Castle Biosciences, Inc. · NASDAQ:CSTL
Castle Biosciences — Q3 2021 Earnings Presentation
54 slides from Castle Biosciences's earnings presentation, Nov 8, 2021
Slide 1: Applying innovative diagnostics to inform disease management decisions
N o v e m b e r 8 , 2 0 2 1 A p p l y i n g i n n o v a t i v e d i a g n o s t i c s t o i n f o r m d i s e a s e m a n a g e m e n t d e c i s i o n s
Slide 2: Disclaimers: Forward-Looking Statements
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
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 4: Financial Summary
F i n a n c i a l S u m m a r y 3 Q 2 0 2 1 3Q21 3Q20 Revenue $23.5M $15.2M Adj. Revenue1 $23.6M $13.8M Total GEP test reports2 7,727 4,779 Total Derm test reports2 7,352 4,461 Operating Cash Flow $(6.1)M $(3.0)M Adj. Operating Cash Flow1 $(3.0)M $(3.0)M Gross Margin 78% 84% Adj. Gross Margin1 81% 8
Slide 5: Test portfolio, reimbursement status and estimated U.S. TAM
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 to Acquire Cernostics
• Acquisition of Cernostics brings a first-to-market risk stratification test for use in patients with Barrett’s Esophagus: • Significant evidence: 6 validation and performance studies with TissueCypher • Medicare paid with a Clinical Laboratory Fee Schedule rate of $2,513 • Clinical use study demon
Slide 8: Cernostics Transaction and Transition Snapshot
Level 1A evidence* 1A 8 C e r n o s t i c s Tra n s a c t i o n a n d Tra n s i t i o n S n a p s h o t Expect to hire a GI commercial team with 13-15 outside sales territories; reporting to Castle’s Chief Commercial Officer 1 up to Castle's sole discretion 2milestones related to revenue and reimbur
Slide 9: Castle's Revenue Growth Story
2022/2023 C a s t l e ’s Re v e n u e G ro w t h S t o r y 9 2021 (Expanded LCD effective Dec 2020) (Potential LCD effective in 2023) (Acquired in May 2021; LCD in effect) (Potential LCD effective in 2023) Pipeline Expansion 2025 (Expected launches ~2025) Cutaneous Melanoma Squamous Cell Carcinoma S
Slide 10: Informing clinical decision making for patients with invasive melanoma
Informing clinical decision making for patients with invasive melanoma
Slide 11: 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 11 Patient
Slide 12: Following Diagnosis, 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 13: DecisionDx-Melanoma: After Diagnosis For 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 14: Problem 1: 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 15: DecisionDx-Melanoma Identifies Those At Low Risk For A Positive SLN
› DecisionDx-Melanoma i31-SLNB accurately identifies low risk (<5%) of SLN positivity in patients with T1-T4 staged disease1 › i31-SLNB 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 reli
Slide 16: 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 17: Introducing i31-Risk Of Recurrence (ROR)
17 I n t r o d u c i n g i 3 1 - R i s k O f R e c u r r e n c e ( R O R ) I n t e g r a t i n g t h e D e c i s i o n D x - M e l a n o m a s c o r e w i t h c l i n i c o p a t h o l o g i c f a c t o r s i n a v a l i d a t e d a l g o r i t h m Gerami et al. Clin Cancer Res 2015; Gerami et al. J
Slide 18: AJCC Only Provides Population-Based Melanoma-Specific Survival
Observed outcomes in the patient population. AJCC Stage 5-year RFS 5-year DMFS 5-year MSS AJCC 5-year MSS (%) Observed % (95% CI) I 93.4% 95.3% 98.6% 98% Observed % (95% CI) II 68.2% 76.9% 91.3% 90% Observed % (95% CI) III 52.0% 57.6% 77.3% 77% Midpoint IIA/IIB >69.8%: Low-risk ≤69.8%: High-risk >82
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 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 2 4 6 8 10 12 14 16 18 20 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
Slide 21: 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 22: 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 >6,000 Peer-reviewed, published studies includ
Slide 23: 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 24: 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 24 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 25: 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 26: 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 have been 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
Slide 27: 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 28: 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 29: 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 30: Comprehensive Diagnostic Offering for melanocytic lesions
Highly accurate and objective tests for melanocytic lesions of unknown malignant potential Comprehensive Diagnostic Offering Comprehensive Diagnostic Offering
Slide 31: 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 31 Patient presents with mole to PCP or dermatologist Biopsy results received: • Positive for melanoma • Negative • Indeterminate If biopsy results show uncertain malignant
Slide 32: 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 33: Comprehensive Diagnostic Offering Improves Clinically Actionable Reporting
*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 portfolio, reimbursement status and estimated U.S. TAM
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 1Q2022: Potential draft LCD for DecisionDx-SCC and DecisionDx DiffDx-Melanoma 2020 2021
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 • 78% in Q32021; 81% adjusted gross margin • Continued margin expansion of existing products (increasing ASPs and efficiencies of scale) could be offset by uptake of pipeline products a
Slide 45: Consistent Execution On Growth Initiatives Helps Enable Long-term Revenue Growth
45 C o n s i s t e n t E x e c u t i o n o n G r o w t h I n i t i a t i v e s H e l p s E n a b l e L o n g - t e r m R e v e n u e G r o w t h E x p e c t e d r e v e n u e g r o w t h 2 0 1 7 t o 2 0 2 1 C A G R ~ 6 0 % 2017 2018 2019 2020 2021 $22.8m $51.9m $62.6m $89-93m1 $13.8m 1 Castle guidan
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™- Melanom
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 r e 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 accepte
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