On May 2, 2024 Castle Biosciences, Inc. (Nasdaq: CSTL), a company improving health through innovative tests that guide patient care, reported its financial results for the first quarter ended March 31, 2024 (Press release, Castle Biosciences, MAY 2, 2024, View Source [SID1234642612]).

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"The first quarter marked an excellent start to the year with strong execution across the company, resulting in outstanding revenue and volume growth across our therapeutic areas," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "These results underscore the dedication of our talented team to improving patient care and the strength of our diverse test portfolio.

"Additionally, we continue to develop evidence to support the clinical utility of our tests. We are especially pleased with three peer-reviewed studies published since the beginning of 2024 that focus on our DecisionDx-SCC test. The studies demonstrate that DecisionDx-SCC can improve risk stratification when used in conjunction with staging, to help predict responsiveness to adjuvant radiation therapy (ART) and when used in conjunction with clinicopathologic factors in considering use of ART, can potentially lead to net annual Medicare healthcare savings of up to approximately $972 million. These studies have been submitted to our Medicare Contractors for their review.

"Our DecisionDx-Melanoma test informs two questions: which patients can consider foregoing a sentinel lymph node biopsy (SLNB) surgical procedure, and what is the risk of recurrence so the most appropriate follow-up treatment plan can be implemented. It is of high importance that when a test identifies patients with a low likelihood of a positive SLNB, and thus they could forego this surgical procedure, the patients also have a low risk of metastatic outcomes. The data from our recent prospective, multicenter study show just that – SLNB-eligible patients who had a DecisionDx-Melanoma Class 1A (lowest risk) test result and made the decision with their physician to forego an SLNB had excellent outcomes during the follow-up period. We believe it is this kind of evidence that should be required in order for clinicians to safely adopt a molecular test that rules out an SLNB surgical procedure.

"Looking ahead, we are raising our 2024 total revenue guidance to $255-265 million, up from the previously provided guidance of $235-240 million, reflecting our excellent start to 2024 and continued confidence in the business. We believe the positive momentum we generated in the first quarter sets a solid foundation for continued executional success throughout the year."

First Quarter Ended March 31, 2024, Financial and Operational Highlights

Revenues were $73.0 million, a 74% increase compared to $42.0 million in 2023. 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 $1.7 million of net positive revenue adjustments, compared to $1.3 million of net negative revenue adjustments for the same period in 2023.
Adjusted Revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $71.3 million, a 64% increase compared to $43.4 million for the same period in 2023.
Delivered 20,888 total test reports in the first quarter of 2024, an increase of 40% compared to 14,916 in the same period of 2023:
DecisionDx-Melanoma test reports delivered in the quarter were 8,384 compared to 7,583 in the first quarter of 2023, an increase of 11%.
DecisionDx-SCC test reports delivered in the quarter were 3,577 compared to 2,411 in the first quarter of 2023, an increase of 48%.
MyPath Melanoma test reports delivered in the quarter were 998, compared to 980 MyPath Melanoma and DiffDx-Melanoma aggregate test reports in the first quarter of 2023, an increase of 2%.
TissueCypher Barrett’s Esophagus test reports delivered in the quarter were 3,429 compared to 1,383 in the first quarter of 2023, an increase of 148%.
IDgenetix test reports delivered in the quarter were 4,078 compared to 2,150 in the first quarter of 2023, an increase of 90%.
DecisionDx-UM test reports delivered in the quarter were 422, compared to 409 in the first quarter of 2023, an increase of 3%.
Gross margin was 78%, and Adjusted Gross Margin was 81%, compared to 71% and 77%, respectively, for the same periods in 2023.
Net cash used in operations was $6.8 million, compared to net cash used in operations of $25.4 million for the same period in 2023.
Net loss, which includes non-cash stock-based compensation expense of $12.7 million, was $2.5 million, compared to a net loss of $29.2 million for the same period in 2023.
Adjusted EBITDA was $10.5 million, compared to $(15.1) million for the same period in 2023.
Cash, Cash Equivalents and Marketable Investment Securities

As of March 31, 2024, the Company’s cash, cash equivalents and marketable investment securities totaled $239.2 million.

2024 Outlook

Castle Biosciences is increasing its guidance for anticipated total revenue in 2024. The Company now anticipates generating between $255-265 million in total revenue in 2024, compared to the previously provided guidance of between $235-240 million.

First Quarter and Recent Accomplishments and Highlights

Dermatology

DecisionDx-SCC: A new study was published, 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." The study showed that in addition to providing risk-stratification information, our DecisionDx-SCC test identified patients most likely to benefit from ART and those who can consider deferring treatment given a lower likelihood of benefit.
DecisionDx-SCC: Related to the ART study mentioned above, the Company also announced the publication of a health economic study which found that guiding ART using DecisionDx-SCC results can lead to substantial Medicare healthcare savings of up to approximately $972 million annually. This net cost reduction focused on the added cost of DecisionDx-SCC and the direct cost of ART in those patients who could consider avoiding ART. See the Company’s news release from Jan. 18, 2024, for more information.
DecisionDx-SCC: The Company announced the publication of a new multicenter performance study of its DecisionDx-SCC risk stratification test. The study analyzed the independent performance of DecisionDx-SCC from risk factors and traditional staging systems (i.e., Brigham and Women’s Hospital and American Joint Committee on Cancer Staging Manual 8th Edition (AJCC8) staging), and demonstrated significantly improved predictive accuracy when the test’s results were integrated with the staging systems and National Comprehensive Cancer Network (NCCN) guidelines to guide risk-appropriate treatment pathway decisions that can improve patient outcomes. See the Company’s news release from March 7, 2024, for more information.
DecisionDx-SCC: The Company also saw publication of an expert consensus article related to the utility of its DecisionDx-SCC test in clinical decision-making regarding the use of ART. The consensus guidelines outline a recommended risk-based workflow that integrates DecisionDx-SCC and AJCC8 staging into current 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. See the Company’s news release from March 19, 2024, for more information.
DecisionDx-Melanoma: The Company announced the publication of a study demonstrating that DecisionDx-Melanoma provided significantly better risk stratification than AJCC8 staging in patients with stage I cutaneous melanoma. 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 suggests that incorporating the DecisionDx-Melanoma test into clinical practice may 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. See the Company’s news release from Feb. 26, 2024, for more information.
DecisionDx-Melanoma: An oral presentation from a multicenter, prospective, U.S. based study examining the performance of DecisionDx-Melanoma in safely ruling out an SLNB showed that of patients with a T1-T2 melanoma and predicted to have a <5% likelihood of a positive SLN, no patients had a positive node. The DecisionDx-Melanoma test had a negative predictive value of 100% and, of clinical importance, outcome data with a median follow up time of two years showed 100% recurrence free survival; meaning that no patients experienced a recurrence in the study period. This data was presented at the Society of Surgical Oncology 2024 Annual Meeting. See the Company’s news release from March 22, 2024, for more information.
Mental Health

In March 2024, the Company announced new data highlighting the value of its IDgenetix pharmacogenomic (PGx) test in guiding medication recommendations for patients who are 65 and older with mental health conditions. Specifically, the study data showed that one-third of the IDgenetix-guided medication recommendations were due to drug-drug interactions and lifestyle factors, demonstrating the value of this additional information in guiding selection of neuropsychiatric medications for older adults in patients 65 and older, with majority being on five or more medications at the time of testing. See the Company’s news release from March 15, 2024, for more information.
Conference Call and Webcast Details

Castle Biosciences will hold a conference call on Thursday, May 2, 2024, at 4:30 p.m. Eastern time to discuss its first quarter 2024 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 May 23, 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 112983.

There will be a brief Question & Answer session following management commentary.