As filed with the Securities and Exchange Commission on January 14, 2022
Registration No. 333-
Delaware | | | 77-0701774 |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification Number) |
Large accelerated filer | | | ☒ | | | | | Accelerated filer | | | ☐ | |
Non-accelerated filer | | | ☐ | | | | | Smaller reporting company | | | ☒ | |
| | | | | | Emerging Growth Company | | | ☐ |
Title of Each Class of Securities to be Registered | | | Number of Shares to be Registered(1) | | | Proposed Maximum Offering Price Per Share(2) | | | Proposed Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee |
Common Stock, $0.001 par value | | | 5,034,642 | | | $37.47 | | | $188,648,036 | | | $17,488 |
(1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares of common stock being registered hereunder include such indeterminate number of additional shares of common stock as may become issuable as a result of stock splits, stock dividends or similar transactions with respect to the shares being registered hereunder. |
(2) | Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act, based upon the average of the high and low prices for the registrant’s common stock on January 13, 2022, as reported by the Nasdaq Global Market. |
• | We rely upon a small number of third-party payors for a significant portion of our revenue. |
• | Our method of recognizing revenue may not reflect our underlying business. |
• | We have incurred significant losses since inception, and we may never achieve profitability. |
• | We are an early, commercial-stage company and have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance. |
• | Our financial results could fluctuate in the future, causing the market price of our stock to decline substantially. |
• | If our internal control over financial reporting is ineffective, we may not be able to accurately report our financial results or file our periodic reports in a timely manner. |
• | We may need to raise additional capital to commercialize new products, to expand operations or to fund existing operations. |
• | We have been, and may continue to be, adversely impacted by the COVID-19 pandemic, which has caused decreased test report volume. |
• | Our revenue heavily relies upon the sale of a single product and our current or future products may not achieve or maintain significant commercial market acceptance. |
• | Billing for our products is complex and we require substantial time and resources to collect payment. |
• | We rely on third parties for sample collection, preparation and delivery. |
• | A depletion or loss of our tumor sample database could significantly harm our business. |
• | If our primary clinical laboratory facilities become damaged or inoperable or we are required to vacate our existing facilities, our ability to conduct our laboratory work for our commercialized products and pursue our research and development efforts may be jeopardized. |
• | Our current or future products may not achieve or maintain significant commercial market acceptance. |
• | New product development is lengthy and complex and our revenues could be limited if we are unable to increase and support adoption of our products by healthcare providers. |
• | We may experience limits on our revenue if we are unable to increase and support adoption of our products by both physicians and other healthcare providers. |
• | We rely on limited or sole suppliers for some of the reagents, equipment, chips and other materials used by our products, and we may not be able to find replacements or transition to alternative suppliers. |
• | The sizes of the markets for our current and future products have not been established with precision and may be smaller than we estimate. |
• | The diagnostic testing industry is subject to rapid change, which could make our current or future products obsolete. |
• | We currently have limited reimbursement coverage for our lead product, DecisionDx-Melanoma, and if third-party payors, including government and commercial payors, do not provide sufficient coverage of, or adequate reimbursement for, our products, our commercial success will be negatively affected. |
• | We conduct business in a heavily regulated industry and failure to comply with regulatory requirements, including those established by the U.S. Food and Drug Administration or any other regulatory authority, or changes in enforcement discretion for laboratory developed tests could harm our business. |
• | Data from our clinical studies may change materially, which could harm our business. |
• | Changes in health care policy or healthcare statutes and regulations or our ability to comply with applicable requirements could cause a material adverse effect to our business and operations. |
• | If we are unable to obtain and maintain sufficient intellectual property protection for our technology, our ability to successfully commercialize our products may be impaired. |
• | Our commercial success depends significantly on our ability to operate without infringing upon the intellectual property rights of third parties. |
• | We rely on information technology systems that we license from third parties and other royalty-bearing license agreements. |
• | We are highly dependent on the services of our key personnel, including our President and Chief Executive Officer. |
• | Our employees and any current or potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading. |
• | We may engage in strategic transactions, such as the acquisition of businesses, assets, products or technologies, which could be disruptive to our existing operations, divert the attention of our management team and adversely impact our liquidity, cash flows, financial condition and results of operations. |
• | Our business may be negatively impacted by cyber security threats, natural disasters and public health crises. |
• | Product or professional liability lawsuits against us could cause us to incur substantial liabilities and could limit our commercialization of our products. |
• | The stock price of our common stock may be volatile or may decline regardless of our operating performance, and you may lose all or part of your investment. |
• | We have broad discretion in the use of working capital and may not use it effectively or in ways that increase our share price. |
• | The concentration of our stock ownership will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval. |
• | Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock. |
• | Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. |
• | estimates of our addressable market, future revenue, expenses, capital requirements and our needs for additional financing; |
• | expectations with respect to reimbursement for our products, including third-party payor reimbursement and coverage decisions; |
• | anticipated cost, timing and success of our products in development, and our plans to research, develop and commercialize new tests; |
• | the impact of the COVID-19 pandemic on our business; |
• | our ability to obtain funding for our operations, including funding necessary to complete the expansion of our operations and development of our product candidates; |
• | the implementation of our business model and strategic plans for our products, technologies and businesses; |
• | expectations with respect to acquisitions of businesses, assets, products or technologies; |
• | our ability to manage and grow our business by expanding our sales to existing customers or introducing our products to new customers; |
• | our ability to develop and maintain sales and marketing capabilities; |
• | regulatory developments in the United States and foreign countries; |
• | the performance of our third-party suppliers; |
• | the success of competing diagnostic products that are or become available; |
• | our ability to attract and retain key personnel; and |
• | our expectations regarding our ability to obtain and maintain intellectual property protection for our products and our ability to operate our business without infringing on the intellectual property rights of others. |
Name of Selling Stockholder | | | Number of Shares Beneficially Owned Before Offering(1) | | | Maximum Number of Shares Offered | | | Shares Beneficially Owned After Offering(2) | |||
| Number | | | Percent | ||||||||
AJM Investments, LLC(3) | | | 44,358 | | | 44,358 | | | — | | | * |
Argos Capital Appreciation Master Fund, LP(4) | | | 541,064 | | | 541,064 | | | — | | | * |
Ben Franklin Technology Partners of Northeastern PA Inc.(5) | | | 42,023 | | | 42,023 | | | — | | | * |
Philadelphia Municipal Employee Retirement System(6) | | | 77,804 | | | 77,804 | | | — | | | * |
D. Lansing Taylor | | | 3,154 | | | 3,154 | | | — | | | * |
Frome Family Partners, L.P.(7) | | | 20,839 | | | 20,839 | | | — | | | * |
Geisinger Health(8) | | | 39,204 | | | 39,204 | | | — | | | * |
Illumina Innovation Fund I, L.P.(9) | | | 3,623,224 | | | 3,623,224 | | | — | | | * |
Innovation Works, Inc.(10) | | | 1,941 | | | 1,941 | | | — | | | * |
JRP Investors 2015, L.P.(11) | | | 110,222 | | | 110,222 | | | — | | | * |
John M. Inadomi | | | 6,588 | | | 6,588 | | | — | | | * |
LeRoy L. Metz II | | | 5,272 | | | 5,272 | | | — | | | * |
MLB Investments 2001, LP(12) | | | 1,296 | | | 1,296 | | | — | | | * |
Michael Caruso | | | 1,296 | | | 1,296 | | | — | | | * |
Noel Thomas Doheny | | | 74,584 | | | 74,584 | | | — | | | * |
Paul Schmitt | | | 3,612 | | | 3,612 | | | — | | | * |
Paul T. Touhey Jr. | | | 78 | | | 78 | | | — | | | * |
Pittsburgh Life Science Greenhouse(13) | | | 84,088 | | | 84,088 | | | — | | | * |
RHP Investments, LP(14) | | | 5,186 | | | 5,186 | | | — | | | * |
Rebecca Jane Thorne | | | 203,859 | | | 203,859 | | | — | | | * |
The Robert E. Gadomski 2011 “Four-Way” Irrevocable Trust (8/12/11)(15) | | | 1,296 | | | 1,296 | | | — | | | * |
UPMC(16) | | | 117,721 | | | 117,721 | | | — | | | * |
West Virginia University Hospitals, Inc.(17) | | | 15,560 | | | 15,560 | | | — | | | * |
West Virginia University Foundation, Inc.(18) | | | 10,373 | | | 10,373 | | | — | | | * |
Total | | | 5,034,642 | | | 5,034,642 | | | | |
* | Represents beneficial ownership of less than one percent of the outstanding shares of our common stock. |
(1) | Assumes the issuance of the maximum number of shares that may be issued as earnout consideration. The shares have not been earned or issued as of the date of this prospectus, and we may not issue the full number of shares of our common stock registered for resale pursuant to this prospectus. |
(2) | Assumes the sale of all shares available for sale under this prospectus and no further acquisitions of shares of common stock by the selling stockholder. |
(3) | Alan Douglas, Marsha Timmerman and Jim Johnston hold shared voting and investment control over the shares of common stock being registered for resale by AJM Investments, LLC. |
(4) | Ephraim Gildor, President of Argos Capital Management, Inc., the General Partner of Argos Capital Appreciation Master Fund, LP (“Argos”), holds sole voting and investment control over the shares of common stock being registered for resale by Argos. |
(5) | Angelo Valletta, Kathy Ann Minnich and Wayne Barz hold shared voting and investment control over the shares of common stock being registered for resale by Ben Franklin Technology Partners of Northeastern PA Inc. |
(6) | Rob Dubow, Carol Stukes-Baylor, Roosevelt Poplar, Rebecca Rhynhart, Paul Reed, Brian Coughlin, Diana Cortes, Michael Zaccagni and Tumar Alexander, as Trustees of the Philadelphia Municipal Employee Retirement System (the “Philadelphia Retirement System”), hold shared voting and investment control over the shares of common stock being registered for resale by the Philadelphia Retirement System. |
(7) | Matthew Frome, Stan Frome and Eric Frome hold shared voting and investment control over the shares of common stock being registered for resale by Frome Family Partners, L.P. |
(8) | Steve Bender, Executive Vice President and Chief Legal Officer of Geisinger Health (“Geisinger”), holds sole voting and investment control over the shares of common stock being registered for resale by Geisinger, formerly known as Geisinger Health System Foundation. |
(9) | Nicholas Naclerio, Managing Member of Illumina Innovation Fund I GP, L.L.C., the General Partner of Illumina Innovation Fund I, L.P. (“Illumina”), holds sole voting and investment control over the shares of common stock being registered for resale by Illumina. |
(10) | Rebecca Doerge, Joe Ferrara, Juan Garrett, Tom Jones, Donna Myers, Catherine Mott, Steven Reis, MD, Rob A. Rutenbar and Jimmy Williams Jr., Ph.D., as board members of Innovation Works, Inc. (“Innovation”), hold shared voting and investment control over the shares of common stock being registered for resale by Innovation. |
(11) | Raymond Durham, Vice President of Jasper Ridge Genpar Holdings, LLC, the General Partner of JRP Investors 2015, L.P. (“JRP”), holds sole voting and investment control over the shares of common stock being registered for resale by JRP. |
(12) | Steven Cohen, as Trustee of the MLB Equity Trust, the General Partner of MLB Investments 2001, LP (“MLB Investments”), holds sole voting and investment control over the shares of common stock being registered for resale by MLB Investments. |
(13) | Diana Cugliari holds sole voting and investment control over the shares of common stock being registered for resale by Pittsburgh Life Science Greenhouse. |
(14) | Richard H. Penske holds sole voting and investment control over the shares of common stock being registered for resale by RHP Investments, LP. |
(15) | Susan F. Gadomski, Trustee of The Robert E. Gadomski 2011 “Four-Way” Irrevocable Trust (8/12/11) (the “Gadomski Trust”), holds sole voting and investment control over the shares of common stock being registered for resale by the Gadomski Trust. |
(16) | Jeanne Cunicelli, Executive Vice President of UPMC and President of UPMC Enterprises, holds sole voting and investment control over the shares of common stock being registered for resale by UPMC. |
(17) | Jennifer B. Cunanan holds sole voting and investment control over the shares of common stock being registered for resale by West Virginia University Hospitals, Inc. |
(18) | Jennifer B. Cunanan holds sole voting and investment control over the shares of common stock being registered for resale by West Virginia University Foundation, Inc. |
• | ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers; |
• | block trades in which a broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account under this prospectus; |
• | an exchange distribution in accordance with the rules of the applicable exchange; |
• | privately negotiated transactions; |
• | “at the market” or through market makers or into an existing market for the shares; |
• | through the distribution of the common stock by any selling stockholders to its partners, members or stockholders; |
• | through broker-dealers that agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
• | through one or more underwritten offerings on a firm commitment or best efforts basis; |
• | a combination of any such methods of sale; and |
• | any other method permitted pursuant to applicable law. |
• | our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 11, 2021; |
• | The information specifically incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 from our definitive proxy statement on Schedule 14A (other than information furnished rather than filed) filed with the SEC on April 27, 2021 and supplemented on May 13, 2021; |
• | our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, filed with the SEC on May 10, 2021, August 9, 2021 and November 8, 2021, respectively; |
• | our Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on April 9, 2021, June 14, 2021, July 16, 2021, September 9, 2021, October 19, 2021, December 3, 2021, December 6, 2021 (as amended on January 14, 2022), and January 5, 2022; and |
• | the description of our common stock, which is registered under Section 12 of the Exchange Act, in our registration statement on Form 8-A, filed with the SEC on July 15, 2019, including any amendments or reports filed for the purpose of updating such description, including any amendment or report filed for the purpose of updating such description, including any amendment or report filed for the purposes of updating such description, including Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020. |
Item 14. | Other Expenses of Issuance and Distribution |
| | Amount to Be Paid | |
SEC registration fee | | | $17,488 |
Legal fees and expenses | | | $50,000 |
Accounting fees and expenses | | | $32,000 |
Printing and miscellaneous | | | $20,512 |
Total | | | $120,000 |
Item 15. | Indemnification of Directors and Officers |
• | transaction from which the director derives an improper personal benefit; |
• | act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
• | unlawful payment of dividends or redemption of shares; or |
• | breach of a director’s duty of loyalty to the corporation or its stockholders. |
• | indemnification beyond that permitted by the Delaware General Corporation Law; |
• | indemnification for any proceeding with respect to the unlawful payment of remuneration to the director or officer; |
• | indemnification for certain proceedings involving a final judgment that the director or officer is required to disgorge profits from the purchase or sale of our stock; |
• | indemnification for proceedings involving a final judgment that the director’s or officer’s conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct or a breach of his or her duty of loyalty, but only to the extent of such specific determination; |
• | indemnification for proceedings or claims brought by an officer or director against us or any of our directors, officers, employees or agents, except for claims to establish a right of indemnification or proceedings or claims approved by our board of directors or required by law; |
• | indemnification for settlements the director or officer enters into without our consent; or |
• | indemnification in violation of any undertaking required by the Securities Act, or in any registration statement filed by us. |
Item 16. | Exhibits |
Exhibit Number | | | Description |
2.1*+ | | | Agreement and Plan of Merger, dated October 18, 2021, by and among the Company, Space Merger Sub, Inc., Cernostics, Inc., and Shareholder Representative Services LLC, as amended, incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 6, 2021. |
| | ||
| | Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019. | |
| | ||
| | Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019. | |
| | ||
4.1 | | | |
| | ||
| | Form of Common Stock Certificate of the Company, incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-1 (File No. 333-232369), as amended, originally filed with the SEC on June 26, 2019. | |
| | ||
| | Sixth Amended and Restated Investors’ Rights Agreement, dated July 12, 2019, by and among the Company and certain of its stockholders, incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1 (File No. 333-232369), as amended, originally filed with the SEC on June 26, 2019. | |
| | ||
| | Opinion of Cooley LLP. | |
| | ||
| | Consent of KPMG LLP. | |
| | ||
| | Consent of Grossman Yanak & Ford LLP. | |
| | ||
| | Consent of Cooley LLP (included in Exhibit 5.1). | |
| | ||
| | Power of Attorney (included on signature page). |
* | Schedules and exhibits to the Agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request. |
+ | Pursuant to Item 601(b)(10) of Regulation S-K, certain portions of this exhibit have been omitted (indicated by “[***]”) because the Company has determined that the information is not material and is the type that the Company treats as private or confidential. |
Item 17. | Undertakings |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act to any purchaser: |
(i) | Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(5) | That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing |
| | CASTLE BIOSCIENCES, INC. | ||||
| | | | |||
| | By: | | | /s/ Derek J. Maetzold | |
| | | | Derek J. Maetzold President and Chief Executive Officer |
Signature | | | Title | | | Date |
/s/ Derek J. Maetzold | | | President, Chief Executive Officer and Director (Principal Executive Officer) | | | January 14, 2022 |
Derek J. Maetzold | | |||||
| | | | |||
/s/ Frank Stokes | | | Chief Financial Officer (Principal Financial and Accounting Officer) | | | January 14, 2022 |
Frank Stokes | | |||||
| | | | |||
/s/ Daniel M. Bradbury | | | Director | | | January 14, 2022 |
Daniel M. Bradbury | | |||||
| | | | |||
/s/ Mara G. Aspinall | | | Director | | | January 14, 2022 |
Mara G. Aspinall | | |||||
| | | | |||
/s/ Kimberlee Caple | | | Director | | | January 14, 2022 |
Kimberlee Caple | | |||||
| | | | |||
/s/ G. Bradley Cole | | | Director | | | January 14, 2022 |
G. Bradley Cole | | |||||
| | | | |||
/s/ Ellen Goldberg | | | Director | | | January 14, 2022 |
Ellen Goldberg | | |||||
| | | | |||
/s/ Miles Harrison | | | Director | | | January 14, 2022 |
Miles Harrison | | |||||
| | | | |||
/s/ Tiffany Olson | | | Director | | | January 14, 2022 |
Tiffany Olson | |
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