- Q2 2019 DecisionDx-Melanoma test report volume increased 27%
compared to Q2 2018
- Q2 2019 recognized revenues increased to $10.7 million, up
from $4.0 million in Q2 2018
- Q2 2019 gross margin increased to 81%, up from 67% in Q2
2018
Castle Biosciences, Inc. (Nasdaq: CSTL) today announced its
financial results for the second quarter and six months ended June
30, 2019.
“We are pleased with our strong second quarter performance,
including our 27% year-over-year growth in DecisionDx-Melanoma test
report volume, which we believe was largely driven by our
successful first quarter 2019 commercial expansion,” said Derek
Maetzold, President and CEO of Castle Biosciences. “We are also
encouraged by the success of our recently completed initial public
offering and the strong level of interest from our investors. We
believe the proceeds from our initial public offering, combined
with our existing working capital, position us to execute upon our
expansion plans and fund research and development activities.”
Second Quarter Ended June 30, 2019 Financial
Highlights
- Revenues of $10.7 million, an increase of $6.8 million from Q2
2018.
- Delivered 4,067 DecisionDx®-Melanoma and DecisionDx®-UM
proprietary test reports, an increase of 24% over Q2 2018, with
DecisionDx-Melanoma having an increase of 27%.
- Gross margin of $8.7 million, or 81%, compared to $2.7 million,
or 67% for Q2 2018.
Six Months Ended June 30, 2019 Financial Highlights
- Revenues of $19.5 million, an increase of $11.8 million from
the first half of 2018.
- Delivered 7,659 DecisionDx-Melanoma and DecisionDx-UM
proprietary test reports, an increase of 21% over the same period
in 2018, with DecisionDx-Melanoma having an increase of 23%.
- Gross margin of $15.9 million, or 82%, compared to $5.1
million, or 66% for the first half of 2018.
Supplemental Revenue Information
Affecting the year-over-year comparability of our revenues were
(a) the issuance of the Medicare Local Coverage Determination (LCD)
for our DecisionDx-Melanoma test, effective December 3, 2018 and
(b) confirmation of the Medicare Contractor rate for
DecisionDx-Melanoma. As a result of timing of these two elements,
all 2018 Medicare claims covered under the LCD were recognized as
revenue in the fourth quarter of 2018. Medicare revenues for
DecisionDx-Melanoma associated with test reports delivered in the
three and six months ended June 30, 2018, but not recorded until
the fourth quarter of 2018, were $2.2 million and $3.0 million,
respectively. Also, included in revenues for the quarter ended June
30, 2019 and 2018 were positive (negative) revenue adjustments
related to tests delivered in prior periods of $3.3 million and
$(0.8) million, respectively. For the six months ended June 30,
2019 and 2018, these amounts totaled $2.8 million and $0.9 million,
respectively.
Second Quarter Business and Clinical Evidence Updates
- An independent, prospective study from investigators at the
Saint Louis University Hospital was published during the second
quarter in the journal Cancer Medicine. The study demonstrated that
DecisionDx-Melanoma accurately identified risk of melanoma
recurrence independent of other prognostic factors such as Breslow
thickness and sentinel lymph node biopsy. The results are
consistent with previously published prospective and retrospective
studies demonstrating the high performance of DecisionDx-Melanoma
to predict outcomes, supporting its clinical value to inform
patient management decisions.
- American Skin Association (ASA) honored Castle Biosciences with
the 2019 Technology Innovation in Melanoma Award for advancing
innovative technology in the field of dermatology.
- Poster at the 2019 American Society of Clinical Oncology (ASCO)
Annual Meeting presented updated results from a prospective,
multicenter study demonstrating the accuracy and performance of
DecisionDx-Melanoma with median follow-up of over 3 years.
Three-year overall survival for patients with T1-T2 melanoma and a
DecisionDx-Melanoma Class 1A test result was greater than 99%,
providing support for the use of a DecisionDx-Melanoma Class 1A
test result to identify patients at low risk for a positive
sentinel lymph node biopsy result, allowing patients to avoid the
invasive surgical procedure.
- Poster at the 2019 Fall Clinical Dermatology Conference for PAs
& NPs highlighted accuracy of DecisionDx-Melanoma risk
prediction in newly expanded cumulative patient cohort of 901
patients.
- Presentation at the 2019 American College of Mohs Surgery
(ACMS) Annual Meeting highlighted progress in the development of
Castle Biosciences’ gene expression profile (GEP) test candidate
for use in cutaneous squamous cell carcinoma (cSCC).
Financing, Liquidity and IPO
As of June 30, 2019, our cash balance was $17.5 million and the
outstanding principal balance on our bank term loan was $26.7
million. Subsequently, on July 12, 2019, we issued a $10.0 million
convertible promissory note and on July 29, 2019, we completed our
IPO, which resulted in net proceeds of approximately $66.0 million,
after deducting underwriting discounts and commissions and other
offering expenses.
Recent Developments
On August 22, 2019, Palmetto GBA, a Medicare Administrative
Contractor, posted a draft LCD that, if finalized, would result in
expanded Medicare coverage for our DecisionDx-Melanoma test. We
expect that Palmetto GBA will finalize and implement the draft LCD
after a public comment period that opens on October 7, 2019 and
closes on November 21, 2019.
The nineteenth peer-reviewed publication supporting
DecisionDx-Melanoma use was published in the journal Skin in early
July. This study was an evidence-based analysis of the clinical
performance and utility of DecisionDx-Melanoma using four different
datasets ranging in size from 403 to 8,944 patients. The study
focused on identifying a tumor thickness that would be appropriate
for use of the test to guide follow-up decisions for cutaneous
melanoma patients. Results demonstrate that a tumor thickness of
0.3 mm and thicker is an appropriate population in which to use
DecisionDx-Melanoma to guide follow-up decisions. Note that
previously published validation, performance and utility studies
support the two primary clinical uses of the DecisionDx-Melanoma
test following the diagnosis of melanoma. The first use is to
inform decisions on sentinel lymph node biopsy in most eligible
patients with tumor thickness less than or equal to 2.0 mm with no
minimum tumor thickness, and the second is to guide follow-up
decisions.
Conference Call Details
Castle Biosciences will hold a conference call on September 3,
2019 at 4:30 p.m. Eastern time to discuss its second quarter 2019
results and provide a general business update.
The conference call will be webcast live from the company’s
website and will be available via the following link:
https://edge.media-server.com/mmc/p/tk8ypudk. Please access the
webcast at least 10 minutes before the conference call start
time.
To access the live conference call via phone, please dial
877-282-2581 from the United States and Canada, or +1 470-495-9479
internationally, at least 10 minutes prior to the start of the
call, using the conference ID 2368125.
A replay of the webcast will be available for two weeks
following the conclusion of the live broadcast and will be
accessible on the Investors section of the company’s website at
www.CastleBiosciences.com.
About Castle Biosciences, Inc.
Castle Biosciences (Nasdaq: CSTL) is a commercial-stage
dermatologic cancer company focused on providing physicians and
their patients with personalized, clinically actionable genomic
information to make more accurate treatment decisions. The Company
currently offers tests for patients with cutaneous melanoma
(DecisionDx®-Melanoma, DecisionDx®-CMSeq; www.SkinMelanoma.com) and
uveal melanoma (DecisionDx®-UM, DecisionDx®-PRAME and DecisionDx®-
UMSeq; www.MyUvealMelanoma.com), with products in development for
other underserved cancers, the two most advanced of which are
focused on patients with cutaneous squamous cell carcinoma, and
patients who have a difficult-to-diagnose pigmented lesion. Castle
Biosciences is based in Friendswood, Texas (Houston), and has
laboratory operations in Phoenix, Arizona. For more information,
visit www.CastleBiosciences.com.
Forward-Looking Statements
The information in this press release contains forward-looking
statements and information within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are subject to
the “safe harbor” created by those sections. These forward-looking
statements include, but are not limited to, statements concerning
our positioning to execute our strategic plans and fund research
and development activities, the outcome of the draft LCD issued by
Palmetto GBA and its process for finalizing the draft LCD, our
prospects and plans and the objectives of management. The words
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “will,” “would” and similar expressions
are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. We
may not actually achieve the plans, intentions, or expectations
disclosed in our forward-looking statements and you should not
place undue reliance on our forward-looking statements. Actual
results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements that we make. These forward-looking statements involve
risks and uncertainties that could cause our actual results to
differ materially from those in the forward-looking statements,
including, without limitation, the risks set forth in our final
prospectus filed with the SEC on July 26, 2019 relating to our
Registration Statements on Form S-1 (File Nos. 333-232369 and
333-232796) and our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2019 and in our other filings with the SEC. The
forward-looking statements are applicable only as of the date on
which they are made, and we do not assume any obligation to update
any forward-looking statements, except as may be required by
law.
CASTLE BIOSCIENCES, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
NET REVENUES
$
10,738,569
$
3,979,381
$
19,455,556
$
7,637,946
COST OF SALES
1,992,784
1,326,839
3,590,742
2,579,822
Gross margin
8,745,785
2,652,542
15,864,814
5,058,124
OPERATING EXPENSES
Research and development
1,317,237
1,159,197
2,711,088
2,421,887
Selling, general and
administrative
6,820,927
4,159,755
12,867,549
8,387,546
Total operating expenses
8,138,164
5,318,952
15,578,637
10,809,433
Operating income (loss)
607,621
(2,666,410
)
286,177
(5,751,309
)
Interest income
5,529
2,240
26,318
7,623
Interest expense
(1,692,582
)
(524,843
)
(2,716,982
)
(1,055,068
)
Other income (expense), net
(189,647
)
34,038
(222,575
)
13,340
Loss before income taxes
(1,269,079
)
(3,154,975
)
(2,627,062
)
(6,785,414
)
Income tax expense
—
—
—
—
Net loss and comprehensive loss
(1,269,079
)
(3,154,975
)
(2,627,062
)
(6,785,414
)
Convertible preferred stock cumulative
dividends
938,892
869,008
1,867,467
1,678,330
Accretion of redeemable convertible
preferred stock to redemption value
56,775
55,795
112,573
105,020
Net loss and comprehensive loss
attributable to common stockholders
$
(2,264,746
)
$
(4,079,778
)
$
(4,607,102
)
$
(8,568,764
)
Loss per share attributable to common
stockholders, basic and diluted
$
(1.05
)
$
(2.15
)
$
(2.26
)
$
(4.52
)
Weighted-average shares outstanding, basic
and diluted
2,152,965
1,897,084
2,035,393
1,897,070
CASTLE BIOSCIENCES, INC.
CONDENSED BALANCE SHEET
June 30, 2019
December 31, 2018
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
17,468,466
$
4,478,512
Accounts receivable, net
9,730,319
12,089,719
Inventory
550,894
882,233
Prepaid expenses and other current
assets
774,885
675,562
Total current assets
28,524,564
18,126,026
Long-term accounts receivable, net
1,266,098
2,532,011
Property and equipment, net
1,743,170
1,528,996
Intangible assets, net
—
4,167
Other assets – long-term
1,813,311
213,735
Total assets
$
33,347,143
$
22,404,935
LIABILITIES, CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable
$
2,084,910
$
1,450,766
Accrued compensation
2,784,746
4,571,011
Other accrued liabilities
1,616,866
715,244
Current portion of long-term debt
833,333
—
Convertible promissory notes
4,425,819
—
Total current liabilities
11,745,674
6,737,021
Long-term debt
23,858,781
24,499,752
Preferred stock warrant liability
1,279,840
1,193,726
Deferred rent liability
56,690
43,587
Total liabilities
36,940,985
32,474,086
Convertible Preferred Stock
Convertible preferred stock Series C
1,500,994
1,500,994
Redeemable convertible preferred stock
Series A, B, D, E-1, E-2, E-2A, E-3 and F
45,107,730
44,995,157
Stockholders’ Deficit
Common stock
2,192
1,916
Additional paid-in capital
9,910,882
921,360
Accumulated deficit
(60,115,640
)
(57,488,578
)
Total stockholders’ deficit
(50,202,566
)
(56,565,302
)
Total liabilities, convertible preferred
stock and stockholders’ deficit
$
33,347,143
$
22,404,935
CASTLE BIOSCIENCES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June
30,
2019
2018
OPERATING ACTIVITIES
Net loss
$
(2,627,062
)
$
(6,785,414
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation
163,285
141,495
Stock compensation expense
307,229
146,340
Amortization of intangibles
4,167
18,673
Amortization of debt discounts and
issuance costs
1,249,964
286,798
Change in fair value of preferred stock
warrant liability
86,114
(13,341
)
Change in fair value of embedded
derivative
136,461
—
Other
337
—
Change in operating assets and
liabilities:
Accounts receivable
3,625,313
(621,175
)
Prepaid expenses and other current
assets
(99,323
)
38,209
Inventory
331,339
(101,676
)
Other assets
(12,057
)
(100,968
)
Accounts payable
(524,029
)
(607,683
)
Accrued compensation
(1,786,265
)
331,465
Other accrued liabilities
901,622
33,305
Deferred rent liability
13,103
28,249
Net cash provided by (used in) operating
activities
1,770,198
(7,205,723
)
INVESTING ACTIVITIES
Purchases of property and equipment
(424,473
)
(184,610
)
Net cash used in investing activities
(424,473
)
(184,610
)
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock
and preferred stock warrants (including exercised warrants)
—
10,382,507
Proceeds from issuance from convertible
promissory notes, net of issuance costs
11,695,495
—
Proceeds from issuance of term debt, net
of issuance costs
1,776,145
—
Proceeds from line of credit
—
1,000,000
Repayments on line of credit
(1,791,145
)
—
Payment of deferred offering costs
(453,816
)
—
Proceeds from exercise of common stock
options
417,550
1,065
Net cash provided by financing
activities
11,644,229
11,383,572
NET CHANGE IN CASH AND CASH
EQUIVALENTS
12,989,954
3,993,239
Beginning of period
4,478,512
1,212,063
End of period
$
17,468,466
$
5,205,302
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190903005793/en/
Frank Stokes Chief Financial Officer 866-788-9007
ir@castlebiosciences.com
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