Castle Biosciences, Inc. · NASDAQ:CSTL
Castle Biosciences — Q2 2022 Earnings Presentation
54 slides from Castle Biosciences's earnings presentation, Aug 8, 2022
Slide 1: Transforming Disease Management
Tr a n s fo r m i n g D i s e a s e Management August 8, 2022
Slide 2: Disclaimers
Disclaimers FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements 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 amended, which are subject to the “safe harbor” created by those sectio
Slide 3: Mission, Vision, Values
MISSION: Improving health through innovative tests that guide patient care VISION: To transform disease management by keeping people first: patients, clinicians, employees and investors VALUES: ExCIITE: Excitement, Collaboration, Integrity, Innovation, 3 Trust and Excellence
Slide 4: Castle Remains Focused on Transforming Disease Management
Castle Remains Focused on Transforming Disease Management S t ra te g i c p r i n c i p l e s t h a t c re a te v a l u e fo r c u s t o m e rs , p a t i e n t s a n d s t o c k h o l d e rs Address areas Leverage advanced Provide robust data to Accelerate test with unmet technologies to support the
Slide 5: Answering Clinical Questions to Guide Care Along the Patient Journey
Answering Clinical Questions to Guide Care Along the Patient Journey O u r fo c u s i s o n d i a g n o s t i c , r i s k s t ra t i f i c a t i o n a n d t h e ra p y re s p o n s e a re a s o f t h e p a t i e n t c a re c o n t i n u u m Inflammatory Dermatology Therapy Response Pipeline Test Mel
Slide 6: Financial Performance Summary Q2 2022
Financial Performance Summary Q2 2022 2Q21 2Q22 Total test reports 7,007 11,034 Total Derm test reports 6,539 9,424 Revenue $22.8M $34.8M Adj. Revenue1 $22.9M $34.3M Gross Margin 82.6% 71.9% Adj. Gross Margin1 83.9% 77.6% Operating Cash Flow $(6.4)M $(9.0)M Adj. Operating Cash Flow1 $(4.3)M $(9.0)M
Slide 7: Q2 2022 Operating Expenses
Q2 2022 Operating Expenses E xe c u te d p l a n n e d i n v e s t m e n t s t o s u p p o r t o u r g ro w t h i n i t i a t i v e s fo r l o n g - te r m va l u e c re a t i o n Operating Expense by Quarter1 Key Drivers for Q2 2022 OpEx • Cost of Sales – Higher personnel costs due to headcount add
Slide 8: Key Q2 and Recent 2022 Accomplishments
Key Q2 and Recent 2022 Accomplishments Draft foundational LCD for melanoma diagnostic tests published providing Achieved strong growth over Q2 2021, in our total test report volume coverage criteria for DiffDx-Melanoma; expect finalization by end of Q2 (+57%) and revenue (+53%) 2023; current coverag
Slide 9: Commercially Available Tests Serve an Estimated ~$8B U.S. TAM
Our Commercially Available Tests Now Serve an Estimated ~$8B U.S. Total Addressable Market 1 Dermatology Gastroenterology Mental Health Cutaneous Cutaneous squamous Suspicious pigmented Barrett’s esophagus/ Mental health therapy melanoma/ cell carcinoma/ lesions/melanoma risk of progression to respo
Slide 10: Driving Long-Term Growth through our Foundational Strategy
Driving Long-Term Growth through our Foundational Strategy: Strong Core Derm Business, Pipeline Initiatives and Strategic Opportunities Near-to Mid-term Growth Mid-to Long-term Growth 2022-2024 2024 and beyond Dermatology Gastrointestinal Dermatology Gastrointestinal Mental Health Strategic Opportun
Slide 11: Operational Growth Pillars
Operational Growth Pillars C o n s i s te n t e xe c u t i o n f u r t h e rs o u r l e a d i n g p o s i t i o n i n d e r m a t o l o g y a n d i n t h e D x s p a c e Strong Core Derm Business Pipeline Initiatives Strategic Opportunities + + • Continuing provider education • Ability to answer cli
Slide 12: Accelerating Investments in Clinical Development
Accelerating Investments in Clinical Development O n g o i n g s t u d i e s t o g e n e ra te d a ta t h a t s u p p o r t s t h e c l i n i c a l va l u e o f o u r te s t s a n d p ro v i d e r a n d p aye r a d o p t i o n 3 Ongoing studies1 5 Ongoing studies 3 Ongoing studies 1 Ongoing study 3
Slide 13: Our Core Derm Business is Strong
O u r C o re D e r m B u s i n e s s i s S t ro n g
Slide 14: Strong Core Derm Business Pillar of Growth
Strong Core Derm Business Pillar of Growth Additional dedicated commerical sales representatives for Optimizing commercial team Castle’s Diagnostic GEP offering, MyPath and DiffDx- Melanoma, planned for mid- Q3 2022 Expanded NCI/SEER study shows patients diagnosed with melanoma and tested with Decis
Slide 15: First-to-Market Dermatologic Franchise, Additional Growth Opportunities
First-to-Market Dermatologic Franchise, Additional Growth Opportunities Diagnostic Support Risk Stratification Therapy Response1 Inflammatory Skin Disease Therapy Response Pipeline Strong provider growth and continued adoption with ~2,280 new ordering clinicians and ~6,960 unique ordering clinicians
Slide 16: DecisionDx-Melanoma: Precision Risk Stratification
DecisionDx-Melanoma: Precision Risk Stratification Based on an Individual Patient ’s Tumor Biology Informs Treatment Plans Market Snapshot Clinical Questions Clinical Utility Transforming Disease Management (post-melanoma diagnosis) DecisionDx-Melanoma could result in 74% Is the risk of SLN-positivi
Slide 17: Current Melanoma Staging Misses Patients with Aggressive Tumor Biology
Current Melanoma Staging Misses Patients with Aggressive Tumor Biology Stage at Diagnosis Melanoma Deaths by Stage at Diagnosis Stage I Stage I 34% Stage II The majority of 80% 26% melanoma deaths 92% 60% occur in patients who Stage I or II 12% Stage II Stage I or II were diagnosed at 8% Stage I or
Slide 18: DecisionDx-Melanoma Is Supported by Significant Scientific Evidence
DecisionDx-Melanoma Is Supported by Significant Scientific Evidence 9,000+ 35+ 105,000+ Total patients included in studies Peer-reviewed, published studies Patients with a clinical including including prospective studies and 2 DecisionDx-Melanoma order independent validation meta-analyses from 10,20
Slide 19: NCI/SEER Data Linked with DecisionDx-Melanoma Test Results
NCI/SEER Data Linked with DecisionDx -Melanoma Test Results D a ta a n a l y s i s o f a c o h o r t o f re a l - w o r l d , u n s e l e c te d , p ro s p e c t i ve l y te s te d p a t i e n t s w i t h c u ta n e o u s m e l a n o m a 3-year MSS (95% CI) Deaths, % (n/N) Benefit in MSS in patients
Slide 20: DecisionDx-Melanoma Survival Outcomes Favorable Relative to Other Tests
DecisionDx-Melanoma Disease Specific Survival Outcomes are Favorable Relative to Other Tests Sentinel lymph node biopsy (SLNB) Tumor size P-value 10-yr MSS • SLNB is a risk-stratification surgical procedure “test” in melanoma Thin (<1.2mm) Not reported Not impacted Intermediate (1.2-3.5mm) not signi
Slide 21: Patients with Melanoma Desire Testing with DecisionDx-Melanoma
Patients with Melanoma Desire Testing with DecisionDx -Melanoma 90% 92% 77% Wanted prognostic Felt the testing Wanted testing to information about their was useful obtain all of the melanoma tumors at information they could diagnosis about their melanoma NONE of the patients surveyed indicated decis
Slide 22: DecisionDx-SCC: Delivering Precision Patient Classification
DecisionDx -SCC: Delivering Precision Patient Classification and Informing Squamous Cell Carcinoma Management Decisions within Established Guidelines Market Snapshot Clinical Question Clinical Utility Transforming Disease Management (post-SCC diagnosis) Strongest independent predictor of SCC metasta
Slide 23: DecisionDx-SCC Can Inform Risk-Appropriate Management
DecisionDx-SCC Can Inform Risk -Appropriate Management to Guide Patient Care 1 or more 40 1,010+ Validated to determine the biological Quantifies expression of 40 genes Validated across 2 independent risk of metastasis for SCC patients from primary tumor using RT-PCR studies spanning 1,018 patients1
Slide 24: Castle's Diagnostic GEP Offering Aids Diagnosis of Ambiguous Lesions
C a s t l e ’s D i a g n o s t i c G E P O f f e r i n g C a n A i d i n t h e D i a g n o s i s a n d I n f o r m Management Decisions for Patients with Ambiguous Melanocytic Lesions Market Clinical Question Clinical Utility Transforming Disease Management Snapshot When the potential for malignancy
Slide 25: Castle's Diagnostic GEP Tests Provide Objective and Accurate Information
C a s t l e ’s D i a g n o s t i c G E P Te s t s P r o v i d e O b j e c t i v e a n d A c c u r a t e Information for More Informed Patient Care 41,000+ 2 8+ Lesions clinically tested Independently validated GEP tests Years of clinical testing experience to aid in diagnosis and guide patient manag
Slide 26: Diagnosing Melanoma, the Clinical Issue: Over- or Under-Treatment Dilemma
Diagnosing Melanoma, the Clinical Issue: Uncertainty Creates a n O v e r - o r U n d e r - Tr e a t m e n t D i l e m m a Histopathologic Staging, surveillance, Clinically evaluated Primary treatment and follow-up options evaluation suspicious pigmented lesions SLNB Definitive melanoma diagnoses (in
Slide 27: Strategic Opportunities
Strategic Opportunities
Slide 28: Cernostics Acquisition Aligns with Strategic Opportunities Goals
Cernostics Acquisition Aligns with Our Strategic Opportunities Goals Integ rat io n exp ec ted to b e a mean in g fu l reven u e cont rib utor in 2 0 2 4 Innovative test that addresses a high unmet Is this patient with Barrett’s Esophagus at a clinical need higher or lower risk of progression to HGD
Slide 29: TissueCypher: Predicts Development of Esophageal Cancer in Barrett's Esophagus
TissueCypher: Designed to Independently Predicts Development of E s o p h a g e a l C a n c e r i n P a t i e n t s w i t h B a r r e t t ’s E s o p h a g u s ( B E ) Market Snapshot Clinical Decision Point Clinical Utility Transforming Disease Management Strongest predictor of progression to Provid
Slide 30: TissueCypher Improves Risk Prediction Over Pathology Alone
TissueCypher Can Contribute Significant Improvements in Risk Prediction Over Pathology Alone 18% 16% 14% 5-Year Risk of Progression 12% EET or 6–12 month Surveillance2 10% 8% 6% 1-year Surveillance2 4% 2% 3–5-year Surveillance3,4 0% NDBE LGD/IND NDBE1 IND1 LGD1 LGD/IND NDBE (Low-Risk)* (Low-Risk)* (
Slide 31: TissueCypher: Significant 2022 Milestones Achieved, Integration On Track
Ti ssueCypher : Si gnificant 2022 Mi l estones Already Ac hieved, I ntegration On Track Ea r l y T i s s u e C y p h e r p e r fo r m a n c e e xc e e d i n g o u r e x p e c ta t i o n s Q2 2022 December 6, April 2022 Laboratory expansion Ongoing 2022+ 2021 Publication of efforts underway, Sept. 20
Slide 32: AltheaDx Acquisition Aligns with Strategic Opportunities Goals
AltheaDx Acquisition Aligns with Our Strategic Opportunities Goals Ea r l y fe e d b a c k c o n s i s te n t w i t h p re - d e a l w o r k , ex p e c t I D g e n e t i x t o b e a m e a n i n g f u l re v e n u e contributor in 2024 Competitive, innovative test that addresses a Which medication is
Slide 33: IDgenetix: Integration Beginning, Significant Milestones Achieved
IDgenetix: Integration Beginning, Significant Milestones Already Achieved June 2022 April 26, 2022 Sales training to align Q2-Q3 2022 Announced close mental health Initiating integration of Q2 2022 of AltheaDx commercial team with internal functions (e.g., April 4, 2022 Commercial acquisition May 20
Slide 34: IDgenetix: Guide Evidence-Based Decisions on the Optimal Drug
IDgenetix: Designed to Guide Timely and Evidence -Based Decisions on the Optimal Drug for Each Patient Market Snapshot Clinical Decision Point Clinical Utility Transforming Disease Management Randomized controlled trial showed a greater than 2.5 times improvement in remission rates for patients with
Slide 35: Enhanced Therapeutic Efficacy vs. Standard of Care
E n hanced T h e rapeuti c Eff i cacy vs . S ta ndard o f C a re Clinical Trial Design Response Rate Control Remission Rate ≥ 50% Reduction from Baseline IDgenetix Back to Normal 73% • Randomized Controlled Trial (RCT) 35% • Peer-reviewed and published in the 55% Journal of Psychiatric Research 25%
Slide 36: IDgenetix Testing Process Consists of Three Important Steps
I D g e n e t i x Te s t i n g P r o c e s s C o n s i s t s o f T h r e e I m p o r t a n t S t e p s 1 2 3 Drug Metabolism Drug Response Algorithmic Genotyping Genotyping Screening Screens for metabolic interactions Analyzes patient-specific genetic PROCESS PROCESS PROCESS Analyzes patient-specifi
Slide 37: Uveal Melanoma
Uveal Melanoma
Slide 38: DecisionDx-UM: Standard of Care in Uveal Melanoma
DecisionDx-UM: the Standard of Care in the Management of Newly Diagnosed Uveal Melanoma Market Snapshot Clinical Decision Point Clinical Utility Transforming Disease Management Key statistics about uveal melanoma: • ~2,000 patients diagnosed in the U.S. annually • ~97% of patients – no evidence of m
Slide 39: Pipeline Initiatives
Pipeline Initiatives 39
Slide 40: Continued Execution on Pipeline Initiatives as a Pillar of Growth
Continued Execution on Pi peline I nitiatives as a Pi l lar of Growth Inflammatory skin disease pipeline test designed to answer Ability to answer clinical questions/impact patient care a clinical question for patients with inflammatory skin conditions: which systemic therapy is best for each patien
Slide 41: Targeting the Unmet Need in Moderate-to-Severe Psoriasis and Atopic Dermatitis
Inflammatory Pipeline Test Targeting the Unmet Need in Moderate -to-Severe Psoriasis and Atopic Dermatitis 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 re sy s te m Psoriasis (PSO) and Atopic Dermatitis (AD) are amo
Slide 42: Inflammatory Skin Disease Pipeline Test to Predict Systemic Therapy Response
Inflammatory Pipeline Test Castle’s Inflammatory Skin Disease Pipeline Test Is Being Developed to Predict Systemic Therapy Response – IDENTITY Study 54 Committed Sites 303 Patients Enrolled Program Milestones Q2-Q32021 Q32021 Q22022 2023 2025 Steering committee First patient Proof of RNA Initial val
Slide 43: Environmental, Social and Governance (ESG)
E nv i ron me nta l , S o c i a l a n d G over n a n ce ( ES G )
Slide 44: ESG Focus Areas for 2022 and Beyond
ESG Focus Areas for 2022 and Beyond Environmental policy Environmental metrics DEI mission statement DEI metrics DEI action plan/roadmap Vendor code of conduct/supplier standard 44 In 2022, Castle Biosciences received a rating of AA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment. 44
Slide 45: Commitment to Diversity
Commitment to Diversity E T H N I C I T Y/ R A C E GENDER 20.4% CAUCASIAN HISPANIC OR LATINO All Employees 3.5% ASIAN 35.4% FEMALE 4.6% 64.3% MALE BLACK OR AFRICAN- 64.6% AMERICAN 7.2% TWO OR MORE RACES (NOT HISPANIC OR LATINO) 3.6% TOTAL EMPLOYEES = 345 Executives CAUCASIAN 21.4% 35.7% FEMALE OTHER
Slide 46: Thank You
THANK YOU
Slide 47: Use Of Non-GAAP Financial Measures (Unaudited)
Use Of Non-GAAP Financial Measures (Unaudited) 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 accounting principles in the United
Slide 48: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non -GAAP Financial Measures (Unaudited) The table below presents the reconciliation of adjusted revenue and adjusted gross margin, which are non-GAAP financial measures. See "Use of Non- GAAP Financial Measures (UNAUDITED)" on the previous slide for further information regarding t
Slide 49: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non -GAAP Financial Measures (Unaudited) The table below presents the reconciliation of adjusted operating cash flow, which is a non-GAAP finanical measure. See "Use of Non- GAAP Financial Measures (UNAUDITED)" on the previous slide for further information regarding the Company's u
Slide 50: Appendix
APPENDIX
Slide 51: Castle Biosciences Is Improving Health through Innovative Tests
C a s t l e B i o s c i e n c e s I s I m p r o v i n g H e a l t h t h r o u g h I n n o v a t i v e Te s t s T h a t Guide Patient Care Dermatology Uveal Melanoma Gastroenterology Mental Health Portfolio of innovative tests designed to guide patient care 51
Slide 52: Improving Health through Innovative Tests that Guide Patient Care
Improving Health through Innovative Tests that Guide Patient Care Castle Team A Diagnostic Leader Robust Data Supporting our Tests Peer-reviewed publications 482 Total employees Strong financial position, driven by investments in our growth pillars and commercial excellence 35+ 10 Diversified portfo
Slide 53: Leadership Team Overview
L e a d e r s h i p Te a m O v e r v i e w BOARD OF DIRECTORS MANAGEMENT TEAM B O A R D O F D I R E C TO R S Derek Maetzold Dan Bradbury Founder, Director, President and CEO Frank Stokes Derek Maetzold Chief Financial Officer Stuart Mara Aspinall Toby Juvenal Pharmaceuticals Chief Commercial Officer
Slide 54: Award-Winning Company
Award-Winning Company C o mmitted to c u lt ivat in g a c u lt u re o f in n ovat io n, co nt in u ous g rowt h a n d a d va n ce me nt 2019 Technology Innovation in Melanoma Award Winner 54