Castle Biosciences, Inc.

Good afternoon and welcome to CASEL Bioscience's first quarter 2021 conference call. As a reminder, today's call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question and answer session. I would like to turn the call over to Camilla Zuccaro, Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. Good afternoon, everyone. Welcome to CASEL Biosciences first quarter 2021 financial results conference call. Joining me today is CASEL's founder, president, and chief executive officer, Derek Matzold, and chief financial officer, Frank Stokes. Information recorded on this call speaks only as of today, May 10th, 2021. Therefore, if you are listening to the replay or reading the transcript of this call, any time sensitive information may no longer be accurate. A recording of today's call will be available on the investor relations page of the company's website for approximately three weeks. Before we begin, I would like to remind you that some of the information discussed today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company, including expectations and assumptions related to the impact of the COVID-19 pandemic and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon current expectations and involve inherent risks and uncertainty, 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 March 31st, 2021, and in the company's other documents and reports 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. I'll now turn the call over to Derek.

Thank you, Carmela, and good afternoon, everyone. This afternoon, I will discuss the highlights of our first quarter results and provide an overview of developments on our key priorities. Frank will then provide additional detail on our financial results and company performance. I would like to start today's call by thanking the CASEL team for their dedication and commitment to improving the lives of patients with skin cancer and other dermatologic diseases with high unmet clinical need. They continue to execute on a growth strategy at a very high level, including furthering our evidence development progressing on our commercial team expansion, advancing our pipeline, and providing strategic support for the pending acquisition of the Myriad MyPath melanoma laboratory. We are off to a great start to the year. We delivered excellent top line growth with first quarter revenue of $22.8 million, a 31% increase over the first quarter of 2020. As we look forward to our growth potential in 2021, And although there remains continued uncertainty related to the impact of COVID-19 with regard to the timing of the return to historical levels of skin cancer diagnoses, we feel confident in providing 2021 revenue guidance of $80 to $83 million. We expect continued investments in our growth initiatives, including our commercial team expansion, the expansion of our body of evidence, and acceleration of our R&D efforts to support our continued growth. In the first quarter of 2021, we delivered 5,142 total gene expression profile test reports, and we are encouraged by what we believe to be positive recovery trends, although melanoma diagnoses have not yet returned to pre-COVID levels. As we have discussed in the past, we expect that the majority of the estimated 26,000 patients who were not diagnosed in 2020 as well as those who were not diagnosed in early 2021 to be diagnosed later this year or in 2022, which could be impacted by the timing of both COVID vaccinations and the continued return to in-person medical care. And as such, we anticipate continued improvement to our volume growth rate for the second half of 2021 and into 2022, but cannot predict the rate or progression of a full return to in-office visits or when all of our representatives will be allowed to visit all of their clinicians' offices. We are seeing increased levels of in-person visits by our commercial team, with just over 75% of our sales calls being live and in-person. We're also seeing a return of in-person peer-to-peer activities. Despite the continued impact of COVID on both diagnoses of melanoma and office in-person visits, we delivered 4,060 DecisionDx melanoma test reports in the first quarter. Importantly though, we saw order volume for DecisionDx melanoma increase by approximately 30% in March 2021 compared to January 2021. And in March, clinicians ordered DecisionDx melanoma more times than in any other previous March. And the positive trends have continued through April, with April older volume exceeding that of March. Turning to our DecisionDx STC test for patients diagnosed with high-risk squamous cell carcinoma and one or more risk factors. We delivered 527 test reports for this test. We launched DecisionDx STC on the last day of August in 2020. And in the fourth quarter of 2020, we delivered 428 test reports. As you may recall, we are focusing our commercial incentives on our DecisionDx melanoma test. Within this context, we remain extremely pleased with its early adoption, as the DecisionDx STC test continues to exceed our expectations. We believe this performance is due, in part, to the high unmet clinical need that this test is filling. Equally important, though, is the value that we are seeing through leveraging our dermatologic commercial channels. Specifically, more than 80% of clinicians who have ordered this test for FCC have also ordered our DecisionDx melanoma test within the last two and a half years. In other words, we believe being able to walk into an office of a current customer, one has adopted DecisionDx melanoma as an important tool in the management of their patients with melanoma, makes it easier for us to lay out the clinical need and the value of our DecisionDx SCC test in those patients with high-risk squamous cell carcinoma. The technical assessment dossier for our DecisionDx SCC test was submitted to Palmetto and Naridian in the second quarter of 2020. We received confirmation of acceptance of the submission as being complete in the third quarter of 2020 and believe, although there can be no assurances, that a draft LCD should be posted in 2021. We believe that the LCD could be posted in 2021, but I remind you that there is no specific timeframe under which Palmetto and Neridian must operate. Now let's discuss our comprehensive test solutions for difficult to diagnose melanocytic lesions. In the first quarter of 2021, we delivered 218 DecisionDx, DiffDx melanoma test reports. Similar to what we are seeing with DecisionDx SCC, the early uptake of our DIF DX melanoma test is exceeding our expectations. And you may have seen our important milestone announcement from April 27th regarding the definitive agreement we signed to acquire the Myriad MyPath melanoma laboratory. We believe this acquisition will add incremental value to both MyPath melanoma and DIF DX melanoma by leveraging the strength of these two validated tests. Through this acquisition, we believe that more patients will receive actionable results more of the time, enabling a more confident diagnosis and a clearer treatment path. We expect this transaction to close in late May 2021. Evidence development remains a key component of our near and long-term growth strategy. We expanded our significant body of evidence in 2020 with 11 supportive peer-reviewed publications published for our proprietary gene expression profile tests. And in the first quarter of 2021, we added two additional articles for DecisionDx Melanoma, which is now supported by 30 peer-reviewed publications. In March, you may recall that we announced our Integrated Test Results, or ITR, for DecisionDx Melanoma. The ITR is calculated by the independently validated integrated 31GEP, or i31GEP algorithm, designed to provide a more precise and personalized prediction of Sentinel-Liftove Positivity in order to guide discussions and recommendations in current risk-based guidelines for the Sentinel-Liftove Biopsy surgical procedure. I-31GEP is an artificial intelligence-based neural network algorithm that integrates the decision DX melanoma test result with the patient's traditional clinical and pathologic features. The algorithm has been validated in a cohort of 1,674 tested patients with T1 to T4 cutaneous melanoma. We presented data on the validation study at the World Congress in Melanoma in April. The independent validation phase showed that the I-31 GEP test provides a highly concordant prediction of sentinel lymph node positivity rate compared to the actual observed rates with a linear regression slope of 0.999. with a slope of 1.0 representing complete concordance. Additionally, a patient's originally classified with a 5 to 10% likelihood of sentineleptopositivity using clinical or pathologic features only, the I-31 GEP was able to reclassify 63% of those patients whose actual risk of sentineleptopositivity was either below 5% or above 10%. Finally, the I-31 GEP has a high negative predictive value of 98% in patients with T1 to T4 melanomas. We plan to continue investing in development for all of our GEP tests as it remains a key component of our growth strategy, supporting adoption of our tests both by clinicians as well as reimbursement by commercial payers. We are a data-driven, evidence-based company and we invest heavily in evidence development, supporting not only our existing tests, but also our pipeline tests as well. And earlier today, we announced one of our innovative pipeline programs. The program's initiative is to develop and validate a genomic test aimed at predicting systemic therapy response for patients with moderate to severe psoriasis, atopic dermatitis, and related conditions. Essentially, those patients with inflammatory skin conditions that have reached the severity of disease to be considered for systemic therapy. With our industry-leading position as the only diagnostics company with a suite of commercially available tests for dermatologic cancer, we have demonstrated our ability to successfully develop, validate, and bring to market clinically actionable, innovative genomic tests. We start by identifying dermatologic diseases with high unmet clinical need, We then use the gene expression profile of an individual patient's biology in an effort to develop a gene expression profile test designed to assist clinicians and their patients by better informing treatment to optimize both health outcomes and reduce healthcare costs. This pipeline test has the potential to expand our reach into non-skin cancer medical dermatology diseases and is expected to provide additional value for our clinical customers and their patients. We recently launched the 4,800 patient prospective multicenter trial to develop and validate this pipeline test and plan to enroll approximately 50 centers with leading experts in the field. This pipeline test, along with our other pipeline products, has the potential to increase our U.S. total addressable market to slightly more than $5.5 billion. Another important component of our growth strategy is the expansion of our commercial team. I'm pleased to say that we completed our expansion ahead of schedule with all new outside sales territories filled. And we expect to enter the third quarter of 2021 with a total of 60 to 65 sales representatives, all calling on dermatologists as a primary call point, followed by Mohs surgeons, surgeons who work in skin cancer, including surgical oncologists, and head and neck surgeons and dermatopathologists. This expansion will nearly double our dermatology-focused sales efforts compared to the 32 outside sales territories we had before the expansion and in time for the expected continued positive trends of offices opening back up for in-person sales calls and in-person peer-to-peer programs. We expect that each of our 60 to 65 sales representatives will sell all four dermatologic tests, DecisionDx Melanoma, DecisionDx STC, MyTap Melanoma, and Disky X Melanoma. Additionally, we have seen that our market is promotionally responsive. So we expect that as offices open more fully, our Salesforce expansion efforts should have a positive impact on our 2021 exit volume and should position us well for growth in 2022. Before I turn the call over to Frank, let me summarize our takeaways. We delivered an excellent quarter of financial performance with strong execution on our growth initiatives. We increase investments in these initiatives during COVID to ensure resiliency and are seeing the benefits of those actions, which we believe furthers our position as a leading dermatologic diagnostics company, strengthening our value proposition and continuing to create shareholder value. I will now turn the call over to Frank, who will provide additional details relating to our financial results. Thank you, Derek.