Castle Biosciences, Inc.

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, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Thank you, operator. Good afternoon, everyone. Welcome to CASEL Biosciences' second quarter 2024 financial results conference call. Joining me today is CASEL's founder, president, and chief executive officer, Derek Massold, and chief financial officer, Frank Stokes. Information recorded on this call speaks only as of today, August 10, 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. 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 would 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, TAM, 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 dates, and the impact of our investments and growth initiatives and expanded commercial team. Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties. 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. In addition, some of the information discussed today includes non-GAAP 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 GAAP. These non-GAAP items should be used in addition to and not as a substitute for any GAAP results. We believe these metrics provide useful supplemental information in assessing our revenue and operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables 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.

Thank you, Camilla, and good afternoon, everyone. I'm pleased to share that Castle Bioscience 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% to 25,102 compared to the second quarter of 2023. Our strong performance is driven by the team's success in developing a differentiated and innovative portfolio underpinned by robust business fundamentals. 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 CASEL 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 to $265 million, reflecting year-over-year growth of somewhere between 25% to 36%. Today, I will walk you through execution and strategy highlights from the second quarter, and then friends 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 decision DX 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 showed that decision DX melanoma is particularly valuable as it can help pinpoint higher risk patients who may benefit from more frequent imaging surveillance, leading to earlier detection of CNS metastases and improved patient survival. 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 1 or 2 by the American Joint Committee on Cancer, 8th edition. Despite this, approximately 14% of patients with stage 2 melanoma will develop CNS metastases. Our study demonstrated that patients with a high-risk class 2B melanoma test result had 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 decision x 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 decision dx melanoma brings to improving patient care decisions and outcomes moving on to our decision dx 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 clinical and economic value in guiding adjuvant radiation therapy, or ART, decisions in patients with high-risk cutaneous squamous cell carcinoma. We are 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. This study demonstrated how DecisionDxSCC 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 decision DXSCC test can apply 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 DecisionDxSCC's ability to identify high-risk patients, enabling more appropriate surveillance or adjuvant treatments to reduce metastasis risk. Specifically, DecisionDxSCC testing before tumor removal significantly improved the prediction accuracy of metastatic events, both alone and when combined with NCCN guidelines BWH staging or AJCC version 8 staging, guiding better patient care decisions. Stated differently, this means that our tests add significant accuracy when used with these three staging systems, thus improving treatment pathway decision making. Now let's turn to our gastroenterology franchise. In the second quarter of 2024, we delivered 4,782 tissue cipher 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 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 tissue cipher 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 AGA reinforces tissue cipher's role in providing personalized and clinically validated risk stratification, helping patients better manage their patients with Barrett's esophagus disease. With our recent commercial team expansion, sufficient capacity in our Pittsburgh laboratory to meet accelerating demand, and very early stages of market penetration in an estimated $1 billion US TAM, we believe tissue cycle represents a significant long-term growth opportunity. Turning to our mental health business, We delivered 4,903 IgGenX test reports in the quarter, compared with 2,681 in the second quarter of 2023, which is 83% year-over-year growth. IgGenX 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 recognized 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. 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.