CSTL - Earnings call transcript Q4 2019 | Castle Biosciences, Inc.

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Operator

Good afternoon, and welcome to Castle Biosciences' Fourth Quarter and Year End 2019 Conference Call.

As a reminder today's call is being recorded.

We will begin today's call with opening remarks and introduction followed by a question-and-answer session.

I would like to turn the call over to Frank Stokes, Chief Financial Officer. Please go ahead, sir.

Frank Stokes

Operator. you, Thank everyone. Good afternoon Castle financial Biosciences year to quarter fourth conference call. XXXX results end Welcome and

Joining is call Derek Maetzold. of me Executive March Information Chief today today, recorded Castle's Founder, on XXXX. this XX, speaks as and only President Officer

website listening sensitive on of Therefore, time today's or reading call, may call approximately recording the of no page longer for will the the if to company's replay available of Investor weeks. transcript Relations the you this A be are information any three be accurate.

Before I Reform Harbor of company statements the future begin, of provisions of or may would we the you like Securities of Safe XXXX. forward-looking that the contain and the Private to are some regarding other Act today or performance remind future made events information Litigation pursuant discussed financial the projections to

statements risks inherent assurances these and realized. based and be upon the uncertainties, statements results Forward-looking current no expectations can in contemplated be that there involve are will and

as revise Form update change. today, relating the to and only factors statements reports the and forward-looking Securities These XX, and and uncertainties actual these in factors Commission obligation S-X the risks other to number filed forward-looking we no Securities those filed or results and and statements prospectus forward-looking described July statements. of and A our company's as registration in in final on from speak materially risks on statements the are with detail contained of XXXX, with then differ assume These and to other documents these cause Exchange circumstances company's Commission. Exchange could

to over turn the I'll Derek Maetzold. call now

Derek Maetzold

everyone. us Thank you, Thank for you joining Frank, today. afternoon good and

upcoming evidence team key products. development in DecisionDx-UM discuss quarter progression financial an in year, results, milestones and XXXX test Biosciences of excellent for in continued guidance Castle throughout priorities. The review our terms our and our strong will our volume, test revenue was did fourth of which an accomplishments terms we strategic afternoon expression pipeline growth and and profile job XXXX strong test This entire our and DecisionDx-Melanoma growth strong year-end and incredibly gene of and

we in provides the We team XX in our one XXXX. quarter us expansions, went in two one of outside and XX which second execute XXXX our of growth as first December successfully XXXX confidence XXXX December, sales outside During from priorities. in to completed December XXXX sales territories ability to commercial XXXX, strategic territories the

$XX.X revenue ended, full quarter $XX.X In The XXXX, reported for million favorably to the we the million $XX.X the year XXXX for million fourth revenue, of respectively. year year compares $XX.X million and XXXX. full reported

forward XXXX, we look to growth $XX million on we million revenue this and updates anticipate guidance. to our plan potential to in $XX quarterly provide As generating in

plan sales growth, our in We R&D support volume profile our expression our In expand continue tests. gene for further both evidence development and our team, we efforts. January continued of did report proprietary commercial order to our further to ramp up announce

XXXX; quarter and patients over X,XXX up or fourth year-over-year year-over-year XX% XX% for prior Adoption XX% with periods in new total ordering and DecisionDx-Melanoma clinicians just test physicians reports with XX,XXX increased melanoma, XXXX in skin in cutaneous use we for in XXXX and to for respectively. over exact. was to XX% be XXXX up delivered DecisionDx-Melanoma For reports test year diagnosed the the invasive

penetration about to of an melanoma patients a saw approximately on the be in moment. will which contributed evidence of further well excellent in discuss development incidents we and approximately XX% invasive annual part I of treat expansion and clinicians. about in XXXX believe melanoma, We diagnosed XXX,XXX growth continued clinicians to XX,XXX as of XXXX believe cutaneous XX the newly XX% commercial we as our U.S. of Based in patients annual to XX,XXX who our DecisionDx-Melanoma to our success February,

We resulted and than XX associated a in customer XX which facing December, anticipate recent doubled as compared teams XXXX personnel. All commensurate our in commercial with more to to December increases medical expansion of affairs XXXX our volume in with outside over total commercial growth of sales in in additional December success continued territories with XXXX. size people

sales As least we stage medical prepare affairs adding team in our assess personnel commensurate eight associated an we have our as half commercial territories the anticipate XXXX. additional the are late in past, continuing increases XX of at and we launch to needs products commercial to outside in second and with to

in uveal respectively. diagnosed melanoma, Turning with reports DecisionDx-UM quarter year X% full for XXXX, our a and reports for and year-over-year XXX we fourth the delivered test the increase to patients XX% test X,XXX

growth that product. recall may an very number of of are been uveal patients our care of ordering treating we a for with year-over-year has diagnosed our and mature years for for we are standard tests DecisionDx-UM estimated pleased Therefore, of with X% You believe clinicians test XX% melanoma. our

discuss accomplishments fourth to and recent with like I'd pipeline our several late key and development evidence Now continued products. quarter stage

aggressiveness test individual recur you melanoma tumor. primary me of assesses our patient's Let that or or biological metastasize an to remind signature based likelihood the DecisionDx-Melanoma upon the

node We decently to death from points. end we have because prediction can shown that likelihood individual sentinel multiple our test recur and for to DecisionDx-Melanoma lymph melanoma metastasized regionally, the patient's predict even

one Our DecisionDx-Melanoma more decision point. test than impacts

the two guides just made of currently time clinical decisions test after that are diagnosis. our Specifically,

to use the less decisions The first millimeters treatment of on or plan two lymph inform decisions. thick use to tumor guide second node when the is sentinel subsequent our and is biopsy tests is

at and the Society the first Castle to use Class lymph less of node procedure. biopsy XB In International X.X% age November patients test years patients test tumors the surgery was guide below the with were of older In prospective result study, cancer test Congress in of importantly sentinel reported multi-center node TX lymph from two risk X% sentinel the threshold biopsy guidelines the XX and and for Melanoma treatment a node a we data or Class supporting biopsy sentinel significantly multi-center XX presented or to not Research. studies discussions lymph do prospective assessed than Castle that XA lymph recommendations surgical or TX regarding clinical node low XA at which to Sentinel result. recommend Class with DecisionDx-melanoma positivity Castle XB

that tumor tumors are is depth millimeters melanomas TX had two that a TX, less. or

As a that today. XX% point patients of this group of comprises all reference, we test

previously a avoided sentinel In of lymph or long-term from a clinical also harm to the the analysis study, TX with node doing one an TX result XA We the study this melanoma question with surgical biopsy patient patients DecisionDx-Melanoma our retrospective tumor are look a this and address second or multi-center question if test prospective and we addressed archival cohorts. Class procedure.

three survival of of follow-up we support time TX of X.X can this from and had this surgical Class did overall outcomes lymph sentinel rate study, recurrence rate XX.X%, biopsy a population XX.X%, data node years a a experience result with patients tumor XX.X% XA Class free In reported a not the study adding TX rate a with patients year a safely prospective metastasis who that further event. XA TX, multi-center of free test survival and on a procedure. metastatic avoid This distant survival that found TX, a in study median

Dermatology. the of XXXX test and designed level National based criteria Network the by NCCN of conducted DecisionDx-Melanoma, Joint American a Dermatology Journal DecisionDx-Melanoma were issue Cancer AAD of establish or Cancer evidence criteria gene the the evidence literature Clinical or results review upon level a American Methodologically, expression the the our Committee the test the study of to of or systematic for published of established from the authors regarding December Comprehensive used respectively. Also in profile on American AJCC, Academy and

that these determined organizations. the show evidence test by results level DecisionDx-Melanoma of time a The higher achieves than at

AJCC review XB of led seven NCCN and to criteria, a to to studies validation two XA systematic criteria. one to classify evaluation according the DecisionDx-Melanoma Specifically, level included to X according criteria AAD and level development according authors level as the that to

status version conclusions three melanoma melanoma of two of NCCN authors by the in NCCN conducted higher and were guidelines all December The and their study. designated the rating XXXX. are for than updated AAD guidelines, official to AJCC by The the unrated the conferred [indiscernible] and prior the were to C which the cutaneous

staging to Although made a systematic it review XXXX. publications XA in adjunct that December evidence. of an the evidence and were with reviewed the XX that AJCC was in of of provide level all with category positive consistent not indicating shift is inclusion a language peer reviewed our appears DecisionDx-Melanoma also noted information that published This test study may level the is just

notification certain In CPT XXXX. algorithmic Association's American Also the CPT application panel analysis category test; one the order a X obtain this editorial that levels requirements. code, will quarter, code must our MAAA, test a fourth accepted we on CPT DecisionDx-Melanoma effective of in code our a multi-analyte assay with received be X, for or January meet evidence category MAAA to for Medical

the documented example, must clinical published For literature. efficacy the in be

of performed be and qualified DecisionDx-Melanoma both category with consistent practice a Additionally, current editorial With test intended tests that MAAA test met this of agreed for these X medical that it used is physicians with frequency many that consistent other use with use performed or by this requires the and healthcare to is DecisionDx-UM The AMA's criteria DecisionDx-Melanoma criteria. have CPT the panel proprietary that acceptance all code. our our CPT MAAA required met professionals.

uses reviewed guideline publications of the the development the two DecisionDx-Melanoma that XXXX the test matters. anticipate we publications review, and systematic clinically reminder, support peer actions panel that As December additional the The CPT update our a and in evidence AMA currently actionable editorial belief have we support conclusions in XXXX. XX NCCN

evidence and We patient support commercial coverage in will payers. both continue by to invest to penetration development

by property, tumors. This to As trademark test our high last covers risk cutaneous melanoma related it cutaneous relates methods patients the patent to of and DecisionDx-Melanoma patent first United intellectual office. treating the States melanoma was week, U.S. in issued having our patent

patients Now products, suspicious tests the lesions. made regarding risk turning and for our with progress our cell excited to we've our test DecisionDx-SCC in about or that squamous carcinomas we high use for more pigmented are one pipeline

XXXX. use we that reported may cell XX, was a use of combination AJCC with you we a XX% metastatic that test staging This categorized carcinomas the on XXXX, test the similar general in to On the validation had study in were by demonstrated in SCC who data from As the rate our patients identifying presented enable high population. that risk recall, of the January high squamous risk data NCCN clinical of study as approximately October guidelines.

XX% words, In approximately could of successfully plan. treatment we a high out other patients from risk rule risk high

We to of excited aggressive more look make forward could commercialize informed disease, we DecisionDx-SCC waiting. patients As with the the they coming initiation of the high about updates with regarding NCCN who providing are decisions hope our criteria therapies months. today, that in to risk potentially diagnosed opportunity an are test or spot adjuvant watchful the

interest, during Denver, late of scheduled pm abstract presentation held basic Daylight for an the received Time as American oral notice Colorado. pathology was breaking accepted Mountain XXXX meeting March begin in annual is at oncology XX. the Dermatology test the on we science Academy abstract session cutaneous Of at on regarding the The to of a being DecisionDx-SCC X:XX Saturday, presentation

total lesions launching will believe second plan validation billion pipeline U.S. Regarding our that study in to TAM tests half pigmented approximately a second pipeline stage for late second products U.S. on that total of the believe increase and clinical our we the XXXX. of test late commercial product, to from the launch approximately for estimated DecisionDx-SCC prior data stage we test. this We lesions, these We half market our track our of by for billion. our remain $X $X.X for suspicious two in addressable pigmented report year suspicious

call over additional I will the to financial results. provide to relating back who now detail turn will our Frank

Frank Stokes

Thank you, Derek.

in our with of respectively. strong year quarter XXXX increase for $XX.X revenue year the pleased $XX.X full fourth the full XXXX. full growth fourth million million quarter and the million quarter We in and and from over an the are We and and $XX.X year, reported fourth execution $XX.X million

our coverage determination As comparability of a affected fourth the XXXX. LCD be for Medicare by DecisionDx-Melanoma in quarter continues issued or the year-over-year test local revenue that was reminder, our to of quarterly

While of covered Medicare from delivered quarter DecisionDx-Melanoma GAAP fourth the became of delivered not LCD until recognized prior in quarters the the reimbursement the quarter test fourth of LCD the derived such all amount million. LCD issuance revenue final and XXXX, recognized The effective. reports but XXXX, until quarter not three first to of and timing XXXX revenue the of recognition of covered the requirements, XXXX of XXXX to when revenue $X.X the LCD test by for the was fourth the DecisionDx-Melanoma was reports due

Medicare performed This see if compared XXXX earnings afternoon. Stated then differently, for $XX.X please revenue the XXXX, measure, a our revenue our XXXX revenue that been is XXXX quarter included have of DecisionDx-Melanoma at of to quarter of reconciliations $X.X quarter release fourth would million in were our tests the non-GAAP fourth only non-GAAP this fourth end from million.

Our year-over-year test as driven reports well revenue revenue in XXXX or a increase ASP. to XX% test higher volume XXXX compared per was by in as by DecisionDx-Melanoma

generating As discussed Derek to our revenue XXXX when update and quarter report May in expect $XX we first earlier, give in results. on the $XX XXXX we anticipate of to million million our progress first financial

adjustments reports The of to includes relates revenue revenue year of adjustments million XX.X positive in primarily for positive revenue full XXXX. million revenue year of full XXXX of million $X.X adjustments The $X.X of increase compared to cash revenue positive the originally, XXXX. the was on recognized collections test prior GAAP. for alignment was words, In under which XXXX no no recognition recognized revenue originally other with requirements to periods for delivered in in revenue previous

at based the believe and adjustments next periods that few reimbursement possible level for on least We recent at future additional positive some are quarters. activity

for quarter strong by margin This the for and XX% operating volume in a primarily XX% was gross was the margin as the year growth. XXXX gross compared leverage full XXXX. during was driven Our our of result of improvement full fourth of year XX% to

expansion XX%. and year in to expansion with higher of and associated marketing was Our an the million This increased December increases to for to the compared were XX, expense our but as primarily by of administrative personnel year XX $XX.X ended increase our XXXX compared as R&D due functions support sales million particularly organization, well also $X.X the of December which of expenses administrative XXXX, $XX.X operating to growth XXXX. in expenses ended increase costs, higher for the XXXX due million

enhancing expect and We in invest activities to expense products to our continue to further products. related new developing increase R&D as we existing our

compared of As XXXX percentage as for primarily to to XX% a the revenue, of the increase. SG&A XX% operating in XXXX a revenue year increase our was leverage expense result our for the improvement full attributable with

promissory XX, due with July, higher converted $X.X million quarter our XXXX the in in notes by These increased driven remainder of in XXXX. to expense of a notes the year XX, combination million the stock to convertible Interest were the on the compared $X.X of year for first to common XXXX, outstanding of December banking IPO. primarily December The XXXX ended by facility. ended balances in higher increases the our connection credit and interest rates issuance credit

income debt million, of months XX extinguishment one-time includes benefit XXXX the was gain. $X.X ended non-cash for a December the net Our which $X.X million XX,

of XXXX, GAAP we gain. For per $X.XX under loss, reported benefit extinguishment which the excludes the share debt

$X.XX we million For loss share or had the $X.X per December year ended XXXX, diluted XX, a of loss net

million $XX.X flows compared in prior the negative Castle flows cash year $X of generated operating Moving million performance, the operating year. XXXX, in positive to next for flow cash to our ended cash

cash sales which and along cash for our we cash XXXX of December sufficient generated our the be future. products with believe million of Finally, operating foreseeable equivalence fund will had to XX, we from expenses at $XX

believe development to we are our our ongoing execute expansion Additionally, plans we and and activities. well research on support positioned

over now to I'll back the call Derek. turn

Derek Maetzold

you, Thank Frank.

team's DecisionDx-Melanoma year-over-year development. including to We our commercial your Castle. year in with thank expansions test, and you interest are in in pleased look another strong we performance teams continued our evidence We summary, great commercial in medical growth in the advances volume forward In significant for affairs for extremely in successful XXXX two XXXX.

now Q&A. for we Operator, ready are

Puneet question Leerink. comes SVB from first with Souda you. Instructions] Thank [Operator Our

open. Your line is

Puneet Souda

is I any provide guide, in through also if a that and modeling. ASP? had contribution that STC So us volume question the Could on was from stronger than from first any, believe I what the guide? we expecting was could you it have if the expected expect from here you you're what contribution and And contribution walk you

Derek Maetzold

Good that think. Hi, I'll you. Puneet. question from Frank hear to handle let I

Frank Stokes

Sure.

products, anticipate are with Puneet, report or product products based enough this revenue shipments. contribution we revenue on record principles, the have assuming year. not we those launching experience new accrue So accounting GAAP from at time of the will which any we of We to

or So in on any a collect just we actually of cash XXXX. we will when the being cash or revenue those don't only meaningful all a reflect appeal tests. we that And the cycle, timing basis material from see just at given

doesn't product include in fairly and in the past, patients. guide. ASP terms as maybe product a in an said we of mature we you the And a we patients, melanoma of have percentage uveal guide can So test flattish that's we've XX% XX%, the that, both the that assume is significant of new think product volumes as

and continue don't support levels, given much we'll test just while volume an for so we that And important it's to test additional model us there. the too penetration

So growth modest test, revenue cutaneous process pathway melanoma one. on improvement again, in in long our and by the and is although a volumes ASP driven primarily the reimbursement is

primarily we're there. growth focused So, volume on

Puneet Souda

of then, And quarter at this large adjustments adjustments, and had quarter on here. Okay. of period out X.X you X.X million now the million last quarter second

adjustments? that about contribution expected how in XXXX contribution is that that you And out we any from forward? expect should So from guidance or going of think period there then,

Frank Stokes

Yes.

If total was at of you look out the period, year it $X.X.

out a little maybe to give of And of coming of where reports a you plus be period sort quarter. quarter The is quarter-to-quarter in. so appears or those to are sense that'll lag bit

see should that converge will as that accrued progress XXXX to progress, our although reimbursement our both in of And begin well see revenue. as some we we toward mature so, continue appeals we as to

Puneet Souda

on for as key growth you. Derek, if if sales the in And I a reps could, I metric obviously could touch Okay. then, volume

sales somewhat Are how travel territory? sort as half look the should at As largely expect due you of there to think this should impact think largely of we full disruption here the about about they this expected second we plans you year? And the local? versus any first And and cadence in year coronavirus. in on the for do given, the year guide, the cadence how half rep

elaborate, you this expectation rep the for last year? if what's also then, could expansion sales one, And your

Derek Maetzold

Thank Excellent you. Puneet. questions, Sure.

So maybe myself forward. I'll sort last, the work start towards

-- outside second you that. as also in and today's So to completed groups we from territories. And sales go our we XX 'XX have XXXX know extended to releases past the December the in of expansion release, in around

So we have as end well medical told, individuals XXXX. of compared the sales as low inside to customer facing at an Castle within personnel. low group that XXXX. of associate affairs XXs at at the All being in the And end XXs, the

in So facing a are the personnel more terms along doubling U.S. here standpoint. ground that than and the a translate across of geography from either customer

roll normally certainly on at have a know, I seen that exhibit one of if March hold would coronavirus We be the meetings we forward conferences organizations and here in canceled April May don't an through and penetration, those will we that couple the news continue period. or one on time depending I flow kind if guess see going adjustment of to cetera. et

or think events major than those or be will I the probably quarter less are had major So in being postponed meetings canceled. planned at meetings second [poding] [ph] for because scheduled we

of interactions science or from postponed. liaison being group the So terms representatives far or in canceled heard local medical we our haven't feedback

hopefully haven't surgical the see that a with question their continues in reduction our of improving practices, belief be which dermatology don't Our to you actually the care can valued. is we're asked patient physicians, is use I know, providing patients our is, physicians tests regarding flow. oncologists of the to maybe information What that

something, or would be of of not. doctor concerned see and go often are that coronavirus that to I avoid diagnosis in I mild would but less think office more risk their say. a guess that physicians it is I going skin in and about because the quite the they if cancer we people and a and Our should national getting moderate, of sort

they're patients this at slow down their or a to time, events. project forego about nothing a seeing in opting So cancer a that concerned would of cancer see skin point AI individual of we when physicians sort

guess model So from a I seek would Castle, sort think they expect put I of not today manner. major need care, that our people a at out we in some reasonably don't would business perspective I still adjustment a because timely who care, in would -- I

of you XXs, melanoma low in sort up about as we with DecisionDx-Melanoma In ramping know, terms the cutaneous of in the XXXX start growth report first year-over-year I our the we growth year-over-year. of was. quarter in think, think fourth 'XX of of year the in at a XXXX fourth XX% And in quarter quarter I right? ended XX% over it the reports test

driven we by elements. So that was two think major

customer would educational that substantially The just the demonstrated out the under of marketplace. expansion responsive the size we Groups I a Medical first was was efforts facing say, That Affairs were guest in crying we Commercial guess for, that and promotionally deliver. you could

to And sales focused course, course development tests year, of in The use of individuals. nice think better XX us XXXX the those than example. clinicians, outside appropriately and evidence to expansion to our was more the very, to not XX communicate and December I our for we're over second, very of aware territories of customer which a helped trail the

growth our throughout XXXX. de-risks opportunity think I

the probably rest a both that to do feels and quarters, that the takes half expansion I And and that think, a become of and expect to Frank quarter pretty I to organization. effective. two comfortable So we group fully

decision the point that that starting So our on in great becomes towards off our feels patient in improving fully XXXX summer of December, XXXX, the internal terms use educate very were care. quarter of which estimates mid strong third hopefully in the all of a clinicians able test, to make effective group to help to being active we're and

add Anything else or to

Operator

Nam comes Ji Thank And question with next our you. from Sung BTIG.

open. is line Your

Sung Ji Nam

year? cadence you with question. taking for XXXX. very Frank, year. maybe we on the of this carry potentially terms think over that and question you you of the forward? takes of help going margin growth modeling we saw could about gross for Thanks the in of could kind Obviously, go that Maybe for kind Should out also a starting strong expansion think over puts how should If about Hi. kind year. us the last

Frank Stokes

Yes. thanks question. your for Sung Ji,

I year my probably we launched periods. we full margin with we performance products. later launch test those think new durable deferred will new but XXXX the comments, that any the the given earlier we'll have we saw when products, until costs gross is actually our revenue for reports, And associated into receive be new

gross that is you sort margin see So going forward But that could for year, somewhat. be impacted state the normalized right that by middle [ph] steady in [eighties terms gross of rate I margin, of about a this run think. percent]

Sung Ji Nam

Great. kind in How milestones type to side, conversations And what the of term might about you there. your over may the able early payer term near in see strategy XX going. next then of Thank we are be could of Derek, the the kind what on is near talk the months commercial be strategies what you. terms coverage of to maybe XX

Derek Maetzold

hear good and sure. Thanks questions Sure, the for to you.

second going to the DecisionDx-Melanoma that on melanoma a assume I'm So I'll tests. primarily our for cutaneous test but UV spend about we're melanoma, here talking

across test, So, terms majority of enjoy as coverage of necessary the plans commercial XX% reasonable, is that U.S. Medicare the do on about test both population, we include And reminder that test. DecisionDx-UM, which we a the melanoma of the patients is in broad covered. do and UV which

third-party support of should because as our of as be And assessment such evaluating outcomes that it, improve data, and of the they all be fact guidelines ensure see We they standard the national our to major test use NCCN. the should it are the covering and groups test patient targeting does this prospect interpret the tests remaining clinical to few and they technical care net plans proactively that actually is care. the health

you to have few this to even those using in that see that So But revenue think melanoma, able expect -- that impact, line. the for gaining don't be on improvements go ahead we we of year. positive occur some terms I policy are in and revenue plans won't modest a of

of XXXX. So in modeled common MolDx as our turning we for melanoma, mid-December, local their see our cutaneous coverage shifting you or to coverage we of had had we LCD had of period policy completed determination DecisionDx-Melanoma be Palmetto review December until years we expanded in a couple that or anticipated August closed test effective commercial posts not XXXX, kind LCD would the ago know, XXXX a And tests. had initial draft and of a

we when expect do statutory LCD of requirements us would as post So draft LCD of LCDs not ahead quarter third the final upon a XXXX. right the do sort that, based the took but the XXXX any be fourth based in There's thinking about to to to earlier to place probably LCDs our they months upon or seems of in the from put maybe a final that draft XX went XX, that stake in of ground.

midyear We in sort based number late the policy the second that from in are were cycle a when XXXX. policies commercial of do in small also quarter, being third third fall were being then affected reviewed payers with quarter, moved We see that in additional last quarter plans. have negative to did in of

them by decision molecular care Palmetto. managed the them engaged MolDx with coverage appreciate let is the certainly group to Our --

the also XX We in of tell, can value improvements from December current they may relates all review our our staging to saw XXXX reviewed we positive add language NCCN what publications. recognizing not systems. did From that in peer it necessarily to test as

think a most That's So is tests the in where I thing. diagnostic reviews. the stance stance, to a from good by of sort sit of molecular shifting terms a semi-positive way negative of NCCN

sort in leverage I would gains to expect years can we improvements and or properly. year So next coverage a that we of And take XXXX the some and would modest half through second we of half more feel and that in out. see two the

will appreciate when be thorough change ASP. that a completed, dependent cycle, assuming out a of upon be difficult to review on fantastic As a kind you it's in know, we're cycle, in careful will of so little

take Sung to the over some we of expect answer think questions, Does that's approach the probably improvements XXXX best-case today. XXXX I and most Ji? modest that kind conservative

Sung Ji Nam

sufficient Yes, later that first publications launch you your anticipate later year? getting at that. of And absolutely. of poster Dermatology of both month. do will for readouts peer you your from lastly this I pipeline do so American me, before of just Academy data you types Thank reviewed oral an meeting think commercial the you. Or on presentations all, then or Thank presentation congratulations for launch? be other for much this commercially products was curious before you accepted

Derek Maetzold

all Thank you. Probably, that's I but question, right. really like that

clinical peer sort adoption piece of peers, own assessment their a from their reviewed they I I been a written publications seeing always on work that's perspective clinicians so make by appreciate guess. think reviewed of can would

are launch I'd like Our imprint at those and near that is a time the manuscripts reviewed timely fairly to or thinking or before published our have we assuming that that in fashion, products.

I number So say guess our said, literature timing need have patient I we would conducted the these care. now decision to an getting new meet closer with of the acceptance impact a sort to we're feedback and ahead to choice publication may meet patient base advance customers and see the potential of go kind weight, about have right get that's But one really needs. review something should a to in monitoring we'd being we a peer comfort to review we more guess and I make make and interactions in those or for upon tests just we care That based so really go clinical to we'll peer a can we're hand credibility, available product. decisions, better as timeline on like add publication reviewed about the to of opportunity measuring

Operator

our And you. Catherine next comes Thank with Baird. Schulte question from

open. is line Your

Catherine Schulte

on the quarter Hey update guys, tailwind congrats thanks this on December, do in the but for any first I and guess what in guideline questions. heard from think your the of comments update in of volumes XXXX? payer terms driving kind you provide could NCCN the perspective, is

Derek Maetzold

tests like clinicians, to have before taken would early standpoint? some I know ordering adopt From position being endorsement, are Qualitatively view to sort have we'd So data NCCN by that comment who an quantitatively Catherine. there that those or third-party guess we valid. it's of we I the are as with there some institutions too think

I So know That being maybe occur expect XX to be institutional some languages our I there growth growth clinician could December. occur that reps discern if our in think sales independently adjustment is to to XX we do said, able force put by the some see the growth in don't we in as teams. and sales out of in

not on So each those other. are fortunately of top came

the than our be forecast. nice see a I'm very that's -- going a growth if to apart example, able know the tease quarter combination of that report to we do force XXXX, of our third supportive the NCCN in in scaled and if both. don't for due internal either we higher saying by a first to that's I they'll it's So again. Hopefully fact due or language improvement up to sales very, in volume

out one our answer the that they were more I Does they question be at seems look waiting way we'll and NCCN. would test to brick to and our for to could confirm able as more before event probably to clinically. think select in where go being that a individual bit track Those comfortably or? information fall some institutions there an who step use

Catherine Schulte

final very that but very, separately I take in should based underlying stab XXXX? Medicare guidance, about I growth And volume your then Is cutaneous there isn't at on Puneet's a be Yes, thinking into might try on assume anything to correct? embedded guidance then another comments, how And expansion. helpful. based question, for we

Frank Stokes

a Your coming three rate. durable so where year five growth a of of this we more correct is volume the see second and we to think is base normalize some year off out we'll we're would suggest point and larger Catherine that,

off year the of coming the big Just last growth larger said, it. much too reimbursement not in on side nothing from as in of numbers, improvement but I there,

Catherine Schulte

this Okay. Great. should for one think then how me, need about we expand major last Any other And capacity or just investments CapEx to year? ahead? lab

Frank Stokes

Yes.

normal fairly both and in the our It's relative nothing some growth, kinds to but CapEx, footprint expanding There'll are to be modest our in accommodate so our modest. significant lab. our it's line course certainly SG&A all and headquarters of there. just We fairly

Derek Maetzold

follow All slightly. up right. I'll

I concur XX,XXX now somewhere we with about on increase basis I commentary. in shift with a is is, single Frank's a between believe exciting do the on what So, week. But an expression is we the in side, calculated right clinically and CapEx footprint days XX,XXX Phoenix we profile our could year, annual five thought would gene tests when last working

made So add maximum improve of get of fall capacity. as Phoenix. certainly potentially the work comfortably if to stronger the that well wet lab We second that we shift facility decision build post a wanted and our need we could commercial sort last or research did as not expand IPO ahead out our facility we weekends footprint, a in

essentially to manage efforts our development of easily footprint And that pipeline decision to as those in for through some to us profile fall hopefully what continue current remains and of back ramp track. accelerate was so gene products future and laboratory part tests to efforts undertake our one expression doubling the clinical discovery our and our also on enable

good. modest get is CapEx actual there, us quite The which is have to

employee we can for company. years budgetary we I facility think in from manage about and in year the and and here here. roughly size the only should also into half of up sure an growth implications rooms CapEx the same overall Friendswood, for We're tight new conference right modest which make And that left facility timeline, are to things several or expect again, to maintained the move it in we've and our summer Houston, have expansion has mid a giving a standpoint.

Catherine Schulte

first great. And additional on would in some this could the year. when initiating two right, in. potentially learn talked color one we might tests pipeline work All know R&D be? sometime on what applications I new you've half sneak more Any those I about of

Derek Maetzold

Yes.

that the through the So, year wiggle some we when analyzing actually I initiation or room of door broad that you right? what's the XXXX, IRB in there. on first protocols guess, question planning half first the we second is are datasets, initiating go but when call it maybe And

like, we sure, guess the direct not I'm there. kind look of I disclose a is first answer what those is targets

until data what at actually part the to I kind times either of development probably I look that picture early might would and TAM in some half I of like -- provide thinking, think from the given out, we that early and it still expectations Frank be. to years kind probably see of be, would in seeing test, not of a second what we of to what cycle discuss as year first But the might means. couple the think XXXX the after given could have of some year. half clinical of figure the we look But availability future what that be will what we that too? the that Is the marketplace terms you're are

Operator

you. Thank

from Max question next Our Canaccord comes Genuity. with Masucci

line open. Your is

Max Masucci

to speak to trends clinician growth that seeing rates, you of same-store doctors? metric in sales can Just start, with and stickiness reordering sort you're

Derek Maetzold

Yes. to to talk Hi, Max. hear. to you. Good Good

Let's that updated something next I'll and see, so have add refresh to go need I maybe through. have do the XX-K, time don't in talk, that we we we

the little around a may year out high, little there's that let's upon get of that practitioners based available data call maybe it ordering is X,XXX that a hands we and have, be that with that clinicians. that maybe physicians tough nurse the to to assistants target clinician best But physician audience finished a estimate data accurate. and we XX,XXX So XX,XXX your maybe but over just last this range. low, a We little

want or So, them guess be our that at what, that, for, last as to we targetable least XX% analyze commissions could once see XX% depending XX% test to on to year. I how of XX%, you

clinicians high order and our quarter the a number until given quarter. of Now smaller in those a growth, third number didn't fourth the

stable growth of was like So it's annual not a that ordering doctors.

aside it to number it just XX% call even. So make and let's put that

both based XXX,XXX and On our regional. melanoma year local the we patients diagnosed that that's upon invasive data there's your believe analysis with each of see melanoma, the patient of around reporting cutaneous or side,

tests. people that use predicts diagnosed does with of stage mean? would of points, use or exclude It's our one stage distant stage are, kind what tests, since our disease poor So that of be our that's three the four and end two inappropriate four; of metastasis, are test which one, a who

denominator. So take your XXX,XXX base as

kind we reported And of rate maybe. of at and change annual XX% last year, that an comes penetration out XX,XXX reports, what XX%, in

got maybe clinicians of last reasonable XX% XX% are patients. we've call by So of seeing year a tested melanoma of number we think patients it

certain use at of the all of Breslow how in of there's So physicians when patient upon of sort tests And thickness, look And on is, a we that populations terminology. I increase there be opportunity that patients, would do is use types have the they may to sometimes. say to think that tests based ordering one an some is to of are sort sales limited without our about I terms same-store we age risk appropriate our physicians that think test. our maybe see

patients. tests of some our published a that for of our of year Dr. population appropriate broader you I what in discussion around of with understand maybe conversation test you a about And at the use Max, kind kind last a are articles focusing we of this that looked use like essentially predominantly have to population.

today. of kind ongoing that is interaction So

had We in use they terms a did more that see terms in improvements appropriate of to what in validate tests appropriate the was latter nice our our who patients against some limited use, XXXX. of of thought half physicians

over estimated of the on using about test So the And have those today, talked we able we of continued have a and sales we've and fence be one publications our sitters to as that to improvements, that as really expansion cetera, et the go given some of year. with quarter a clinicians well that guideline to in evidence nice also course impact to to conversation same-store there's past. that opportunity about course, only ordering in development the both of other

or who not their three listen decisions. betterment our equally opportunistic may, all. to and care physicians be breadth consider our years, once to test but And at them increased adopt hopefully have only have patient field seen with in also in opportunity I four and appreciate, understand, really our of an the to able are think for But the we've to

Max Masucci

going up. that customer do to resilience end behavior back and then user I just circling view button COVID-XX And from have guess standpoint? generally, supply of just questions then the business chain helpful. to you is very your with how That's

Derek Maetzold

Yes.

there reagents none sounded key and indicated like So focused sort partners might And that anticipated of from come suppliers the of are in perspective. back from on out are China. no chain a the That bottlenecks reagents that or exposure. They on here, January issued we supply our confirm material to we supply chain vendor reached separately key early laboratory be. use limited

because haven't do but plant close we down or to we to diagnosed to might might limit what employee population said -- there's a I plant a have they that coronavirus. gauge individual can't in -- how seen, with that sort quite when, going of or that be manufacturing their be, being right guesstimate that now frank. Now, that think part be would small don't some That contact be would know I

don't We've every see issues. about once two any checked they in with vendor our here partners and they And indicate weeks.

anyways. our reagents out. We also healthy maintain going of a very supply average It'll

don't be fair think So see concern is that'll a that I that Frank?. we today

Frank Stokes

Okay.

Derek Maetzold

of them order a bubble a newer concerned of we able opportunities major of any at base And our over time report of could our patient seen meetings, or up being or we haven't that's course XXth that so couple in podium losing of engaging customers to to sort flow hearing Again, use should That maybe material flow about, aren't here. far a and flow. on access educate then, appropriately of as that we help and material about be today. but change terms as But chest. date be change outside question to on appropriate physician impact March the

So for us. that see we a issue being larger don't

about, are is go my mole going a a you're we regular as the think is, dermatologist thing patient said that I delay makes from comment likely suspicious to diagnosis of concerned as see would on in that basis for to be if have their care. is guess clinician predict earlier you abstaining into a the opposed think patients themselves to hard I going I I first which melanoma. to

want think quarterly see from week comment shift we Frank, month. reporting on non-visible might to week public something a would add to I would or impact to a a So our any here? be month standpoint. of you terms

Max Masucci

questions. the taking for Thanks

Operator

Thank no it for questions you. like turn Derek to the to queue. And closing showing comments. I'd back I'm in other

Derek Maetzold

earnings Okay. you call. thank joining XXXX for fourth interest and concludes us and of Thank year-end want to again continued you, support I quarter operator. This your in our for Biosciences. today Castle

Operator

Thank gentlemen, this and today's call. concludes you for participating. conference Ladies

great may disconnect. have a Everyone You now day.

Castle Biosciences (CSTL) 11 Mar 202019 Q4 Earnings call transcript