Earnings call transcript Q3 2022

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Operator

Good afternoon and welcome to Castle Biosciences Third Quarter 2022 Conference Call. [Operator Instructions] I would like to turn the call over to Camilla Zuckero, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Camilla Zuckero

Thank you, operator. Good afternoon everyone. third financial Biosciences conference Castle to quarter results XXXX call. Welcome

recorded President today Financial Executive Information Therefore, speaks if is X, me listening today, and as Officer, this of only Castle’s Stokes. you Chief Joining XXXX. and Founder, Chief November call Maetzold; Officer, the Frank to are reading will of on longer of this or A recording website be accurate. Relations be on company’s of any Investor time-sensitive replay X the call approximately call, the transcript today’s available the no weeks. information for may page Derek

remind Before items today regarding or and we limited to, of COVID begin, include, referenced Hurricane you within or Private I similar revenue flow conditions, issued that to our forward-looking of about contain containing macro events statements Reform expected operating of would the made statements outlook, like expectations XXXX XXXX. our today positivity statements Litigation range are of of TAM impact forward-looking and the of our the related to future pandemic, in inflation Securities but the not statements financial earnings meaning some our will Act including cash by financial Ian. projections and future anticipated XXXX and performance, and our statements and assumptions in release the total operational These

obligation and those in and the in and XXth, Commission. the these only Form the of Securities also contemplated other differ inherent as today, the statements. uncertainties, Exchange quarterly we number the from uncertainties and contained and and risks of these no results could company’s Factors described XXXX, in risks statements there documents update These realized. circumstances company’s and based ended forward-looking or statements risks factors involve September no forward-looking speak results Forward-looking cause to forward-looking revise detail on XX-Q and are are reports be and assurances with expectations assume the in to as heading and Risk filed These statements that current under in upon will for change. materially other factors can actual A these be report quarter statements

information some addition, States for And measures and as non-GAAP calculated non-GAAP have or adjusted in not These gross any non-GAAP such earnings flow supplemental adjusted assessing revenue, adjusted as today Investor be Reconciliations discussed the and are and addition to We financial financial of the the includes of measures GAAP margin end release today, to GAAP. In website. the in in that on accepted has principles cash directly earlier issued of the generally been in comparable used a our accordance information performance. believe United the posted of EBITDA. useful substitute items which metrics should been accounting our revenue, page the GAAP these presented operating at not in results. company’s with these provide Relations financial tables measures most

turn to will I Derek. call now the over

Derek Maetzold

million our XX% from business, our revenue least guidance by afternoon, total Biosciences at pleased our quarter growing the million, in increased test full upon XX% of over and and Based growth year between and have the another anticipated Today, XX% results we to share year-to-date to good XXXX representing $XXX XXXX are momentum revenue. $XXX and that Camilla, strong by Castle you, Thank XXXX. total delivered volume everyone. report quarter, of we third

in that detail, we a like held our in I discuss September. Investor Day key reiterate Before few the points quarter from I’d greater to

to and solution-centric continuous mission, how guidepost, and in and our are and business. In exceptional evolution vision, terms follow will corporate are improvement, is and customer values we Castle’s our of we The exceptional our three guideposts to foundational strategy, believe what achieve employees, we execution. operate grounded

exceptional guidepost, that that we gratitude first this is wouldn’t if I we those express acknowledge are it make be to employees, relates home. Castle who weren’t and to Castle we to it my it’s what you those of call where who important As for

all your So, efforts, your Castle for productivity. thank your dedication, employees, and you to

relates will remainder the of to As Frank you by this we may call to financial the then I review it will finish quarter. in responding the over period highlights I have. that and questions any call, will to will provide who turn up for the highlights

me our dermatology Let with now business. begin core

our cancer a estimate skin we XXXX. increase and of combined, our XXXX the report quarter reports, September over combined. the of XXXX approximately and X combined, Overall, clinicians our quarter clinicians XX, X% second delivered X,XXX XXXX, For a increase for we skin that of for total ordering quarter tests And new saw third XX% X%. approximately test we test test the X,XXX ended penetration cancer third volume test dermatologic X,XXX market approximately ordering over represents months

quarter third For test XX% delivered an DecisionDx-Melanoma, of we of increase the X,XXX XXXX. over reports,

are to most growth the clinical customer base. can coupled contribute believe of our the commercial the prior educate test investments strong of our expansion our drivers intended significant our to We melanoma, management impact with

As to data it in patients factors from have and to clinical who world Institute benefit DecisionDx-Melanoma a patients the the and Cancer plans. and untested to traditional for data showed of pathologic improved actions pathologic compared to collaboration had relates addition determine a their follow-up clinical with to National test who real clinical treatment our survival only impact, expanded traditional

American and tested in alone, conjunction the guidelines XX% patients. can untested had double showed more with patients staging DecisionDx-Melanoma X guide reminder, DecisionDx-Melanoma DecisionDx-Melanoma and to melanoma-specific results improvement key management. test help help Health in years factors than of as a patient which the melanoma pathologic pathologic integrated of and with the in melanoma-specific provides risk, survival at patient score cancer current the collaborated the than in ultimately NCI algorithms years breast a with And improve with diagnosed the compared the A when prognosis clinical was of and study refine can Dermatology survival quarter accurate their the result combine seen more third and Further, that Specifically, unnecessary Journal Academy the show procedures study and was DecisionDx-Melanoma of earlier. couple factors published continuous a risk-aligned Oncotype DX test Genomic reduce with with care. clinical personalized that patient using what survival

As treatment the ensure in of discussed Dermatology the the with cases the of our patient or NCI can National to tests Comprehensive aggressive aid demonstrate Cancer continues Network Journal the individual Academy patient of I the more results test such appropriate patients, evidence impact guidelines use continued risk more have could and with or NCCN allocation and risk-aligned melanoma collaboration less a accurately for of American align decisions decisions more DecisionDx-Melanoma help to identifying patients We healthcare just outcomes. of as growth believe the resources. improving publication and that toward the recommend

fourth key continued accelerated initiatives. as investments which believe coupled or been as commercial dermatology drove we our expansion record We quarter. the quarter. of you in and in test are of penetration efforts execution factors marching has the a perspective, that our typical with Despite historically down From quarter seasonality result careful this our a volume, is seasonal this strong growth well business, feel market another flat sequentially established data, this the third

melanoma Melanoma dermatopathologists diagnostic in a DGEP and supporting tests lesion. expression to test diagnosis point includes use the general with of benign call profile The turn difficult-to-diagnose patients in or pathologists. is MyPath gene let’s our for which primary or for offering, Now, the lesion DiffDx these monocytic both Melanoma or

our focus quarter a on we dedicated As diagnostic GEP team sales we discussed call, to during our reestablished offering. second

on for teams focus our We test have our focusing just of that this both territories than more now offering our diagnostic growth adjustment appropriately. a DecisionDx-Melanoma will call focusing our dermatology allow a point, support supporting dermatology diagnostic and We and outside the GEP will offering. in have DecisionDx-SCC small believe sales its manner to team sales XX GEP that we exclusively on are

also we cancer believe this to of responsive. frequency And We seen and tests. promotionally historically, is our our target contribute have could our that improved commercial sales team all realignment for of market reach

continued level we optimal momentum into as sales change So, two reach dermatology we XXXX. of for move Historically, believe contribute quarters reps to takes it a this will about productivity. to

investment diagnostic quarter review. team impact XXXX our to our evaluate commercial expect the second We of GEP in

MyPath LCD of Melanoma historical of well. Melanoma already to include as both would the we Medicare, With to covered as draft quarter should MyPath Benchmarking the XXXX. against business one be in quarter tests motivations to Medicare finalized by ultimately our of expand DiffDx-LCD believe acquire covered was MyPath it diagnostic to was our of you relates a XXXX Melanoma an that GEP reimbursement, the for Melanoma Palmetto the for will coverage. timing existing second recall give this posted that pull patterns, would As end In second under coverage forward reimbursement LCD. XXXX, DiffDx

test. to Now, let’s DecisionDx-SCC turn our

volume year ago with We of momentum the in continue third period. volumes support to see quarter the strong from up test XX% XXXX,

at Further, of volume, growth in As the part strong in with growth coupled it. in the the is we due to has DecisionDx-Melanoma DecisionDx-SCC the of large our the test value growth pleased come with DecisionDx-SCC not in our expense the provides. high test the SCC in of growth need strong volume to our combination we are volume conjunction believe DecisionDx-Melanoma, in clinical see our with for

In DecisionDx-SCC laboratory our claims this and expression were believe track diagnosed relates PLA the Pittsburgh, completed earlier second-quarter a codes per Schedule, Laboratory that patients DecisionDx-SCC $X,XXX related medical update and an Draft recall test MyPath appropriate additional such [indiscernible] testing XXXX priced subsequently this we Medicare included stratification is earnings the manages of rate entitled test our which customary prognostic the rate broad DiffDx test to posted and X, days a by Both or at oncology updates tests what our Melanoma, of breast, period to late not like diagnostic for first they prostate additional our profile DiffDx what it in or XX recommended cancers, was were pricing reimbursement, codes. Novitas did test, Novitas, this the of have test that CLFS, used did September time. back Novitas test DiffDx-Melanoma at for Clinical in our quarter for XXXX. and year CLFS. May. CMS new and dl-XX-XXX, released for the extend the on genetic on risk commentary call, discussed As contractor in draft this and as those in review support We Melanoma. Fee the we a we with year Pennsylvania to with other ended XXXX gene September, common LCD also Melanoma is usual and new signed

the as prognostic to majority recommendation and panel laboratory to advisory clinical DecisionDx-Melanoma. be the was as This against test against advisory However, recommendation. advisory cross-walking panel, stratification, majority also for risk MyPath DecisionDx-SCC known diagnostic recommendation our the DecisionDx-SCC CMS The was or the CDLT proposed of CDLT well. to as crosswalk minority Melanoma from panel as well test the

We to have those function for tests with submitted risk out comments tests. required point support for that CMS of are diagnostic met resources and significantly from different stratification the

communicate CMS our final the We fourth a XXXX. on to expect of late rate determination quarter XXXX in

turn test gastroenterology factors. of number several Now third in will the our test let’s key quarter. the second to reports delivered quarter, upon in seeing We based believe that XXX we the reports the TissueCypher momentum are delivered franchise. We nearly continue doubling

patients. billing First, CMS for from the test earlier the called year, process what ADLT is for in laboratory test status the rule, TissueCypher which status XX-day exempt Medicare or simplifying granted diagnostic advanced the

Second, and patients clinicians year the greater Barrett’s intended of Esophagus. provides technology drive represents XX% may screening low Esophagus, in of And market for Esophagus. American approximately update innovation be with This practice advances and an Association, represents advice believe Barrett’s best endoscopies product of surveillance helping important end, the regarding so the to in innovation penetration. we per publishes clinical on Barrett’s TissueCypher awareness or Esophagus, us on practice use XXX,XXX new of Barrett’s update or surveillance beneficial for practice stated Gastroenterological for of the a test it screening non-dysplastic approximately and development guidance risk stratification AGA, clinical statement which on the

we the of the XXXX. in momentum of saw half additional in given third outside sales year, territories Third, the we first late added the quarter

and levels refined believe and we XXXX going adoption. to the sales and our that so quarter, materials we with educate product and impactful updated also are inform and finishing gas better year for third materials greater that the neurologists drive messaging will into marketing more We of

bringing We be it strong will XXXX. and we personnel put us of training growth believe up speed, to these in will going which into position a

X, quarter ADLT X-year determined in for part $XXX. granted from TissueCypher payer rate XXXX was reimbursement as and to Medicare submitted the to recall XXXX median Beginning and been Medicare status a the XXXX going this first December will and X, be On XXXX, XXXX that January XX, allowable through to private to December the so the period time period, TissueCypher reimbursement between XX, expect January late of front, time April we based August that received upon early has rate the the ADLT XXXX. XXXX or XXXX. Data published in be for

we for To our in XXXX, beginning growth pleased to-date gastroenterology in this with mental was build are and intended mind Keep XXXX revenue as trajectory summarize, the our business profitable business revenue acquisition of health beyond. business. a with contribution that to results our particular stronger, as of us well

the proprietary that these in-market markets or already some were test, of estimated drive in on generating revenue material revenue succeeded first-in-class material believe total on individual Our criteria. larger positive that we could best-in-class which primary long-term, and it were anticipate filters products were percentage We any achieving focused algorithms for for necessarily not that dermatology market, TissueCypher our addressable but met reimbursement than had decision coverage. that the with

workflows, XXXX are integration by quarter of of or complete end to optimization the of TissueCypher, second XX and for and the to of around enhancement phase entering next we we XX Finally, the post-acquisition. expect months processes in which

of the second integration turn of seen during test have we when progress acquisition pleased franchise. the the We limited X,XXX XX forward mental XXXX from believe is XX% are test attention the delivered in progressing was the our the reports nicely We Now, period up quarter our April and final. let’s to XXX the with so health third reports from in quarter we XXXX, IDgenetix far.

believe anticipated with plan in acquisition, market also XX-month acquisition individual larger a met phase we reimbursement any term the generating which of IDgenetix XX early not integration but total had could coverage. our However, was or on addressable for longer We material filters are in best-in-class of test, percentage again proprietary that gastroenterology algorithms market, positive we dermatology in-market some have already was material with still achieving and drive to and estimated our as process. the than succeeded revenue was that revenue that first-in-class an necessarily

value market, a We opportunity won’t but Our an the large of integration efforts markets. mental will health the large mental franchise. single be pharmacogenomics our leverage critical could a and to patient of health enter opportunity believe be be a matter fully very just to series of

those expect of to will One on segments of seen where patients. value is our easily integration their clinicians and we the focus by objectives IDgenetix market be

For conditions These a just medications market patients pinnacle high example, have want the not often on but be represents need. can very and population patient histories large a unmet and clinical conditions. their complex older for multiple

of by a the moderate a randomized factors test trial results provides test therapy the with in and into this in tighter decision IDgenetix remission proactive developers with experienced severe early single that lifestyle and interactions trial We Our drug-gene is XXXX IDgenetix and selection and are report. depression believe that drug-drug rates. why severe to and IDgenetix guided versus controlled error treated who a patients show response interactions,

are this fact, I that test as and was lifestyle built believe during of bioinformatics factors or earlier, In came that drug-gene, the mentioned we pharmacogenomic of IDgenetix inclusion analysis. drug-drug a to algorithm best-in-class prospective because diligence into

depressive meta-analysis and with online in disorder. the test therapeutics, patients published systematic had a and trials published review in that In pharmacogenomics clinical fact, and was evaluating pharmacology clinical just major

and estimated most of IDgenetix that the in gain trials with came our overall test displayed in Their inroads make market trial the test years. that share penetrated. to to billion believe of controlled pharmacogenomic a overall ratio U.S. the ratio the risk our X.XX. represents health randomized and to during in one in is us compared view TAM X.XX% the We will substantial controlled plan our impact mental seen believe significant slightly enable a we was the a risk opportunity $X coming We that that analysis believe confirm what diligence randomized

will call and over now the to financial to Frank will details turn relating results I guidance. our who provide

Frank Stokes

and good afternoon you, everyone. Thank Derek

to may our time, of with results we the Before this results, Ian for But and orders depend time. at fourth which number assessing based I that third we due have that future impact cannot predicted this on our like financial Ian. are significant see Florida. to skin volumes quarter potential be state the still on our cancer Hurricane fourth for will begin Historically, quarter Hurricane a at impacts our XXXX, test quarter results that of I to tests clinicians of would in developments could

are impacted our As predict operations, to and future test be of we cash will condition which Ian. flows unable our ultimately to the Hurricane and volumes by results such, extent financial report

Now, XXXX, line DecisionDx-Melanoma was strong from XXXX, the dermatologic and XXXX over XXXX growth another million revenue driven quarter quarter of to overall million. third have to our an were our increase our by $XXX of million largely closely million XX% the revenue growth. we higher outlook again, revenues the DecisionDx-SCC. quarter quarter $XX primarily turning $XXX total to Once of and raised third to to test, anticipated third $XXX for $XXX test we developed of In report tracking million, volume top

periods, million negative XXXX by for also reflect Medicare ended X reimbursements previous delivered Derek for revenues to XX, ended months related months adjustments X The the discussed which as the negative effect September $X.X earlier, $X.X test XX, the higher negative compared to were for million DecisionDx-SCC of higher partially revenue offset in September XXXX.

in million, quarter was of prior delivered adjustments XX% over periods, effects $XX.X of related XXXX. increase of the third tests an adjusted to the Excluding revenue revenue

to XX.X% third XX.X% for quarter the XXXX. the third of gross Our quarter in margin compared was

the which margin, of intangible XX.X% the asset related delivered effects periods reports in to same XX.X% prior the excludes compared for quarter gross amortization with XXXX. acquisitions and our in to revenue associated adjusted in Our test was period

discussed, impacted As intangible GAAP the gross our acquisitions. of be negatively recent associated margin assets we will by amortization previously to continue with

cost operating XXXX. the of million $XX.X including quarter $XX.X September expenses, were sales to Our total quarter the for for million third of compared ended XX, XXXX

salaries, compensation. expenses September Our compared XX, ended months bonuses increased for the attributable million sales and including ended personnel X stock-based marketing higher XXXX and September $X.X to X costs, the to XXXX, months XX, by

Personnel costs of AltheaDx Cernostics acquisition team XXXX well general associated dermatology April other meetings, in XXXX existing facing headcount our training have and of in of increased and December personnel commercial with marketing the through through the for travel, was primarily expense and increase in the costs The remainder expansion in as our increases XXXX in sales and as events, employees. increases.

personnel administrative compared costs, of our including to expenses the costs personnel headcount reflect AltheaDx. related of higher the $X.X acquisitions million administrative including expanded XXXX. quarter quarter in functions the The bonuses, compensation. stock-based increased support and and Cernostics to primarily is third by and salaries, increase third XXXX to of higher attributable The in General

by due to rates increased headcount support compared the higher the attributable of XXXX higher clinical in expense third for stock-based growth, to and cost quarter of cost quarter to third higher $X.X due primarily in studies. compensation pay in expense R&D also million to and personnel expansions our higher

to million including costs to attributable Cost to XXXX higher laboratory months AltheaDx Cernostics rates. headcount personnel increased ended of additional attributable the months primarily for as acquired addition pay September XX, and $X.X as sales September X well amortization of higher X compared headcount operations, to XX, due the intangible exclusive our XXXX of and increased the testing by ended of assets

increases of and activity saw higher We prices. the levels also supplies and services, in reflecting increases cost in

most terms force Inflation has us impacting is costs. a in stubborn of been personnel and

SG&A the remain quarter macro we for Given are million million challenging, future stock-based we third among of $X.X for to to of the R&D compared totaled which to due the expect impacts and believe is inflation. cost third expense, $X.X allocated Total going quarter XXXX. conditions compensation sales,

in We headcount. in increases due outstanding compensation expect rewards periods, mainly future to expense reflecting stock-based material our higher in growth

XXXX. had employees as we of to XXX XX, September XXX compared September XX, XXXX, As of

weighted As September be million, related years. recognized basis is period costs line XX, compensation of average unrecognized to total stock-based $XX.X X.X XXXX, of straight awards is over the expected to which on outstanding a

increases We periods. expect we stock-based in stock-based awards to contribute which continue future compensation to further to expect granting in expense compensation

value acquisition activity in such remeasurement Operating gain changes is change changes ended net up of vary quarter million for consideration we assets The AltheaDx months of projections quarter-to-quarter XXXX. during developed in was the payments depending on contingent from acquired XX, XXXX our of to of ended the reflects and Myriad expenses $X.X commercial Lab, attainment months in April this regarding the acquired and There valuation milestones. X also XXXX of which results. the MyPath any assumptions certain included primarily Further, of $X.X contingent to technology connection amortization in XX, expense fair to and related related intangible that management’s three September earn-out consideration the no of million, September AltheaDx in liability is we late for mid can had the and XXXX, respectively. from Cernostics with

quarter in the loss $X.X activities $XX.X ended nine cash the contingent net the used and compensation primarily the with quarter AR diluted $X.X loss was to million, in million increase quarter of negative accrued loss expense Basic for million. amortization of compared in $XX.X per the million was $XX.X compared of $X.X by and for to of $X.X fair $X.X XXXX. million XXXX. $XX.X share in compared increases million, EBITDA for basic share Net the for and for attributable change September $X.XX Adjusted non-cash comparable consideration net and partially $X.XX the a of per quarter third was diluted million was loss loss the third third compensation XXXX. depreciation XXXX of in to value offset net of to of in negative third XXXX XX, the of of and million stock $XX $XX.X months the Our quarter of was operating of million, for period third million million

equivalents September cash we had and cash Finally, XX, XXXX of $XXX at million.

rates short-term held a advantage help company million value part fair in securities. investments, of of classified higher unrealized in we order these losses income our purchased sheet not the loss interest considered will available-for-sale therefore are investment reported the and impacts. and as inflationary of are which Additionally, These investments carried $XXX have offset to take as and marketable and gains cash for securities reported under Also, holdings are income. not comprehensive be separately or other as on part balance net accumulated

As we outlined ending Day, disciplined anticipate top to XXXX. be cash flow in for operating total a XX, million range to $XXX million Investor the we capital margins, to expectations XXXX. continued September gross net at growth achieving along in of expect allocation, our $XXX approach with our for the by December we strong in our line revenue positive year Combining

I call over Derek. turn to will now the back

Derek Maetzold

expect position like continued another test on of today volumes in you, revenue well with thanking year, team an all to of interest in accelerated XX% Frank. plans, finish momentum a the going of XXXX. Thank In strength growth at executing total with by closely over growth, you I and to summary, we would conclude report XX% for and our strong your year Castle. our Castle trending increase into delivered last quarter in are with

questions. your be to will we take happy Now, Operator?

Operator

you. [Operator Schulte Baird. Catherine today our Catherine, question ahead. Instructions] of first goes please Thank to go And

Your open. line is

Catherine Schulte

impact in assumed give recovered of Can guess Ian, sense so how that’s just are you on I questions. in far? what’s Hurricane, and October the a us guidance? first you Thanks assessing what so for the guys. there. And the impact still was Hey,

Derek Maetzold

some a when Hey, a DecisionDx-Melanoma of the analysis between at did Catherine. we if back X bid, We in Yes. the X-week there And lag range. the it’s is a is when to patient and placed. – way recall beginning the is to of you biopsied reasonable back order

And started until have would see that to recently. we really so not

the impact be in So, don’t that disruptive, but around not for to our full here. we so why that everybody because highlight noting we far arms yet could have to to be too what and lag, things were we keep wanted just just appear that of mind that’s

Catherine Schulte

guidance sort Got it. is be will that something there But impact in some there there? assumes of

Derek Maetzold

is, that is raised we what on view in what impact to. included Our we what have

Catherine Schulte

got final to maybe test? an application you Okay, status talked out, Difficulty] for come update ADLT SEC, [Technical And determinations potential pathway for that for about on it. then the any and

Derek Maetzold

first of again, You of that, the you you repeat question the can – broke part the beginning were up Catherine? at

Catherine Schulte

Yes.

SEC, there heard for you comments potential or for determination but I the the payment for update ADLT said is I test? application on As an status your submitting the Medicare code, am for on around any waiting final new that

Derek Maetzold

Yes.

our So SEC status. there. qualify we And our evaluating we certainly believe in approach the assessment that test should for are ADLT

We of will update you shortly forward. as sort we move

Catherine Schulte

Got you. it. Thank

Operator

to go Kyle And you. next of Kyle, question Thank Canaccord. goes Mikson the please ahead.

Your line is open.

Unidentified Analyst

quarter. I Alex Hello. This cover to Kyle briefly. Great just wanted is really [indiscernible] on the Mikson. line for

then XQ, been? Melanoma. Can been go in you then sales has you. new have Thank been I more and It that one after for more into underway. for that And has DiffDx characterize you team MyPath that. team the this dedicated this had since sounds of it’s the So you just length Melanoma quarter discussed a like and

Derek Maetzold

Yes.

here. the question hiring think interviewing for should that. date good was I think. clarify and I began I So, probably, the We mid-September, what, group Frank,

So training still we completing now. are

So at-home training they say during September. were new employees I would doing

third That test of facing closely with sort from cutaneous melanoma we the been group per would aligned had STC dermatology our the being test. se. more quarter the So, and impact refocused there no also said, have

in see recheck they in the to want future expect if resized – more quarter quarter make modest the terms kind – here to often. we are of field here we and training predictor really expect sales history some looking a would of for or out the get quarter obviously do do do would fourth some towards in performance of a if we come of we be is to adjustments But first improvement So, and the kind correctly XXXX? second in the if – effectiveness, of I as would of

Unidentified Analyst

more One if it. you. question Got Thank I it. appreciate alright. Good color. that’s

some wondering could adoption So, provide, on of qualitative color guess, you early I I Thanks. TissueCypher? was if more

Derek Maetzold

Yes.

Okay.

back. let’s So, a step take

So, had ‘XX. until in company commercial-facing that one the December effort is they no we acquired

only So Executive sales the Officer sort Chief of was person. the

fits he think to because in company. CEO Friday other in run I the type every do we the had to afternoon thing,

are of call So low of XX low effective certainly year. in we this very are I January force think, We staffing starting and X would sales of up December a when very an awareness base spend quarter people also in in partner we ‘XX. from time additional the total subsequent of, staffing base period user of a that in territories ended very, XX XX kind company I bring They up acquired the – initial We outside we to moving I sales speak. up mid-September as a made training most at – group training second is through kind of XX think of part in and training territories X us the first field. it

background that’s terms sort of sales is So commercial the in investments. of rep

a any of lesion, probably esophagus is perspective, So the we at diagnosed from breaks in with so believe Barrett’s can’t adoption, qualitative the XX esophagus grading XX%, of a but if market Barrett’s you X out dysplasia. assessment dysplasia of see – the sort pathologist look about patients how

between Barrett’s esophagus. And would in patients patients call remaining non-dysplastic indefinite we low dysplasia So, we the is of call roughly split have dysplasia. XX% what kind of that who would with grade

want the it’s to if middle of guess, as pathologist. view warm a you So an dysplasia, I it’s – kind of kind on of in

diagnosed the non-dysplastic least most in use that our think test or likely the would we So adoption important year XXX,XXX element that of most be disease. group, patients believe that which in large at per with is Barrett’s percentile XX we background,

that cancer proportion of in out out Barrett’s esophageal is up either turns patients that? that that progressing significant to high-grade are why group. or dysplasia esophagus hiding It a non-dysplastic end Now,

so to able I Barrett’s I And of the high-risk find at a have use the to my clinical TissueCypher say, dysplasia. number they patient know going of hey, validation a and a score. back those Mayo I esophagus. from pooled I certainly analysis of including perspective of test, based upon your disease in think see your, X test this test a gastroenterologist pretty clear our to year, significant the a is no April know be am I studies, patients perspective, sort have utility then pathologists who If Clinic

patient, look patients fact is across higher receive from slightly high-risk results dysplasia. cancer actually And in I that for progression And have that’s mean pathology U.S. eradication that up is esophageal low-grade end my who having it GIs a out people if therapy. non-dysplastic endoscopic that least with of a ablation test dysplasia of than or high-grade low-grade standard care does TissueCypher do of standpoint at the therapy, to the risk many commonly of the today at turns what those most in which dysplasia on that community a

so are endpoint. what is or actual roughly or non-dysplastic of very orders our match coming XX% the we And majority in, a it’s So, fact, seeing that today that BE in group.

answers that of So question. qualitative that the I – maybe hope part

X, cell our carcinoma very practice. unaware The by test, with melanoma other in X, all to test, repetition, is to begin almost clinically from try to our it we of actionable though X to which launch being aware, DiffDx incorporate being take even way, and squamous calls their the test, our test that Melanoma we sales to them, very part, of it being into I have have interested November our XXXX, gastroenterologist test, believe and is exciting go the we a does to think, of seen a have as of

we’re quarter in expectations. feedback So, line sort third in and because the quarter second quite quarter year of are the relative versus-quarter with we pleased the this change that getting right our seeing the is in growth to

Unidentified Analyst

it. you very Got much. Thank

Derek Maetzold

are You welcome.

Operator

of And the to go Puneet, question please Securities. ahead. you. SVB Puneet Souda next Thank goes

is open. Your line

Puneet Souda

guys. Derek. the question. Thanks Hi, taking Thanks, for Yes.

So an just SEC, just on that’s given point quarter. fourth that important maybe for the

to If things. you But could then could walk Obviously, potentially through side ADLT potential there side, scenarios. of you the math. on is other other maybe an apply

are think coverage And Obviously, couple address do walk so questions for you lost, first through if those. covering of jurisdiction? jurisdiction all? so Secondly, you another pursue to us thanks when can was revenue maybe sort this? ADLT the – And or the you route, a impact, timeline there, it just was if to another through able the was of what is of

Derek Maetzold

you. to Good Puneet. absolutely, Yes, hear

interactions we We very Novitas a in which this perspective. so were laboratory, positive submit we about, up were Pennsylvania at Pittsburgh, as to guess, today, medical did And I Medicare. which for our a And we of less late that March. in overseas, So talked earlier that with we asked be test review had a requested Pennsylvania out the setting second pricing of bit and came and year. quarter we processed call in Novitas thumbs dossier, to our a up out through

think $XXX which was is it you being to cancer. prostate which April. for at us did in of was over the breast, for think price happened – Novitas first basically issued, change, I as know, or is crosswalked Oncotype I And what Oncotype they they ahead our reports mid-March and which

reduce a So essentially looking And in this of in alluded medical that to Novitas to to three all review try think of up but and one little then draft from I and be broad well. a lined a offload more their LCD, databases. to, biomarkers try pretty as to year, maybe – that’s a harsh work you efficient and say, published June oncology responsibility,

doubled significant of period, draft here, was to we a is that out believe, early the to a so the assume you days for databases, know closed weren’t and be then as covered. XX-day for included, land those number in if That they due LCDs, that may XX covered. you’d not in if you you’re comment of of that wanting usually background. be they September included would was lay And this the actually there comment And And to assume audience people year. public

we’re high I LCD with and a modified and believe is we’re finalize that, likelihood to consultants consultants a guess that include believe fourth might to our not as aligned would Our anyways. scenario. you most other under is the That one three will and go these the contract and Medicare we likely our reviewed medical aren’t to ahead review databases, supposed probably already covered do such that be is that if there as of by pathway

said, what would and what benchmarking suggest LCD an saying But you’re in maybe aren’t the earliest that and that NCC, as they finalize that time, happens that mean? Our if does might is at point the being middle Novitas LCD have they to data, final first late the that’s by, but the to I the issue in limited LCD would finalized quarter, to based historical date sometime They a upon posted be a think, issue honest. draft. you

you’d June XXXX, typical that So a notice by would period, implementation occur have of period. a XX-day

So ranges on depending between maybe a accurate. maybe maybe July might if states in date gap which coverage April are accurate, have you through those

as part. come the expect, other the between meantime, that interim that’s you would NCCN time including we’re so and and some working So with In now for then. along may at reviews, groups, that point in in

earnings We back you to you or a from, XXXX review cut submit would also, SCC guess, may COVID, dossier technical of the and for of recall, summer calls, technical medical in the XXXX for as or got in test. we did Palmetto XXXX, a assessment I middle up expect. request know we We the as

take covers for XX-month And can January next a next so potential – known let’s that it run Xnd, would to be there. if as as quarter through take pre-COVID, for assume used would until I time that things year, model cycle we about standard plan January goes period outcome been it post, fast quarter, review if we’d any of wouldn’t running coverage but say, a that XXXX, haven’t – at first a got for Palmetto XXXX, cycle,

not under be is XXX% is but So is likelihood that LCD on the X evaluating ones current a certain from But high I scenarios our comments gets again, think the modified there months, inside there. We could think that we’re current they anyways. nothing Novitas, the what again, months gap the belief X potentially received.

Puneet Souda

raising here the XXXX potential the details. guide, how Derek helpful. rep year had increases have XXXX momentum. continues the SEC growth you’ve on the on those and appreciate but full And Frank, for DecisionDx There is on all getting Super and given DiffDx about comments we the reimbursed. guide it. change prior sales Thanks coverage is some think Got to obviously solid should here, – that just for here, you’re

we given XXXX? we Thank So about to maybe where just think about today how talk you. should us stand

Derek Maetzold

do you Frank, to want that? cover

Frank Stokes

Yes.

really good We’ve great, setup coming. there. a We’ve got I is Puneet. salespeople out of the think lot it’s got data

the volume well tests of our validates think competitively. of I clinical we utility and that positioned still the are each here,

So demonstrating excited I our data for the and it about is think that off. setup the careful investments and think paying ‘XX, we’re is terrific are

Puneet Souda

believe, submitted there dramatically differ it, TissueCypher should the just was, then but if Is lower was the Thanks. rates on last versus Got TissueCypher? it. medium initial that slightly the rates one, say in could tier to shouldn’t I reason why And rate, same ask there Is ADLC – ballpark? already? you’ve any I assigned from which you any

Derek Maetzold

see let’s here. Well,

of the price once attained So year, X the way the list one next is at original that ADLT as status March a back – the was was when. ADLT rate on at $XX.XX months XX new $XX.XX or which was this set were price,

necessarily that wouldn’t original the would I rate, So first ADLT that the period. collection the during price list call call I

first this ADLT first toward end our the collected X year. months, obviously rate data during we’ve and of that post So would have will end we September,] the

hard rate. lower. seeing the that’s calculating But again, a Medicare going that payer had median I time So rate private

Operator

Street. Thomas go the Thank question And Lake Please next of goes you. Flaten to ahead.

is line Your open.

Thomas Flaten

might on the if side you wondering of as be guys integrating to in you SEER commercial into color how provide was the as messaging. I reimbursement both data Derek, Hey, some business are well able the the

Derek Maetzold

Okay.

and So from field certainly perspective, have a we commercial up trained the team. messaging outfitted

the So and as other the in poster group, medical form. science group, sales the abstract the presented liaison the data terms been it’s medical directors of in

seeing clinicians we’re the there. are educating that value they So on

is really should right who That comparator, breast we make as talked me? before improve, those doubting really cancer it somehow be data a is removing breast and do a when I But this not gives similar on between publication. evidence what abstract review focused patients with decisions, especially for And that’s as and make we’ve to improving unnecessary what untested information that working is a this for that you Now Oncotype that more survival. the might more mean to informed Oncotype long-term linkage for has to taxane therapy, opposed decision I as same received guess, cancer. seems you for tested, been accurate to level those an show outcomes it message now. clinicians, about What that does of are by or well does of

of similar kinds having who of picked is being funneled disease that it up procedures That’s So be the or withdrawal the treatments, reality are we are how they should data. aggressive people of funneled. unnecessary see where but more as to

probably as field of the during the to as publication. that released second the strong been Again, not that’s quarter year. was So this

that So we will I domain. would the perspective, into have, payer have aside that’s until come that’s can of going in the way Scholar reality that’s we From myself. another important up pubmed I I but publication pull tested a the publication guess, is on say, peer-reviewed slightly, to back is be water as or interesting a when more public out commercial a very see put we come Google

question two, today zero great that back get the So that’s out landscape; publication the with is quarter on gets of commercial or door. impact I impact the don’t after on one, a think is and in the the think I so us to a payer touch

Thomas Flaten

the they on full the productivity? know the the would been being now. team, a while you or How ramp them And maybe have derm and in size quantify qualify expanded field sales I to for Got on it.

Derek Maetzold

Dermatology.

hit I full quarter, first right team second can’t remember. we quarter, of move dermatology of think, group, that the sales move dermatology earlier this into Now TissueCypher the is I and couple one, a Frank, over did think probably representatives a the right? stride I year late just dermatopathology couple have,

in as typical So there right is you’d some expect anyways backfilling organization.

volume normal one, noise. second-quarter effective, reflects fully I you’ve just think everybody being So got background third-quarter probably some knowing penetration volume,

Operator

question please you. next Massaro of go ahead. Thank BTIG. Mark, to goes Mark the And

Your line open. is

Mark Massaro

cell but here. I congrats squamous think And the there a questions. covered I know tests, Hey, for helpful guys. be lot of of raise. on a beat on the bit been the carcinoma strong and could Thanks little clarity is detail

expecting in So get as And crosswalk I for test. earlier I’m were to payment wondering not just in year. priced it paid a to MyPath this you a sounds QX were that crosswalk I a XX – XX, this you guess, the if expecting in I’m XXXX, expect there to guess but Melanoma risk that trying you were to that Is of here perspective. lot I you And Novitas SEC know instead, you parts in similar put I moving it get like there at don’t expecting any know to did are QX? QX. DecisionDx-Melanoma. you

Derek Maetzold

they short preliminary are So preliminary final turned the determinations yes. but Xst, whenever – they determinations The effective so the post answer them, is XXXX. January

that So that I would be the would not in just or influence unprecedented. quarter, fourth expect would – up any down

expected My taken in Central that understand produce but one, that test that the that will up risk like more for good companies. crosswalked more some And versus test both certainly, a no if In the We of we to this last be care month. DecisionDx-Melanoma, under than same level call dealt MyPath that Oncotype and and skin interactions another quarter. the do now Oncotype company. between stratification of But the needed over they by run and is approach. thing for no to our had believe act cancer. years, SCC breast. But the lastly, or tests a less historically terms there be of test right Medicare that’s have resources tests try a with have diagnostic as honest, the hope not a We to or mentioned, the our I for the for Central CMS to people would for cancer over is and look with their course, patient like breast expectations, difference support test, mine, acute develop risk to that course, accordingly. at prostate I could of have Baltimore and the of their restrictions would impact group we that normal ratification group is Novitas they I to position is fourth follow think our would I think they crosswalk likely SCC like stratification likely given land, been across to another approach be be risk

shouldn’t that I expected. think be

Mark Massaro

perfect. Okay,

to is a do think ‘XX? there than you you to to likely And from the more $XX, it’s Melanoma? later breast rather go that just So there sorry, it MyPath change would do in Oncotype think update be your clarify, CMS now if clarify, QX also may an at $XX calendar

Derek Maetzold

off Yes. period. normal COVID has thrown the posting

the last afterwards. when rates, will new new just of December got in think to may think but posted can final for You a or couple out be But recall next with Fridays years. shifted expect the have that the if Typically, updated Friday final all they would codes, precut sometime after That I I not schedule – codes year’s X is the like rate the Thanksgiving far. back bit the determination. that for we the usually in test

that a think cross and go for I to the and to potential the process in would could would current the a be they XXXX is staying move there That effect process. throw And there rate the XXXX. Now back MyPath, have potential forward and MAX guess, with ahead a DecisionDx-Melanoma. be a option, I are same gap-fill blocked XX, staying be up at is typical XX, go fourth throughout on the potentially which that into crosswalk from

potential fourth a there So is outcome.

Operator

go to Stephens, question And Carrico goes Inc. Thank you. of please Mason Mason, the final ahead.

open. line Your is

Mason Carrico

just DecisionDx-SCC versus to Most in of conversations have with color early questions. done quick the maybe have lot these terms educating already docs of in taking about guys any test it the in you overlap here was test me. so test ordering? in of comes on you’ve the of leverage guys. DecisionDx-Melanoma when the the mine the when volumes, tests who’s in ramp work one types for that how early answered, Hey, for XXXX Thinking of or seen a of Have that adoption on curve? maybe derms differed for Thanks of terms adoption one been

Derek Maetzold

Yes.

cell those – and carcinoma I between now adopting the test, the that’s a current is to squamous there significant so already a DecisionDx-Melanoma due think test, probably are factors. first, adopted overlap and who two So last had are there is who clinicians or

our sat results about One and had that that we’ve with in receives when test in conversations along obviously hand managing is value pathologic the having clinical factors them the not one hand. of in results test additional and our have melanoma versus you

already through are and practice So thinking reality. integrated the that appreciate concept have they in and

we here when we about talk same So in with walk the cell next a into squamous people clinician high-risk day that carcinoma. see gap and

can with to think Here’s how you make then so really we world. I follow with how Do agree result. the and what need generally get patients that, going in nodding, you manage is I your of changes these through to saying, they see I am head and course, well, would along

there, and get bit and think become that our test initial it. then they adopting customers might Once they I test dabble begin a

than when years introduced like it So when the a that’s was risk in I stratification doing dermatology ago quicker in anything was test think we few melanoma there nobody this.

certainly, was helpful. So that

the made the even and XXXX, – course, before at I is then though representatives first real sales across think available was U.S. XX the XX we we were mid-XXs maybe XXXX, we’re that then – the we the but really in of it test went other element, launch, people and right was was to it now.

in increase marketplace. visibility a So that’s nice significant of the terms the in

having all have with So to are a us if it’s factor. leading and I or X I they those easier a clinicians adoption if cell certainly, squamous think, features, around being it’s aware think, the quicker or driving the those, the But that’s of with X if for same melanoma, conversation of rapid years adoption, of are seeing or more X it’s mix know also as the promotional but saying, size with all I of and just more carcinoma quite together. company, we’re and accept clinician don’t now that’s to those testing message a part of

Mason Carrico

makes Thanks, That’s it. Got guys. sense.

Operator

you. Thank

have questions. I’ll closing back Derek remarks. further no hand now We for to

Derek Maetzold

Nadia. you, Thank

us Biosciences. XXXX in want for for again continued behalf So call. you this today thank interest to concludes joining earnings on our of the your I quarter and team Castle Castle third

Operator

Thank you all for concludes Thank today’s This joining. call. you.

may now lines. You your disconnect

Castle Biosciences (CSTL) 2 Nov 222022 Q3 Earnings call transcript