Transforming Dermatology via Precision Medicine with Dr. John Dobak

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And welcome back to the Tacos and Tech podcast. I am your host, Neil Bloom and I am excited to introduce Dr. John Doback, CEO of Dermtech Precision dermatology company based here in La Jolla. And I'm really excited to get to know you, John. Thanks for joining.

Thanks for having me. Appreciate it. I like that you're a local boy. This is good.

Yeah, we got to put CNA on the map. We're building some, you know, life changing things. We got to let people know what's going on and who are the ones behind the scenes making it happen. So we want to hear about that. Do you want to give us a quick overview of what Dermtech is?

Sure. So Dermtech is actually creating a new category of medicine that we refer to as precision dermatology. And it's enabled by our non invasive skin genomics platform. And what I mean by that is we can collect a sample of skin using an adhesive patch. We call it the smart sticker. It feels a lot like Scotch tape. And we collect the cells off the surface of the skin non invasively and we can run a variety of genomic tests on that sample and we can use it to do things like diagnose skin cancer. And we're really. We call it precision dermatology because it's about really transforming the way dermatology is practiced. Dermatology is really one of the subjective clinical specialties and it involves dermatologists looking at the skin with the naked eye, trying to understand diagnostic and treatment decisions, or even the pathologist looking under the microscope doing the same. And that whole paradigm has really low accuracy. It's invasive, it's subjective, and it's really higher cost. And with this platform we can turn that paradigm on its head and we can make it objective, more accurate, non invasive and lower cost. And that's our fundamental value proposition with our precision derivative dermatology category.

Fascinating. This is going to be a great conversation. I think San Diego should be known as Precision City. We seem to be at the forefront of precision genomics, precision medicine, and now precision dermatology. So I'm excited to kind of hear the field that you're breaking in, that dermtech is pushing forward. But let's get to know you a little bit. Where'd you grow up? Where are you from?

I didn't grow up too far away. I grew up in Orange county, in Tustin, California. My dad was in the military, my mom worked in entertainment and I went to college at up at ucla and then I ultimately came down to San Diego when I started medical school. I never left Southern California because I'm a lifelong surfer and I can't be too far from the ocean. I've had many chances to move in other places, but I've always had to make a hard decision about moving away from the ocean. So I've been a Southern California boy most of my life.

I can totally relate. I am all Southern Californian as well. Born in LA and bounced back and forth between LA and San Diego. So I totally understand that. So you're surfing. Are you still surfing today? Did you get in the water recently?

Yeah, and I'm going on a trip to Namotu in about three weeks, which I'm really excited about because nobody's there. And it's like it was back in the 1970s when those world class waves were completely unridden. So it's going to be a great trip.

That's fantastic. So did you jump right into dermatology right from med school or have you played in a few different areas?

I took a very different path. I graduated from medical school. I was going to be a surgeon. That was kind of my lifelong goal. But when I was down here in San Diego, I kind of got exposed to the biotech world. San Diego was one of the very early biotech clusters that kind of formed in the 1980s and early 1990s. I got exposed to that and I got very interested in that path. It was a very uncommon path for a new medical school graduate. So I put my plans on being a surgeon on holding. I started to try to figure out how to be an entrepreneur. I did a postdoc fellowship at Scripps and I had some ideas, but they didn't really work out. Then I decided to go back and get my license. I went back to ucla. I did an internship at the county hospital there in harbor or in Torrance, it was the Harbor UCLA Hospital. And then, well, I was actually an intern. I got an SBIR grant for an idea for a cardiac catheter that could freeze tissue to treat arrhythmias. And then I actually raised my first venture round at the very end of my internship. And then I got my license and I came down to San Diego and I pretty much started running my first company, which was called Cryo Core.

Oh, wow. Okay. So was venture capital pretty prevalent at least in the biotech sphere? Or was that still pretty outside the realm of what most entrepreneurs and even doctors knew what to do, how to raise?

Well, this was the mid-1990s, so it was definitely around, you know, I raised money for my first company from Kleiner Perkins, which is probably one of the early pioneers in venture capital. You know, they were pretty well known, but it certainly wasn't like it was today. I would guess back then there was maybe a billion or $2 billion in venture capital investment. I think now there's got to be 15 billion in venture investment going on every year is my guess. Oh, at least, yeah, definitely. Definitely a lot smaller back then, a lot harder to come by. I think certainly medical technology, that where I was playing in was a very small subset of venture investment back then. But I was able to attract some high quality VCs at that time.

That's fantastic. What ended up happening with the company?

So the company Developed the first cryosurgical catheter that could treat arrhythmias. Freezing tissue in the heart was actually the safest way to go. And the company got through the FDA and spun out another company called Cryogen that worked on a surgical tool using the same technology. And Cryocor went public and got acquired by Boston Scientific and Cryogen got acquired by American Medical Systems. I had left that company to start another company called Intercool, which was a fascinating company where we employed therapeutic hypothermia, where we cooled the blood inside the body with a catheter. We used it to protect the brain and the heart when they had an injury or a heart attack or a stroke. That's what we were developing it for anyway. And I was running that company in the early 2000s, and that company had a little struggles. We couldn't get the clinical data to turn out the way we needed it to turn out. So we ultimately sold the company to Philips and it's used now in neurosurgery. But it never achieved that much broader adoption. But it was. It was one of my favorite companies because it was just wild to be able to cool people down 10 degrees. We would warm the outside of their skin with a blanket and you could trick the body. Even though the body inside might have been like, say, at 10 degrees Fahrenheit, lower than normal body temperature, people would still think they were warm because their skin was in this warm environment. So we could actually cool them down and they could be awake and talking while they were. While they were about 10 degrees colder on the inside. So it was a great development effort. And I should mention the guy behind that was Dr. Juan Lacerys, who, unfortunately I just put out a post last night, who passed away unexpectedly, but he's the guy who really drove and made that technology work. He was the Chairman of Mechanical Engineering at ucsd, a fantastic guy, and was really the driving force to make that whole thing work and, and bring that technology to life.

So I had Professor Lacheuras in undergrad, no kidding, for Fluid Dynamics, when I was at UCSD. And I just heard the word also from UCSD's note. It is sad. And yeah, I didn't actually know his entrepreneurial side, actually, his. Oh, yeah, the technology development side. But he was a wonderful professor.

He was. He helped a lot also on Cryocore, solving some hard challenges. Those are all fluid dynamics problems. All both of those technologies. He was so creative. He was just a fantastic, great innovator. Just a fantastic guy. Great mentor, too.

Was There a lot of interaction between, you know, university technology and kind of the startup scene in that regard was. Was that pretty typical of where companies started and went from?

I think so, you know, I think so. When I was in medical school, it was still kind of frowned upon. There was sort of this wall between academia and industry and academics didn't think industry was as a noble pursuit as fundamental research in the academic world. I think that's all changed now. And you don't have a professor in any major university that's not involved in starting companies. Certainly Juan was sort of a pioneer in that regard that he would embrace sort of interaction with industry and technology. But the reality is all the great, the great technology we use today, whether it's in biotechnology or information technology, it all starts in the academic world. All those foundations are laid there and it's industry that makes them into products and commercializes them. But we really need that basic science effort and that fundamental academic research. It's an important driver in general.

Absolutely. So take us through the path of how sound like you're already starting to work on, you know, skin related products, but not specifically a dermatology case. How did you get towards that field of study?

Well, I had started a company that was actually treating an eye condition with a drug and we found that it had some application in a dermatology, it was more in aesthetic dermatology. And the company wanted to shift directions. So I had gotten some exposure to dermatology. It didn't really interest me that, that much that other area, but the board really wanted to go in that direction. So we found a guy who came from that world and then I moved on and I was, and I was looking at what I was going to do next. I was introduced through I'm in ypo and one of the guys in YPO was Paul Jacobs and his brother Gary had been involved with Dermtech. Dermtech was sort of at a point where they started out. They were really a contract research organization. They were selling clinical trial services to the dermatology companies. They had gotten a lot of requests about a way to do analysis of skin without having to do a surgical biopsy, particularly genomics. And so they had done some pilot work with this adhesive patch platform and it looked like it was feasible. And so the company was making a shift. They were, they had sold off their CRO business and now they wanted to become a technology company. And there were about five people there at the time. And I started talking to Gary after he was introduced to him through Paul and he said, does this interest you? And I said, actually, it does. I had actually just had a personal kind of experience with melanoma, actually, which is where our first product is focused, where my mother's significant other, after my father died, she was with a Scottish man. And he had all kinds of skin cancers. He was always getting them cut off. And one time he went to the dermatologist, and the dermatologist had cut off a couple of lesions on his skin. And. And he could tell that Dean was getting tired of being cut. And he found he came across something that looked like a melanoma. But he said, you know, Dean, I've cut you enough today. Let's look at that one next time. Unfortunately, that was a melanoma. And by the time they got around to it, it already spread metastatically. And so I understood right away, you know, that this was really a transformative approach. And so I decided to take it on. It was. I'm not technically the founder, but it was pretty much a founding effort with just a small group of people. We built it from basically from scratch and turned it into a technology company.

That's fantastic. You've been there for a bit now take us through kind of what the technology development has been, kind of the hoops you've had to gone through to get it to where it is now.

Sure. I've been here going on nine years, which is amazing to me because I was a serial entrepreneur. I'd spend four or five years, typically at a company and then start another one. But most innovation in medicine is kind of incremental. It's a slight improvement on what's come before. And when I looked at Dermtech, I thought this was completely transformational, a total paradigm shift. And those are the kind of things I like. That's probably why I've been there so long. You know, some of the bigger challenges. One was just the technology worked on a proof of concept level, but it was so far from commercialization. So I would say in the early days, maybe only 30% of the samples we collected with this patch could actually be analyzed because we wouldn't have enough material, or there would be contaminants or whatever it might be that was interfering with the ability to do the genomic analysis. So we probably spent a few years just trying to work those bugs out, and now we have it to the point where it works 95 to 97% of the time. There was also a lot of change. You know, it's very challenging to finance Dermtech as revolutionary. As it is this problem that we solved around enhancing early melanoma detection, it was a problem that existed when I was in medical school and there were companies that were trying to address it for decades and they all failed. And just when I joined, there was another big failure. A company that was called Melafine that was trying to take photographs of moles and use image analysis to determine if it might be malignant. And they had over $700 million invested in the company. And it just never worked, the technology. So that was a huge headwind. People thought, you know, geez, am I going to invest in this again? This is an area that nobody's ever been able to solve. So I had a lot of financing challenges. I mean, I'd always raised venture capital, but I couldn't get the venture guys interested for those reasons. Also you Theranos thing happened and they changed the reimbursement for genomic testing shortly after I joined. So there are all these headwinds. We ultimately raised money from a lot of high net worth people, which was a new way for me to raise money. And then when we finally started to show this really had legs, we got some institutional investors in the company and then ultimately went public by a very atypical way at the time, which was a SPAC merger. Now you hear about SPACs, but we were probably the first company to one of the few companies in life sciences do a SPAC in the last 20 years. That turned out to be a good decision too, and really allowed us to capitalize the company. Now, you know, people looked at me like I was crazy. You're going to do a spac? What the heck is a spac even? And now all you do is hear about SPACs. I get a phone call every week if they people want to tell me about how to merge with a spac. But that worked out well and now we've been just growing the company commercially.

That's funny about SPACs. It really felt like it was meant for taking gold mines public back in the day. But you're right, it really is. There's like dozens a day going out there and sounds like you guys were revolutionary and using that as a vehicle.

So congrats on that in more ways than one. We've been revolutionary, that's for sure.

Yeah. So what is, what's growth been like? What is commercialization like in, you know, in the dermatology space? Especially under the, you know, purview of COVID over the last year?

Yeah. So I would say we had been selling the product on A very limited basis with just a few sales reps. A few years ago, it was what we call reimbursement selling, where you're just trying to get enough volume so that the payers, like Medicare, for example, will even look at it like a payer is not going to evaluate a technology to pay for it if nobody's using it. So you have to get some usage. And we were really targeting our full launch for the product kind of after we merged with the SPAC and when our Medicare coverage policy went into effect, which was February of last year. And so we were all gearing up to scale our sales team to about 55 reps. And that was in February of last year. And boom, that was when Covid arrived in the US and so it was a major, I don't want to call it a setback. It was just some big headwinds. Sure. So we paused on our scaling of the salesforce. We only went to about 23 reps at the time. And surprisingly, despite those headwinds of COVID we were able to grow. I mean, we had almost no access to doctor's offices, but we were still able to grow. And one of the reasons was when Covid hit and all the medical practices shut down for a few months, it turned out we could actually offer to send our kit to the patient's home and patients could collect the sample themselves. And so if you really needed someone that you were worried about, might have had a mole that was at risk for melanoma, this was the only way to do it. So it turned out we actually got a lot of visibility in the dermatology community. We were like the number one, you know, technology solution in the face of COVID because we had this, this way to do in home collection for assessing a mole. And I think that visibility sort of carried through. And so despite the limited access and the challenges with access to doctor's offices, we've been able to grow actually pretty significantly. I think we did like 12,000 samples in 2019, and we did 27,000, don't quote me exactly, but something like that in last year. And we're growing beyond that for this coming year. But I think that was why we still sort of thrive in that difficult environment. Now we've got 40 sales reps, so we did start to add more sales reps in the latter half of the year. Now we're at about 40, or we still want to go closer to the 50 to 55, but we're taking our time. As the COVID subsides, we'll start to add more people, but it's worked out despite those challenges.

Yeah. How fortuitous to have a product that just works so well with kind of at home collection like that. I know we've seen the complete rise of that, of at home samples of everything from blood and take your own COVID test and stuff like that. So what a wave to be able to ride. So congrats on that.

Yeah, it was good. It was good for our visibility.

Take us through a little bit of the industry within San Diego. So is there a robust dermatology tech community within San Diego that you feel that you're a part of?

There's nobody that's really doing what we're doing per se. In San Diego. There are some biotech companies, a fair number, that are developing drugs for dermatology. And we actually have partnerships with a lot of companies that are developing drugs, particularly biologic drugs in dermatology, because they like to use our technology to assess how well the drug is working, particularly measuring the targets that, that change, the genomic targets that change when their drug is administered. And it may be that you can actually select patients that are going to likely to respond to that drug. A lot of biologic drugs don't work in everybody because they're so targeted. So maybe you get 30 or 40% responder rate. So if you could identify the people that are likely to respond, you can enrich that responder rate dramatically. So that's an area of opportunity for us that we're going to dip our toe into. But we do collaborate with a lot of these companies to help them assess those kinds of things. We know some of those companies, but you know, I think there are some people that are interested now more in derm because of what we're doing, the success we've had. And you know, there are companies that want to develop devices for dermatology, whether it's delivering energy into the skin or, you know, other ways to help diagnose skin conditions with spectroscopy and things like that. So I suspect you'll see more. It's sort of typical. You get one company that does something and then it builds a little ecosystem around it.

Absolutely. Especially an entrepreneurial ecosystem, feeds off that of people starting their next thing after having some sort of success at a previous company. It absolutely makes an ecosystem which is fantastic to carve out as another little cluster here in San Diego. Speaking of San Diego, it sounds like you've been here a bit. You know, not just the taco scene, but, you know, the surf scene. I'm not going to ask you about your secret spot because that's private to everyone. But post surf, where are you going for a taco these days?

Well, let's be clear. There are no more secret spots in San Diego, right? I mean, but my favorite taco Sienna is Los Dose right there on Turquoise, that little hole in the wall. Most people look at it and they're afraid to walk in the door, but they got really good food.

Yep, that's a great one. Yeah, I frequent down the street taco surf, but Los Dose is a good one as well too. Appreciate that. Do you have favorite other spots when you sounds like you travel for surf? Do you have some other favorite food spots that accompany international surf spots?

Gosh, you know, I'll tell you, the best taco stand I ever ate in is in Scorpion Bay, which is down in mainland Mexico. And they had this little taco shack. Again, it's a thing you'd like. Most people would be shocked to think you're going to eat from there, but they had the most incredible fish and carne asada tacos. We ate there every day. We were there for a week a couple years ago. I was there with my kids and I think we ate there twice a day the entire week. It was phenomenal.

Oh, it's a good one. All right. We appreciate that. We'll add it to our taco database for sure.

Yes. I don't even know if there was a name on it. Just kind of sat up there out there over the bluff.

Yeah, those are the absolute best for sure. Well, John, we appreciate spending some time with you and we're excited to continue to watch dermtech build here in town. And not just build, but make a major impact on helping so many. So thanks for that Great and all the best and have a safe surf trip coming up soon.

Fantastic. Nice talking with you. Thanks.

Thanks for joining us on the Tacos and Tech podcast with Neil Bloom. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to School of Rap for our rad intro music. And thanks as well to Nest Podcast network where we are recording live inside their studio at Ness Co working in Bankers Hill. You can find Neil Bloom on Twitter eelbloom as well as fresh brewed tech and tacos in tech pod on Twitter too.

Startups get the party. Startups get the party started. You want tech and tacos, Tacos in tech, you know we got it.

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