On November 4, 2024 Castle Biosciences, Inc. (Nasdaq: CSTL), a company improving health through innovative tests that guide patient care, reported its financial results for the third quarter and nine months ended September 30, 2024 (Press release, Castle Biosciences, NOV 4, 2024, View Source [SID1234647656]).

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"We are thrilled with our third quarter performance, which reflects the continued success of our growth initiatives and the dedication of our team," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "We believe these outstanding third quarter results demonstrate the strength of our business model and the trust our patients and clinicians place in us. Moreover, we are especially proud of our operating results, which show our ability to translate growth into profitability. This performance is a testament to our team’s hard work – that is, the people who call Castle home – and our focus on creating value for our patients, clinicians and stockholders.

"Our third quarter results were strong across our therapeutic areas, with significant test adoption growth for our core products, which we believe was driven in part by expanded clinical evidence supporting their use. We were particularly excited about the recent publication of a new study which confirmed the use of DecisionDx-SCC in identifying which patients with high-risk cutaneous squamous cell carcinoma (SCC) will have a low or high likelihood of benefiting from adjuvant radiation therapy (ART). Importantly, this was the second study this year to demonstrate this utility of our test, as well as the second largest study ever published that evaluates the effectiveness of ART in SCC. Another DecisionDx-SCC related publication from earlier this year, Arron et al., was the largest study to date evaluating the effectiveness of ART in SCC.

"Looking forward, we are encouraged by the strength of our execution and the fundamentals of our business. As such, we are raising our full-year 2024 total revenue guidance to $320-330 million, up from the previously provided guidance of $275-300 million, following our strong year-to-date performance and continued momentum in our business."

Third Quarter Ended September 30, 2024, Financial and Operational Highlights
•Revenues were $85.8 million, a 39% increase compared to $61.5 million in the third quarter of 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 $0.6 million of net negative revenue adjustments, compared to $0.9 million of net positive 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 $86.3 million, a 42% increase compared to $60.6 million for the same period in 2023.
•Delivered 26,010 total test reports in the third quarter of 2024, an increase of 41% compared to 18,409 in the same period of 2023:
◦DecisionDx-Melanoma test reports delivered in the quarter were 9,367, compared to 8,559 in the third quarter of 2023, an increase of 9%.
◦DecisionDx-SCC test reports delivered in the quarter were 4,195, compared to 2,820 in the third quarter of 2023, an increase of 49%.
◦MyPath Melanoma test reports delivered in the quarter were 933, compared to 1,011 in the third quarter of 2023, a decrease of 8%.

◦TissueCypher Barrett’s Esophagus test reports delivered in the quarter were 6,073, compared to 2,829 in the third quarter of 2023, an increase of 115%.
◦IDgenetix test reports delivered in the quarter were 5,045, compared to 2,791 in the third quarter of 2023, an increase of 81%.
◦DecisionDx-UM test reports delivered in the quarter were 397, compared to 399 in the third quarter of 2023.
•Gross margin was 79%, and Adjusted Gross Margin was 82%, compared to 78% and 81%, respectively, for the same periods in 2023.
•Net cash provided by operations was $23.3 million, compared to $5.0 million for the same period in 2023.
•Net income, which includes non-cash stock-based compensation expense of $13.0 million, was $2.3 million, compared to a net loss of $(6.9) million for the same period in 2023.
•Adjusted EBITDA was $21.6 million, compared to $6.6 million for the same period in 2023.

Nine Months Ended September 30, 2024, Financial and Operational Highlights
•Revenues were $245.8 million, a 60% increase compared to $153.7 million during the same period 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 nine months ended September 30, 2024, were $1.3 million of net negative revenue adjustments, compared to $3.1 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 $247.1 million, a 58% increase compared to $156.8 million for the same period in 2023.
•Delivered 72,000 total test reports in the nine months ended September 30, 2024, an increase of 44% compared to 50,145 in the same period of 2023:
◦DecisionDx-Melanoma test reports delivered in the nine months ended September 30, 2024, were 27,336, compared to 24,739 for the same period in 2023, an increase of 10%.
◦DecisionDx-SCC test reports delivered in the nine months ended September 30, 2024, were 12,049, compared to 7,912 for the same period in 2023, an increase of 52%.
◦MyPath Melanoma test reports delivered in the nine months ended September 30, 2024, were 3,030, compared to 2,944 for the same period in 2023, an increase of 3%.
◦TissueCypher Barrett’s Esophagus test reports delivered in the nine months ended September 30, 2024, were 14,284, compared to 5,659 for the same period in 2023, an increase of 152%.
◦IDgenetix test reports delivered in the nine months ended September 30, 2024, were 14,026, compared to 7,622 for the same period in 2023, an increase of 84%.
◦DecisionDx-UM test reports delivered in the nine months ended September 30, 2024, were 1,275, compared to 1,269 for the same period in 2023.
•Gross margin for the nine months ended September 30, 2024, was 79%, and Adjusted Gross Margin was 82%.
•Net cash provided by operations was $40.5 million, compared to $24.2 million net cash used in operations for the same period in 2023.
•Net income for the nine months ended September 30, 2024, which includes non-cash stock-based compensation expense of $38.9 million, was $8.7 million, compared to a net loss of $(54.9) million for the same period in 2023.
•Adjusted EBITDA for the nine months ended September 30, 2024, was $53.7 million, compared to $(13.8) million for the same period in 2023.
Cash, Cash Equivalents and Marketable Investment Securities
As of September 30, 2024, the Company’s cash, cash equivalents and marketable investment securities totaled $279.8 million.
2024 Outlook
Based upon revenue generated through September 30, 2024, the Company is increasing its guidance for anticipated total revenue in 2024 to between $320-330 million, compared to the previously provided guidance of between $275-300 million.

Third Quarter and Recent Accomplishments and Highlights
Dermatology
•DecisionDx-SCC: The Company presented new data demonstrating the DecisionDx-SCC test provided more precise risk stratification than Brigham and Women’s Hospital (BWH) staging alone to guide intensified treatment for immune suppressed patients with high-risk SCC. Specifically, the data demonstrated the ability of DecisionDx-SCC to provide clinically impactful risk stratification in high-risk SCC patient sub-populations (i.e., patients with suppressed immune systems in this study) to guide potential treatment intensification, such as ART. In the study, patients with lower-stage BWH T1-T2a SCC tumors were further stratified into distinct groups of those with more favorable and less favorable survival by the DecisionDx-SCC test, including in the T2a immunosuppressed patient subset which showed a higher rate of metastasis. See the Company’s news release from September 27, 2024, for more information.
•DecisionDx-SCC: The Company also announced the publication of a new study, Ruiz et al., confirming use of the DecisionDx-SCC test to guide patient selection and decision-making related to the use of ART in patients with high-risk SCC based on the ability of the test to identify patients likely to benefit from treatment. This is the second study to demonstrate the ability of DecisionDx-SCC to identify patients who are either more likely or less likely to benefit from ART, confirmed in an independent cohort of high-risk SCC patients. The first was demonstrated in a study by Arron et al. published in May 2024. See the Company’s news release from September 5, 2024, and the published paper for more information.
•DecisionDx-Melanoma: The Company presented new data from a prospective, multicenter CONNECTION study that indicated using DecisionDx-Melanoma test results to guide sentinel lymph node biopsy (SLNB) decisions in patients with T1 melanoma tumors could have reduced the number of unnecessary biopsies by up to 64%, which, in turn, could have reduced procedure-related complications and health care costs. Specifically, data from this study showed that DecisionDx-Melanoma can identify patients with T1 tumors with a low risk of sentinel lymph node (SLN) positivity who can safely forgo SLNB (negative predictive value of 98.4%), while maintaining very high survival rates in low-risk patients who did not have an SLNB (three-year recurrence free survival rate of 99.5%). See the Company’s news release from October 20, 2024, for more information.
•DecisionDx-Melanoma: The Company announced the publication of a new independent study further demonstrating that the DecisionDx-Melanoma test can precisely predict risk of SLN positivity to help guide risk-aligned SLNB decisions, potentially reducing the number of unnecessary procedures and increasing the SLNB positivity yield if the procedure is performed. Specifically, data from this study showed that DecisionDx-Melanoma can identify patients with a low risk of SLN positivity who can safely forgo SLNB (negative predictive value of 100.0%). The results of this study demonstrate that DecisionDx-Melanoma can allow for more precise and personalized management of melanoma patients, improving patient selection for the SLNB surgical procedure and reducing unnecessary procedures and their associated healthcare costs. See the Company’s news release from September 11, 2024, and the published paper for more information.
Gastroenterology
•The Company shared new data supporting the ability of the TissueCypher Barrett’s Esophagus test to independently predict risk of progression to esophageal cancer in patients with Barrett’s esophagus (BE) at the American Foregut Society (AFS) 2024 Annual Meeting in Denver. The data showed that TissueCypher alone outperformed all prediction models that combine TissueCypher results with clinicopathologic risk factors, along with a second study that demonstrated that TissueCypher significantly influenced physician management decisions for patients with non-dysplastic BE and enabled risk-aligned clinical management, such as endoscopic eradication therapy for patients identified as high or intermediate risk and long-interval surveillance for patients identified as low-risk for progression to high grade dysplasia or esophageal adenocarcinoma. See the Company’s news release from September 23, 2024, for more information.
Corporate
•The Company announced that Kristen Oelschlager, R.N., Castle’s chief operating officer, was named the 2024 Jon W. McGarity Arizona Bioscience Leader of the Year. The award, presented by the Arizona Bioindustry Association, recognized Oelschlager for her outstanding leadership that has contributed

significantly to the progression of the bioscience industry in Arizona. See the Company’s news release from September 16, 2024, for more information.

Conference Call and Webcast Details
Castle Biosciences will hold a conference call on Monday, November 4, 2024, at 4:30 p.m. Eastern time to discuss its third 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 November 25, 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 652870.

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