On February 28, 2024 Castle Biosciences, Inc. (Nasdaq: CSTL), a company improving health through innovative tests that guide patient care, reported its financial results for the fourth quarter and year ended Dec. 31, 2023 (Press release, Castle Biosciences, FEB 28, 2024, View Source [SID1234640601]).
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"2023 was another exceptional year, with strong top-line growth and test report volume growth, driven in large part by consistent execution by the entire Castle team," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "I am extremely pleased with the continued success we saw from careful investments in our initiatives. We expanded our body of evidence, with data further demonstrating the potential of our tests to improve patient outcomes, including increased survival. In addition, our foundational dermatology business continued to expand solidly, and growth in our TissueCypher Barrett’s Esophagus test outpaced our expectations.
"In our commitment to ongoing evidence development, we are exceptionally proud of the progress we have made regarding DecisionDx-Melanoma. The independent risk-stratification provided by this test has already been demonstrated in numerous retrospective and prospective studies, is supported with 50 peer-reviewed publications, and has been studied in more than 10,000 patients. In 2023, there were two critical peer-reviewed publications demonstrating an association with DecisionDx-Melanoma testing and improved patient outcomes. The first study demonstrated that testing with DecisionDx-Melanoma was associated with lower melanoma-specific and overall mortality relative to untested patients (Bailey et al.), and the second demonstrated that patients who received routine imaging after high-risk DecisionDx-Melanoma test scores had an earlier recurrence diagnosis with lower tumor burden, leading to better clinical outcomes, including improved overall survival (Dhillon et al.). DecisionDx-Melanoma is the only melanoma prognostic test shown to be associated with improved patient survival.
"We are optimistic about continued commercial momentum in 2024 and will continue to focus on the needs of the patients and clinicians who drive our business."
Twelve Months Ended Dec. 31, 2023, Financial and Operational Highlights
•Revenues were $219.8 million, a 60% increase compared to $137.0 million in 2022. Included in revenue for the year were revenue adjustments related to tests delivered in prior periods. These prior period revenue adjustments for the twelve months ended Dec. 31, 2023, were $4.5 million of net negative revenue adjustments, compared to $2.0 million of net negative revenue adjustments for 2022.
•Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $224.3 million, a 61% increase compared to $139.0 million in 2022.
•Delivered 70,429 total test reports in 2023, an increase of 59% compared to 44,419 in 2022:
◦DecisionDx-Melanoma test reports delivered in 2023 were 33,330, compared to 27,803 in 2022, an increase of 20%.
◦DecisionDx-SCC test reports delivered in 2023 were 11,442, compared to 5,967 in 2022, an increase of 92%.
◦MyPath Melanoma and DiffDx-Melanoma test reports delivered in 2023 were 3,962, compared to 3,561 in 2022, an increase of 11%.
◦TissueCypher Barrett’s Esophagus test reports delivered in 2023 were 9,100, compared to 2,128 in 2022, an increase of 328%.
◦IDgenetix test reports delivered in 2023 were 10,921, compared to 3,249 in 2022, an increase of 236%.
◦DecisionDx-UM test reports delivered in 2023 were 1,674, compared to 1,711 in 2022, a decrease of 2%.
•Gross margin for 2023 was 75%, and adjusted gross margin was 80%, compared to 71% and 77% respectively for the same periods in 2022.
•Net cash used in operations was $5.6 million, compared to $41.7 million in 2022.
•Net loss for 2023, which includes non-cash stock-based compensation expense of $51.2 million, was $57.5 million, compared to $67.1 million in 2022.
•Adjusted EBITDA for 2023 was $(4.4) million, compared to $(42.6) million in 2022.
Cash, Cash Equivalents and Marketable Investment Securities
As of Dec. 31, 2023, the Company’s cash, cash equivalents and marketable investment securities totaled $243.1 million.
Fourth Quarter Ended Dec. 31, 2023, Financial and Operational Highlights
•Revenues were $66.1 million, a 72% increase compared to $38.3 million during the same period in 2022. Included in revenue for the period were revenue adjustments related to tests delivered in prior periods. These prior period revenue adjustments for the quarter were $4.1 million of net negative revenue adjustments, compared to $0.8 million of net positive revenue adjustments for the same period in 2022.
•Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $70.2 million, an 87% increase compared to $37.5 million for the same period in 2022.
•Delivered 20,284 total test reports, an increase of 60% compared to 12,644 in the same period of 2022:
◦DecisionDx-Melanoma test reports delivered in the quarter were 8,591, compared to 7,301 in the fourth quarter of 2022, an increase of 18%.
◦DecisionDx-SCC test reports delivered in the quarter were 3,530, compared to 1,845 in the fourth quarter of 2022, an increase of 91%.
◦MyPath Melanoma test reports delivered in the quarter were 1,018, compared to 822 MyPath Melanoma and DiffDx-Melanoma aggregate test reports in the fourth quarter of 2022, an increase of 24%.
◦TissueCypher Barrett’s Esophagus test reports delivered in the quarter were 3,441, compared to 1,030 in the fourth quarter of 2022, an increase of 234%.
◦IDgenetix test reports delivered in the quarter were 3,299, compared to 1,214 in the fourth quarter of 2022, an increase of 172%.
◦DecisionDx-UM test reports delivered in the quarter were 405, compared to 432 in the fourth quarter of 2022, a decrease of 6%.
•Gross margin was 78%, and adjusted gross margin was 82%, compared to 69% and 75% respectively for the same periods in 2022.
•Net cash provided by operations was $18.6 million, compared to net cash used in operations of $6.0 million for the same period in 2022.
•Net loss, which includes non-cash stock-based compensation expense of $11.8 million, was $2.6 million, compared to a net loss of $20.6 million for the same period in 2022.
•Adjusted EBITDA was $9.4 million, compared to $(10.4) million for the same period in 2022.
2024 Outlook
The Company anticipates generating between $235-240 million in total revenue in 2024.
Fourth Quarter and Recent Accomplishments and Highlights
Dermatology
•DecisionDx-Melanoma: In December 2023, the Company announced the publication of a study in the Journal of the Advanced Practitioner in Oncology that assessed the viewpoints of nurse practitioners and physician assistants (NPs/PAs) toward the clinical use of DecisionDx-Melanoma in patients diagnosed with cutaneous melanoma (CM). The study found that more than 90% of the NPs/PAs who completed a survey about DecisionDx-Melanoma believe that prognostic (i.e., risk-stratification) information about a patient’s melanoma is valuable and improves patient care. See the Company’s news release from Dec. 1, 2023, for more information.
•DecisionDx-Melanoma: In February 2024, the Company announced the publication of a study in Cancers demonstrating that DecisionDx-Melanoma provided significantly better risk stratification than American Joint Committee on Cancer 8th Edition (AJCC8) staging in patients with stage I CM. This study reports the results of two large stage I cohorts, including 5,561 patients from the National Cancer Institute’s Surveillance, Epidemiology and End Results (SEER) Program Registries. It supports incorporating the DecisionDx-Melanoma test into clinical practice to help clinicians and patients with stage I melanoma obtain more precise information about a patient’s risk of disease progression to inform more personalized, risk-aligned treatment and surveillance management plans.
•DecisionDx-SCC: In January 2024, the Company announced the publication of a new study in the Journal of Clinical and Aesthetic Dermatology (JCAD), which found that guiding adjuvant radiation treatment (ART) using DecisionDx-SCC results can lead to substantial Medicare healthcare savings of up to approximately $972 million annually. This cost reduction is primarily attributed to avoiding direct costs of unnecessary ART in patients with low-risk DecisionDx-SCC profiles and the appropriate selection of patient treatment based on molecular risk assessment. Additionally, integrating the objective DecisionDx-SCC test into the management of ART-eligible high-risk cutaneous squamous cell carcinoma (SCC) can identify those who may safely avoid ART who would, therefore, have reduced complications, a net improvement in health outcomes and reduced cost in the Medicare population. See the Company’s news release from Jan. 18, 2024, for more information.
•DecisionDx-SCC: In February 2024, the Company announced the publication of an expert consensus article in JCAD related to its DecisionDx-SCC test. The expert multidisciplinary panel included radiation oncologists and dermatologists/Mohs micrographic surgeons with expertise in SCC management and provides risk-based clinical recommendations and a workflow for use of ART in patients with high-risk SCC to control disease progression. The suggested workflow integrates DecisionDx-SCC testing and AJCC8 staging, based on clinicopathologic risk factors, with the current National Comprehensive Cancer Network (NCCN) guidelines to improve precision in ART recommendations based on which patients are at the highest risk for metastasis and most likely to benefit from treatment.
•In February 2024, the Company was notified that a new study, titled "Inconsistent associations between risk factor profiles and adjuvant radiation therapy (ART) treatment in patients with cutaneous squamous cell carcinoma and utility of the 40-gene expression profile to refine ART guidance," was accepted for publication in Dermatology and Therapy. The study shows that including tumor biology-based risk stratification from the DecisionDx-SCC test in ART decisions can refine risk and identify appropriate SCC patients who are likely to benefit from ART treatment, as well as those who can consider deferring it.
•In February 2024, the Company was notified that a new study, titled "Integrating the 40-gene expression profile (40-GEP) test improves metastatic risk-stratification within clinically relevant subgroups of high-risk cutaneous squamous cell carcinoma (cSCC) patients," was accepted for publication in Dermatology and Therapy. The study of 897 patients analyzed the independent performance of DecisionDx-SCC from risk factors and staging systems, and demonstrated improved predictive accuracy when integrated with the NCCN, Brigham and Women’s Hospital (BWH) and AJCC8 clinicopathologic risk assessment systems to significantly enhance risk-aligned treatment for patients.
Gastroenterology
•In October 2023, the Company announced new data demonstrating the significant clinical utility of its TissueCypher Barrett’s Esophagus test in guiding risk-aligned upstaging of care for patients with non-dysplastic Barrett’s esophagus (BE) at a higher risk of progression to high-grade dysplasia or
esophageal adenocarcinoma than indicated by their clinicopathologic risk factors. See the Company’s news release from Oct. 2, 2023, for more information.
Mental Health
•In November 2023, the Company announced data from a single-site, open-label study demonstrating the consistent impact of IDgenetix on medication response and remission rates in patients with major depressive disorder (MDD). The study found that real-world patient outcomes were strongly aligned to the results of a previously published randomized controlled trial that demonstrated IDgenetix-guided medication management significantly improved response and remission rates for patients with MDD. See the Company’s news release from Nov. 8, 2023, for more information.
Pipeline Initiatives
•Uveal Melanoma: In November 2023, the Company announced new discovery data from an ongoing study exploring the potential for developing a minimally invasive test, complementary to DecisionDx-UM, to evaluate small, suspicious lesions of uncertain malignant potential in patients’ eyes. See the Company’s news release from Nov. 3, 2023, for more information.
•Inflammatory Skin Disease: In November 2023, the Company announced new data showing the ability of its pipeline test in development to distinguish between responders and non-responders to an atopic dermatitis (AD) therapy and also distinguish between AD, psoriasis (PSO) and mycosis fungoides (MF) skin lesions. Additional updates regarding development of this pipeline program are expected in 2024. See the Company’s news release from Nov. 2, 2023, for more information.
Corporate
•In November 2023, the Company announced that it was named a Houston Chronicle Top Workplace for the third year in a row and awarded three new Culture Excellence awards, recognizing the Company in the areas of Employee Appreciation, Employee Well-Being and Professional Development. See the Company’s news release from Nov. 13, 2023, for more information.
•In January 2024, the Company announced that its chief operating officer, Kristen Oelschlager, was named to The Healthcare Technology Report’s Top 25 Women Leaders in Biotechnology of 2023. The honorees "stand as a driving force, ensuring diverse perspectives on scientific breakthroughs and groundbreaking therapies," according to the publication. See the Company’s news release from Jan. 9, 2024, for more information.
Conference Call and Webcast Details
Castle Biosciences will hold a conference call on Wednesday, Feb. 28, 2024, at 4:30 p.m. Eastern time to discuss its fourth quarter and full-year 2023 results and provide a corporate update.
A live webcast of the conference call can be accessed here: View Source
or via the webcast link on the Investor Relations page of the Company’s website,
View Source Please access the webcast at least 10 minutes before the conference call start time. An archive of the webcast will be available on the Company’s website until March 20, 2024.
To access the live conference call via phone, please dial 833 470 1428 from the United States, or +1 404 975 4839 internationally, at least 10 minutes prior to the start of the call, using the conference ID 036526.
There will be a brief Question & Answer session following management commentary.