DermTech: Melanoma Patch Test Maker Sold After Chapter 11 Filing

DermTech, Inc., a San Diego-based molecular diagnostics company that developed a non-invasive patch test for melanoma, filed chapter 11 on June 18, 2024 in the U.S. Bankruptcy Court for the District of Delaware. The company said it intended to continue laboratory operations and process orders for the DermTech Melanoma Test while it pursued a sale process, as described in the bankruptcy filing announcement. MedTech Dive reported that DermTech had about $15 million in cash at the time of filing and that 2023 test revenue was $14.4 million against $104 million in operating expenses. The San Diego Union-Tribune reported that the company gained Medicare coverage for its melanoma test but did not obtain FDA approval and that it listed assets of roughly $98 million and liabilities of $63 million.

The filing followed a series of restructuring steps. The company reduced headcount in June 2023, again in February 2024, and announced layoffs of about 100 employees in April 2024 while forming a special committee to evaluate strategic alternatives, according to MedTech Dive and the San Diego Union-Tribune. The April restructuring included approximately $1.6 million in severance and benefit charges and followed a Nasdaq delisting warning for a stock price below $1, as reported by MedTech Dive. The company retained TD Cowen and AlixPartners to advise on the process, according to the bankruptcy filing announcement.

The chapter 11 case moved on a sale-focused timeline. The debtors filed a sale and bidding procedures motion on June 21, 2024, and the court later entered a bidding procedures order establishing an August auction and sale hearing schedule in the bidding procedures order. The court approved an asset purchase agreement with DERM-JES Holdings, LLC on August 21, 2024 in the sale order, and Business Wire reported that the transaction closed on August 30, 2024 with operations continuing under DermTech, LLC. The case later transitioned to a liquidating plan confirmed on July 17, 2025, with general unsecured creditor recoveries estimated at 39% to 55% in the disclosure statement and the plan confirmed in the confirmation order.

Debtor(s)	DermTech, Inc.
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-11378
Judge	Hon. Mary F. Walrath
Petition Date	June 18, 2024
Sale Buyer	DERM-JES Holdings, LLC
Sale Closing	August 30, 2024
Confirmation Date	July 17, 2025
Estimated Assets	Approximately $98 million
Estimated Liabilities	Approximately $63 million
Asset and Liability Range	$50 million to $100 million
Cash at Filing	Approximately $15 million
Estimated Creditors	1,000 to 5,000
GUC Recovery Estimate	39% to 55%
Claims Agent	Stretto, Inc.

Restructuring Overview

Case structure and milestones. The debtors pursued a section 363 sale process that began with the June 21 sale and bidding procedures motion and culminated in an August 21 sale order approving an asset purchase agreement with DERM-JES Holdings, LLC. The bid procedures order set an August 7 bid deadline, an August 9 auction if multiple qualified bids, and a sale hearing on August 14, with closing targeted by August 29. The court approved the sale free and clear under section 363(f) with good-faith purchaser findings and authorized assumption and assignment of executory contracts under section 365.

Marketing timeline and sale objective. In the filing announcement, the company stated that it intended to continue laboratory operations while pursuing a sale on a timeline that balanced debtor needs with significant prepetition marketing efforts. That framing appears in the bankruptcy filing announcement and aligns with the court-approved auction schedule set in the bidding procedures order.

Post-sale trajectory. Business Wire reported that the sale closed on August 30, 2024 and that the business continued operations under DermTech, LLC, with the laboratory remaining in San Diego and the company continuing to process orders for the DermTech Melanoma Test in the sale closing announcement. MarketScreener also reported the bid, signing, and closing timeline from August 15 through August 30 in the transaction update.

Plan confirmation and liquidation. The disclosure statement summarized a liquidating plan with a liquidating trust and a trustee empowered to administer assets, object to claims, and pursue retained causes of action. The plan estimated recoveries of 39% to 55% for general unsecured creditors and provided no recovery for subordinated claims, intercompany claims, or equity interests, as described in the disclosure statement. The court confirmed the plan on July 17, 2025 under sections 1129(a) and (b) and approved the liquidating trust structure in the confirmation order.

Distribution mechanics. The disclosure statement detailed a priority structure in which secured and priority claims are unimpaired and paid in full, while general unsecured creditors receive pro rata distributions from the liquidating trust. The confirmation order designated the liquidating trustee as the sole director and officer of post-effective date debtors and vested retained causes of action in the trust. The plan structure therefore translated the sale proceeds and residual estate assets into trust distributions rather than a going-concern reorganization.

Professional advisors and case administration. Early in the case, the debtors sought approval to retain TD Cowen as investment banker in the TD Cowen retention application, Wilson Sonsini Goodrich & Rosati as debtor's counsel in the counsel retention application, and AlixPartners as financial advisor in the financial advisor retention application. Stretto was appointed as Administrative Advisor to perform bankruptcy administration services in the Stretto retention application. The committee later retained Hogan Lovells and Potter Anderson as counsel and BRG as financial advisor, as reflected in the UCC counsel retention, co-counsel retention, and UCC financial advisor retention.

The Stretto retention application described the firm as an administrative services provider with experience in noticing, claims administration, solicitation, and other chapter 11 tasks. That appointment formalized the claims and noticing function used by creditors throughout the case. The appointment supported claims intake and distribution notices across the case.

Company Background and Technology

DermTech was founded in 1995 and withdrew a prior IPO filing in 2014 before later returning to public markets. MedCity News reported the 1995 founding and the 2014 IPO withdrawal in coverage of early financing efforts in the company history report. The San Diego Union-Tribune reported that the company went public in 2019 in the bankruptcy filing report.

The voluntary petition lists the debtor's address as 12340 El Camino Real, San Diego, California 92130, which aligns with the company's San Diego operating base described in public reporting. The address appears in the voluntary petition.

The core product was the DermTech Melanoma Test, a non-invasive patch that collects skin samples for molecular analysis rather than requiring a surgical biopsy. MedTech Dive described the test as a patch-based approach to melanoma detection and reported that the company sought to commercialize the product broadly in the bankruptcy coverage. Business Wire described continued laboratory operations for the melanoma test at the time of filing in the bankruptcy filing announcement.

The San Diego Union-Tribune reported that the melanoma test gained Medicare coverage but did not receive FDA approval, a gap that was relevant to commercial adoption and reimbursement scope in the bankruptcy filing report. The company continued to market the test while executing multiple cost-reduction programs and exploring strategic alternatives, as outlined in the April 2024 restructuring coverage from MedTech Dive.

DermTech provided periodic performance disclosures before the bankruptcy filing. The company reported approximately 44,620 billable sample volumes in 2021 and a $78 million loss, while 2022 revenue was reported at $14.5 million with a $116.7 million loss. These figures are summarized in the 2021 results announcement and the July 2023 restructuring report. MedTech Dive reported that 2023 test revenue was $14.4 million against $104 million in operating expenses in the bankruptcy coverage.

The disclosed operating metrics show a company that grew test volume but did not convert that scale into profitability. DermTech reported approximately 44,620 billable samples in 2021 and $2.9 million of assay revenue in the second quarter of that year, according to the 2021 results announcement. The same period included a $78 million loss, while the 2022 revenue of $14.5 million was accompanied by a $116.7 million loss in the July 2023 restructuring report.

By 2023, MedTech Dive reported test revenue of $14.4 million and operating expenses of $104 million, underscoring the gap between revenue and fixed cost structure as the company entered 2024. Those figures are detailed in the bankruptcy coverage and explain the urgency of the cost reductions and sale process that followed.

Prepetition Financials and Restructuring Efforts

The company reported a balance sheet that placed total assets near $98 million and liabilities around $63 million as of April 30, 2024, with an estimated creditor count between 1,000 and 5,000, according to the San Diego Union-Tribune. Bloomberg Law reported that the company listed assets and liabilities in the $50 million to $100 million range in the bankruptcy report. MedTech Dive reported that DermTech had approximately $15 million in cash on hand at filing in the bankruptcy coverage.

The San Diego Union-Tribune reported that the largest creditor was Kilroy Realty LP with a $1.323 million lease claim and that the landlord sought unpaid rent of $661,706.34. These details are included in the bankruptcy filing report, illustrating the lease obligations that contributed to the restructuring pressures.

The company implemented several restructuring rounds before filing. The San Diego Union-Tribune reported that DermTech cut about 40 jobs in July 2023 and paused certain research programs, with expected savings of $25 million to $30 million, as described in the July 2023 restructuring report. In February 2024, the company cut about 15% of its workforce and aimed to reduce operating expenses by roughly $40 million relative to 2022 levels, according to the February 2024 workforce report. In April 2024, the company announced layoffs of about 100 employees, equal to 56% of the workforce, and said the reduction would be complete by the end of the second quarter, as reported in the April 2024 restructuring coverage and in the MD+DI Online update.

The April restructuring also included the formation of a board special committee to explore strategic alternatives and the engagement of TD Cowen and AlixPartners, as reported by MedTech Dive and the bankruptcy filing announcement. MedTech Dive reported that the company had received a Nasdaq delisting warning for a stock price below $1 on April 15, 2024. The San Diego Union-Tribune reported that after the April cuts the workforce had been reduced to roughly 75 employees and that a further reduction of 15 employees occurred in June 2024, as described in the bankruptcy filing report.

MD+DI Online reported that the April restructuring included the formation of a special committee to explore strategic alternatives alongside the 100-person reduction, while GenomeWeb reported that the February 2024 restructuring emphasized focusing resources on the melanoma test. Those reports reinforce how the company narrowed its operating scope while evaluating strategic options, as described in the MD+DI Online update and the GenomeWeb report.

The reported financial profile reflected a company that had not reached profitability despite multiple rounds of cost reductions. MedTech Dive described the product as having "failed to take off commercially" and reported that reimbursement challenges, research and development costs, and facility lease obligations contributed to the financial strain in the bankruptcy coverage. The combination of declining cash reserves, ongoing operating losses, and the need to preserve the laboratory business for a buyer helped frame the decision to pursue a sale in chapter 11.

Section 363 Sale Process

The debtors filed a sale and bidding procedures motion on June 21, 2024 and sought approval of a timeline centered on an early August auction and mid-August sale hearing. The motion specified a bid deadline of August 7, an auction on August 9 if multiple qualified bids were received, and a sale hearing on August 14, along with a 10% good-faith deposit requirement tied to cash consideration. Those motion terms are described in the sale motion.

The sale motion also required bids to specify the purchase price and form of consideration and contemplated bid protections to be documented in a stalking horse asset purchase agreement. Those bid requirements and the deposit structure served as the foundation for the bidding procedures order and the eventual sale order.

The court entered a bidding procedures order on July 15, 2024 that set a bid deadline of August 7 at 5:00 p.m. ET, an auction on August 9 at 10:00 a.m. ET, and a sale hearing on August 14 at 1:00 p.m. ET, with a targeted closing by August 29. The order also set a stalking horse supplement deadline of July 24 and established a five-business-day objection period after supplement service. Those milestones are stated in the bidding procedures order.

The stalking horse schedule and objection window created a structured process for competing bids and contract objections. The order required the stalking horse supplement to be served by July 24, triggering a five-business-day period to object to bid protections or other proposed sale terms. The order also provided that any approved bid protections would be treated as administrative expense claims. Those procedural elements set the framework for resolving objections before the auction and sale hearing.

The sale order entered on August 21, 2024 approved the asset purchase agreement dated August 20, 2024 with DERM-JES Holdings, LLC as buyer. The order authorized a sale free and clear under section 363(f), made good-faith purchaser findings, and approved assumption and assignment of executory contracts under section 365. These findings and authorizations are described in the sale order.

Business Wire reported that the buyer continued the business as DermTech, LLC, with the laboratory remaining in San Diego and ongoing processing of DermTech Melanoma Test orders after closing. The same release described the post-closing operating team as a dedicated group of dermatologists, dermatopathologists, and laboratory and industry professionals, as stated in the sale closing announcement.

The bidding procedures order also provides the framework for bid protections and sale objections. The order contemplated bid protections in the stalking horse agreement and treated any approved protections as administrative expense claims, while setting the timetable for objections tied to the stalking horse supplement. Those governance provisions defined the process for competing bids and objections to the proposed sale.

The sale order's section 365 findings enabled the purchaser to assume and assign executory contracts and leases needed for ongoing operations. That authority is central to transferring a laboratory-based business and maintaining continuity for test processing and customer relationships. The court's approval of assumption and assignment and its free-and-clear findings supported that continuity.

Business Wire reported that the sale closed on August 30, 2024 and that the business continued operations as DermTech, LLC, a private company with its laboratory in San Diego continuing to process orders for the DermTech Melanoma Test in the sale closing announcement. MarketScreener reported that the winning bid was submitted on August 15, the agreement was signed on August 20, and the acquisition closed on August 30 in the transaction update.

The sale order also authorized the assumption and assignment of executory contracts to facilitate a going-forward operating platform. By approving a sale free and clear with good-faith purchaser findings, the court cleared the way for a transfer of assets to a new ownership entity while the chapter 11 estate transitioned toward liquidation and plan confirmation.

Liquidating Plan and Trust

The debtors filed a plan and disclosure statement in November 2024 and later filed an amended plan and disclosure statement in December 2024, followed by a further modified plan in July 2025. The plan materials culminated in a confirmation order entered on July 17, 2025, as reflected in the plan filing and the amended plan.

The disclosure statement summarized class treatment and estimated recoveries. Secured claims and priority non-tax claims were unimpaired and paid in full, while general unsecured claims were impaired and scheduled to receive a pro rata distribution from the liquidating trust with estimated recoveries of 39% to 55%. Subordinated claims, intercompany claims, and equity interests were impaired and received no recovery. These terms are described in the disclosure statement.

The disclosure statement's treatment of equity aligned with public reporting around the sale. Business Wire stated that stockholders were not expected to receive value from the sale or the chapter 11 process, and the plan confirmed that equity interests would be canceled with no recovery. Those points appear in the sale closing announcement and in the equity treatment described in the disclosure statement.

The confirmation order approved the liquidating trust and appointed the liquidating trustee as the sole director and officer of the post-effective date debtors. The order confirmed the plan under sections 1129(a) and (b), applied cramdown to rejecting classes, required payment of U.S. Trustee fees on or before the effective date, and approved releases, exculpation, and injunction provisions described as consensual and necessary in the plan. The order also preserved retained causes of action and vested them in the liquidating trust, as stated in the confirmation order.

The plan structure therefore shifts remaining value from the sale process into a liquidation framework overseen by the trustee. The disclosure statement and confirmation order describe how claims administration, avoidance actions, and fiduciary claims are pursued on behalf of the estate and ultimately distributed to general unsecured creditors through the trust. These mechanics are detailed in the disclosure statement and the confirmation order.

The disclosure statement's recovery estimates and the confirmation order's cramdown findings show a plan that resolved dissenting classes through the statutory confirmation framework. The plan preserved avoidance actions and fiduciary claims for the liquidating trust, providing a potential source of recovery beyond the sale proceeds. Those retained causes of action and the trustee's authority are described in the disclosure statement and confirmed in the confirmation order.

Key Case Timeline

Frequently Asked Questions

When did DermTech file chapter 11?

DermTech filed chapter 11 on June 18, 2024 in the U.S. Bankruptcy Court for the District of Delaware. The filing date and court were stated in the bankruptcy filing announcement and reflected in the petition package.

What did DermTech do and what was its main product?

DermTech developed molecular diagnostics for melanoma using a non-invasive patch that collects skin samples for genomic analysis. MedTech Dive described the DermTech Melanoma Test as a patch-based alternative to surgical biopsy in the bankruptcy coverage.

Why did DermTech pursue a sale in chapter 11?

MedTech Dive reported that the company had $14.4 million in 2023 test revenue against $104 million in operating expenses, had about $15 million in cash at filing, and had faced reimbursement challenges and facility lease obligations. The same report described the product as having "failed to take off commercially" and noted that financing offers were highly dilutive, as described in the bankruptcy coverage.

What happened to operations after the sale?

Business Wire reported that the asset sale closed on August 30, 2024 and that the business continued operating under DermTech, LLC with the laboratory in San Diego continuing to process orders for the DermTech Melanoma Test. Those operational details appear in the sale closing announcement.

Who bought DermTech's assets?

The court approved an asset purchase agreement with DERM-JES Holdings, LLC. Business Wire reported the closing and buyer identity in the sale closing announcement.

What were the key sale milestones?

The bidding procedures order set a bid deadline of August 7, an auction on August 9 if needed, and a sale hearing on August 14, with a targeted closing by August 29. Those dates are stated in the bidding procedures order.

What were DermTech's assets and liabilities at filing?

The San Diego Union-Tribune reported assets of about $98 million and liabilities of about $63 million as of April 30, 2024, with an estimated creditor count between 1,000 and 5,000, in the bankruptcy filing report. Bloomberg Law reported that the company listed assets and liabilities in the $50 million to $100 million range in the bankruptcy report.

What recovery did the plan estimate for general unsecured creditors?

The disclosure statement estimated that general unsecured creditors would receive 39% to 55% recoveries through the liquidating trust. That estimate appears in the disclosure statement, and the plan was confirmed in the confirmation order.

What happened to shareholders?

Business Wire stated that stockholders were not expected to receive value from the sale or the chapter 11 process, and the plan provided no recovery for equity interests. Those points appear in the sale closing announcement and in the equity treatment described in the disclosure statement.

Who is the claims agent for DermTech?

Stretto serves as the claims and noticing agent and was appointed as Administrative Advisor in the retention application. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest on the claims portal.

Read more chapter 11 case coverage at ElevenFlo's blog.