Castle Biosciences, Inc. · NASDAQ:CSTL
Castle Biosciences — Q2 2021 Earnings Presentation
54 slides from Castle Biosciences's earnings presentation, Aug 9, 2021
Slide 1: Transforming the management of dermatologic cancers and other dermatologic diseases
A u g u s t 9 , 2 0 2 1 Tr a n s f o r m i n g t h e m a n a g e m e n t o f d e r m a t o l o g i c c a n c e r s a n d o t h e r d e r m a t o l o g i c d i s e a s e s w i t h h i g h u n m e t n e e d
Slide 2: Disclaimers
D i s c l a i m e rs F O R W A R D - L O O K I N G S T A T E M E N T S The information in this presentation contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amen
Slide 3: Leading Dermatologic Diagnostics Company
Transforming the management of skin cancer and other dermatologic diseases with high unmet clinical need Expansive Body of Evidence Suite of Dermatologic Prognostic And Diagnostic Tests Strong Financial Position Robust Pipeline L e a d i n g D e r m a t o l o g i c D i a g n o s t i c s C o m p a ny
Slide 4: Financial Summary
F i n a n c i a l S u m m a r y 2 Q 2 0 2 1 2Q21 2Q20 Revenue $22.8M $12.7M Adj. Revenue1 $22.9M $10.4M Total GEP test reports2 7,007 3,314 Total Derm test reports2 6,539 3,008 Operating Cash Flow $(6.4)M $13.5M Adj. Operating Cash Flow1 $(4.3)M $3.3M Gross Margin 83% 83% Adj. Gross Margin1 84% 79%
Slide 5: Test indications, reimbursement and addressable market
Indication/ Test outcome Trade Name Reimbursement Status Peer-Reviewed Publications Primary Customers Initial Launch Targets Initial addressable market, patients2 Estimated U.S. TAM Cutaneous melanoma/ Risk of metastasis MCR, MCRA Commercial – in process 30+ Derms (including Mohs), Surgeons __ ~130k
Slide 6: Clinical Portfolio and Pipeline Tests
6 C l i n i c a l Po r t fo l i o A n d P i p e l i n e Te s t s P o t e n t i a l t o l a u n c h 3 - 5 n e w t e s t s b y t h e e n d o f 2 0 2 5 Skin Cancer Cutaneous melanoma/ Risk of metastasis Cutaneous squamous cell carcinoma/ Risk of metastasis Suspicious pigmented lesions/ Melanoma status
Slide 7: Castle's Long-Term Revenue Growth Potential
2022 C a s t l e ’s L o n g - Te r m Re v e n u e G r o w t h Po t e n t i a l 7 Cutaneous Melanoma 2021 Squamous Cell Carcinoma Cutaneous Melanoma Additional Tests for Dermatologic Diseases 2025 (Expanded LCD effective Dec 2020) (Potential LCD effective in 2022) (Acquired in May 2021; LCD in effect
Slide 8: The Castle Approach
T h e C a s t l e A p p ro a c h 8 Identify dermatologic diseases with high unmet medical need, where genomic information has the potential to improve management decisions Leveraging artificial intelligence, tests are designed to provide clinically actionable information based on tumor gene expressi
Slide 9: Informing clinical decision making for patients with invasive melanoma
Informing clinical decision making for patients with invasive melanoma
Slide 10: DecisionDx-Melanoma: After Diagnosis of Cancer
If melanoma, clinician orders to answer SLNB and/or management questions: • Is the risk of SLN-positivity high enough to warrant referral for the SLNB surgery? • What is the individual risk of recurrence? D e c i s i o n D x - M e l a n o m a : A f t e r D i a g n o s i s O f C a n c e r 10 Patient
Slide 11: Two Primary Clinical Questions Help Guide Melanoma Management
Cutaneous melanoma diagnosis F o l l o w i n g D i a g n o s i s , Tw o P r i m a r y C l i n i c a l Q u e s t i o n s H e l p G u i d e M e l a n o m a M a n a g e m e n t C h o o s i n g r i s k - a p p r o p r i a t e l e v e l o f m a n a g e m e n t i s k e y SLN = sentinel lymph node; SLNB =
Slide 12: DecisionDx-Melanoma: More Accurate Risk Assessments
Gerami et al. Clin Cancer Res 2015; Gerami et al. JAAD 2015; Zager et al. BMC Cancer 2018; Gastman et al. JAAD 2019 D e c i s i o n D x - M e l a n o m a : A f t e r D i a g n o s i s F o r M o r e A c c u ra t e R i s k A s s e s s m e n t s qPCR: open array card, 31-gene expression profile CM tumo
Slide 13: Problem One: Need for Better Stratification of Risk of Positive SLN
1Ellis et al. Am J Surg 2010; 2Bamboat et al. Ann Surg Oncol 2014; 3Morton et al. N Engl J Med 2014; 4Sondak et al. Ann Surg Oncol 2009; 5Moody et al. Eur J Surg Oncol 2017, SEER data release 2017 18% median false negative rate for nodal recurrence4 Majority of patients (~88%) subjected to a SLNB ar
Slide 14: DecisionDx-Melanoma Identifies Those at Low Risk for a Positive SLN
› DecisionDx-Melanoma i31-GEP accurately identifies low risk (<5%) of SLN positivity in patients with T1-T4 staged disease1 › i31-GEP accurately identifies patients within the 5-10% and >10% ranges of SLN positivity risk1 › In T1aHR cases, patients with a Class 2B (highest risk) could be more reliab
Slide 15: DecisionDx-Melanoma Is the Most Important Variable in Predicting SLN Positivity
1Whitman, JCO Precision Oncology, 2021 accepted for publication Variable Variable importance assessment function Log-likelihood value (G2) DecisionDx- Melanoma 100 Most important 91.3 P<.001 Breslow thickness 56 53.5 P<.001 Mitotic rate 25 20.7 P<.001 Ulceration 83 19.1 P<.001 Age 0 10.5 P=.001 Lowe
Slide 16: Vignette: Patient with T1b Melanoma
V i g n e t t e : Pa t i e n t W i t h T 2 b M e l a n o m a With the DecisionDx-Melanoma Class designation of Class 1A and an i31-GEP of 2.9%, this patient is within the range to forgo SLNB DecisionDx-Melanoma: Class 1A 31-GEP continuous score: 0.12 Likelihood of SLNB Positivity: 2.9% Likelihood of
Slide 17: Problem 2: Need for Improved Prognostic Accuracy
Text sources:1Poklepovic and Carvajal. ONCOLOGY 2018; 2Ribas et al. JAMA 2016; 3Schadendorf et al. Eur J Can 2017; 4Robert et al. J Clin Oncol 2017; 5Joseph et al. Clin Cancer Res 2018; 6SEER data release 2017; 7Whiteman et al. J Invest Dermatol 2015; 8Shaikh et al. J Natl Cancer Inst 2016 Graph sou
Slide 18: DecisionDx-Melanoma Is a Significant, Independent Predictor of Outcomes
0 1 2 3 4 5 6 7 8 9 10 Archival, Multi-center1 Disease-Free Survival Stage I-II AJCC high risk DecisionDx-Melanoma Class 2 0 5 10 15 20 25 30 Prospective, Multi-center4 Recurrence-Free Survival Stage I-II 0 1 2 3 4 5 6 7 8 9 10 Archival, Multi-center2 Melanoma Specific Survival Stage I-III 0 1 2 3 4
Slide 19: DecisionDx-Melanoma Further Stratifies Risk of Recurrence Beyond AJCC Staging
Low Risk Stage I-IIA High Risk Stage IIB-III NCCN Risk Category Prado et al. SKIN J Cutan Med 2018:suppl 2. n=690 D e c i s i o n D x - M e l a n o m a F u r t h e r S t ra t i f i e s R i s k O f Re c u r re n c e B e y o n d A J C C ( 8 T H E d . ) S t a g i n g 19 STAGE M el an o m a- Sp ec if ic
Slide 20: DecisionDx-Melanoma Changed Management for 50% of Patients
D e c i s i o n D x - M e l a n o m a C h a n g e d M a n a g e m e n t F o r 5 0 % O f Pa t i e n t s 1Berger, et al. 2016 Curr Med Res Opin; 2Dillon et al. 2018 Skin; 3Farberg et al. 2017 Jrnl Drugs Derm; 4Schuitevoerder, et al. 2018 Jrnl Drugs Derm. Changes in patient management include: Imaging
Slide 21: DecisionDx-Melanoma: Well-studied, Informs Cancer Management Decisions
D e c i s i o n D x - M e l a n o m a : We l l - s t u d i e d , I n fo r m s C a n c e r M a n a g e m e n t D e c i s i o n s * A c c o r d i n g t o s o r t s y s t e m , u s e d b y A A D Patients included in studies including independent validation >5,700 Peer-reviewed, published studies includ
Slide 22: Identifying the risk of metastasis in cutaneous squamous cell carcinoma
Identifying the risk of metastasis in patients with cutaneous squamous cell carcinoma with one or more risk factors
Slide 23: Patient Journey: Where DecisionDx-SCC Fits
Pa t i e n t J o u r n e y : W h e re D e c i s i o n D x - S C C F i t s 23 Patient referred to a dermatologist who performs a skin exam History and physical • Complete skin exam • Regional lymph node exam Skin biopsy Lesion suspicious for skin cancer discovered by patient or PCP Diagnosis of SCC w
Slide 24: Problem: The Unmet Need in High-Risk SCC Patients
~20% of SCC patients (200,000 annually) have one or more clinical or pathological risk factors, and a subset will develop metastasis They suffer the majority of SCC mortality These factors alone are often not specific enough to determine risk-appropriate treatment and further management P ro b l e m
Slide 25: Designed to Predict Individual Metastatic Risk
200,000 high-risk patients annually; $820M U.S TAM1 Validated in 420- patient cohort of high- risk SCC from 33 U.S. centers 5 peer-reviewed publications to date; Over 2,320 patients enrolled in studies to date from 110 centers D e s i g n e d To P r e d i c t I n d i v i d u a l M e t a s t a t i c
Slide 26: Workflow for DecisionDx-SCC
Wo r k f l o w F o r D e c i s i o n D x - S C C : P ro c e s s I d e n t i c a l To D e c i s i o n D x - M e l a n o m a qPCR: open array card 34 discriminant gene targets and 6 control genes Class 1 low metastatic risk (~50% of results)a Class 2A moderate metastatic risk (~40% of results) Class 2
Slide 27: DecisionDx-SCC Is Validated to Predict Metastatic Risk
M et as ta si s- fr ee s u rv iv al ( M FS ) Years Kaplan-Meier Estimated MFS n = 420 p < 0.0001 D e c i s i o n D x - S C C I s Va l i d at e d To P r e d i c t M e t a s ta t i c R i s k F o r I n d i v i d u a l S C C Pa t i e n t s W i t h O n e O r M o r e R i s k Fa c t o rs Wysong et al. JAAD
Slide 28: Class A and Class B Are Independent Predictors of Metastasis
C l a s s 2 A A n d C l a s s 2 B A r e I n d e p e n d e n t P r e d i c t o rs O f M e ta s ta s i s Deep invasion: beyond subcutaneous fat, depth >6mm, or Clark level V. Wysong et al. JAAD 2020; Ibrahim et al. submitted; Data on file, Castle Biosciences. W h a t i s t h e i m p a c t o f D e c i
Slide 29: Tests for melanocytic lesions of unknown malignant potential
Highly accurate and objective tests for melanocytic lesions of unknown malignant potential Comprehensive Diagnostic Offering Comprehensive Diagnostic Offering
Slide 30: Dermatopathologists and Dermatologists Work Together to Diagnose Melanoma
D e r m a t o p at h o l o g i s t s A n d D e r m a t o l o g i s t s Wo r k To g e t h e r To D i a g n o s e M e l a n o m a 30 Patient presents with mole to PCP or dermatologist Biopsy results received: • Positive for melanoma • Negative • Indeterminate If biopsy results show uncertain malignant
Slide 31: The Clinical Issue: Uncertainty Creates an Over- or Under-Treatment Dilemma
T h e C l i n i c a l I s s u e : U n c e r ta i n t y C r e a t e s A n O v e r - O r U n d e r - Tre a t m e n t D i l e m m a Definitive melanoma diagnoses (invasive or in situ) Definitive benign diagnoses SLNB Imaging Increased Follow-up No additional treatment Routine follow-up Clinically evalu
Slide 32: Comprehensive Diagnostic Offering Designed for Use Following IHC
C o m p re h e n s i v e D i a g n o s t i c O f fe r i n g I s D e s i g n e d F o r U s e F o l l o w i n g I m m u n o h i s t o c h e m i s t r y ( I H C ) A n d / O r L o c a l C o n s e n s u s Uncertain malignant potential IHC stains/recuts or local consensus conference/colleagues Uncertain m
Slide 33: Comprehensive Diagnostic Offering for Clarity in Clinical Decisions
*For purposes of reporting and consistency in the Comprehensive Diagnostic Offering, the term “indeterminate” will be now be referred to as “intermediate” for myPath Melanoma. **If both GEP tests result as intermediate, myPath Melanoma will be reported with a note stating that DiffDx- Melanoma was a
Slide 34: Leveraging the Strengths of myPath Melanoma and DecisionDx DiffDx-Melanoma
L e v e ra g i n g T h e S t r e n gt h s O f my Pa t h M e l a n o m a A n d D e c i s i o n D x D i f f D x - M e l a n o m a F o r T h e B e n e f i t O f Pa t i e n t C a r e Interpreted in the context of other clinical, laboratory and histopathologic information, the Comprehensive Diagnostic Of
Slide 35: Pipeline
Pipel ine 35
Slide 36: Expanding Castle's Genomic Tests to Non-Skin Cancer Medical Dermatology
Factors Defining Success Committed to dermatology and informing clinical management decisions Robust development pipeline and proven track record of AI-informed GEP algorithms Steering committee with world-class KOLs Large study investment for development and validation E x p a n d i n g C a s t l e
Slide 37: Patient Journey for Psoriasis, Atopic Dermatitis and Related Conditions
37 Patient presents with skin signs and symptoms to PCP or dermatologist Clinical diagnosis of psoriasis, atopic dermatitis or related condition is made Patient achieves faster treatment response time resulting in improved patient outcomes and QoL Personalized therapy guidance leads to reduced medic
Slide 38: Problem: The Unmet Need in Moderate to Severe Psoriasis and Atopic Dermatitis
P r o b l e m : T h e U n m e t N e e d I n M o d e r a t e To S e v e r e P s o r i a s i s A n d A t o p i c D e r m a t i t i s C o m m o n s k i n d i s e a s e s w i t h s i g n i f i c a n t p a t i e n t i m p a c t s a n d c o s t s t o h e a l t h c a r e s y s t e m Treatments are signific
Slide 39: The Standard of Care for Evaluating Metastatic Risk in Uveal Melanoma
The Standard of Care for Evaluating Metastatic Risk in Uveal Melanoma
Slide 40: DecisionDx-UM: Standard of Care
z D e c i s i o n D x - U M : S t a n d a r d O f C a r e ~2,000 patients diagnosed in the U.S. annually ~97% of patients – no evidence of metastatic disease at the time of diagnosis ~30% will develop metastases within 3 years Low-risk: ~67% Low Intensity Management High-risk: ~33% High Intensity Ma
Slide 41: Market And Financial Overview
Market And F inancial Overview
Slide 42: Test indications, reimbursement and addressable market
Indication/ Test outcome Trade Name Reimbursement Status Peer-Reviewed Publications Primary Customers Initial Launch Targets Initial addressable market, patients2 Estimated U.S. TAM Cutaneous melanoma/ Risk of metastasis MCR, MCRA Commercial – in process 30+ Derms (including Mohs), Surgeons __ ~130k
Slide 43: Recent Achievements and Expected Future Milestones
Re c e n t A c h i e v e m e n t s A n d E x p e c t e d F u t u re M i l e s t o n e s 2 0 2 1 m i l e s t o n e s o n t r a c k Oct 2020: LCD expansion finalized for DecisionDx-Melanoma, effective date 12/6/20 2021: Potential draft LCD for DecisionDx-SCC and DecisionDx DiffDx-Melanoma 2020 2021 20
Slide 44: Factors Driving Near- and Long-Term Growth
Fa c t o rs D r i v i n g N e a r - A n d L o n g - Te r m G ro w t h REVENUE PROFITABILITY PIPELINE Gross Margins • 83% in Q2 2021 • Continued margin expansion of existing products (increasing ASPs and efficiencies of scale) could be offset by uptake of pipeline products ahead of reimbursement New
Slide 45: Increase in Revenue in Q2, Driven by Test Report and ASP Growth
7 9 % I n c re a s e I n Re v e n u e I n Q 2 2 0 2 1 , D r i v e n B y Te s t Re p o r t A n d A S P G ro w t h * 2Q2019 2Q2020 2Q2021 Revenue *2Q2021 ASP growth over 2020 and 2019 $22.8m $12.7m $10.7m 45
Slide 46: Commitment to Diversity
Asian Black or African American Hispanic or Latino Two or more races (not Hispanic or Latino) White Othe (n t Hispanic r Latino) Female Male Female Male C o m m i t m e n t To D i v e rs i t y 46 37.3% 62.7% 68.2% 31.8% 79.1% 5% 9.5 4.9% 1.5% A ll Em p lo ye e s Ex ec u ti ve s E T H N I C I T Y/ R
Slide 47: Award-Winning Company
C o m m i t t e d t o c u l t i v a t i n g a c u l t u r e o f i n n o v a t i o n , c o n t i n u o u s g r o w t h a n d a d v a n c e m e n t A w a r d - W i n n i n g C o m p a ny 47 “Market Value, Market Return & Revenue Growth” Awarded for the DecisionDx®-SCC and DecisionDx® DiffDx™- Melanoma
Slide 48: Leading Dermatologic Diagnostics Company
Tr a n s f o r m i n g t h e m a n a g e m e n t o f s k i n c a n c e r a n d o t h e r d e r m a t o l o g i c d i s e a s e s w i t h h i g h u n m e t c l i n i c a l n e e d Expansive Body of Evidence Suite of Dermatologic Prognostic And Diagnostic Tests Strong Financial Position Robust Pipelin
Slide 49: Thank You
THANK YOU
Slide 50: Use of Non-GAAP Financial Measures (Unaudited)
U s e O f N o n - G A A P F i n a n c i a l M e a s u re s ( U n a u d i t e d ) 50 In this presentation, we use the metrics of Adjusted Revenue, Adjusted Gross Margin and Adjusted Operating Cash Flow, which are non-GAAP financial measures and are not calculated in accordance with generally accepted
Slide 51: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Re c o n c i l i a t i o n O f N o n - G A A P F i n a n c i a l M e a s u r e s ( U n a u d i t e d ) The table below presents the reconciliation of adjusted revenue and adjusted gross margin, which are non-GAAP measures. See "Use of Non-GAAP Financial Measures (UNAUDITED)" on the previous slide fo
Slide 52: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Re c o n c i l i a t i o n O f N o n - G A A P F i n a n c i a l M e a s u r e s ( U n a u d i t e d ) The table below presents the reconciliation of adjusted operating cash flow, which is a non-GAAP measure. See "Use of Non-GAAP Financial Measures (UNAUDITED)" on the previous slide for further info
Slide 53: Appendix
APPENDIX
Slide 54: Leadership Team Overview
Stuart Pharmaceuticals Robert Cook, PhD Senior Vice President, Research & Development L E A D E RS H I P T E A M O V E RV I E W M A N A G E M E N T T E A M Derek Maetzold Founder, Director, President and CEO Frank Stokes Chief Financial Officer Bernhard Spiess Chief Business Officer Toby Juvenal Chi