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
A u g u s t 8 , 2 0 2 2 Tra n s fo r m i n g D i s e a s e M a n a g e m e nt
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 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
Slide 3: Mission, Vision, Values
3 MISSION: VISION: VALUES: Improving health through innovative tests that guide patient care To transform disease management by keeping people first: patients, clinicians, employees and investors ExCIITE: Excitement, Collaboration, Integrity, Innovation, Trust and Excellence
Slide 4: Castle Remains Focused on Transforming Disease Management
4 Castle Remains Focused on Transforming Disease Management S t rate g ic pr inc ip le s t hat c re ate va lue for custome rs , pat ie nt s and s tockholde rs Address areas with unmet clinical need Leverage advanced technologies to develop innovative tests Accelerate test adoption through proven com
Slide 5: Answering Clinical Questions to Guide Care Along the Patient Journey
4 55 Screening Diagnostic Support Risk Stratification Therapy Response MRD/Recurrence Monitoring Answering Cl inical Questions to Guide Care Along the Patient Journey Our focus i s on d iagnost ic , r i s k s t rat i f i cat ion and t he rapy re s pons e are as o f t he pat ie nt care cont inuum Inf
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 7 Operating Expense by Quarter1 1Amounts in millions. Operating expenses rounded and summarized as presented E xe cute d p lanne d inve st me nts to s upport our grow t h in i t iat ive s for long- te rm va lue cre at ion Key Drivers for Q2 2022 OpEx • Cost of Sales – High
Slide 8: Key Q2 and Recent 2022 Accomplishments
Draft foundational LCD for melanoma diagnostic tests published providing coverage criteria for DiffDx-Melanoma; expect finalization by end of Q2 2023; current coverage for MyPath remains unchanged Expanded NCI / SEER Registries data shared at EADO Congress showed patients diagnosed with melanoma and
Slide 9: Commercially Available Tests Serve an Estimated ~$8B U.S. TAM
Barrett’s esophagus/ risk of progression to esophageal cancer Patients receiving upper GI endoscopies/year who meet the intended use criteria for TissueCypher3 ῀$1B ~384K Our Commercial ly Avai lable Tests Now Serve an Est imated ~$8B U.S. Total Addressable Market1 1U.S. TAM = Total addressable mark
Slide 10: Driving Long-Term Growth through our Foundational Strategy
Driving Long-Term Growth through our Foundational Strategy: Strong Core Derm Business, Pipeline Init iat ives and Strategic Opportunit ies 10 Near-to Mid-term Growth Mid-to Long-term Growth (Expected launches ~2025) 2022-2024 2024 and beyond Gastrointestinal Strategic Opps Mental Health Gastrointest
Slide 11: Operational Growth Pillars
Operational Growth Pi l lars 11 Cons i s te nt exe cut ion f ur t he rs our le ad ing pos i t ion in de rmato logy and in t he Dx s pace Strong Core Derm Business Pipeline Initiatives Strategic Opportunities • Continuing provider education • Optimizing commercial team • Evolving our go-to-market str
Slide 12: Accelerating Investments in Clinical Development
12 Accelerating Investments in Cl inical Development Ongoing s t ud ie s to ge ne rate data t hat s upport s t he c l in ica l va lue of our te sts and prov ide r and paye r adopt ion 100 Committed sites ~2,455 Patients enrolled 3 Ongoing studies1 147 ~3,500 5 Committed sites Patients enrolled Ongoi
Slide 13: Our Core Derm Business is Strong
Our Core Derm Bus iness i s S t rong
Slide 14: Strong Core Derm Business Pillar of Growth
Strong Core Derm Business Pi l lar of Growth 14 Continuing provider education Optimizing commercial team Enhancing digital presence NCI/SEER collaboration Robust conference attendance, data presentations/posters, peer-reviewed publications and peer-to-peer programs Additional dedicated commerical sa
Slide 15: First-to-Market Dermatologic Franchise
15 First-to-Market Dermatologic Franchise, Additional Growth Opportunit ies Diagnostic Support Risk Stratification Therapy Response1 1Target launch anticipated by the end of 2025 2New and unique ordering clinicians for all dermatologic tests combined between June 30, 2021-June 30, 2022 . Inflammator
Slide 16: DecisionDx-Melanoma: Precision Risk Stratification
16 DecisionDx-Melanoma: Precision Risk Strati f ication Based on an Individual Patient ’s Tumor Biology Informs Treatment Plans Market Snapshot Clinical Questions (post-melanoma diagnosis) Clinical Utility Transforming Disease Management ~$540M revenue opportunity1 ~130k patients classified as Stage
Slide 17: Current Melanoma Staging Misses Patients with Aggressive Tumor Biology
17 Current Melanoma Staging Misses Patients with Aggressive Tumor Biology 80% 12% 8% Stage at Diagnosis Stage II Stage III Stage I Excludes Stage IV 26% 34% 40% Melanoma Deaths by Stage at Diagnosis Stage II Stage III Stage I Excludes Stage IV 92% Stage I or II 60% Stage I or II The majority of mela
Slide 18: DecisionDx-Melanoma Is Supported by Significant Scientific Evidence
1A Level 1A evidence* D e c i s i o n D x - M e l a n o m a I s S u p p o r t e d b y S i g n i f i c a n t S c i e n t i f i c E v i d e n c e 18 9,000+ Total patients included in studies including independent validation 105,000+ Patients with a clinical DecisionDx-Melanoma order from 10,200+ clini
Slide 19: NCI/SEER Data Linked with DecisionDx-Melanoma Test Results
NCI/SEER Data L inked with DecisionDx-Melanoma Test Results Data ana lys i s o f a cohort o f re a l -wor ld , uns e le cted , pros pe ct ive ly te ste d pat ie nt s w i t h cutane ous me lanoma 19 Data provide direct evidence that patients tested with DecisionDx-Melanoma can have better survival ra
Slide 20: DecisionDx-Melanoma Survival Outcomes Favorable Relative to Other Tests
MSS mortality difference of 1.1% at 3 years when comparing tests and untested populations 20 DecisionDx-Melanoma Disease Specif ic Survival Outcomes are Favorable Relative to Other Tests Sentinel lymph node biopsy (SLNB) • SLNB is a risk-stratification surgical procedure “test” in melanoma • MSLT-1
Slide 21: Patients with Melanoma Desire Testing with DecisionDx-Melanoma
21 Patients with Melanoma Desire Testing with DecisionDx-Melanoma Ahmed et al. Cancer Medicine 2022; some values have been rounded Wanted prognostic information about their melanoma tumors at diagnosis 90% 92% Felt the testing was useful 77% Wanted testing to obtain all of the information they could
Slide 22: DecisionDx-SCC Market Snapshot
22 Market Snapshot Clinical Question (post-SCC diagnosis) Clinical Utility Transforming Disease Management ~$820M revenue opportunity1 ~200k patients with high-risk features2 Who is really at low risk or high risk for metastasis? Predicts metastatic risk for individual SCC patients with one or more
Slide 23: DecisionDx-SCC Can Inform Risk-Appropriate Management
D e c i s i o n D x - S C C C a n I n fo r m R i s k - A p p ro p r i a t e M a n a g e m e n t t o G u i d e P a t i e n t C a r e 23 1,010+ Validated across 2 independent studies spanning 1,018 patients1 2,100+ Clinicians have ordered DecisionDx-SCC Clinical development data as of July 7, 2022; ot
Slide 24: Castle's Diagnostic GEP Offering
24 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 M a n a g e m e n t D e c i s i o n s f o r P a t i e n t s w i t h A m b i g u o u s M e l a n o c y t i c L e s i o n s Market Snapshot Clinical Question Clinical Utility Transform
Slide 25: Diagnostic GEP Tests Provide Objective and Accurate Information
12 Peer-reviewed publications, including prospective studies 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 ra t e I n fo r m a t i o n fo r M o r e I n fo r m e d P a t i e n t C a r e 25 41,000+ Lesions clinically tested 8+ Years of clinical testing
Slide 26: Diagnosing Melanoma: Uncertainty Creates an Over- or Under-Treatment Dilemma
D i a g n o s i n g M e l a n o m a , t h e C l i n i c a l I s s u e : U n c e r t a i n t y C r e a t e s 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 Definitive melanoma diagnoses (invasive or in situ) Definitive benign diagnoses SLNB Imaging Increased Follow-up No additional trea
Slide 27: Strategic Opportunities
Strategic Opportunit ies
Slide 28: Cernostics Acquisition Aligns with Strategic Opportunities Goals
C e r n o s t i c s A c q u i s i t i o n A l i g n s w i t h O u r S t ra t e g i c O p p o r t u n i t i e s G o a l s 28 Integrat ion expected to be a meaningful revenue contr ibutor in 2024 Our capital allocation priorities include strategic acquisitions with potential for mid- to long-term valu
Slide 29: TissueCypher: Predicts Development of Esophageal Cancer in Barrett's Esophagus
29 T i s s u e C y p h e r : D e s i g n e d t o I n d e p e n d e n t l y P r e d i c t s D e v e l o p m e n t o f 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 Ma
Slide 30: TissueCypher Improves Risk Prediction Over Pathology Alone
5 -Y e ar R is k o f P ro gr e ss io n 3–5-year Surveillance3,4 1-year Surveillance2 EET or 6–12 month Surveillance2 NDBE1 IND1 LGD1 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% NDBE (Low-Risk)* NDBE (High-Risk)* LGD/IND (High-Risk)* LGD/IND (Low-Risk)* High-Risk TissueCypherLow-Risk TissueCypher 30 T i s s u
Slide 31: TissueCypher: Significant 2022 Milestones Already Achieved
TissueCypher: S igni f icant 2022 Mi lestones A lready Achieved, Integrat ion On Track Q1 2022 31 March 24, 2022 Granted Advanced Diagnostic Laboratory Test (ADLT) status, exempts from 14-day rule April 2022 Entered into a lease agreement in Pittsburgh as part of our planned investment to expand lab
Slide 32: AltheaDx Acquisition Aligns with Strategic Opportunities Goals
A l t h e a D x A c q u i s i t i o n A l i g n s w i t h O u r S t r a t e g i c O p p o r t u n i t i e s G o a l s 32 Our capital allocation priorities include strategic acquisitions with potential for mid- to long-term value creation and revenue and earnings growth Immediately adds significant i
Slide 33: IDgenetix: Integration Beginning, Significant Milestones Achieved
IDgenetix: Integration Beginning, S ignif icant Mi lestones Already Achieved Q2 2022 Q3 2022 33 April 4, 2022 Announced acquisition of AltheaDx Q2 2022 Announced expanded Medicare coverage for IDgenetix (seven additional mental health conditions beyond major depressive disorder) April 26, 2022 Annou
Slide 34: IDgenetix: Guides Decisions on the Optimal Drug for Each Patient
34 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 ῀$5B revenue opportunity1 Which medication is best for each patient? Provides drug-gene, drug-drug and lif
Slide 35: IDgenetix Clinical Trial Design and Efficacy
Clinical Trial Design • Randomized Controlled Trial (RCT) • Peer-reviewed and published in the Journal of Psychiatric Research • 685 participants, Depression and Anxiety • Double-blinded • Treated by a broader group of medical professionals, beyond psychiatrists • 20 independent clinical sites • 4,
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 36 Drug Metabolism Genotyping Drug Response Genotyping Algorithmic Screening Analyzes patient-specific genetic variants that influence the function of drug metabolizing enzymes Influences how much
Slide 37: Uveal Melanoma
Uveal Melanoma
Slide 38: DecisionDx-UM: Standard of Care in Uveal Melanoma
38 DecisionDx-UM: the Standard of Care in the Management of Newly Diagnosed Uveal Melanoma Market Snapshot Clinical Decision Point Clinical Utility Transforming Disease Management More than 90% of U.S. ocular oncology institutions order DecisionDx- Melanoma (1,618 reports issued in 2021) What is the
Slide 39: Pipeline Initiatives
Pipel ine In i t iat ives 39
Slide 40: Continued Execution on Pipeline Initiatives as a Pillar of Growth
C o n t i n u e d E xe c u t i o n o n P i p e l i n e I n i t i a t i v e s a s a P i l l a r o f G r o w t h 40 Ability to answer clinical questions/impact patient care Utilizing our areas of expertise (genomics, spatialomics, AI, pharmacogenomics) to develop innovative tests Leveraging our commer
Slide 41: Targeting the Unmet Need in Moderate-to-Severe Psoriasis and Atopic Dermatitis
Targeting the Unmet Need in Moderate-to-Severe Psorias is and Atopic Dermatit is Common s k in d i s e as e s w i t h s ign i f i cant pat ie nt impact s and cost s to he a l t h care syste m Treatments are significantly different for PSO and AD and can be costly (e.g., Humira for PSO ~$68k/year; Du
Slide 42: Inflammatory Skin Disease Pipeline Test – IDENTITY Study
42 Castle’s Inf lammatory Skin Disease Pipeline Test Is Being Developed to Predict Systemic Therapy Response – IDENTITY Study Program Milestones Q32021 Steering committee formed with top KOLs 2025 Target launch 54 Committed Sites Data as of July 26, 2022 First patient enrolled Proof of RNA extractio
Slide 43: Environmental, Social and Governance (ESG)
Env i ronmental , Soc ia l and Governance ( ESG)
Slide 44: ESG Focus Areas
44 E S G F o c u s A r e a s fo r 2 0 2 2 a n d B e y o n d 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 Rat
Slide 45: Commitment to Diversity
35.7% 64.3% FEMALE MALE Commitment to Diversity 45 A ll Em p lo ye e s Ex e cu ti ve s E T H N I C I T Y/ R A C E G E N D E R Data as of 12/31/21, Executive= Executive Director or Regional Business Director level and above 64.6% 35.4% FEMALE MALE TOTAL EMPLOYEES = 345 75% 21.4% 3.6% CAUCASIAN OTHER
Slide 46: Thank You
THANK YOU
Slide 47: Use of Non-GAAP Financial Measures
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 ) 47 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 48: Reconciliation of Non-GAAP Financial Measures
R e 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 financial measures. See "Use of Non- GAAP Financial Measures (UNAUDITED)" on the previ
Slide 49: Reconciliation of Non-GAAP Financial Measures
R e 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 finanical measure. See "Use of Non- GAAP Financial Measures (UNAUDITED)" on the previous slide for
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 ro 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 G u i d e P a t i e n t C a r e 51 Dermatology Gastroenterology Mental HealthUveal Melanoma Portfolio of innovative tests designed to guide patient care
Slide 52: Improving Health through Innovative Tests that Guide Patient Care
Improving Health through Innovative Tests that Guide Patient Care 52 A Diagnostic Leader Robust Data Supporting our TestsCastle Team 482 Total employees 111 Laboratory testing operations team members 87 35+ Peer-reviewed publications Strong financial position, driven by investments in our growth pil
Slide 53: Leadership Team Overview
L e a d e rs h i p Te a m O v e r v i e w Dan Bradbury Derek Maetzold Mara Aspinall Brad Cole Miles D. Harrison 53 Stuart Pharmaceuticals Robert Cook, PhD Senior Vice President, Research & Development Derek Maetzold Founder, Director, President and CEO Frank Stokes Chief Financial Officer Toby Juven
Slide 54: Award-Winning Company
Committed to cu l t ivat ing a cu l ture of innovat ion, cont inuous growth and advancement Award-Winning Company 54 2019 Technology Innovation in Melanoma Award Winner