credit losses were measured under U.S. GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new guidance requires companies to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for financial instruments, using information such as historical experience and current economic conditions, plus the use of reasonable supportable forecast information. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses, which included an amendment of the effective date for nonpublic entities. For non-EGCs, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. For EGCs, ASU 2016-13 was to be effective for fiscal years beginning after December 15, 2021. However, in November 2019, the FASB issued ASU 2019-10, which included a one-year deferral of the effective date of ASU 2016-13 for certain entities. As a result, ASU is now effective for EGCs for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, and the standard is adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Since the Company will cease to be an emerging growth company as of December 31, 2021, the relief granted under ASU 2019-10 will not apply and the Company is required to adopt ASU 2016-13 during the fourth quarter of 2021. We are currently evaluating the impact the adoption of this standard will have on the Company’s condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the effects, if any, of the adoption of ASU 2021-04 guidance on the Company’s condensed consolidated financial statements.

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The Company and a Summary of its Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Revision to Prior Period Financial Statements

The Company’s accounting for the Private SPAC Warrants as components of liabilities instead of as equity did not have any effect on the Company’s previously reported operating expenses, total cash flows from operating activities, investing activities, and financing activities, cash or total assets. The impact on the individual line items of the Company’s condensed consolidated balance sheets for each period presented from the adjustment was as follows (in thousands):

	As Previously Reported			Adjustments			As Revised
Condensed Consolidated Balance Sheet as of December 31, 2019
Long term liabilities:
Warrant liability		—			628			628
Total liabilities		5,722			628			6,350
Stockholders’ equity:
Additional paid-in capital		103,599			(187	)		103,412
Accumulated deficit		(91,111	)		(441	)		(91,552	)
Total stockholders’ equity		12,489			(628	)		11,861
Condensed Consolidated Balance Sheet as of June 30, 2020
Long term liabilities:
Warrant liability		—			704			704
Total liabilities		5,762			704			6,466
Stockholders’ equity:
Additional paid in capital		166,455			(187	)		166,268
Accumulated deficit		(107,529	)		(517	)		(108,046	)
Total stockholders’ equity		58,928			(704	)		58,224
Condensed Consolidated Balance Sheet as of December 31, 2020
Long term liabilities:
Warrant liability		—			1,650			1,650
Total liabilities		6,290			1,650			7,940
Stockholders’ equity:
Additional paid-in capital		189,849			19			189,868
Accumulated deficit		(126,360	)		(1,669	)		(128,029	)
Total stockholders’ equity		63,490			(1,650	)		61,840

The impact on the individual line items of the Company’s condensed consolidated statements of operations for the periods presented from the adjustment was as follows (in thousands):

	Year Ended December 31, 2019									Year Ended December 31, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(441	)	$	(441	)	$	—		$	(1,228	)	$	(1,228	)
Total other expense		(2,084	)		(441	)		(2,525	)		40			(1,228	)		(1,188	)
Net loss	$	(19,689	)	$	(441	)	$	(20,130	)	$	(35,249	)	$	(1,228	)	$	(36,477	)
Net loss per share of common stock outstanding, basic and diluted	$	(2.81	)	$	(0.06	)	$	(2.87	)	$	(2.08	)	$	(0.07	)	$	(2.15	)
	Three Months Ended June 30, 2020									Six Months Ended June 30, 2020
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Condensed Consolidated Statement of Operations
Other income/(expense):
Change in fair value of warrant liability	$	—		$	(180	)	$	(180	)	$	—		$	(76	)	$	(76	)
Total other income/(expense)		10			(180	)		(170	)		10			(76	)		(66	)
Net loss	$	(9,417	)	$	(180	)	$	(9,597	)	$	(16,418	)	$	(76	)	$	(16,494	)
Net loss per share of common stock outstanding, basic and diluted	$	(0.58	)	$	(0.01	)	$	(0.59	)	$	(1.12	)	$	(0.01	)	$	(1.13	)

Schedule of Revenues Disaggregated by Revenue Source

The following table presents the Company’s revenues disaggregated by revenue source during the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assay Revenue
PLA and PLAplus tests	$	2,910	$	648	$	5,100	$	1,445
Contract Revenue
Adhesive patch kits		125		24		314		38
RNA extractions		35		94		139		764
Project management fees		49		78		90		154
Total revenues	$	3,119	$	844	$	5,643	$	2,401

Summary of Percentages of Total Revenue or Accounts Receivable for Third Party Payers and Pharmaceutical Customers

The following table sets forth the percentages of total revenue or accounts receivable for the Company’s third-party payors and pharmaceutical customers that represent 10% or more of the respective amounts for the periods shown:

	Total Revenue												Accounts Receivable
	Three Months Ended June 30,						Six Months Ended June 30,						As of June 30,
	2021			2020			2021			2020			2021			2020
Assay Revenue
Payor A		36	%		37	%		34	%		25	%		26	%		31	%
Payor B	*				15	%	*				11	%		13	%		26	%
Contract Revenue
Customer A	*				23	%	*				33	%	*			*

* Less than 10%

Assumptions Used to Determine Fair Value of Each Option on Date of Grant Issued

The following table sets forth assumptions used to determine the fair value of each option on the date of grant issued under the 2020 Equity Incentive Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	1.03% - 1.07%		0.43% - 0.44%		0.52% - 1.13%		0.43% - 1.69%
Assumed volatility	77.69%		68.34%		74.88% - 77.69%		64.03% - 68.34%
Expected option term	6.08 years		5.55 - 6.25 years		6.08 years		5.04 - 6.25 years
Expected dividend yield		—		—		—		—

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the 2020 Employee Stock Purchase Plan:

	Three Months Ended June 30,			Six Months Ended June 30,
	2021		2020	2021		2020
Assumed risk-free interest rate	0.10%		Not applicable	0.10% - 0.18%		Not applicable
Assumed volatility	69.34%		Not applicable	68.44% - 69.34%		Not applicable
Expected option term	0.50 years		Not applicable	0.49 - 0.50 years		Not applicable
Expected dividend yield		—	Not applicable		—	Not applicable

Summary of Assumptions Used to Calculate Fair Value of Warrant Liability Using Black-Scholes-Merton Valuation Model

The following assumptions were used to calculate the fair value of the Company’s warrant liability using the Black-Scholes-Merton valuation model:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Assumed risk-free interest rate	0.46%		0.24%		0.46% - 0.64%		0.24% - 0.33%
Assumed volatility	88.28%		69.79%		85.85% - 88.28%		69.79% - 73.73%
Expected term	3.17 years		4.17 years		3.17 - 3.42 years		4.17 - 4.42 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 June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	1,320	$	—	$	—	$	1,320
Marketable securities, available for sale:
Corporate debt		—		6,889		—		6,889
Municipal securities		—		5,495		—		5,495
U.S. government debt securities		—		26,260		—		26,260
Total marketable securities, available for sale		—		38,644		—		38,644
Total assets measured at fair value on a recurring basis	$	1,320	$	38,644	$	—	$	39,964
Liabilities:
Warrant liability	$	—	$	—	$	577	$	577
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	577	$	577

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	448	$	—	$	—	$	448
Marketable securities, available for sale:
Corporate debt		—		8,940		—		8,940
Municipal securities		—		7,324		—		7,324
U.S. government debt securities		—		23,265		—		23,265
Total marketable securities, available for sale		—		39,529		—		39,529
Total assets measured at fair value on a recurring basis	$	448	$	39,529	$	—	$	39,977
Liabilities:
Warrant liability	$	—	$	—	$	1,650	$	1,650
Total liabilities measured at fair value on a recurring basis	$	—	$	—	$	1,650	$	1,650

Summary of Changes in Fair Value of Level 3 Liabilities

The following table summarizes the changes in the fair value of the Company’s Level 3 liabilities (in thousands):

Balance as of December 31, 2020	$	1,650
Derecognition of warrant liability from exercise of Private SPAC Warrants		(2,158	)
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(411	)
Change in fair value of warrant liability		1,689
Balance as of March 31, 2021		770
Derecognition of warrant liability from exercise of Private SPAC Warrants		—
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder		(23	)
Change in fair value of warrant liability		(170	)
Balance as of June 30, 2021	$	577

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Balance Sheet Details (Tables)

6 Months Ended

Jun. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Short-Term Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of June 30, 2021 were as follows (in thousands):

	June 30, 2021
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	6,895	$	—	$	(6	)	$	6,889
Municipal securities		5,494		2		(1	)		5,495
U.S. government debt securities		26,253		7		—			26,260
Total short-term marketable securities,    available-for-sale	$	38,642	$	9	$	(7	)	$	38,644

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of debt securities classified as available-for-sale securities by major security type and class of security as of December 31, 2020 were as follows (in thousands):

	December 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Market Value
Short-term marketable securities, available-for-sale:
Corporate debt	$	8,946	$	—	$	(6	)	$	8,940
Municipal securities		7,325		1		(2	)		7,324
U.S. government debt securities		23,259		6		—			23,265
Total short-term marketable securities,    available-for-sale	$	39,530	$	7	$	(8	)	$	39,529

Schedule of Prepaid Expenses and PP&E

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021			December 31, 2020
Prepaid expenses and other current assets:
Prepaid insurance	$	376		$	1,172
Prepaid trade shows		43			—
Prepaid software fees		760			214
Deferred issuance costs		—			56
Other current assets		134			79
Total prepaid expenses and other current assets	$	1,313		$	1,521
Property and equipment, gross:
Laboratory equipment	$	3,404		$	2,544
Computer equipment		97			38
Furniture and fixtures		92			109
Leasehold improvements		727			727
Total property and equipment, gross		4,320			3,418
Less accumulated depreciation		(1,035	)		(687	)
Total property and equipment, net	$	3,285		$	2,731

Schedule of Accrued Compensation and Accrued Liabilities

Condensed consolidated balance sheet details are as follows (in thousands):

	June 30, 2021		December 31, 2020
Accrued compensation:
Accrued paid time off	$	905	$	606
Accrued bonus and deferred compensation		2,262		1,469
Total accrued compensation	$	3,167	$	2,075
Accrued liabilities:
Accrued consulting services	$	254	$	285
Deferred rent		254		300
Other accrued expenses		379		178
Total accrued liabilities	$	887	$	763

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Convertible Preferred Stock and Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Summary of Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021		December 31, 2020
Warrants to purchase common stock		31		151
SPAC Warrants to purchase common stock*		719		3,734
Stock options issued and outstanding		1,746		1,552
Restricted stock units issued and outstanding		724		560
Authorized for future equity grants		970		935
Authorized for future ESPP purchases		567		400
Total common stock reserved for future issuance		4,757		7,332

* Four SPAC Warrants are needed to purchase one share of common stock. The numbers presented above reflect the amount of shares of common stock underlying SPAC Warrants.

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Leases, Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Schedule of Long-term Capital Lease Obligations

Certain laboratory equipment has been acquired under a capital lease. The Company determined the interest rate implicit in the lease arrangement for the purpose of calculating the interest and principal components of each lease payment was 5.54%. Total capital lease interest expense was approximately $4,000 and zero for the three months ended June 30, 2021 and 2020, respectively, and $8,000 and zero for the six months ended June 30, 2021 and 2020, respectively, and is included within interest income, net on the condensed consolidated statements of operations. Long-term capital lease obligations are as follows (in thousands):

	June 30, 2021			December 31, 2020
Gross capital lease obligations	$	301		$	362
Less imputed interest		(19	)		(27	)
Present value of net minimum lease payments		282			335
Less current portion of capital lease obligations		(112	)		(109	)
Total long-term capital lease obligations	$	170		$	226

Schedule of Future Minimum Operating Lease and Capital Lease Payments for Operating Facilities and Laboratory Equipment

Future minimum operating lease and capital lease payments for the operating facilities and laboratory equipment as of June 30, 2021 were (in thousands):

	2021		2022		2023		Total
Operating lease obligations	$	690	$	1,411	$	478	$	2,579
Capital lease obligations, including interest		63		124		114		301
Total future minimum lease payments	$	753	$	1,535	$	592	$	2,880

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The Company and a Summary of its Significant Accounting Policies - Additional Information (Details)		3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 29, 2019	Jun. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) shares	Jun. 30, 2021 USD ($) Warrant Revenue_Stream Segment $ / shares shares	Jun. 30, 2020 USD ($) shares	Dec. 31, 2020 USD ($)
The Company and Summary of its Significant Accounting Policies [Line Items]
Conversion ratio of reverse stock split	0.5
Description of reverse stock split of common stock				one-for-two
Net change in net cash used in operating activities				$ 0
Depreciation expense		$ 200,000	$ 100,000	401,000	$ 148,000
Gross assets		4,320,000		4,320,000		$ 3,418,000
Disposal of plant or equipment		0	0	100,000	0
Impairment losses		0	0	0	0
Sweep account		100,000,000.0		100,000,000.0
Insured amount by FDIC		250,000		250,000
Cash held in excess of FDIC limit		129,300,000		$ 129,300,000
Number of revenue streams | Revenue_Stream				2
Short-term deferred revenue		1,372,000		$ 1,372,000		905,000
Long-term deferred revenue		2,000		2,000		639,000
Accounts receivable		2,185,000		$ 2,185,000		1,480,000
Number of operating segments | Segment				1
Stock-based compensation expense		3,500,000	$ 1,100,000	$ 5,700,000	$ 2,100,000
Compensation cost related to non-vested awards not yet recognized		$ 34,800,000		$ 34,800,000
Weighted average term expected to be recognized				2 years 10 months 24 days
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 share of common stock | shares			1,139,194		1,139,194
Common Stock Warrants
The Company and Summary of its Significant Accounting Policies [Line Items]
Anti-dilutive equity instruments excluded from diluted net loss per share of common stock | shares		749,210	4,153,631	749,210	4,153,631
Stock Options and RSUs
The Company and Summary of its Significant Accounting Policies [Line Items]
Anti-dilutive equity instruments excluded from diluted net loss per share of common stock | shares		2,469,816	1,798,900	2,469,816	1,798,900
Assay Revenue
The Company and Summary of its Significant Accounting Policies [Line Items]
Accounts receivable gross		$ 2,100,000		$ 2,100,000		1,000,000.0
Contract Revenue
The Company and Summary of its Significant Accounting Policies [Line Items]
Accounts receivable		100,000		$ 100,000		500,000
Minimum
The Company and Summary of its Significant Accounting Policies [Line Items]
Useful life of the assets				2 years
Minimum | Stock Options
The Company and Summary of its Significant Accounting Policies [Line Items]
Requisite service period				3 years
Minimum | Restricted Stock Units
The Company and Summary of its Significant Accounting Policies [Line Items]
Requisite service period				2 years
Maximum
The Company and Summary of its Significant Accounting Policies [Line Items]
Useful life of the assets				5 years
Maximum | Stock Options
The Company and Summary of its Significant Accounting Policies [Line Items]
Requisite service period				4 years
Maximum | Restricted Stock Units
The Company and Summary of its Significant Accounting Policies [Line Items]
Requisite service period				4 years
Amortization of Laboratory Equipment Acquired under Capital Leases
The Company and Summary of its Significant Accounting Policies [Line Items]
Depreciation expense		17,000	$ 0	$ 34,000	$ 0
Assets Recorded under Capital Leases
The Company and Summary of its Significant Accounting Policies [Line Items]
Gross assets		$ 300,000		300,000		300,000
Accumulated amortization				$ 44,000		$ 10,000
SPAC Warrants
The Company and Summary of its Significant Accounting Policies [Line Items]
Warrants expiration period		5 years		5 years
Number of warrants entitle holder to purchase one share | Warrant				4
SPAC Warrants | Common Stock
The Company and Summary of its Significant Accounting Policies [Line Items]
Number of shares issued for each warrant | shares		0.25		0.25
Exercise price of warrant | $ / shares		$ 23.00		$ 23.00
SPAC Warrants | Public Offering | Public Warrants
The Company and Summary of its Significant Accounting Policies [Line Items]
Warrants issued to purchase common stock | shares				14,375,000
SPAC Warrants | Private Placement Offering | Private Warrants
The Company and Summary of its Significant Accounting Policies [Line Items]
Warrants issued to purchase common stock | shares				561,250

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The Company and a Summary of its Significant Accounting Policies - Summary of Impact of Condensed Consolidated Balance Sheets from Adjustment (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Long term liabilities:
Warrant liability			$ 1,650	$ 704		$ 628
Total liabilities	$ 8,391		7,940	6,466		6,350
Stockholders’ equity:
Additional paid-in capital	427,503		189,868	166,268		103,412
Accumulated deficit	(160,199)		(128,029)	(108,046)		(91,552)
Total stockholders’ equity	$ 267,309	$ 256,827	61,840	58,224	$ 66,106	11,861
As Previously Reported
Long term liabilities:
Total liabilities			6,290	5,762		5,722
Stockholders’ equity:
Additional paid-in capital			189,849	166,455		103,599
Accumulated deficit			(126,360)	(107,529)		(91,111)
Total stockholders’ equity			63,490	58,928		12,489
Adjustments
Long term liabilities:
Warrant liability			1,650	704		628
Total liabilities			1,650	704		628
Stockholders’ equity:
Additional paid-in capital			19	(187)		(187)
Accumulated deficit			(1,669)	(517)		(441)
Total stockholders’ equity			$ (1,650)	$ (704)		$ (628)

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The Company and a Summary of its Significant Accounting Policies - Summary of Impact of Condensed Consolidated Statements of Operations from Adjustment (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Other income/(expense):
Change in fair value of warrant liability	$ 170		$ (180)		$ (1,519)	$ (76)	$ (1,228)	$ (441)
Total other income/(expense)	205		(170)		(1,450)	(66)	(1,188)	(2,525)
Net loss	$ (17,102)	$ (15,068)	$ (9,597)	$ (6,897)	$ (32,170)	$ (16,494)	$ (36,477)	$ (20,130)
Net loss per share of common stock outstanding, basic and diluted	$ (0.59)		$ (0.59)		$ (1.15)	$ (1.13)	$ (2.15)	$ (2.87)
As Previously Reported
Other income/(expense):
Total other income/(expense)			$ 10			$ 10	$ 40	$ (2,084)
Net loss			$ (9,417)			$ (16,418)	$ (35,249)	$ (19,689)
Net loss per share of common stock outstanding, basic and diluted			$ (0.58)			$ (1.12)	$ (2.08)	$ (2.81)
Adjustments
Other income/(expense):
Change in fair value of warrant liability			$ (180)			$ (76)	$ (1,228)	$ (441)
Total other income/(expense)			(180)			(76)	(1,228)	(441)
Net loss			$ (180)			$ (76)	$ (1,228)	$ (441)
Net loss per share of common stock outstanding, basic and diluted			$ (0.01)			$ (0.01)	$ (0.07)	$ (0.06)

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The Company and a Summary of its Significant Accounting Policies - Schedule of Revenues Disaggregated by Revenue Source (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation Of Revenue [Line Items]
Total revenues	$ 3,119	$ 844	$ 5,643	$ 2,401
Assay Revenue, PLA and PLAplus Tests
Disaggregation Of Revenue [Line Items]
Total revenues	2,910	648	5,100	1,445
Contract Revenue, Adhesive Patch kits
Disaggregation Of Revenue [Line Items]
Total revenues	125	24	314	38
Contract Revenue, RNA Extractions
Disaggregation Of Revenue [Line Items]
Total revenues	35	94	139	764
Contract Revenue, Project Management Fees
Disaggregation Of Revenue [Line Items]
Total revenues	$ 49	$ 78	$ 90	$ 154

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The Company and a Summary of its Significant Accounting Policies - Summary of Percentages of Total Revenue or Accounts Receivable for Third Party Payers and Pharmaceutical Customers (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Total Revenue | Assay Revenue Payor A
Product Information [Line Items]
Concentration risk, percentage	36.00%	37.00%	34.00%	25.00%
Total Revenue | Assay Revenue Payor B
Product Information [Line Items]
Concentration risk, percentage		15.00%		11.00%
Total Revenue | Contract Revenue Customer A
Product Information [Line Items]
Concentration risk, percentage		23.00%		33.00%
Accounts Receivable | Assay Revenue Payor A
Product Information [Line Items]
Concentration risk, percentage			26.00%	31.00%
Accounts Receivable | Assay Revenue Payor B
Product Information [Line Items]
Concentration risk, percentage			13.00%	26.00%

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The Company and a Summary of its Significant Accounting Policies - Summary of Percentages of Total Revenue or Accounts Receivable for Third Party Payers and Pharmaceutical Customers (Parenthetical) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue Benchmark | Assay Revenue Payor B
Product Information [Line Items]
Concentration risk, percentage		15.00%		11.00%
Revenue Benchmark | Contract Revenue Customer A
Product Information [Line Items]
Concentration risk, percentage		23.00%		33.00%
Accounts Receivable | Assay Revenue Payor B
Product Information [Line Items]
Concentration risk, percentage			13.00%	26.00%
Maximum | Revenue Benchmark | Assay Revenue Payor B
Product Information [Line Items]
Concentration risk, percentage	10.00%		10.00%
Maximum | Revenue Benchmark | Contract Revenue Customer A
Product Information [Line Items]
Concentration risk, percentage	10.00%		10.00%
Maximum | Accounts Receivable | Contract Revenue Customer A
Product Information [Line Items]
Concentration risk, percentage			10.00%	10.00%

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The Company and a Summary of its Significant Accounting Policies - Additional Information (Details 1) $ in Millions	Jun. 30, 2021 USD ($)
The Company and Summary of its Significant Accounting Policies [Line Items]
Remaining performance obligation, estimated revenue expected to be recognized	$ 0.5
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

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The Company and a Summary of its Significant Accounting Policies - Assumptions Used to Determine Fair Value of Each Option on Date of Grant Issued (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
2020 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Assumed risk-free interest rate,minimum	1.03%	0.43%	0.52%	0.43%
Assumed risk-free interest rate,maximum	1.07%	0.44%	1.13%	1.69%
Assumed volatility	77.69%	68.34%
Assumed volatility,minimum			74.88%	64.03%
Assumed volatility,maximum			77.69%	68.34%
Expected option term	6 years 29 days		6 years 29 days
2020 Equity Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected option term		5 years 6 months 18 days		5 years 14 days
2020 Equity Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected option term		6 years 3 months		6 years 3 months
2020 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Assumed risk-free interest rate	0.10%
Assumed risk-free interest rate,minimum			0.10%
Assumed risk-free interest rate,maximum			0.18%
Assumed volatility	69.34%
Assumed volatility,minimum			68.44%
Assumed volatility,maximum			69.34%
Expected option term	6 months
2020 Employee Stock Purchase Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected option term			5 months 26 days
2020 Employee Stock Purchase Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected option term			6 months

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The Company and a Summary of its Significant Accounting Policies - Assumptions Used to Calculate Fair Value of Warrant Liability Using Black-Scholes-Merton Valuation Model (Details)	Jun. 30, 2021	Jun. 30, 2020
Assumed Risk-free Interest Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	0.46	0.24
Assumed Risk-free Interest Rate | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	0.46	0.24
Assumed Risk-free Interest Rate | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	0.64	0.33
Assumed Volatility
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	88.28	69.79
Assumed Volatility | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	85.85	69.79
Assumed Volatility | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Warrant liability, fair value measurement inputs	88.28	73.73
Expected Term
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Expected term (years)	3 years 2 months 1 day	4 years 2 months 1 day
Expected Term | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Expected term (years)	3 years 2 months 1 day	4 years 2 months 1 day
Expected Term | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Expected term (years)	3 years 5 months 1 day	4 years 5 months 1 day

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The Company and a Summary of its Significant Accounting Policies - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Marketable securities, available for sale:
Marketable securities, available for sale	$ 38,644	$ 39,529
Fair Value, Recurring
Assets:
Cash equivalents	1,320	448
Marketable securities, available for sale:
Marketable securities, available for sale	38,644	39,529
Total assets measured at fair value on a recurring basis	39,964	39,977
Liabilities:
Warrant liability	577	1,650
Total liabilities measured at fair value on a recurring basis	577	1,650
Fair Value, Recurring | Level 1
Assets:
Cash equivalents	1,320	448
Marketable securities, available for sale:
Total assets measured at fair value on a recurring basis	1,320	448
Fair Value, Recurring | Level 2
Marketable securities, available for sale:
Marketable securities, available for sale	38,644	39,529
Total assets measured at fair value on a recurring basis	38,644	39,529
Fair Value, Recurring | Level 3
Liabilities:
Warrant liability	577	1,650
Total liabilities measured at fair value on a recurring basis	577	1,650
Corporate Debt
Marketable securities, available for sale:
Marketable securities, available for sale	6,889	8,940
Corporate Debt | Fair Value, Recurring
Marketable securities, available for sale:
Marketable securities, available for sale	6,889	8,940
Corporate Debt | Fair Value, Recurring | Level 2
Marketable securities, available for sale:
Marketable securities, available for sale	6,889	8,940
Municipal Securities
Marketable securities, available for sale:
Marketable securities, available for sale	5,495	7,324
Municipal Securities | Fair Value, Recurring
Marketable securities, available for sale:
Marketable securities, available for sale	5,495	7,324
Municipal Securities | Fair Value, Recurring | Level 2
Marketable securities, available for sale:
Marketable securities, available for sale	5,495	7,324
U.S. Government Debt Securities
Marketable securities, available for sale:
Marketable securities, available for sale	26,260	23,265
U.S. Government Debt Securities | Fair Value, Recurring
Marketable securities, available for sale:
Marketable securities, available for sale	26,260	23,265
U.S. Government Debt Securities | Fair Value, Recurring | Level 2
Marketable securities, available for sale:
Marketable securities, available for sale	$ 26,260	$ 23,265

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The Company and a Summary of its Significant Accounting Policies - Summary of Changes in Fair Value of Level 3 Liabilities (Details) - Level 3 - Warrant Liability - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2021
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance	$ 770	$ 1,650
Derecognition of warrant liability from exercise of Private SPAC Warrants		(2,158)
Reclassification of warrant liability due to Private SPAC Warrants not held by original holder	(23)	(411)
Change in fair value of warrant liability	(170)	1,689
Balance	$ 577	$ 770

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Balance Sheet Details - Schedule of Short-Term Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Investment Holdings [Line Items]
Amortized Cost	$ 38,642	$ 39,530
Gross Unrealized Gain	9	7
Gross Unrealized Loss	(7)	(8)
Marketable securities, available for sale	38,644	39,529
Corporate Debt
Investment Holdings [Line Items]
Amortized Cost	6,895	8,946
Gross Unrealized Loss	(6)	(6)
Marketable securities, available for sale	6,889	8,940
Municipal Securities
Investment Holdings [Line Items]
Amortized Cost	5,494	7,325
Gross Unrealized Gain	2	1
Gross Unrealized Loss	(1)	(2)
Marketable securities, available for sale	5,495	7,324
U.S. Government Debt Securities
Investment Holdings [Line Items]
Amortized Cost	26,253	23,259
Gross Unrealized Gain	7	6
Marketable securities, available for sale	$ 26,260	$ 23,265

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Balance Sheet Details - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Estimated market value of debt securities with contractual maturities of less than 12 months	$ 36.9	$ 37.3
Estimated market value of remaining debt securities with contractual maturities of up to 14 months	$ 1.8	$ 2.3

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Balance Sheet Details - Schedule of Prepaid Expenses and PP&E (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Prepaid expenses and other current assets:
Prepaid insurance	$ 376	$ 1,172
Prepaid trade shows	43
Prepaid software fees	760	214
Deferred issuance costs		56
Other current assets	134	79
Total prepaid expenses and other current assets	1,313	1,521
Property and equipment, gross:
Laboratory equipment	3,404	2,544
Computer equipment	97	38
Furniture and fixtures	92	109
Leasehold improvements	727	727
Total property and equipment, gross	4,320	3,418
Less accumulated depreciation	(1,035)	(687)
Total property and equipment, net	$ 3,285	$ 2,731

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Balance Sheet Details - Schedule of Accrued Compensation and Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accrued compensation:
Accrued paid time off	$ 905	$ 606
Accrued bonus and deferred compensation	2,262	1,469
Total accrued compensation	3,167	2,075
Accrued liabilities:
Accrued consulting services	254	285
Deferred rent	254	300
Other accrued expenses	379	178
Total accrued liabilities	$ 887	$ 763

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Convertible Preferred Stock and Stockholders Equity - Additional Information (Details)											3 Months Ended				6 Months Ended		12 Months Ended	24 Months Ended	36 Months Ended
	Feb. 28, 2021 shares	Jan. 11, 2021 USD ($) $ / shares shares	Jan. 06, 2021 shares	Nov. 10, 2020 USD ($) $ / shares shares	Aug. 10, 2020 shares	May 27, 2020 shares	Mar. 02, 2020 USD ($) shares	Feb. 28, 2020 USD ($) $ / shares shares	Aug. 29, 2019 USD ($) shares	Jun. 23, 2017 shares	Jun. 30, 2021 USD ($) $ / shares shares	Mar. 31, 2021 USD ($) shares	Jun. 30, 2020 shares	Mar. 31, 2020 shares	Jun. 30, 2021 USD ($) Warrant $ / shares shares	Jun. 30, 2020 USD ($)	Dec. 31, 2020 $ / shares shares	Dec. 31, 2016 $ / shares shares	Dec. 31, 2018 $ / shares shares	Jan. 01, 2021 shares
Class of Stock [Line Items]
Common stock, shares authorized											50,000,000				50,000,000		50,000,000
Preferred stock, shares authorized											5,000,000				5,000,000
Common stock, par value per share | $ / shares											$ 0.0001				$ 0.0001		$ 0.0001
Preferred stock, par value per share | $ / shares											$ 0.0001				$ 0.0001
Preferred stock, shares issued during period			4,237,288
Issuance of preferred stock, total offering amount | $												$ 134,582,000
Issuance of common stock through conversion, Shares					615,385
Issuance of stock			4,872,881
Preferred stock, issuance costs | $																$ 77,000
Net proceeds from issuance of common stock | $		$ 134,600,000
Shares purchased by underwriters		635,593	635,593
Number of days granted to underwriters option to purchase			30 days
Public offering price | $ / shares		$ 29.50
Gross proceeds from offering, before deducting underwriting discounts and commissions and other offering expenses | $		$ 143,700,000
Total proceeds from exercise of public warrants | $															$ 69,928,000	$ 482,000
Common stock available for issuance											4,757				4,757		7,332
2010 Stock Plan
Class of Stock [Line Items]
Common stock initially reserved for issuance											1,000,000.0				1,000,000.0
Contractual term of options granted															10 years
Options remain available for issuance pursuant to future grants											0				0
2010 Stock Plan | Incentive Stock Options
Class of Stock [Line Items]
Options granted to shareholder, percentage															10.00%
2020 Equity Incentive Plan
Class of Stock [Line Items]
Common stock, shares authorized											1,900,000				1,900,000
Contractual term of options granted															10 years
Options remain available for issuance pursuant to future grants											969,666				969,666
Common stock outstanding percentage															3.50%
2020 Employee Stock Purchase Plan
Class of Stock [Line Items]
Preferred stock, shares issued during period	39,960
Options remain available for issuance pursuant to future grants											567,444				567,444					207,404
Shares, issued											300,000				300,000
Common stock outstanding percentage															1.00%
Percentage of price at shares purchased															85.00%
Common stock available for issuance																	400,000
SPAC 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
Total number exercised of public warrants											12,060,871				12,060,871
Common shares issued upon exercise of warrants															3,015,211
Total proceeds from exercise of public warrants | $															$ 69,400,000
Warrants outstanding											2,875,379				2,875,379		14,936,250
Public SPAC Warrants
Class of Stock [Line Items]
Warrants issued to purchase common stock										14,375,000
Private SPAC Warrants
Class of Stock [Line Items]
Warrants issued to purchase common stock										561,250
Warrants outstanding											80,350				80,350		323,500
Series C Warrants
Class of Stock [Line Items]
Warrants expiration period											3 years				3 years
Warrants outstanding											0				0		97,563
Placement Agent Warrants
Class of Stock [Line Items]
Warrants issued to purchase common stock																		168,522	72,658
Warrants expiration period																		7 years	7 years
Warrants outstanding											10,039				10,039		31,365
Placement Agent Warrants | 2018 Convertible Bridge Notes
Class of Stock [Line Items]
Warrants issued to purchase common stock																	15,724
Warrants expiration period																	7 years
Management Warrants
Class of Stock [Line Items]
Warrants expiration period											10 years				10 years
Warrants outstanding											20,320				20,320		22,320
Cowen and Company LLC
Class of Stock [Line Items]
Preferred stock, shares issued during period				951,792							530,551				530,551
Issuance of preferred stock, total offering amount | $				$ 50,000,000.0
Weighted average purchase price per share | $ / shares				$ 20.97							$ 46.33				$ 46.33
Gross proceeds from issuance of common stock | $				$ 20,000,000.0							$ 24,600,000				$ 24,600,000
Decrease in issuance costs | $				900,000							700,000				700,000
Net proceeds from issuance of common stock | $				$ 19,100,000							$ 23,800,000				$ 23,800,000
Common Stock
Class of Stock [Line Items]
Preferred stock, shares issued during period												4,872,881
Issuance of preferred stock, total offering amount | $												$ 1,000
Issuance of common stock through conversion, Shares													3,198,949
Common Stock | SPAC Warrants
Class of Stock [Line Items]
Number of shares issued for each warrant											0.25				0.25
Exercise price of warrant | $ / shares											$ 23.00				$ 23.00
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
Exercise price of warrant | $ / shares																		$ 8.68	$ 9.54
Common Stock | Placement Agent Warrants | 2018 Convertible Bridge Notes
Class of Stock [Line Items]
Number of shares issued for each warrant																	1
Exercise price of warrant | $ / shares																	$ 9.54
Common Stock | Management Warrants
Class of Stock [Line Items]
Exercise price of warrant | $ / shares											$ 1.08				$ 1.08
Warrants vesting period															4 years
Securities Purchase Agreement
Class of Stock [Line Items]
Gross proceeds from PIPE financing | $								$ 65,000,000.0
Preferred stock, issuance costs | $								$ 5,100,000
2020 PIPE Financing | Securities Purchase Agreement
Class of Stock [Line Items]
PIPE financing closing date															Mar. 04, 2020
2020 PIPE Financing | Securities Purchase Agreement | Common Stock
Class of Stock [Line Items]
Issuance of stock								2,467,724
Issuance price per share | $ / shares								$ 10.50
Series A Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued during period					1,231				1,231
Issuance of preferred stock, total offering amount | $									$ 4,000,000.0
Series B-1 Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued during period														3,199
Issuance of common stock through conversion, Shares													(3,199)
Series B-1 Convertible Preferred Stock | 2020 PIPE Financing
Class of Stock [Line Items]
Preferred stock, shares issued during period							3,199
Issuance of preferred stock, total offering amount | $							$ 33,600,000
Issuance of common stock through conversion, Shares						3,198,949
Convertible preferred stock, shares outstanding						3,199
Series B-1 Convertible Preferred Stock | 2020 PIPE Financing | Securities Purchase Agreement
Class of Stock [Line Items]
Issuance of stock								3,199
Issuance price per share | $ / shares								$ 10,500
Preferred stock designated shares authorized and unissued								3,200
Series B-2 Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued during period														524
Series B-2 Convertible Preferred Stock | 2020 PIPE Financing
Class of Stock [Line Items]
Preferred stock, shares issued during period					524										524
Issuance of preferred stock, total offering amount | $															$ 5,500,000
Issuance of common stock through conversion, Shares					523,814
Series B-2 Convertible Preferred Stock | 2020 PIPE Financing | Securities Purchase Agreement
Class of Stock [Line Items]
Issuance of stock								524
Issuance price per share | $ / shares								$ 10,500
Preferred stock designated shares authorized and unissued								525
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%
Maximum | 2020 Equity Incentive Plan
Class of Stock [Line Items]
Shares, issued											1,400,000				1,400,000
Term of the option															5 years
Maximum | 2020 Employee Stock Purchase Plan
Class of Stock [Line Items]
Common stock available for issuance											400,000				400,000
Minimum | 2010 Stock 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%
Minimum | 2010 Stock Plan | Incentive Stock Options
Class of Stock [Line Items]
Options granted, exercise price expressed as a percentage of fair market value															110.00%
Minimum | 2020 Equity Incentive Plan | Incentive Stock Options
Class of Stock [Line Items]
Options granted, exercise price expressed as a percentage of fair market value															110.00%
Minimum | 2020 Equity Incentive Plan | Incentive and Non-qualified Stock Options
Class of Stock [Line Items]
Options granted, exercise price expressed as a percentage of fair market value															100.00%
Minimum | Series C convertible preferred stock | Series C Warrants
Class of Stock [Line Items]
Preferred stock value of shares purchased in single closing | $															$ 1,000,000

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Convertible Preferred Stock and Stockholders Equity - Summary of Common Stock Reserved for Future Issuance (Detail) - shares	Jun. 30, 2021	Dec. 31, 2020
Class of Stock [Line Items]
Common stock reserved for future issuance	4,757	7,332
Warrants to Purchase Common Stock
Class of Stock [Line Items]
Common stock reserved for future issuance	31	151
SPAC Warrants to Purchase Common Stock
Class of Stock [Line Items]
Common stock reserved for future issuance	719	3,734
Stock Options
Class of Stock [Line Items]
Common stock reserved for future issuance	1,746	1,552
Restricted Stock Units
Class of Stock [Line Items]
Common stock reserved for future issuance	724	560
Authorized for Future Equity Grants
Class of Stock [Line Items]
Common stock reserved for future issuance	970	935
Authorized for Future ESPP Purchases
Class of Stock [Line Items]
Common stock reserved for future issuance	567	400

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Convertible Preferred Stock and Stockholders Equity - Summary of Common Stock Reserved for Future Issuance (Parenthetical) (Details) - SPAC Warrants	6 Months Ended
	Jun. 30, 2021 Warrant shares
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

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Income Taxes - Additional Information (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Operating Loss Carryforwards [Line Items]
Federal statutory rate	21.00%	21.00%
Effective income tax rate	0.00%	0.00%
Minimum
Operating Loss Carryforwards [Line Items]
Ownership interest	50.00%

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Leases, Commitments and Contingencies - Additional Information (Details) - USD ($)		3 Months Ended		6 Months Ended
	Sep. 04, 2019	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 02, 2020
Commitments And Contingencies [Line Items]
Capital lease arrangement interest rate implicit		5.54%		5.54%
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 February 2020, the Company signed a fifth 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.
Tenant improvement allowance		$ 300,000		$ 300,000
Rent and common area maintenance expense		500,000	$ 600,000	1,000,000.0	$ 800,000
Cowen and Company LLC
Commitments And Contingencies [Line Items]
Payments for deferred underwriting fees	$ 800,000
Underwriting fees	$ 1,400,000	1,400,000		1,400,000		$ 1,400,000
Proceeds from equity financing				15,000,000.0
Gross proceeds from PIPE financing				65,000,000.0
Deferred underwriting fee equity payable if equity financing limit not raised		0		0
Maximum
Commitments And Contingencies [Line Items]
Increase in tenant improvement allowance				100,000
Interest Income, Net
Commitments And Contingencies [Line Items]
Capital lease interest expense		$ 4,000	$ 0	$ 8,000	$ 0

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Leases, Commitments and Contingencies - Schedule of Long-term Capital Lease Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Commitments And Contingencies Disclosure [Abstract]
Gross capital lease obligations	$ 301	$ 362
Less imputed interest	(19)	(27)
Present value of net minimum lease payments	282	335
Less current portion of capital lease obligations	(112)	(109)
Total long-term capital lease obligations	$ 170	$ 226

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Leases, Commitments and Contingencies - Schedule of Future Minimum Operating Lease and Capital Lease Payments for Operating Facilities and Laboratory Equipment (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Commitments And Contingencies [Line Items]
Operating lease obligations payments due in 2021	$ 690
Operating lease obligations payments due in 2022	1,411
Operating lease obligations payments due in 2023	478
Operating lease obligations payments due, Total	2,579
Total future minimum lease payments due in 2021	753
Total future minimum lease payments due in 2022	1,535
Total future minimum lease payments due in 2023	592
Total future minimum lease payments	2,880
Laboratory Equipment
Commitments And Contingencies [Line Items]
Capital lease obligations, including interest payments due in 2021	63
Capital lease obligations, including interest payments due in 2022	124
Capital lease obligations, including interest payments due in 2023	114
Capital lease obligations, including interest payments due, Total	$ 301

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Related Party Transactions - Additional Information (Details) - USD ($)				1 Months Ended					3 Months Ended		6 Months Ended
	Feb. 26, 2021	Nov. 11, 2020	Oct. 01, 2019	Sep. 30, 2020	Aug. 31, 2020	Jul. 31, 2020	Jun. 30, 2020	May 31, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Jan. 02, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Common stock, shares issued									29,607,394		29,607,394			20,740,413
Related party transaction, other											$ 0	$ 0
EVERSANA | Leana Wood
Related Party Transaction [Line Items]
Related party certain marketing cost									$ 500,000	$ 300,000	900,000	600,000
DermTech Operations | Michael Dobak
Related Party Transaction [Line Items]
Related party certain marketing cost	$ 20,000	$ 15,000		$ 15,000	$ 15,000	$ 15,000	$ 15,000	$ 15,000	$ 20,000	$ 47,000	$ 100,000	$ 100,000
Common stock, shares issued													5,000
DermTech Operations | Michael Dobak | Maximum
Related Party Transaction [Line Items]
Related party certain marketing cost			$ 100,000

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Subsequent Events - Additional Information (Details) - Kilroy Realty, L.P $ in Millions		6 Months Ended
	Jul. 01, 2021 USD ($) ft² $ / ft²	Jun. 30, 2021
Subsequent Event [Line Items]
Lessee, operating lease, description		The Lease provides for a tenant improvement allowance of $125.00 per rentable square foot of the Entire Premises for a total of $12.0 million, that the Landlord will use to fund the installation and/or construction of certain improvements to the Entire Premises in four phases, with each phase pertaining to a specified portion of the Entire Premises. The initial term of the Lease is ten years and six months beginning on the earlier to occur of (i) January 1, 2023 and (ii) the date that Landlord tenders possession of the Phase III Premises (as defined in the Lease) to the Company following the substantial completion of the improvements to the Phase III Premises required by the Lease (the “Lease Commencement Date”). The Company has the option to extend the term of the Lease for two additional five-year periods, subject to the terms of the Lease.
Subsequent Event
Subsequent Event [Line Items]
Lease commencement date	Jul. 01, 2021
Area of building | ft²	95,997
Tenant improvement allowance per rentable square foot | $ / ft²	125.00
Tenant improvements	$ 12.0
Subsequent Event | Letter of Credit
Subsequent Event [Line Items]
Lease security deposit to be paid on lease commencement date	3.0
Subsequent Event | Letter of Credit | Third Anniversary
Subsequent Event [Line Items]
Lease security deposit to be paid on lease commencement date	2.0
Subsequent Event | Letter of Credit | Fifth Anniversary
Subsequent Event [Line Items]
Lease security deposit to be paid on lease commencement date	$ 1.0