Castle Biosciences, Inc. · NASDAQ:CSTL
Castle Biosciences — Q3 2022 Earnings Presentation
54 slides from Castle Biosciences's earnings presentation, Nov 2, 2022
Slide 1: Transforming Disease Management
Transforming Disease Management November 2, 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: Financial Performance Summary Q3 2022
Financial Performance Summary Q3 2022 Nine Months Ended 3Q21 3Q22 September 30, 2022 Total test reports 7,727 12,114 31,775 Total Derm test reports 7,352 9,824 27,363 Revenue $23.5M $37.0M $98.7M Adj. Revenue1 $23.6M $37.3M $100.6M Gross Margin 77.9% 69.8% 71.1% Adj. Gross Margin1 80.9% 76.2% 77.6%
Slide 4: Mission Vision Values
Mission Vision Values Improving health To transform disease ExCIITE: Excitement, through innovative management by keeping Collaboration, tests that guide people first: patients, Integrity, Innovation, patient care clinicians, employees Trust and Excellence and investors 4
Slide 5: Castle Is Focused on Improving Health through Innovative Tests That Guide Patient Care
Castle Is Focused on Improving Health through Innovative Tests That Guide Patient Care Dermatology Uveal Melanoma Gastroenterology Mental Health Answering clinical questions to guide care along the patient journey 5
Slide 6: Three Strategic Guideposts That Create Value for Customers, Patients and Stockholders
Three Strategic Guideposts That Create Value for Customers, Patients and Stockholders Customer & Solution Centric We value best-in-class customer experience at all points along the testing journey, and we leverage multiple solutions for a single customer to provide a single source of high quality mo
Slide 7: Driving Long-Term Growth through Strong Execution and our Operational Guideposts
Driving Long-Term Growth through Strong Execution and our Operational Guideposts Exceptional Employees, Continuous Evolution & Improvement and Customer & Solution Centric Near- to Mid-term Growth Mid- to Long-term Growth Strategic Mental Health Opportunities Mental Health Gastrointestinal Gastrointe
Slide 8: Answering Clinical Questions to Guide Care along the Patient Journey
Answering Clinical Questions to Guide Care along the Patient Journey Our focus is on diagnostic support, risk stratification and therapy response areas of the patient care continuum MRD/Recurrence PATIENT CARE JOURNEY Screening Diagnostic Support Risk Stratification Therapy Resource Monitoring Infla
Slide 9: Estimated ~$8B U.S. Total Addressable Market for Commercially Available Tests
Estimated ~$8B U.S. Total Addressable Market1 for Commercially Available Tests Dermatology Gastroenterology Mental Health Cutaneous melanoma/ Cutaneous squamous cell Suspicious pigmented Barrett’s esophagus/risk of progression to risk of metastasis, SLNB Mental health therapy response carcinoma/risk
Slide 10: Committed to Delivering Long-term Growth with Net Operating Cash Flow Positivity by 2025
Committed to Delivering Long-term Growth with Net Operating Cash Flow Positivity by 2025 Three-year plan (2025) 25-35% year-over-year growth1; Revenue Total revenue in 2025 of $255m-$330m Adjusted Gross Margins 80%-85% by 2025 Other Operating Expenses2 75%-85% of revenue by 2025 Net Operating Cash F
Slide 11: Q3 2022 Operating Expenses
Q3 2022 Operating Expenses Executed planned investments to support our growth initiatives for long-term value creation Operating Expense by Quarter1 Key Drivers for Q3 2022 OpEx • Cost of Sales – Higher personnel costs due to headcount additions, particularly in our laboratories related to recent ac
Slide 12: Key Q3 and Recent 2022 Accomplishments
Key Q3 and Recent 2022 Accomplishments Achieved strong growth over Q3 2021 Presented three-year financial targets AGA Clinical Practice Update in total revenue (+58%) and achieved and strategic guideposts at 2022 released with best practice advice a new record in total test report Investor Day for t
Slide 13: Expected Upcoming Milestones
Expected Upcoming Milestones Expected publication of Expected finalization of Expect new GI collaborative NCI study showing Palmetto/Noridian LCD for DiffDx- and MyPath/DiffDx commercial higher melanoma specific survival Melanoma by end of Q2 2023; team expansion to reach optimal for patients tested
Slide 14: 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 ~2,335 new ordering clinicians and ~9,155 unique ordering clinicians
Slide 15: DecisionDx-Melanoma
C/ASTLE BIOSCIENCES Decision Dx > Melanoma
Slide 16: Traditional Approaches to Staging Melanoma Miss Patients with Aggressive Tumor Biology
Traditional Approaches to Staging Melanoma Miss Patients with Aggressive Tumor Biology *Excludes stage IV AJCCv7 J Clin Oncol 2009. SEER data release 2017. Ibrahim et al. Ann Surg Oncol 2020. 16
Slide 17: DecisionDx-Melanoma Provides Answers for Two Critical Clinical Questions
DecisionDx-Melanoma Provides Answers for Two Critical Clinical Questions Individual Breslow Risk of Thickness Sentinel Ulceration Mitotic Rate Lymph Age Node Positivity DecisionDx- Melanoma Neural network Class Result with AI algorithm Breslow Thickness Individual Ulceration Risk of Mitotic Rate Rec
Slide 18: DecisionDx-Melanoma GEP Has Consistent and Independent Evidence of Prognostic Value
DecisionDx-Melanoma GEP Has Consistent and Independent Evidence of Prognostic Value across Studies 100 RFS HR RFS (95% CI) HR DMFS (95% CI) FEATURE p-value p-value 80 % Recurrence Free Breslow thickness (per mm) 1.12 (1.03-1.22), p=0.01 1.14 (1.02-1.26), p=0.02 60 40 Ulceration 1.63 (1.18-2.25), p=0
Slide 19: Collaboration with the National Cancer Institute
Collaboration with the National Cancer Institute Linking DecisionDx-Melanoma clinical testing with patients captured in the NCI-SEER Registry
Slide 20: NCI/SEER Data Linked with DecisionDx-Melanoma Test Results
NCI/SEER Data Linked with DecisionDx-Melanoma Test Results Data analysis of a cohort of real-world, unselected, prospectively tested patients with cutaneous melanoma 3-year OS (95% CI) Deaths, % (n/N) 31-GEP Tested 93.1% (92.0-94.2%) 4.8% (174/3,621) Benefit in Overall Survival (OS) in 21% patients
Slide 21: DecisionDx-Melanoma Disease Specific Survival Outcomes are Favorable Relative to Other Tests
DecisionDx-Melanoma Disease Specific Survival Outcomes are Favorable Relative to Other Tests Tumor size P-value 10-yr MSS Sentinel lymph node biopsy (SLNB) Thin (<1.2mm) Not reported Not impacted • SLNB is a risk-stratification surgical procedure “test” in melanoma Intermediate (1.2-3.5mm) not signi
Slide 22: Patients with Melanoma Desire Testing with DecisionDx-Melanoma
Patients with Melanoma Desire Testing with DecisionDx-Melanoma Data from a patient study conducted in collaboration with the Melanoma Research Foundation 90% 92% 77% 54% Wanted prognostic Wanted testing to obtain all Of the patients who did not receive information about their Felt the testing was us
Slide 23: DecisionDx-Melanoma Is Supported by Significant Scientific Evidence
DecisionDx-Melanoma Is Supported by Significant Scientific Evidence 9,000+ 36+ 112,820+ Total patients included in studies Peer-reviewed, published studies Patients with a clinical including independent including prospective studies DecisionDx-Melanoma order validation and 2 meta-analyses from 10,75
Slide 24: DecisionDx-SCC
C/ASTLE BIOSCIENCES Decision Dx »SCC
Slide 25: Cutaneous Squamous Cell Carcinoma Is an Emerging Problem in the U.S.
Cutaneous Squamous Cell Carcinoma Is an Emerging Problem in the U.S. • Managing SCC is a significant clinical issue as deaths from SCC are now estimated to exceed those from melanoma DEATHS PER YEAR IN THE U.S. • Because cancer treatment plans and their outcomes are guided by ~7,650 risk for metasta
Slide 26: How is Risk Assessment Traditionally Done for SCC Patients?
How is Risk Assessment Traditionally Done for SCC Patients? • The SCC community uses the term “high-risk” SCC to describe different patient >2 cm3, populations Deep3 (broad definition), BWH4 T2a BWH4 T2b • Current SCC staging fails to PNI3 (broad def’), Any 1 of: Any 2-3 of: NCCN1 HR >2 cm, >2 cm, i
Slide 27: DecisionDx-SCC Predicts Metastatic Risk For SCC Patients With One Or More Risk Factors
DecisionDx-SCC Predicts Metastatic Risk For SCC Patients With One Or More Risk Factors Class 1: Low Biological Risk Less than half the general study population risk • Quantifies expression of 40 genes from primary SCC tumor using RT-PCR Class 2A: patients Moderate Biological with one or • Applies a
Slide 28: DecisionDx-SCC Is Validated To Predict Metastatic Risk
Decisiondx-scc Is Validated To Predict Metastatic Risk For Individual SCC Patients With One Or More Risk Factors Kaplan-Meier Estimated MFS Class 1 – Low Biological Risk <7% risk of metastasis; Less than half the general study population risk Metastasis-free survival Class 2A – Moderate Biological R
Slide 29: MyPath DiffDx Melanoma
C/ASTLE BIOSCIENCES MyPath_ DiffDx >Melanoma
Slide 30: Unmet Need in Patients with a Difficult-to-Diagnose Pigmented Lesion
Unmet Need in Patients with a Difficult-to-Diagnose Pigmented Lesion The Clinical Problem These difficult-to-diagnose Of the estimated two million lesions are commonly sent Diagnostic ambiguity can suspicious pigmented lesions for second opinions to lead to clinical management A clinical hurdle for
Slide 31: Diagnostic GEP is Designed to Provide Clinically Actionable, Objective Results
Diagnostic GEP is Designed to Provide Clinically Actionable, Objective Results for Nearly All Patients Benign Benign Intermediate or Intermediate or Technical Failure Technical Failure (22.2%) (1.3%) Malignant Malignant >98% By leveraging our second GEP test, >98% of patients with ambiguous melanocy
Slide 32: TissueCypher Barrett's Esophagus
C/ASTLE BIOSCIENCES TissueCypher > Barrett's Esophagus
Slide 33: 435,000 Barrett's Esophagus Related Endoscopies Per Year
435,000 Barrett’s Esophagus Related Endoscopies Per Year Expert Pathology Need for additional risk stratification tools NDBE 50% of annual progressors are initially (0.63%) (0.80%) 50% diagnosed as non-dysplastic1 Pathology (% progression/year) IND (1.5%) Up to 85% of low-grade patients are downgrad
Slide 34: TissueCypher is a Risk Stratification Tool for Patients with Barrett's Esophagus
TissueCypher is a Risk Stratification Tool for Patients with Barrett's Esophagus Biomarkers and Spatial Biology Clinical Validation Molecular biomarkers to detect Peer-reviewed publications that changes in the context of tissue demonstrate the effectiveness of structure prior to morphologic the test
Slide 35: The World's First Prognostic AI-driven Precision Medicine Test for Barrett's Esophagus
The World’s First Prognostic AI-driven Precision Medicine Test for Barrett's Esophagus Individualize 5-year risk of progression to HGD or EAC • Indicated for NDBE, IND, and LGD • High Risk score enables increased surveillance or early intervention to prevent cancer • Low Risk score minimizes over tr
Slide 36: TissueCypher Is the Strongest Independent Predictor of Progression
TissueCypher Is the Strongest Independent Predictor of Progression Original Pathologic Diagnosis TissueCypher HR = 7.7 (high- vs. low-risk) p<0.0001 HR = 2.8 (inter- vs. low-risk) p<0.0001 n=699 patients1-5 (ND n=567, IND n=50, LGD n=82) 152 incident progressors, 38 prevalent cases, 509 non-progress
Slide 37: Consideration of Patient Management Based on Risk of Progression
Consideration of Patient Management Based on Risk of Progression 18% 16% 14% Endoscopic Eradication 5-year risk of progression 12% Therapy (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-Ri
Slide 38: How Incorporation of TissueCypher Testing Can Change Clinical Practice
How Incorporation of TissueCypher Testing Can Change Clinical Practice Clinical guideline based on histology and segment length NDBE IND LGD Surveillance in 3 to 6 months following Surveillance in 3 to 5 years1,2,3 PPI Rx, EET or 3 years if segment length ≥3 cm2 Surveillance in 12 months for persist
Slide 39: IDgenetix
C/ASTLE BIOSCIENCES IDgeneti4
Slide 40: Medication Selection for Mental Illness Is Challenging
Medication Selection for Mental Illness Is Challenging Inadequate Therapy Low High Prevalence of Response Remission Rates Adverse Drug Events ~53% of patients with major 72% of patients with MDD The likelihood of discontinuation rises depressive disorder (MDD) do not achieve remission from 8.6% with
Slide 41: 2.5x Increase in Remission Rates for Severe Depression
2.5x Increase in Remission Rates for Severe Depression Demonstrated Enhanced Clinical Outcomes vs. Standard of Care >2.5x Response Rate Remission Rate increase in remission rate vs. control ≥ 50% Reduction from Baseline Patients Achieving Remission 2x increase in response rate vs. control p-value 0.
Slide 42: Precision Medicine Designed to Streamline Medication Selection for Mental Health
Precision Medicine Designed to Streamline Medication Selection for Mental Health IDgenetix is redefining the standards of next generation PGx IDgenetix PGx Original Trial & Error Multi-Gene Test RCT/Clinical Utility Medicare Coverage Comorbidity (MDD & Anxiety) Drug-Drug Interactions Lifestyle Facto
Slide 43: DecisionDx-UM
CASTLE BIOSCIENCES Decision Dx -UM
Slide 44: DecisionDx-UM: the Standard of Care in the Management of Newly Diagnosed Uveal Melanoma
DecisionDx-UM: the Standard of Care in the Management of Newly Diagnosed Uveal Melanoma Uveal Melanoma Facts – A Melanoma About Uveal Rare Eye Cancer Strong Evidence Base • 24 peer-reviewed publications, 3,100+ patients ~2,000 patients diagnosed in the U.S. annually ~97% of patients – no evidence of
Slide 45: Thank you
CASTLE BIOSCIENCES Thank you
Slide 46: 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 47: 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 previous slide for further information regarding the Company’s use of non-GAAP financial measures. 47
Slide 48: 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 financial measure. See slide 47 for further information regarding the Company’s use of non-GAAP financial measures. 48
Slide 49: Appendix
Appendix
Slide 50: ESG Focus Areas for 2022 and Beyond
ESG Focus Areas for 2022 and Beyond Environmental policy Environmental metrics DEI statement DEI metrics DEI action plan/roadmap Vendor code of conduct/supplier standard In 2022, Castle Biosciences received a rating of AA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment. 50
Slide 51: Employee Engagement is Part of our Core Strategy for Success
Employee Engagement is Part of our Core Strategy for Success Based on the results of Castle’s annual employee survey1 81% 53% 2022 Castle employee Healthcare benchmark engagement score: average engagement score: 89% Response Rate 40% 41% 17% 2% Enthusiastically engaged Engaged Disengaged Deeply dise
Slide 52: Commitment to Diversity
Commitment to Diversity ETHNICITY/RACE GENDER 1.0% AMERICAN INDIAN OR 3.9% ALASKA NATIVE 7.1% ASIAN ALL EMPLOYEES BLACK OR AFRICAN 11.2% AMERCIAN FEMALE 0.2% 34.3% HISPANIC 3.0% NATIVE HAWAIIAN OR 65.7% MALE 73.6% OTHER PACIFIC ISLANDER TWO OR MORE RACES (NOT HISPANIC OR LATINO) WHITE 3.2% TOTAL EMP
Slide 53: Award-Winning Company
Award-Winning Company Committed to cultivating a culture of innovation, continuous growth and advancement 2019 Technology Innovation in Melanoma Award Winner 53
Slide 54: Leadership Team Overview
Leadership Team Overview Derek Maetzold © SCHERING Dan Bradbury Eauillium Founder, Director, President and CEO SSXSINE a am S, SANDOZ —, Frank Stokes LEERINK” nd fz] Derek Maetzold CASTLE Chief Financial Officer Suan Mara Aspinall Toby Juvenal Bi eccove seneucs Gy Ese Pharmaceuticals Chief Commercia