Castle Biosciences Inc (CSTL) 2024 Q2 法說會逐字稿

Good afternoon, and welcome to Castle Biosciences second quarter 2024 conference call. As a remainder, today's call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question-and-answer session.

下午好，歡迎參加 Castle Biosciences 2024 年第二季電話會議。作為剩餘內容，今天的通話正在進行錄音。我們將以開場白和介紹開始今天的電話會議，然後進行問答環節。

I would like to turn the call over to Camilla Zuckero, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

我想將電話轉給投資者關係和公司事務副總裁 Camilla Zuckero。請繼續。

Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences second quarter 2024 financial results conference call. Joining me today is Castle's Founder, President and Chief Executive Officer, Derek Maetzold; and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, August 5th, 2024. Therefore, if you are listening to the replay or reading the transcript of this call any time-sensitive information may no longer be accurate.

謝謝你，接線生。大家下午好。歡迎參加 Castle Biosciences 2024 年第二季財務業績電話會議。今天加入我的是 Castle 的創辦人、總裁兼執行長 Derek Maetzold；和首席財務官弗蘭克斯托克斯。本次電話會議記錄的資訊僅截至今天（2024 年 8 月 5 日）。因此，如果您正在收聽重播或閱讀本次通話的文字記錄，任何時間敏感的資訊可能不再準確。

A recording of today's call will be available on the Investor Relations page of the company's website for approximately three weeks following the conclusion of the call. Before we begin, I’d like to remind you that some of the statements made today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to statements about our financial outlook and similar items referenced in our earnings release issued today and statements containing projections regarding future events or our future financial or operational performance, including our anticipated 2024 total revenue, our expectations regarding reimbursement for our products and targeted launch date and the impact of our investments in growth initiatives and expanded commercial team.

今天的電話會議錄音將在電話會議結束後大約三週內發佈在公司網站的投資者關係頁面上。在我們開始之前，我想提醒您，今天發表的一些聲明將包含 1995 年《私人證券訴訟改革法案》含義內的前瞻性聲明。這些前瞻性陳述包括但不限於有關我們的財務前景的陳述以及我們今天發布的收益報告中引用的類似項目，以及包含有關未來事件或我們未來財務或營運業績的預測的陳述，包括我們預期的2024年總收入、我們的對我們產品報銷和目標發布日期的期望，以及我們對成長計劃和擴大商業團隊的投資的影響。

Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 under the heading Risk Factors, and in the company’s other documents and reports filed or to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change.

前瞻性陳述基於當前預期，涉及固有風險和不確定性，無法保證這些陳述中預期的結果將會實現。許多因素和風險可能導致實際結果與這些前瞻性陳述中包含的結果有重大差異。這些因素以及其他風險和不確定性在公司截至2024 年6 月30 日的季度10-Q 表格的季度報告“風險因素”標題下以及公司已提交或即將提交的其他文件和報告中進行了詳細描述。這些前瞻性陳述僅代表今天的情況，我們不承擔隨著情況變化而更新或修改這些前瞻性陳述的義務。

In addition, some of the information discussed today includes non-I financial measures such as adjusted revenue, adjusted gross margin and adjusted EBITDA that have not been calculated in accordance with generally accepted accounting principles in the United States or I. These non-I items should be used in addition to and not as a substitute for any I results. We believe these metrics provide useful supplemental information in assessing our revenue and operating performance.

此外，今天討論的一些資訊還包括非I財務指標，例如調整後的收入、調整後的毛利率和調整後的EBITDA，這些指標並未按照美國或I的公認會計原則計算。作為任何I 結果的補充使用，而不是取代任何I 結果。我們相信這些指標為評估我們的收入和營運績效提供了有用的補充資訊。

Reconciliations of these non-I financial measures to the most directly comparable I financial measures are presented in the table at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of the company’s website. I will now turn the call over to Derek.

這些非 I 財務指標與最直接可比較的 I 財務指標的對帳顯示在我們今天早些時候發布的收益報告末尾的表格中，該報告已發佈在公司網站的投資者關係頁面上。我現在會把電話轉給德里克。

Thank you, Camilla, and good afternoon, everyone. I am pleased to share that Castle Biosciences has delivered yet another outstanding quarter, continuing our long-standing history of strong execution and performance excellence. Second quarter 2024 revenue grew by 74% to $87 million, and total test report volume grew by 49% 25,102 compared to the second quarter of 2023. Our strong performance is driven by the team's success in developing a differentiated innovative portfolio underpinned by robust business fundamentals.

謝謝卡米拉，大家下午好。我很高興地告訴大家，Castle Biosciences 又交付了一個出色的季度，延續了我們強大執行力和卓越績效的悠久歷史。2024 年第二季營收成長 74%，達到 8,700 萬美元，測試報告總量較 2023 年第二季成長 49% 25,102。我們的強勁業績得益於團隊成功開發以穩健的業務基礎為基礎的差異化創新產品組合。

Additionally, we believe there is significant room for growth across our portfolio, positioning us well for continued success, and we have a strong balance sheet to support our growth initiatives in alignment with our capital allocation strategy. Our second quarter results highlight our discipline execution of our strategic growth initiatives, including generating robust clinical evidence and the winning spirit of the entire Castle team. Based on a strong first half execution and confidence in our business, we are raising our full year 2024 revenue guidance to $275 million to $300 million, up from the previously reported guidance of $255 million to $265 million, reflecting year-over-year growth of somewhere between 25% to 36%.

此外，我們相信我們的投資組合還有巨大的成長空間，這使我們能夠繼續取得成功，並且我們擁有強大的資產負債表來支持我們的成長計劃，並與我們的資本配置策略保持一致。我們第二季的業績凸顯了我們對策略性成長計畫的嚴格執行，包括產生強有力的臨床證據和整個 Castle 團隊的必勝精神。基於上半年強勁的執行力和對我們業務的信心，我們將 2024 年全年收入指引從先前報告的 2.55 億美元至 2.65 億美元提高至 2.75 億美元至 3 億美元，反映了同比增長介於25 % 到36% 之間。

Today, I will walk you through execution and strategy highlights from the second quarter, and then and Frank will provide additional financial highlights before we turn to your questions. Starting with our core dermatology business, for DecisionDX-Melanoma, we delivered 9,585 test reports in the second quarter, an 11% year-over-year increase, and a 14% sequential increase. As you know, generating robust clinical evidence is a key component of our growth plans, and I'm exceptionally proud of the ongoing data development related to our DecisionDX-Melanoma test. We believe our significant body of evidence is a key driver for test adoption, and also distinguishes our test from the competition, further expanding our leadership position. In fact, during the second quarter, we presented exciting new data at the American Society of Clinical Oncology Annual Meeting, or ASCO, demonstrating how DecisionDX-Melanoma can identify patients with earlier-stage melanoma who have a higher risk of central nervous system or CNS metastasis within the first three years post-diagnosis. This study shows that DecisionDX-Melanoma is particularly valuable as it can help pinpoint higher risk patients who may benefit from more frequent imaging surveillance, leading to early detection of CNS metastases and improved patient survival.

今天，我將向您介紹第二季度的執行和策略要點，然後在回答您的問題之前，弗蘭克將提供更多財務要點。從我們的核心皮膚科業務開始，對於DecisionDX-Melanoma，我們在第二季度交付了 9,585 份測試報告，同比增長 11%，環比增長 14%。如您所知，產生可靠的臨床證據是我們成長計畫的關鍵組成部分，我對與 DecisionDX-Melanoma 測試相關的持續數據開發感到非常自豪。我們相信，我們大量的證據是測試採用的關鍵驅動力，也使我們的測試與競爭對手區分開來，進一步擴大我們的領導地位。事實上，在第二季度，我們在美國臨床腫瘤學會年會 (ASCO) 上展示了令人興奮的新數據，展示了 DecisionDX-Melanoma 如何識別具有較高中樞神經系統或 CNS 風險的早期黑色素瘤患者診斷後頭三年內發生轉移。這項研究表明，DecisionDX-Melanoma 特別有價值，因為它可以幫助找出可能受益於更頻繁的影像監測的高風險患者，從而及早發現 CNS 轉移並提高患者存活率。

As background, cutaneous melanoma metastasis to the central nervous system generally has a poor prognosis. However, patients tend to experience better outcomes if CNS metastases are detected and treated early while they are still asymptomatic. Currently, CNS imaging is not routinely recommended for patients with early stage cutaneous melanoma, classified as stage one or two by the American Joint Committee on Cancer, 8th Edition. Despite this, approximately 14% of patients with stage two melanoma will develop CNS metastases. Our study demonstrated that patients with a high-risk class 2B melanoma test result has significantly greater or higher rates of CNS metastases and lower five-year recurrence-free survival compared to those with a low-risk class 1A or an intermediate-risk class 1B/2A test result. Moreover, the study showed that a class 2B DecisionDX-Melanoma test result was the only significant predictor of CNS metastasis under multivariate analysis. This is to say, this is data that demonstrates the significant clinical value that DecisionDX-Melanoma brings to improving patient care decisions and outcomes.

作為背景，皮膚黑色素瘤轉移至中樞神經系統通常預後不良。然而，如果在無症狀時儘早發現和治療中樞神經系統轉移，患者往往會獲得更好的結果。目前，中樞神經系統影像不常規建議用於早期皮膚黑色素瘤患者（美國癌症聯合委員會第 8 版將其分類為一期或二期）。儘管如此，大約 14% 的第二期黑色素瘤患者會發生中樞神經系統轉移。我們的研究表明，與低風險1A 級或中風險1B 級黑色素瘤測試結果的患者相比，具有高風險2B 級黑色素瘤測試結果的患者的中樞神經系統轉移率明顯更高或更高，並且五年無復發生存率較低/2A測試結果。此外，研究表明，2B 類 DecisionDX-Melanoma 測試結果是多變量分析下中樞神經系統轉移的唯一顯著預測因子。也就是說，這些數據證明了 DecisionDX-Melanoma 為改善病患照護決策和結果帶來的重大臨床價值。

Moving on to our DecisionDX-SCC test, we continue to see strong test report volume momentum with 4,277 test reports delivered in the second quarter, an increase of 60% compared to the same period in 2023. DecisionDX-SCC continues to be supported by a robust and growing body of evidence, including several publications this year demonstrating the test's clinical and economic value in guiding adjuvant radiation therapy, or ART, decisions in patients with high-risk cutaneous squamous cell carcinoma. We were particularly excited about a recent study published in the American Society for Radiation Oncology's flagship journal, the International Journal of Radiation Oncology, Biology, and Physics, also known as the Red Journal.

繼續進行 DecisionDX-SCC 測試，我們繼續看到強勁的測試報告量勢頭，第二季交付了 4,277 份測試報告，與 2023 年同期相比增加了 60%。DecisionDX-SCC 繼續得到強有力且不斷增長的證據的支持，包括今年的幾篇出版物，證明了該測試在指導高風險皮膚鱗狀細胞癌患者的輔助放射治療(ART) 決策方面的臨床和經濟價值。我們對美國放射腫瘤學會旗艦期刊《國際放射腫瘤學、生物學和物理學雜誌》（也稱為《紅色雜誌》）最近發表的一項研究感到特別興奮。

This study demonstrated how DecisionDX-SCC can identify patients who are eligible for consideration of adjuvant radiation therapy and identify those patients who are unlikely to receive meaningful clinical benefit from ART and consider deferring radiation therapy. On the flip side, the study also showed that our DecisionDX-SCC test can identify those patients who are expected to receive a significant clinical benefit from ART, with the result being a significant reduction in the likelihood of metastasis. Separately, we also share new data supporting the use of our test for patients with cutaneous squamous cell carcinoma tumors on the head and neck. Presented at the American College of Mohs Surgery annual meeting, the data showed Decision-DX SCC's ability to identify high-risk patients, enabling more appropriate surveillance or adjuvant treatments to reduce metastasis risk.

這項研究展示了 DecisionDX-SCC 如何識別有資格考慮輔助放射治療的患者，並識別那些不太可能從 ART 中獲得有意義的臨床益處並考慮推遲放射治療的患者。另一方面，研究也表明，我們的 DecisionDX-SCC 測試可以識別那些有望從 ART 中獲得顯著臨床效益的患者，從而顯著降低轉移的可能性。另外，我們也分享了支持我們的測試用於頭頸部皮膚鱗狀細胞癌患者的新數據。在美國莫氏外科學會年會上發表的數據顯示，Decision-DX SCC 能夠識別高風險患者，從而能夠進行更適當的監測或輔助治療，以降低轉移風險。

Specifically, DecisionDX-SCC testing before tumor removal significantly improved the prediction accuracy of metastatic events, both alone and when combined with NCCN guidelines, BWA staging, or AJCC version 8 staging, guiding better patient care decisions. Stated differently, this means that our test adds significant accuracy when used with these three staging systems, thus improving treatment pathway decision making.

具體而言，腫瘤切除前的DecisionDX-SCC 測試顯著提高了轉移事件的預測準確性，無論是單獨使用還是與NCCN 指南、BWA 分期或AJCC 版本8 分期結合使用，都可以指導更好的患者護理決策。換句話說，這意味著我們的測試在與這三個分期系統一起使用時顯著提高了準確性，從而改善了治療途徑決策。

Now let's turn to our gastroenterology franchise. In the second quarter of 2024, we delivered 4,782 TissueCypher test reports, compared to 1,447 in the same period of 2023 and 3,429 in the first quarter of 2024. This represents a 230% year-over-year growth and 39% sequential over the first quarter growth. We believe this momentum is driven by the test's clinical utility to determine a patient's individual risk of progression from Barrett's esophagus, or BE, to cancer. Supporting our belief, the American Gastroenterological Society, or AGA, recently released new practice guidelines in endoscopic eradication therapy for Barrett's esophagus, stating that Barrett's esophagus can be treated effectively with endoscopic procedures like ablation, but identifying high-risk patients is crucial. Importantly, our TissueCypher test was highlighted as the first prognostic assay capable of identifying Barrett’s esophagus patients at risk of progressing to high-grade dysplasia or esophageal cancer. This recognition by the A.GA reinforces TissueCypher’s role in providing personalized and clinically-validated risk stratification, helping patients better manage their patients with Barrett’s esophagus disease.

現在讓我們轉向我們的胃腸病學專營權。2024 年第二季度，我們交付了 4,782 份 TissueCypher 測試報告，而 2023 年同期為 1,447 份，2024 年第一季為 3,429 份。這意味著同比增長 230%，比第一季環比增長 39%。我們相信這一勢頭是由該測試的臨床實用性推動的，該臨床實用性可確定患者從巴雷特食道（BE）進展為癌症的個體風險。支持我們的觀點的是，美國胃腸病學會(AGA) 最近發布了巴雷特食道內視鏡根除治療的新實踐指南，指出巴雷特食道可以透過消融等內視鏡手術有效治療，但識別高風險患者至關重要。重要的是，我們的 TissueCypher 測試被強調為第一個能夠識別有進展為高度不典型增生或食道癌風險的巴雷特食道患者的預後測定。A.GA 的這項認可強化了 TissueCypher 在提供個人化且經過臨床驗證的風險分層方面的作用，幫助患者更好地管理巴雷特食道病患者。

With our recent commercial team expansion, sufficient capacity in our Pittsburgh laboratory to meet accelerating demand, and very early stages of marker penetration in an estimated $1 billion US TAM, we believe TissueCypher represents a significant long-term growth opportunity.

隨著我們最近商業團隊的擴張、我們匹茲堡實驗室有足夠的能力來滿足不斷增長的需求，以及在估計價值10 億美元的美國TAM 中標記物滲透的早期階段，我們相信TissueCypher 代表了一個重要的長期成長機會。

Turning to our Mental Health business. We delivered 4,903 IDgenetix test reports in the quarter, compare with 2,681 in the second quarter of 2023, which is 83% year-over-year growth. IGX was recently selected as the winner of the Best Overall Mental Health Solution Award in the 8th Annual MedTech Breakthrough Awards Program. The MedTech Breakthrough Awards honor excellent and recognize innovation, hard work, and success in a range of health and medical technology categories, attracting thousands of nominations from over 18 countries across the world.

轉向我們的心理健康業務。我們本季交付了 4,903 份 IDgenetix 測試報告，而 2023 年第二季為 2,681 份，較去年同期成長 83%。IGX 最近被選為第八屆年度 MedTech 突破獎計劃的最佳整體心理健康解決方案獎得主。醫療技術突破獎旨在表彰一系列健康和醫療技術領域的傑出人物，並表彰創新、辛勤工作和成功，吸引了來自全球超過 18 個國家的數千項提名。

To sum up our commercial test highlights, we are enthusiastic about the long-term prospects across our entire portfolio, with six proprietary tests available in the early innings, we see significant opportunities ahead. Lastly, moving on to our pipeline, we continue to make progress on our inflammatory skin disease pipeline initiative and expect to provide you with additional development updates before the end of 2024. As you recall, this pipeline genomic test is for patients with moderate to severe atopic dermatitis, psoriasis and related conditions, and is targeted for launch by the end of 2025, assuming a positive outcome of our discovery, development, and validation efforts. I now turn the call over to Frank, who will provide details relating to our financial results.

總結我們的商業測試亮點，我們對整個產品組合的長期前景充滿熱情，在早期階段就提供了六項專有測試，我們看到了未來的重大機會。最後，談到我們的產品線，我們將繼續在發炎性皮膚病產品線計劃上取得進展，並期望在 2024 年底之前為您提供更多的開發更新。如您所知，此管道基因組測試適用於患有中度至重度異位性皮膚炎、牛皮癬及相關疾病的患者，併計劃於 2025 年底推出，前提是我們的發現、開發和驗證工作取得積極成果。我現在將電話轉給弗蘭克，他將提供有關我們財務業績的詳細資訊。

Thank you, Derek, and good afternoon, everyone. Reiterating Derek's sentiment, we are proud to report excellent financial results for the second quarter of 2024. Revenue was $87 million, an increase of 74% over the second quarter of 2023. The increase was driven by higher ASPs and test volume growth for our dermatologic and non-dermatologic tests. Adjusted revenue, which excludes the effects of revenue adjustments in the current period related to tests delivered in prior periods, was $86.6 million from second quarter, an increase of 72% over the second quarter of 2023.

謝謝德里克，大家下午好。重申德里克的觀點，我們很自豪地報告 2024 年第二季的出色財務業績。營收為 8,700 萬美元，較 2023 年第二季成長 74%。這一增長是由較高的平均售價以及我們的皮膚科和非皮膚科測試的測試量增長所推動的。調整後收入（不包括與前期交付的測試相關的當期收入調整的影響）為 8,660 萬美元，較第二季度增長 72%，較 2023 年第二季度增長 72%。

Our gross margin during the second quarter was 80.7% compared to 73.5% in the second quarter of 2023. Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and excludes the effects of revenue adjustments in the current period associated with test reports delivered in prior periods, was 83.2% for the quarter compared to 78% for the same period in 2023, an improvement of 520 basis points.

我們第二季的毛利率為 80.7%，而 2023 年第二季為 73.5%。我們的調整後毛利率（不包括與收購相關的無形資產攤銷的影響，也不包括與前期交付的測試報告相關的當期收入調整的影響）為 83.2%，而上一季為 78%。年期間，將提高520 個基點。

Turning to expenses, our total operating expenses, including cost of sales for the quarter, were $82 million compared to $71.3 million for the second quarter of 2023. Sales and marketing expenses were $32.7 million compared to $28.3 million for the same period in 2023. The increase is mainly due to higher personnel costs and marketing expenses associated with travel, training events, and speaker conferences. General administrative expenses were $18.4 million compared to $16.4 million for the same period of 2023. The increase is primarily attributable to higher personnel costs and to a lesser extent higher expenses for professional services, subscriptions, and licensing. Cost of sales expenses were $14.5 million in the second quarter compared to $11.1 million in the second quarter of 2023, primarily due to higher personnel costs and increased expenditures on supplies.

說到費用，我們的總營運費用（包括本季的銷售成本）為 8,200 萬美元，而 2023 年第二季為 7,130 萬美元。銷售和行銷費用為 3,270 萬美元，而 2023 年同期為 2,830 萬美元。增加的主要原因是與旅行、培訓活動和演講者會議相關的人員成本和行銷費用增加。一般管理費用為 1,840 萬美元，而 2023 年同期為 1,640 萬美元。這一增長主要歸因於人員成本的增加以及專業服務、訂閱和許可費用的增加（較小程度）。第二季銷售成本費用為 1,450 萬美元，而 2023 年第二季為 1,110 萬美元，主要是由於人員成本增加和用品支出增加。

The increase in personnel costs primarily consists of higher salaries and wages, bonuses, stock-based compensation, and employee benefits, reflecting headcount additions made to support business growth as well as merit and annual inflationary wage adjustments for existing employees. Supply and service expenses increased largely due to our higher test volumes. R&D expenses were $14.1 million compared to $13.3 million for the same period in 2023, primarily due to higher personnel costs and clinical studies. Total noncash stock-based compensation expense, which is allocated among cost of sales, R&D expense, and SG&A expense, totaled $13.2 million for the second quarter compared to $12.8 million for the second quarter of 2023. Interest income increased by $0.7 million for the quarter compared to the second quarter of 2023, and the increase primarily reflects higher average balances of marketable investment securities and slightly higher interest rates. Our net income for the second quarter of 2024 was $8.9 million compared to a net loss of $18.8 million for the second quarter of 2023. Diluted earnings per share for the second quarter was $0.31 compared to a diluted loss per share of $0.70 in the second quarter of 2023. Adjusted EBITDA for the second quarter was $21.5 million compared to negative $5.3 million for the comparable period in 2023, an improvement of $26.8 million. The substantial year-over-year improvement primarily affects strong topline growth along with continued disciplined expense management.

人事成本的增加主要包括薪資和工資、獎金、股票薪酬和員工福利的增加，反映了為支持業務增長而增加的員工人數以及現有員工的績效和年度通膨工資調整。由於我們的測試量增加，供應和服務費用大幅增加。研發費用為 1,410 萬美元，而 2023 年同期為 1,330 萬美元，主要是由於人員成本和臨床研究費用增加。第二季非現金股票補償費用總額（分配在銷售成本、研發費用和銷售成本、銷售、一般管理費用中）總計 1,320 萬美元，而 2023 年第二季為 1,280 萬美元。與 2023 年第二季相比，本季利息收入增加了 70 萬美元，這一增長主要反映了有價投資證券的平均餘額增加和利率略有上升。我們 2024 年第二季的淨利潤為 890 萬美元，而 2023 年第二季的淨虧損為 1,880 萬美元。第二季稀釋後每股收益為 0.31 美元，而 2023 年第二季稀釋後每股虧損為 0.70 美元。第二季調整後 EBITDA 為 2,150 萬美元，與 2023 年同期的負 530 萬美元相比，增加了 2,680 萬美元。同比的大幅改善主要影響了強勁的營收成長以及持續嚴格的費用管理。

Net cash provided by operating activities was $24 million for the second quarter of 2024 and $17.2 million for the six months into June 30. As you recall, cash used during the first quarter of 2024 was due in part to annual cash bonus payments and certain healthcare benefit payments that are not expected to occur during the remainder of 2024. Net cash used in investing activities was $41.1 million for the six months into June 30, 2024 and consisted primarily of purchases of marketable investment securities of $113.2 million and purchases of property and equipment of $14.4 million, partially offset by the maturity of marketable investment securities of $86.5 million. Net cash provided by financing activities was $10.7 million for the six months into June 30, 2024 and consisted primarily of $10 million of proceeds from issuance of long-term debt and $1.7 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan partially offset by $1.1 million of employee taxes attributable to the vesting of restricted stock units.

2024 年第二季營運活動提供的淨現金為 2,400 萬美元，截至 6 月 30 日的六個月為 1,720 萬美元。您還記得，2024 年第一季使用的現金部分是由於年度現金獎金支付和某些醫療保健福利支付預計不會在 2024 年剩餘時間內發生。截至2024 年6 月30 日的六個月，投資活動使用的現金淨額為4,110 萬美元，主要包括購買1.132 億美元的有價投資證券以及購買1,440 萬美元的財產和設備，部分被到期的有價投資證券所抵銷。截至 2024 年 6 月 30 日的六個月，融資活動提供的淨現金為 1,070 萬美元，主要包括發行長期債務的 1,000 萬美元收益以及向 2019 年員工股票購買計劃捐款的 170 萬美元收益，部分抵消110 萬美元的員工稅歸因於限制性股票單位的歸屬。

We ended the quarter with cash, cash equivalent to marketable securities of $259.7 million. We believe that with continued strong execution and financial stability, we have the flexibility to invest in future growth opportunities while maintaining a healthy balance sheet. As Derek mentioned, we are raising our 2024 revenue guidance to $275 million to $300 million, up from $255 million to $265 million.

本季結束時，我們的現金、相當於有價證券的現金為 2.597 億美元。我們相信，憑藉持續強勁的執行力和財務穩定性，我們可以靈活地投資未來的成長機會，同時維持健康的資產負債表。正如德里克所提到的，我們將 2024 年的收入指引從 2.55 億美元至 2.65 億美元上調至 2.75 億美元至 3 億美元。

In conclusion, I'm pleased with our execution through the first half of the year. We look forward to continuing to achieve the financial goals we set for 2024 as our focus remains on driving both near and long-term shareholder value. I'll now turn the call back over to Derek.

總之，我對我們上半年的執行感到滿意。我們期待繼續實現我們為 2024 年設定的財務目標，因為我們的重點仍然是推動近期和長期股東價值。我現在將把電話轉回給德里克。

Thank you, Frank. In summary, we are very proud of our second quarter results, which highlight the effectiveness of our innovative portfolio, commitment to ongoing robust clinical evidence, and the winning spirit of our entire Castle team. We thank you for your continued interest in Castle Biosciences. We will now be happy to take your questions. Operator?

謝謝你，弗蘭克。總而言之，我們對第二季的業績感到非常自豪，這突顯了我們創新產品組合的有效性、對持續可靠臨床證據的承諾以及我們整個 Castle 團隊的必勝精神。我們感謝您對 Castle Biosciences 的持續關注。我們現在很樂意回答您的問題。操作員？

(Operator Instructions)

（操作員說明）

Catherine Schulte, Baird.

凱瑟琳舒爾特，貝爾德。

Hey guys, thanks for the question. And just first on TissueCypher, big quarter here for you volumes up almost 40% sequentially. What's driving the growth there and how should we think about your expectations for sequential volume growth for the rest of the year and any change to commercial investments you plan to make there, just given the strength you're seeing?

嘿夥計們，謝謝你的提問。首先是 TissueCypher，這個季度的交易量比上一季成長了近 40%。是什麼推動了那裡的成長？

Yes, good to hear your voice, Catherine. This is Derek here. From a TissueCypher perspective, maybe I'll, investments first. We had expanded the TissueCypher for sales team, I guess it was April 1st, May 1st. Early mid-second quarter, and that group of expanded area managers is I think just completing final training maybe the next couple of weeks. And so we would expect them to be effective or fully effective probably in the early fourth quarter, mid-fourth quarter. So really driving hopefully additional appropriate use in 2025, maybe obviously some impact now, but more so three or four months out from now going forward.

是的，很高興聽到你的聲音，凱瑟琳。這是德里克。從 TissueCypher 的角度來看，也許我會先投資。我們擴大了 TissueCypher 的銷售團隊，我猜是 4 月 1 日、5 月 1 日。第二季中期初期，我認為那群擴大的區域經理可能會在接下來的幾週內完成最後的訓練。因此，我們預計它們可能在第四季度初、第四季度中期有效或完全有效。因此，希望在 2025 年真正推動更多的適當使用，也許現在顯然會產生一些影響，但更重要的是從現在起三、四個月後。

From a demand perspective, I just think this shows us and maybe everybody the high clinical need out there for a population. I think we underestimated and we were doing diligence a couple of years ago. There are some data now suggesting that there should be a target market of probably over 400,000 endoscopic biopsies performed per year and people with a definitive diagnosis of Barrett's esophagus disease. So that's by far our largest sort of disease orientation that's tissue based like that. And I think we're just seeing the efforts of our medical education programs to really educate gastroenterologist regarding the benefit that our test brings to identifying people, who have Barrett's esophagus disease. You could have effective interventions at blocking or halting that progression to esophageal cancer and adopting it for appropriate use. Frank, do you want to add anything?

從需求的角度來看，我只是認為這向我們以及也許每個人展示了人群的高臨床需求。我認為我們低估了，幾年前我們一直在努力。現在有一些數據表明，目標市場應該是每年進行超過 40 萬次內視鏡活檢以及明確診斷為巴雷特食道病的人群。這是迄今為止我們最大的一種基於組織的疾病導向。我認為我們只是看到我們的醫學教育計劃所做的努力，以真正教育胃腸科醫生了解我們的測試為識別患有巴雷特食道病的人帶來的好處。您可以採取有效的干預措施來阻止或阻止食道癌的進展，並將其用於適當的用途。法蘭克，你想補充什麼嗎？

No

不

Great. And then can we get your response to the MolDX non-coverage decision for Decision-DX SCC? Are there any studies you're running or plan to run to address some of the areas of pushback, be it around performance versus individual SCC and risk categories or generating outcomes data?

偉大的。那麼我們能否得到您對 Decision-DX SCC 的 MolDX 不承保決定的回應？您是否正在進行或計劃進行任何研究來解決某些方面的阻力，無論是圍繞績效與個人 SCC 和風險類別還是產生結果數據？

And then have you had any follow up conversations with MolDX to discuss their decision and next steps there?

然後您是否與 MolDX 進行過後續對話，討論他們的決定和後續步驟？

Yes, I guess, first of all, as you know, or the audience should hopefully know, we had a review completed early 2022 from Novitas and as of today, we remain covered by Medicare. So, the Palmetto MolDX LCD, doesn't impact our business in the immediate term. That being said, what we did look at when we read through the final LCD was that none of the articles that have been published and that were actually developed as a result of the first of the initial draft LCD were reviewed or included in this final LCD.

是的，我想，首先，正如您所知，或者觀眾應該知道，我們在 2022 年初完成了 Novitas 的審查，截至今天，我們仍然享受 Medicare 的承保。因此，Palmetto MolDX LCD 短期內不會影響我們的業務。話雖這麼說，當我們通讀最終 LCD 時，我們確實看到的是，已發表的文章以及實際上作為第一份初始 LCD 草案的結果而開發的文章均未經過審查或包含在最終 LCD 中。

So we believe there's an opportunity to work in a positive manner with Palmetto to say, hey, there's a really singularly focused benefit of our test to patients with high-risk SCC, which is really helping to rule out a rule in adjuvant radiation therapy. So our intention is to have dialogues with them and understand a path forward so that Medicare patients, should we need backup laboratory systems in Phoenix, are able to access our SCC test.

因此，我們相信有機會以積極的方式與 Palmetto 合作，說，嘿，我們的測試對高風險鱗狀細胞癌患者確實有一個非常集中的好處，這確實有助於排除輔助放射治療的規則。因此，我們的目的是與他們進行對話並了解前進的道路，以便 Medicare 患者（如果我們需要鳳凰城的備用實驗室系統）能夠存取我們的 SCC 測試。

Perfect. Thank you.

完美的。謝謝。

Mason Carrico, Stephens

梅森·卡里科、史蒂芬斯

Hey, guys. Thanks for the questions. Frank or Derek, sorry if I missed this, but could you provide some detail behind what's baked into the guide, specifically from the DecisionDX-SCC test standpoint. Are you assuming a full quarter, next quarter, only a partial quarter? How should we think about that?

嘿，夥計們。感謝您的提問。Frank 或 Derek，抱歉，如果我錯過了這一點，但是您能否提供指南中內容背後的一些詳細信息，特別是從 DecisionDX-SCC 測試的角度來看。您是假設整個季度、下個季度還是僅部分季度？我們該如何思考這個問題？

We're assuming that it comes out of our numbers for the fourth quarter.`

我們假設它來自我們第四季的數據。

Yes, I can. I would concur with you that the team has done an excellent job of really driving what we see as impactful publications, primarily to help establish the clinical outcome benefit of our test and patient care. We have seen, although we don't announce these in a public manner, a number of individual commercial carriers and even some laboratory benefit managers switching from sort of a non-coverage or no statement to positive coverage. Some of those policies rolled out, I think July 1st, that right, Frank, effective data this year. And we'll see more, I think, early next year. So we are seeing progress there, Mason. We just don't call those out specifically at this point in time, given our lifecycle. Frank, do want to add anything?

是的，我可以。我同意您的觀點，該團隊在真正推動我們認為有影響力的出版物方面做得非常出色，主要是為了幫助確定我們的測試和患者護理的臨床結果益處。我們已經看到，儘管我們沒有以公開的方式宣布這些內容，但許多個人商業運營商甚至一些實驗室福利管理者從不承保或不聲明轉為積極承保。其中一些政策推出了，我認為是 7 月 1 日，弗蘭克，今年的有效數據。我想，明年初我們會看到更多。所以我們看到了進展，梅森。考慮到我們的生命週期，我們只是暫時不會具體指出這些內容。弗蘭克，想補充什麼嗎？

Yes, we're making progress, Mason. We would agree with you that there is clearly more than enough evidence published on all of our tests to demonstrate clinical utility and economic savings, economic benefit to the system. So the evidence is certainly sufficient to find coverage, if it's a matter of just continuing to kind of push that rock up the hill.

是的，我們正在取得進展，梅森。我們同意您的觀點，即我們的所有測試中顯然已經發布了足夠的證據來證明系統的臨床實用性和經濟節省以及經濟效益。因此，如果只是繼續將這塊石頭推上山的話，證據肯定足以找到報告。

Perfect. Thanks, guys.

完美的。謝謝，夥計們。

Thomas Flaten, Lake Street

托馬斯·弗拉頓，湖街

Great. I appreciate you taking the questions. On ID genetics, I know it's still early innings, but are you seeing kind of a physician profile starting to emerge of who's adopting the test and then maybe following on to that, are there specific patients for whom these doctors are using the test?

偉大的。感謝您提出問題。關於 ID 遺傳學，我知道現在還處於早期階段，但是您是否看到醫生的資料開始出現，誰正在採用該測試，然後也許接下來，這些醫生是否有特定的患者正在使用該測試？

I can comment on that level of detail, Thomas.

托馬斯，我可以對這個細節進行評論。

Yes. Our primary call points are a mixture of psychiatrists, obviously, who are interested in helping or having a Pharmacogenomic test like ours help improve their therapy decision-making processes as well as higher volume primary care or first-line clinicians, both physicians and also MPs and PAs, who are treating more of an elderly complex population and then some long-term care facilities thrown in there. And that's primarily because certainly those latter two customer groups are wrestling with concomitant drug interactions. And, of course, with our report always having provided a drug gene plus a drug-drug and also, of course, an environmental factor, our reporting structure in the output of the report, it provides those clinicians with a streamlined way to interpret the drug gene combined with drug -drug and environmental bodies. Beyond that, I'd be skating on thin ice.

是的。顯然，我們的主要呼叫點是精神科醫生，他們有興趣幫助或進行像我們這樣的藥物基因組測試，以幫助改善他們的治療決策過程，以及更多的初級保健或一線臨床醫生，包括醫生和國會議員和 PA，他們正在治療更多的老年人群，然後在那裡設立一些長期護理設施。這主要是因為後兩個客戶群正在努力應對伴隨的藥物交互作用。當然，由於我們的報告總是提供藥物基因加上藥物，當然還有環境因素，我們報告輸出中的報告結構，它為那些臨床醫生提供了一種簡化的方式來解釋藥物基因與藥物-藥物和環境體相結合。除此之外，我就如履薄冰。

Got it. And then flipping to Novitas, have you had any engagement with them following this delay or maybe even leading up to it? And there precedents we could be looking to understand how this might play out over the coming months?

知道了。然後轉向 Novitas，在這次延遲之後甚至可能導致延遲之前，您是否與他們有過任何接觸？我們可以尋找一些先例來了解未來幾個月這將如何發揮作用？

We haven't gone back far to see about precedents per se. I think it's a reasonably unusual impact. If you look back and you want to kind of look at MolDX timelines in the past years, like three, four, five years ago, you can see some LCDs that might post from draft to final that are appear to be 370 or 80 days. I don't know if those represented just time for the CMS website to update items or if that was actually a formal request that was granted. So I can give no flavor on that. We and others are seeking some input from both Novitas and CMS to try to understand what this might mean in terms of timing, in terms of not necessarily precedent, but any information and give us, we have heard back, no information at this point in time to share.

我們並沒有回過頭來看看先例本身。我認為這是一個相當不尋常的影響。如果你回顧過去，想了解過去幾年的 MolDX 時間表，例如三、四年、五年前，你會發現一些 LCD 從草稿到最終版本可能需要 370 或 80 天。我不知道這些是否只是 CMS 網站更新專案的時間，或者這是否實際上是已獲得批准的正式請求。所以我對此無法給出任何意見。我們和其他人正在尋求 Novitas 和 CMS 的一些意見，試圖了解這在時間方面可能意味著什麼，不一定是先例，但我們收到回复，目前沒有任何資訊給我們。

Appreciate it. Thank you.

欣賞它。謝謝。

Puneet Souda, Leerink Partners.

Puneet Souda，Leerink 合夥人。

Yes, hi, Derek, Frank, thanks for taking my question. So, first one is you had a beat here at $18 million or so guide raises about 27.5 and just wondering third quarter, you are including the SCC coverage, if I heard that correctly. So just wondering shouldn't the guide raise be more than that, to reflect, if I think Frank said you will be covered in the fourth quarter as well. So I just want to understand sort of the dynamic of SCC volume growth and the ASP that we ought to be thinking about over the next two quarters with respect to the guide.

是的，嗨，德瑞克，弗蘭克，感謝您提出我的問題。所以，第一個是你在這裡獲得了 1800 萬美元左右的指導，籌集了大約 27.5 美元，只是想知道第三季度，你是否包括了 SCC 的覆蓋範圍，如果我沒聽錯的話。因此，我想知道指導加薪是否應該超過這個數字，以反映，如果我認為弗蘭克說你也會在第四季度得到覆蓋。因此，我只想了解 SCC 銷售成長的動態以及我們應該在接下來的兩個季度根據指南考慮的 ASP。

So our new guide assumes that we don't have SCC coverage in the fourth quarter, and I wouldn't have any comment or any change to our ASP. I don't think you'll see a change in ASP from now until then.

因此，我們的新指南假設我們在第四季度沒有 SCC 覆蓋範圍，我不會對我們的 ASP 發表任何評論或任何更改。我認為從現在到那時您不會看到 ASP 發生變化。

Okay. And then Derek sort of stepping back and just looking at the MolDX maintaining their non-covers decision. Novatis is disclosing an extension now, which is unclear exactly when they will come back and cover this test. So the question here is should we assume essentially, first of all, should we assume no coverage for 2025? That's just wanted to clarify that. And I do hope that you get coverage here from Novatis, but if that wasn't going to happen, then what are the other avenues? And then ultimately, how do you bring this test to the commercial population? Just help us elaborate on the path forward for this test and the path for getting paid for this test.

好的。然後 Derek 退後一步，只是看著 MolDX 維持他們的非封面決定。Novatis 現在透露了延期，目前尚不清楚他們何時會回來進行這項測試。所以這裡的問題是，我們是否應該假設，首先，我們是否應該假設 2025 年沒有保險保障？這只是想澄清這一點。我確實希望您能從 Novatis 獲得報道，但如果這不會發生，那麼還有其他途徑嗎？最後，你如何將這個測驗帶給商業人群？請幫助我們詳細說明此測試的前進路徑以及獲得此測試報酬的路徑。

A lot of questions packed there, Puneet, to try and be brief and organized here. I think, first of all, we remain a covered test by Medicare, I guess, point number one. Point number two, in terms of forecasting SCC in your guide going forward, I would, I think as Frank said, take it out October 1st going forward just because it's a prudent overhang there. So that would be our recommendation. That's how we're thinking about our business as well. In terms of next steps, there are a number of approaches one could consider taking with Novitas as well as Palmetto, which would include reconsideration requests if it was negative, which would include challenges to the LCD, other interactions with CMS, as well as individual claim appeals. All of those are on the table. And as we see the outcome here, we can pull the triggers on what the appropriate approach should be, I guess, covers questions, I think so.

那裡有很多問題，普尼特，在這裡盡量簡短和有條理。我認為，首先，我們仍然是醫療保險承保的測試，我想，這是第一點。第二點，就您的指南中未來 SCC 的預測而言，我認為正如弗蘭克所說，我將在 10 月 1 日將其刪除，因為這是一個謹慎的懸而未決的問題。這就是我們的建議。我們也是這樣思考我們的業務的。就下一步而言，人們可以考慮與 Novitas 和 Palmetto 採取多種方法，其中包括如果是否定的則重新考慮請求，其中包括對 LCD 的挑戰、與 CMS 的其他互動以及個人索賠上訴。所有這些都擺在桌面上。當我們看到這裡的結果時，我們可以觸發適當的方法應該是什麼，我想，涵蓋問題，我認為是這樣。

Okay, then just maybe just briefly on EBITDA improvement was strong in the quarter. Frank, any thoughts on how should we think about that for the rest of the year and 2025 if you could elaborate. Thank you.

好吧，那麼也許只是簡單地談談本季 EBITDA 的改善強勁。Frank，如果您能詳細說明一下，我們在今年剩餘時間和 2025 年應該如何考慮這個問題，有什麼想法嗎？謝謝。

What improvement, Puneet?

有什麼改進，普尼特？

Adjusted EBITDA came in strong versus our estimates and just wanted to get a view on continued ramp there. Obviously, some of it is from SCC getting paid, but just improvement.

調整後的 EBITDA 與我們的預期相比強勁，只是想了解那裡的持續成長。顯然，其中一些是來自SCC的報酬，但只是改進。

Yes, we continue to see us grow into the end of the P&L and we're seeing leverage across the P&L as you see revenue is growing more than expenses and that obviously drives a better margin. Going forward, what that profile looks like depends on coverage for SCC among other things. So, as we said before, our long term guidance, which we've reiterated for 2025 assumes no SCC coverage but still hitting a positive adjusted operating cash flow.Kyle Mikson with Canaccord Genuity.

是的，我們繼續看到我們成長到損益表的末尾，我們看到整個損益表的槓桿作用，因為你看到收入的成長超過了支出，這顯然會帶來更好的利潤。展望未來，該概況的外觀取決於 SCC 的覆蓋範圍等。因此，正如我們之前所說，我們重申的 2025 年長期指導假設沒有 SCC 保險，但調整後的營運現金流仍為正值。

Kyle Mikson, Canaccord Genuity.

凱爾米克森，Canaccord Genuity。

Yes. Hey guys. Thanks for the question. Congrats on the quarter. Yes, just sticking going back to SCC, I guess, if that remains noncovered by both of these max here and there's something you can do the near term for that, what can you do in your dermatologic cancer side of the business to like keep growth or, and then kind of maintain margins as well. Like could you shift resources to marketing decisions the Dx-Melanoma or is there something about the past practices that kind of prevent you from beefing up the melanoma marketing effort?

是的。嘿夥計們。謝謝你的提問。恭喜本季。是的，只是回到 SCC，我想，如果這兩個最大值仍然沒有涵蓋，並且您可以在短期內做一些事情，那麼您可以在皮膚癌業務方面做些什麼來保持增長或者，然後也維持利潤。例如，您能否將資源轉移到 Dx-黑色素瘤的行銷決策上，或者過去的做法是否有一些阻礙您加強黑色素瘤行銷工作的因素？

Excellent question, Kyle. Many of our programs today because it's a, what we're primarily calling on interacting with medically oriented dermatologists who, who see patients with skin cancer is kind of the same kind of clinician you might say, I mean, there might be a few less, most surgeons who are seeing or applying most surgery to invasive melanoma like it would be to squamous cell carcinoma. So I think that we feel like we're sized right from a field force standpoint. There are certainly some other marketing and other educational activities that we would kind of redirect, I guess you would call it our SCC dermatology spend in marketing and medical education over towards melanoma specifically so that it would have hopefully the intended expectation you have here, which is would we go ahead and be able to improve upon the sort of market penetration adoption of appropriate patients for the melanoma test. I don't know what that would look like execution at the end of the day, but certainly we're thinking about the same things.

很好的問題，凱爾。我們今天的許多項目，因為我們主要呼籲與以醫學為導向的皮膚科醫生進行互動，他們看到皮膚癌患者，他們與你可能會說的那種臨床醫生是一樣的，我的意思是，可能會少一些大多數外科醫生對侵襲性黑色素瘤進行手術治療，就像對鱗狀細胞癌進行手術一樣。所以我認為，從現場部隊的角度來看，我們的規模是正確的。當然還有一些其他的行銷和其他教育活動，我們會重新定位，我想你會稱之為我們的SCC 皮膚病學在行銷和醫學教育方面的支出，專門針對黑色素瘤，這樣它就有希望達到你在這裡的預期期望，這我們能否繼續前進，並能夠提高市場滲透率，採用適當的患者進行黑色素瘤測試。我不知道最終執行會是什麼樣子，但我們肯定在考慮同樣的事情。

Okay. That was great. Thanks, Derek. And yes, maybe just look at two more questions. So first, is the really interesting that the kind of the attach rate basically like the kind of synergy rate between SCC and melanoma is 68% for the first half of the year that compares to 55% in 1Q. What benefits have you seen there look and again as you think about this like with possibly maybe that's in fourth quarter or something like that, how does that really like really kind of give you confidence for ‘25 growth basically. that's the first part of the question.

好的。那很棒。謝謝，德里克。是的，也許再看兩個問題。首先，真正有趣的是，上半年的附著率基本上就像鱗狀細胞癌和黑色素瘤之間的協同率一樣，為 68%，而第一季為 55%。當您思考這個問題時，您看到了哪些好處，可能是在第四季度或類似的情況，這實際上如何給您對 25 美元成長的信心。這是問題的第一部分。

And just given your second part is going to be a cash balance is how do you think about M&A going forward? Which side makes sense to bolster that dermatologic side or maybe like this GI side that is super promising? Thanks

鑑於您的第二部分將是現金餘額，您如何看待未來的併購？哪一方對於增強皮膚病學方面有意義，或者可能像超級有前途的胃腸道方面一樣？謝謝

Sure, Kyle. so starting with the cash here I think that we're pleased to have the cash position we do. It's enabled us to run the company as we think the company needs to be run and to cautiously and carefully invest and continue growth and so those are our first priorities is sales and marketing of our existing products, and then R&D to support those products as well as new products. M&A's further down the list. Obviously, we never say never, but we've got a tremendous opportunity at hand with the products that we currently have available. Kyle, what was the first part of your question? Oh, synergy, so that was really our thesis in developing our SCC test is having more than one test to sell for the same physician, and there's a balance there.

當然，凱爾。因此，從現金開始，我認為我們很高興擁有目前的現金狀況。它使我們能夠以我們認為公司需要的方式來經營公司，並謹慎小心地投資和持續成長，因此我們的首要任務是現有產品的銷售和行銷，然後是支援這些產品的研發作為新產品。併購的排名靠後。顯然，我們永遠不會說永遠，但我們目前擁有的產品擁有巨大的機會。凱爾，你問題的第一部分是什麼？哦，協同作用，所以這實際上是我們開發 SCC 測試的論文，即向同一位醫生出售多個測試，並且存在平衡。

You can only have conversation about so many things in a physician encounter, so because those tests are largely the same physician base, there's great opportunity and great leverage, and for a non-medical person like me, it's a pretty simple thesis. Each of those tests answers a similar question just for a different group of patients, and so once a physician has been educated on the benefits of a test for melanoma, for example, it's an easy adjacency to say now you've got these other patients over here, and we have a test that answers the same question with the same clinical utility, so there's great synergy there, and it's a powerful leverage between the two, so that was part of our thesis originally. When we set out to develop the SCC test, we heard from clinicians that they had a clinical question that needed to be answered, and it struck us that those were the same clinicians for whom we were answering a similar question in melanoma, so there's great leverage between the two.

在與醫生見面時，你只能談論這麼多事情，所以因為這些測試基本上都是相同的醫生基礎，所以有很大的機會和很大的影響力，對於像我這樣的非醫學人士來說，這是一個非常簡單的論文。這些測試中的每一項都針對不同的患者群體回答了類似的問題，因此，一旦醫生接受了有關黑色素瘤測試的好處的教育，例如，很容易就可以說現在你已經有了這些其他患者在這裡，我們有一個測試可以回答具有相同臨床效用的相同問題，因此存在很大的協同作用，並且這是兩者之間的強大槓桿，所以這最初是我們論文的一部分。當我們開始開發 SCC 測試時，我們從臨床醫生那裡得知，他們有一個需要回答的臨床問題，我們驚訝地發現，我們正在為這些臨床醫生回答類似的黑色素瘤問題，所以這很棒兩者之間的槓桿作用。

Sung Ji Nam, Scotiabank.

宋志南，豐業銀行。

Hi, thanks for taking the questions. Maybe starting with TissueCypher, congrats on getting that mentioned in the AGA publication. The same publication talks about forthcoming guidelines on surveillance in their esophagus, and was wondering if you have any insight into kind of the timing for that and whether you guys might be engaged with the AGA in terms of providing data and things like that.

您好，感謝您提出問題。也許從 TissueCypher 開始，恭喜您在 AGA 出版物中提到了這一點。同一份出版物談到了即將出台的食道監測指南，並想知道您是否對具體時間有任何了解，以及您是否可能在提供數據等方面與 AGA 合作。

Yes, their cadence of guidelines update is a little opaque, Sung Ji. I would think we're talking a couple of quarters out of these, and certainly our teams are working as they should to make sure that appropriate stakeholders are aware of the TissueCypher data and hopefully how to consider it against sort of not using the TissueCypher test. But timing of that, I would think, would be a couple of quarters away, but it's a little bit of a more opaque organization than, say, SCC, in order to have a history of updates and you see where they, our meetings updates are coming out, usually the routine cadence.

是的，他們的指南更新節奏有點不透明，Sung Ji。我認為我們正在討論其中的幾個季度，當然我們的團隊正在盡其所能地工作，以確保適當的利益相關者了解 TissueCypher 數據，並希望如何考慮它而不是不使用 TissueCypher 測試。但我認為，這個時間還需要幾個季度的時間，但它是一個比 SCC 更不透明的組織，以便有更新歷史記錄，你可以看到它們、我們的會議更新的位置正在出來，通常是常規節奏。

Got it. And then maybe following up Catherine's question earlier on the MolDX determination, just kind of curious about it. It seems like they're pretty positive in terms of the use of DecisionDX-SCC in patients for adjuvant radiation therapy. And so I was wondering if you guys have additional studies, what are your strategies in terms of potentially implementing additional studies around that? Are there ways to incorporate or kind of get involved in some of the larger scale studies that might be underway? Just kind of curious if you could touch on that.

知道了。然後也許會跟進凱瑟琳之前關於 MolDX 測定的問題，只是對此感到好奇。他們似乎對在患者中使用 DecisionDX-SCC 進行輔助放射治療持相當積極的態度。所以我想知道你們是否有額外的研究，你們在可能實施額外研究方面有何策略？有沒有辦法合併或參與一些可能正在進行的更大規模的研究？只是有點好奇你是否能觸及這一點。

Yes, excellent question. So we're always doing more studies, one. So how's that for non-answer? I don't mean to be cynical to you. When we first saw this data on ART, I guess about a year, a year and a quarter ago, we certainly said, okay, this is quite interesting. We will end up publishing the feedback in May, of course, the most, I guess, the best controlled article that we've seen out there evaluating the effectiveness of ART, which is good. And so we began additional programs to look at highlighting that, replicating the data essentially. So we expect to see things coming out later on this year that would support that study that came out of May of this year by Aaron et al as being confirmed from a particular standpoint.

是的，很好的問題。所以我們一直在做更多的研究，一。那麼不回答又如何呢？我無意對你憤世嫉俗。當我們第一次在 ART 上看到這些數據時，我猜大約是一年、一年又一個季度前，我們當然說，好吧，這很有趣。我們最終將在五月發布反饋，當然，我想，這是我們見過的評估 ART 有效性的最受控制的文章，這很好。因此，我們開始了額外的計劃來強調這一點，從本質上複製資料。因此，我們預計今年稍後會出現一些結果，這些結果將支持 Aaron 等人今年 5 月發表的研究，從特定的角度得到證實。

Great, Thank you.

太好了，謝謝。

Subbu Nambi, Guggenheim

蘇布南比，古根漢

Hey, guys. Thank you for taking my questions. I don't think this is the case, but I just want to make sure. From a risk perspective given that Novitas is reviewing, is there any retrospective risk to the revenue from SCC? That's one, and I have a follow-up.

嘿，夥計們。感謝您回答我的問題。我認為情況並非如此，但我只是想確定一下。從風險角度來看，Novitas正在審查，SCC的收入是否有追溯風險？這就是其中之一，我還有一個後續行動。

Good. I hear the question.

好的。我聽到了這個問題。

Retrospective risk to SCC, given Novitas, to the revenue from the SCC.

鑑於 Novitas，SCC 的收入存在追溯風險。

Is there a retrospective risk to SCC?

SCC 是否有追溯風險？

To the revenue. Will they claw back?

到收入。他們會反擊嗎？

Oh, claw back to revenue. Novitas reviewed us back in the first quarter of 2022, included us in a billing article, I think, in April or May of 2022, indicating that we're covered test. We bill specifically with our unique PLA code, which we received, I think, in April or March of 2022. So I don't think that's any kind of realistic expectation. There would be claw back when they know exactly what they're paying for.

哦，收回收入。Novitas 早在 2022 年第一季就對我們進行了審核，我認為是在 2022 年 4 月或 5 月，將我們納入了一篇計費文章中，表明我們已覆蓋測試。我們專門使用我們獨特的 PLA 代碼進行計費，我認為我們是在 2022 年 4 月或 3 月收到的。所以我認為這不是任何現實的期望。當他們確切地知道自己付出的代價時，就會有回扣。

Got it. That's helpful, Derek. It is good to DecisionDX-Melanoma grow 14% sequentially and it also alleviates the concern around volume growth moderating. Do you still anticipate growing double digit until you reach 60% market penetration?

知道了。這很有幫助，德里克。DecisionDX-Melanoma 連續成長 14% 是件好事，也減輕了對銷售成長放緩的擔憂。在市場滲透率達到 60% 之前，您是否仍預計會達到兩位數成長？

That was about CM and UM?

那是關於 CM 和 UM 的嗎？

That is DecisionDX-Melanoma, yes.

是的，這就是 DecisionDX-黑色素瘤。

Ever since the IPO, we have, there is a chart in our MD&A that shows the volumes for all of our tests. Obviously, at that point, it was just CM and UM. What you can see is with the exception of 2020, which was, if you recall, the year that we all let them convince us that some groups of physicians were essential and they closed our offices, but since that time, you see a real just a very, very clear seasonality pattern on our CM test or melanoma test. And this year, I think, winds up exactly with what those other years are. So as we said earlier quarters, what we have seen is really just the typical seasonality for the test. I do think at some point, our squamous cell test will become penetrated enough that you will see similar seasonality there.

自從首次公開募股以來，我們的 MD&A 中有一個圖表，顯示了我們所有測試的交易量。顯然，那時就只有 CM 和 UM。你能看到的除了2020 年之外，如果你還記得的話，那一年我們都讓他們讓我們相信某些醫生小組是必不可少的，他們關閉了我們的辦公室，但從那時起，你看到了真正的正義我們的 CM 測試或黑色素瘤測試有非常非常清晰的季節性模式。我認為，今年的結局與往年完全一樣。正如我們在前幾個季度所說，我們所看到的實際上只是測試的典型季節性。我確實認為在某個時候，我們的鱗狀細胞測試將變得足夠深入，你會在那裡看到類似的季節性。

And we believe the drivers are really related to the number of physician encounters around melanoma, which is related to practice days in offices. And Q2 just has the most office days of any of the quarters. Q1 has big physician meetings, two of them. Q3, you've got summer holidays. Q4, you've got the summer holidays. So Q2 has the most days of kind of physician encounters of any quarter and that's what drives that very predictable, very regular seasonality. So not much of a surprise to see the pattern this year, and yes, we think we'll continue to grow our melanoma test. Of course, it's on a bigger base, so the percentage is lower, but we'll continue to see that grow as we increase penetration.

我們相信，驅動因素確實與黑色素瘤醫師就診的次數有關，而這與辦公室的實習天數有關。第二季的辦公天數是所有季度中最多的。第一季有大型醫生會議，其中有兩次。Q3，你放暑假了。Q4，你已經放暑假了。因此，第二季的醫生就診天數是所有季度中最多的，這就是推動非常可預測、非常規律的季節性的原因。因此，今年看到這種模式並不令人意外，是的，我們認為我們將繼續擴大黑色素瘤測試。當然，它的基數更大，因此百分比較低，但隨著滲透率的提高，我們將繼續看到這一比例的增長。

Mark Massaro, BTIG.

馬克·馬薩羅，BTIG。

Hey, guys. Yes. Thanks for taking the questions. Yes, I guess my first one is on just maybe a question that you don't get very often in years, perhaps, is on the commercial payer side. You guys have still relatively immature commercial pay covered lives, even on your flagship core melanoma test, so can you just speak about the frequency with which you try to get in front of these commercial payers? Do you have meetings scheduled perhaps later this year? Or how are you thinking about getting in front of these? Because I see a potential for another leg higher in terms of recognizing revenue and pricing from payers that are giving you denials today. So how should we think about commercial pay, both for melanoma and for SCC?

嘿，夥計們。是的。感謝您提出問題。是的，我想我的第一個問題也許是一個多年來你很少遇到的問題，也許是商業付款人方面的問題。即使在你們的旗艦核心黑色素瘤測試中，你們的商業支付覆蓋生活仍然相對不成熟，所以你們能談談你們試圖在這些商業支付者面前出現的頻率嗎？今年稍後你們有安排會議嗎？還是你是如何考慮面對這些的？因為我認為在確認今天拒絕付款的付款人的收入和定價方面還有可能進一步提高。那我們應該如何考慮黑色素瘤和鱗狀細胞癌的商業支付呢？

So Mark, the commercial and payer environment is not much different for Castle than it is for other high value molecular diagnostic testing companies. And the reality is the decision to cover tests significantly lags the development of clinical utility evidence. Said another way, there is ample evidence to support coverage long before that coverage comes. It would be supposition on my part to offer why that is. You can talk to payers or we can all think about it and probably come up with our own views. But that's pretty typical in the sector and across the industry. What's changed in recent years is the growing number of payers who have outsourced their own technical assessments to lab benefit managers or technical third party tech assessment groups. And so when that happens, you're unable to access medical directors and director teams and individual payers because they direct you to the LBM’s, the third parties.

因此，馬克，Castle 的商業和付款環境與其他高價值分子診斷測試公司沒有太大不同。現實情況是，覆蓋測試的決定明顯落後於臨床實用證據的發展。換句話說，早在報道到來之前就有充足的證據支持報道。我的假設是提供其中的原因。您可以與付款人交談，或者我們都可以考慮一下，並可能提出我們自己的觀點。但這在該行業和整個行業中是非常典型的。近年來發生的變化是，越來越多的付款人將自己的技術評估外包給實驗室福利管理者或技術第三方技術評估小組。因此，當發生這種情況時，您無法聯繫醫療主管、主管團隊和個人付款人，因為他們會將您引導至 LBM（第三方）。

And those groups tend to have fairly regular cycles of review. And they follow them pretty clearly. There is occasionally the opportunity for off cycle review with those groups. But if you just think it through, there's not much benefit to them to offer an off cycle review. And so even in the case of tests that have significant cost savings to the healthcare system. In many cases, the companies are already providing test results to patients whose payers are declining claims. And so if you think that through, you're going to a payer and saying we think you should cover this test because it's going to save you 50% or 70% of the cycles of adjuvant radiation therapy you would pay for otherwise. But they understand in many cases that they're already getting that benefit because we are providing the test report to patients anyway. So it's a how we think about commercial coverage. We're in favor of it. We certainly agree it would be a positive. We were able to get to that view. And we spent a lot of time and a lot of money working on that process. But it is unfortunately fairly opaque and not necessarily one we can directly have significant influence over, from a quarterly basis.

這些團體往往有相當定期的審查週期。他們非常清楚地跟隨他們。有時會有機會與這些小組進行非週期審查。但如果你仔細想想，他們提供非週期審查並沒有多大好處。因此，即使在測試的情況下，也可以為醫療保健系統節省大量成本。在許多情況下，這些公司已經向付款人拒絕索賠的患者提供測試結果。因此，如果您考慮清楚，您就會向付款人說我們認為您應該承保這項檢查，因為它將為您節省 50% 或 70% 的輔助放射治療週期，否則您將為此付費。但他們明白，在許多情況下，他們已經獲得了這種好處，因為我們無論如何都會向患者提供測試報告。這就是我們對商業報道的看法。我們對此表示贊成。我們當然同意這將是積極的。我們能夠看到那樣的景色。我們在這個過程上花費了大量的時間和金錢。但不幸的是，它相當不透明，我們不一定能夠從季度的角度直接對其產生重大影響。

Okay. Got it. And you guys put up a really terrific quarter. And so congrats on that. And you're baking in SCC Medicare revenue through the end of September. I guess questions we get from investors are how should we handicap the extra time that Novatis might need to render their final decision. So you guys seem perhaps to have some visibility into the end of September. That's more visibility than I have, quite frankly. So just curious if you can give us a sense for is there any chance that they could be might need six months, nine months, 12 months.

好的。知道了。你們這個季度的表現非常出色。對此表示祝賀。到 9 月底，您將獲得 SCC Medicare 收入。我想我們從投資者那裡得到的問題是，我們應該如何限制 Novatis 做出最終決定可能需要的額外時間。所以你們似乎對九月底有一些了解。坦白說，這比我的知名度更高。所以我很好奇你能否讓我們了解他們是否有可能需要六個月、九個月、12 個月。

And then second part of this question is not for Palmetto on your SCC directly, but generally speaking, because I don't see a ton of reconsideration requests to Palmetto. What is the typical timeline for reconsideration requests and claim appeals? Because I recognize that Palmetto did not include a lot of really solid evidence that you submitted to them. So I'm just curious if you have a sense based on your conversations with consultants, what type of timeline a reconsideration request or claim appeal is with Palmetto?

然後這個問題的第二部分不是直接針對您的 SCC 上的 Palmetto，而是一般來說，因為我沒有看到對 Palmetto 的大量重新考慮請求。複議請求和索賠上訴的典型時間表是怎樣的？因為我認識到 Palmetto 並沒有提供很多你提交給他們的確實可靠的證據。所以我很好奇，根據您與顧問的對話，您是否了解 Palmetto 提出的重新考慮請求或索賠上訴的時間表是什麼類型？

Yes. So Mark, as it relates to the guide and first of October versus any other date, we have the same, you and I have the same visibility there. And that is, as we've said in other quarters when we've updated our guidance, if a contractor follows Medicare's published policies when a new LCD is finalized, there's a 45-day period before it becomes effective. I am told that is to allow the computer programmers to make the changes that are necessary and to make the edits in the systems. I don't know if that's completely full story or not because I'm not an expert there. And so, as we said before, we are currently a covered test service following a full medical review that was performed in 2022. And so, all I'm doing is saying I'm taking 45 days from today and I'm not trying to do it by the week. I'm just doing it by the month and I get to October 1st. So, that's the visibility there, which has been the same as each quarter.

是的。所以，馬克，因為它涉及指南和十月一日與任何其他日期，我們有相同的，你和我在那裡有相同的可見性。也就是說，正如我們在其他季度更新指南時所說的那樣，如果承包商在新的 LCD 最終確定時遵循 Medicare 公佈的政策，則在其生效之前有 45 天的時間。有人告訴我，這是為了允許電腦程式設計師進行必要的更改並在系統中進行編輯。我不知道這是否是完整的故事，因為我不是這方面的專家。因此，正如我們之前所說，在 2022 年進行全面醫療審查後，我們目前提供承保測試服務。所以，我所做的就是說從今天開始我要花 45 天的時間，而不是試著按週完成。我只是按月做，直到 10 月 1 日。這就是可見度，每季都是一樣的。

On a reconsideration request, my understanding is the only timeline that's required is to notify you if the reconsideration is going to be granted, I think, correct. And then there's no one-year clock like from a draft LCD on a reconsideration. To your point, there aren't a whole lot of precedents there. So, it would be difficult to say here's a sample pool and we can kind of get to a standard deviation of what we expect it to be given the other the cadence of other processes at Medicare. You feel like it's sort of a one year, maybe a two year process. But that would be, again, it's not there. There's nothing in the manual that directs them there. So that's the, I guess that's the negative, right. That's the negative delivery path process.

對於重審請求，我的理解是，唯一需要的時間表是通知您重審是否會被批准（我認為是正確的）。然後，沒有像重新考慮的 LCD 草案那樣的一年時鐘。就你的觀點而言，那裡沒有很多先例。因此，很難說這是一個樣本庫，我們可以根據 Medicare 的其他流程的節奏得出我們期望的標準差。你覺得這是一個一年，也許兩年的過程。但那又是不存在的。手冊中沒有任何內容指導他們去那裡。所以這就是，我想這是負面的，對吧。這就是負傳遞路徑過程。

Yes. The only, so, yes, so the history is limited doesn't tell us what we can do. One would expect that if they had certainly seen or read our submissions last summer, it would have seen the ART in prepublication form and that should be and as you noted earlier Mark, there's been significant, I think we're extremely clear publications in the last four, five or six months regarding the use of our tests in that matter for ART our guidance, they know about our SCC test to just finalize the LCD. Does one think that if a reconsideration request goes in fairly soon, because it's top of mind, they realize there was a lot of data that's come out that was not included in the review because of timing periods from Medicare standpoint. Does that say it should be reviewed quicker rather than later? I have no idea to gauge that, except that's an interesting possibility.

是的。唯一的，所以，是的，所以歷史是有限的，並沒有告訴我們我們能做什麼。人們會期望，如果他們確實看到或閱讀了我們去年夏天提交的材料，那麼他們就會看到預出版形式的ART，這應該是，正如您之前指出的，馬克，有重要的，我認為我們在過去四、五或六個月關於我們在 ART 方面的測試的使用，我們的指導，他們了解我們的 SCC 測試，以最終確定 LCD。有人是否認為，如果重新考慮請求很快提出，因為這是首要考慮的事情，他們會意識到，從醫療保險的角度來看，由於時間週期的原因，有很多數據沒有包含在審查中。這是否意味著應該盡快審查而不是稍後審查？我不知道如何衡量這一點，除非這是一個有趣的可能性。

Thank you. I would now like to hand it back to Derek for some final closing remarks.

謝謝。現在我想把它交還給德瑞克，讓他做最後的總結發言。

Thank you, operator. This concludes our second quarter 2024 earnings call. Thank you again for joining us today and for your continued interest in Castle Biosciences.

謝謝你，接線生。我們的 2024 年第二季財報電話會議到此結束。再次感謝您今天加入我們並感謝您對 Castle Biosciences 的持續關注。

Thank you for joining. I can confirm that does conclude the Castle Biosciences second quarter 2024 conference call. Please enjoy the rest of your day. And you may now disconnect from the call.

感謝您的加入。我可以確認 Castle Biosciences 2024 年第二季電話會議確實結束了。請享受您剩下的一天。您現在可以斷開通話。