Castle Biosciences, Inc. (Nasdaq: CSTL), a skin cancer diagnostics company providing personalized genomic information to improve cancer treatment decisions, today announced its financial results for the fourth quarter and twelve months ended December 31, 2019.
"The Castle Biosciences' team delivered very strong results in 2019, with growth in test report volume and revenue, continued evidence development for DecisionDx®-Melanoma and DecisionDx®-UM tests and advancement of our pipeline products," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "Our team also delivered on two commercial expansions, with all 32 outside sales territories filled as of December 2019, establishing a solid base for execution of our 2020 plan.
"We presented data on our late-stage pipeline test, DecisionDx®-SCC, for use in patients diagnosed with high-risk cutaneous squamous cell carcinoma (SCC), as defined by the National Comprehensive Cancer Network (NCCN). The data demonstrated the ability of the test to stratify patients presenting as high-risk into those who are truly high-risk patients and those who are lower-risk patients. DecisionDx-SCC is designed to aid physicians in the development of appropriate, risk-aligned treatment plans. Our DecisionDx-SCC test remains on track for expected commercial launch in the second half of 2020.
"Additionally, development of our third skin cancer product, for use in patients with a suspicious pigmented lesion, remains on track for expected commercial launch in the second half of 2020. We estimate that combined, our three skin cancer products, DecisionDx-Melanoma, DecisionDx-SCC and our test for suspicious pigmented lesions, will have a total addressable U.S. market of approximately $2.0 billion."
Fourth Quarter Ended December 31, 2019, Financial Highlights
Twelve Months Ended December 31, 2019, Financial Highlights
Cash and Cash Equivalents
As of December 31, 2019, the Company's cash and cash equivalents totaled $99 million, and the outstanding principal balance on the Company's bank term loan was $26.7 million.
2020 Revenue Guidance
Castle Biosciences anticipates generating $61-64 million in revenue in 2020.
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 first three quarters of 2018, but not recorded until the fourth quarter of 2018, were $5.2 million. Also, included in revenues for the quarters ended December 31, 2019 and 2018, were positive (negative) revenue adjustments related to tests delivered in prior periods of $4.3 million and $(1.2) million, respectively. For the twelve months ended December 31, 2019, and 2018, these amounts totaled $2.5 million and $0.3 million, respectively.
Fourth Quarter Business and Clinical Evidence Updates
In the expanded, multi-center prospectively tested patient cohort study: | ||
? |
In SLNB-assessed patients 65 years of age or older with T1-T2 tumors and a Class 1A test result, SLN positivity was 2.7%, significantly less than patients with a Class 1B-2A (p<0.01) or Class 2B result (p<0.0001), and below the 5% threshold at which guidelines do not recommend the procedure. |
|
In the multi-center prospective outcomes study: | ||
? |
In a prospective cohort with median follow-up of 3.2 years for patients without an event, Class 1A patients with T1-T2 melanoma, at three years, had overall survival of 99.4%, distant metastasis-free survival of 98.7% and recurrence-free survival of 96.6%, adding further support that this population can safely avoid the SLNB surgical procedure. |
Recent Developments
Conference Call and Webcast Details
Castle Biosciences will hold a conference call on Tuesday, March 10, 2020, at 4:30 p.m. Eastern time to discuss its fourth quarter and full-year 2019 results and provide a corporate update.
A live webcast of the conference call can be accessed here: https://edge.media-server.com/mmc/p/z5thjfrt or via the webcast link on the Investor Relations page of the Company's website (www.castlebiosciences.com). Please access the webcast at least 10 minutes before the conference call start time. An archive of the webcast will be available on the Company's website until April 1, 2020.
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 5836318.
There will be a brief Question & Answer session following management commentary.
Use of Non-GAAP Financial Measures (UNAUDITED)
In this release, we use the metric of Adjusted Revenue, which is a non-GAAP financial measure and is not calculated in accordance with generally acceptance accounting principles in the United States (GAAP). This non-GAAP financial measure reflects adjustments to total revenue associated with certain test reports delivered in one reporting period that were not recognizable until a later reporting period because all the criteria for revenue recognition were not met under GAAP. Specifically, we did not have a Medicare LCD in place for our DecisionDx-Melanoma test until the fourth quarter of 2018. When issued, the LCD also provided coverage for payment of claims beginning in February 2018. Therefore, all the revenue covered by the LCD associated with tests delivered in the first through third quarters of 2018 were not recognized in our reported GAAP revenue until the fourth quarter of 2018. For the fourth quarter of 2018, Adjusted Revenue excludes revenue that was recognized during such quarter that relate to test reports covered by the LCD that were delivered in the first through third quarters of 2018. Since the LCD was in effect for all of 2019, Adjusted Revenue for the fourth quarter of 2019 is the same as revenue calculated in accordance with GAAP.
We use Adjusted Revenue internally because we believe this metric provides useful supplemental information in understanding changes in our year-over-year financial performance by reflecting DecisionDx-Melanoma Medicare LCD revenue in the periods the test reports were delivered. We believe this metric is also useful to investors as a supplement to GAAP measures in analyzing the performance of our business. However, this non-GAAP financial measure may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. This non-GAAP financial measure is not meant to be a substitute for revenue reported in accordance with GAAP and should be considered in conjunction with our financial information presented on a GAAP basis. Accordingly, investors should not place undue reliance on non-GAAP financial measures. Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the table at the end of this release.
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 the expected commercial availability of our pipeline products, estimated total addressable market attributable to these pipeline products, our plans for commercial expansion, including anticipated number of sales territories and related increased hiring activity, the impact of our tests, including DecisionDx-Melanoma, on patient treatment plans, our revenue expectations for 2020, 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 timing and amount of revenue we are able to recognize in a given fiscal period, unexpected delays in planned launch of our pipeline products, the level and availability of reimbursement for our products, our ability to manage our anticipated growth and 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 September 30, 2019, filed with the SEC on November 12, 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 INCOME (LOSS) (in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
(unaudited) |
|
(unaudited) |
|
|
|
|
||||||||
NET REVENUES |
$ |
17,635 |
|
|
$ |
11,436 |
|
|
$ |
51,865 |
|
|
$ |
22,786 |
|
COST OF SALES |
|
2,011 |
|
|
|
1,366 |
|
|
|
7,310 |
|
|
|
5,297 |
|
Gross margin |
|
15,624 |
|
|
|
10,070 |
|
|
|
44,555 |
|
|
|
17,489 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
||||||||
Research and development |
|
3,159 |
|
|
|
1,138 |
|
|
|
7,385 |
|
|
|
4,854 |
|
Selling, general and administrative |
|
9,852 |
|
|
|
4,165 |
|
|
|
29,842 |
|
|
|
16,471 |
|
Total operating expenses |
|
13,011 |
|
|
|
5,303 |
|
|
|
37,227 |
|
|
|
21,325 |
|
Operating income (loss) |
|
2,613 |
|
|
|
4,767 |
|
|
|
7,328 |
|
|
|
(3,836 |
) |
Interest income |
|
280 |
|
|
|
3 |
|
|
|
312 |
|
|
|
24 |
|
Interest expense |
|
(766 |
) |
|
|
(650 |
) |
|
|
(4,571 |
) |
|
|
(2,274 |
) |
Gain on extinguishment of debt |
? |
|
|
? |
|
|
|
5,213 |
|
|
? |
|
|||
Other expense, net |
? |
|
|
|
(243 |
) |
|
|
(2,933 |
) |
|
|
(272 |
) |
|
Income (loss) before income taxes |
|
2,127 |
|
|
|
3,877 |
|
|
|
5,349 |
|
|
|
(6,358 |
) |
Income tax expense |
|
72 |
|
|
|
9 |
|
|
|
72 |
|
|
|
9 |
|
Net income (loss) and comprehensive income (loss) |
|
2,055 |
|
|
|
3,868 |
|
|
|
5,277 |
|
|
|
(6,367 |
) |
Convertible preferred stock cumulative dividends |
? |
|
|
|
949 |
|
|
|
2,156 |
|
|
|
3,577 |
|
|
Accretion of redeemable convertible preferred stock to redemption value |
? |
|
|
|
57 |
|
|
|
130 |
|
|
|
219 |
|
|
Net income (loss) and comprehensive income (loss) attributable to common stockholders |
$ |
2,055 |
|
|
$ |
2,862 |
|
|
$ |
2,991 |
|
|
$ |
(10,163 |
) |
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.12 |
|
|
$ |
1.49 |
|
|
$ |
0.35 |
|
|
$ |
(5.33 |
) |
Diluted |
$ |
0.11 |
|
|
$ |
0.38 |
|
|
$ |
(0.21 |
) |
|
$ |
(5.33 |
) |
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
17,295 |
|
|
|
1,916 |
|
|
|
8,584 |
|
|
|
1,906 |
|
Diluted |
|
18,600 |
|
|
|
10,301 |
|
|
|
8,658 |
|
|
|
1,906 |
|
CASTLE BIOSCIENCES, INC. CONDENSED BALANCE SHEETS (in thousands) |
|||||||||
|
December 31, |
||||||||
|
2019 |
|
2018 |
||||||
|
|
|
|
||||||
ASSETS |
|
|
|
||||||
Current Assets |
|
|
|
||||||
Cash and cash equivalents |
$ |
|
98,845 |
|
|
$ |
|
4,479 |
|
Accounts receivable, net |
|
14,648 |
|
|
|
12,090 |
|
||
Inventory |
|
1,237 |
|
|
|
882 |
|
||
Prepaid expenses and other current assets |
|
1,951 |
|
|
|
675 |
|
||
Total current assets |
|
116,681 |
|
|
|
18,126 |
|
||
Long-term accounts receivable, net |
|
870 |
|
|
|
2,532 |
|
||
Property and equipment, net |
|
2,060 |
|
|
|
1,529 |
|
||
Intangible assets, net |
|
? |
|
|
|
4 |
|
||
Other assets ? long-term |
|
135 |
|
|
|
214 |
|
||
Total assets |
$ |
|
119,746 |
|
|
$ |
|
22,405 |
|
|
|
|
|
||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
||||||
Current Liabilities |
|
|
|
||||||
Accounts payable |
$ |
|
1,865 |
|
|
$ |
|
1,451 |
|
Accrued compensation |
|
5,779 |
|
|
|
4,571 |
|
||
Other accrued liabilities |
|
1,812 |
|
|
|
715 |
|
||
Current portion of long-term debt |
|
5,833 |
|
|
|
? |
|
||
Total current liabilities |
|
15,289 |
|
|
|
6,737 |
|
||
Long-term debt |
|
19,289 |
|
|
|
24,500 |
|
||
Preferred stock warrant liability |
|
? |
|
|
|
1,194 |
|
||
Deferred rent liability |
|
55 |
|
|
|
44 |
|
||
Total liabilities |
|
34,633 |
|
|
|
32,475 |
|
||
Convertible Preferred Stock |
|
|
|
||||||
Convertible preferred stock Series C |
|
? |
|
|
|
1,501 |
|
||
Redeemable convertible preferred stock Series A, B, D, E-1, E-2, E-2A, E-3 and F |
|
? |
|
|
|
44,995 |
|
||
Stockholders' Equity (Deficit) |
|
|
|
||||||
Common stock |
|
17 |
|
|
|
2 |
|
||
Additional paid-in capital |
|
137,308 |
|
|
|
921 |
|
||
Accumulated deficit |
|
(52,212 |
) |
|
|
(57,489 |
) |
||
Total stockholders' equity (deficit) |
|
85,113 |
|
|
|
(56,566 |
) |
||
Total liabilities, convertible preferred stock and stockholders' equity (deficit) |
$ |
|
119,746 |
|
|
$ |
|
22,405 |
|
CASTLE BIOSCIENCES, INC. CONDENSED STATEMENTS OF CASH FLOWS (in thousands) |
|||||||
|
Twelve Months Ended
|
||||||
|
2019 |
|
2018 |
||||
OPERATING ACTIVITIES |
|
|
|
||||
Net income (loss) |
$ |
5,277 |
|
|
$ |
(6,367 |
) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
||||
Depreciation |
|
354 |
|
|
|
287 |
|
Stock compensation expense |
|
1,249 |
|
|
|
294 |
|
Amortization of intangibles |
|
4 |
|
|
|
36 |
|
Amortization of debt discounts and issuance costs |
|
1,925 |
|
|
|
566 |
|
Other non-cash interest |
|
442 |
|
|
? |
|
|
Gain on extinguishment of debt |
|
(5,213 |
) |
|
? |
|
|
Change in fair value of preferred stock warrant liability |
|
619 |
|
|
|
272 |
|
Change in fair value of embedded derivative |
|
237 |
|
|
? |
|
|
Change in fair value of convertible promissory note accounted for under the fair value option |
|
2,077 |
|
|
? |
|
|
Other |
? |
|
|
|
(24 |
) |
|
Change in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(896 |
) |
|
|
(8,408 |
) |
Prepaid expenses and other current assets |
|
(1,276 |
) |
|
|
(160 |
) |
Inventory |
|
(355 |
) |
|
|
(578 |
) |
Other assets |
|
(85 |
) |
|
|
14 |
|
Accounts payable |
|
557 |
|
|
|
197 |
|
Accrued compensation |
|
1,208 |
|
|
|
1,347 |
|
Other accrued liabilities |
|
879 |
|
|
|
201 |
|
Deferred rent liability |
|
12 |
|
|
|
28 |
|
Net cash provided by (used in) operating activities |
|
7,015 |
|
|
|
(12,295 |
) |
INVESTING ACTIVITIES |
|
|
|
||||
Purchases of property and equipment |
|
(937 |
) |
|
|
(277 |
) |
Net cash used in investing activities |
|
(937 |
) |
|
|
(277 |
) |
FINANCING ACTIVITIES |
|
|
|
||||
Proceeds from initial public offering of common stock, net of underwriting discounts, commissions and issuance costs |
|
65,931 |
|
|
? |
|
|
Proceeds from issuance of preferred stock and preferred stock warrants (including exercised warrants) |
|
49 |
|
|
|
10,383 |
|
Proceeds from issuance of term debt and preferred stock warrants, net of issuance costs |
? |
|
|
|
4,418 |
|
|
Proceeds from issuance of convertible promissory notes, net of issuance costs |
|
11,695 |
|
|
? |
|
|
Proceeds from issuance of convertible promissory note and common stock warrant, net of issuance costs |
|
9,236 |
|
|
? |
|
|
Proceeds from issuance of term debt, net of issuance costs |
|
1,776 |
|
|
? |
|
|
Proceeds from line of credit |
? |
|
|
|
1,000 |
|
|
Repayments on line of credit |
|
(1,791 |
) |
|
? |
|
|
Proceeds from exercise of common stock options |
|
1,174 |
|
|
|
38 |
|
Proceeds from contributions to the employee stock purchase plan |
|
218 |
|
|
? |
|
|
Net cash provided by financing activities |
|
88,288 |
|
|
|
15,839 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
94,366 |
|
|
|
3,267 |
|
Beginning of period |
|
4,479 |
|
|
|
1,212 |
|
End of period |
$ |
98,845 |
|
|
$ |
4,479 |
|
CASTLE BIOSCIENCES, INC.
Reconciliation of Non-GAAP Financial Measures (UNAUDITED)
The table below presents the reconciliation of adjusted revenue, which is a non-GAAP measure. See "Use of Non-GAAP Financial Measures (UNAUDITED)" above for further information regarding the Company's use of non-GAAP financial measures.
|
|
Three Months Ended
|
||||||
|
|
2019 |
|
2018 |
||||
(in thousands) |
|
|
|
|
||||
Adjusted Revenues |
|
|
|
|
||||
Adjusted Revenues (Non-GAAP) |
|
$ |
17,635 |
|
|
$ |
6,245 |
|
DecisionDx-Melanoma Medicare revenue associated with test reports delivered prior to 4Q18 not recognizable until 4Q18 |
|
? |
|
|
5,191 |
|
||
Net Revenues (GAAP) |
|
$ |
17,635 |
|
|
$ |
11,436 |
|
|
|
|
|
|
These press releases may also interest you
|