Q2 2021 Castle Biosciences Inc Earnings Call
Good afternoon, and welcome to Castle Biosciences second 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 Camillo Zuccaro Executive Director Investor Relations and corporate Communications. Please go ahead.
Thank you operator, good afternoon, everyone welcome to Castle Biosciences second quarter 2021 financial results Conference call. Joining me today is castle's founder President and Chief Executive Officer, Derek muscle and Chief Financial Officer, Frank Stokes.
Information recorded on this call speaks only as of today August 9.2021. 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.
<unk> 3 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 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 provision.
<unk> of the private Securities Litigation Reform Act of 1995.
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 32021, and in the company's other documents and reports filed with the Securities and Exchange Commission the.
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 include the financial metrics, such as adjusted revenue and adjusted gross margin, which are non-GAAP financial measures.
We believe these metrics provide useful supplemental information and assessing our revenue and cash flow 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.
<unk> of the Companys website, I will now turn the call over to Darren Thank.
Thank you Kim and good afternoon, everyone.
Thank you for joining us today for castle second quarter 2021 earnings call.
Good afternoon, I will discuss highlights from the quarter and the recent progress against our growth initiatives.
Frank will then provide additional detail on our financial results of performance.
To start today's call by thanking the castle team on.
On the sales side, we're able to conduct sales trading updates in person in the first quarter and we entered the second quarter of fully engaged as our clinical.
Clinician customers continue to open up their practices.
It is our team's hard work that contributed to an exceptional quarter and by exceptional I mean that we had record test report volume in a single quarter per each of our proprietary gene X profile of tests.
So the differently, we continue to execute on our long term growth initiatives furthering our position as the leader in Dermatologic diagnostics.
In the second quarter 2021, we delivered total revenue of $22.8 million a day.
79% increase over the second quarter of 2020.
Additionally, our adjusted revenue.
Excluding the effects of revenue adjustments ways of tests delivered in prior periods was $22.9 million and 1 of 120% increase over the second quarter of 2020.
As you May recall, we provided revenue guidance in may for the full year 2021.
Due to our strong performance and expected continued momentum.
We are raising our 2021 revenue guidance for the full year.
$93 million compared to our previously provided guidance of $80 million to $83 million.
We delivered 7007 total gene expression profile of reports in the second quarter 2021, compared to 3314 in the same period of 2020.
This includes 5128 decision Dx melanoma test reports delivered.
Despite cutaneous melanoma diagnoses remaining below historical 2019 levels by approximately 12% based upon our analysis of third party data.
The year over year growth in decision Dx melanoma test reports of 70% reflects gains in both diagnosis compared to 2020 as well as significant gains in market penetration.
We understand the comparing tests reported growth of 2020, maybe less informative given that we believe the pandemic impacted us the hardest during the second quarter of last year.
So to provide a different perspective, our second quarter 2021 test report volume for the decision Dx melanoma is a 39% increase over the second quarter of 2019.
This is in the face of the ongoing decreased cutaneous melanoma diagnosis I just mentioned.
Although we cannot be certain of any potential future impacts of COVID-19, including the emergence of spread of variance. We believe the positive momentum we have seen will continue.
Additionally, the expansion of our sales team is complete and beginning on July 1 our dermatology clinicians focused outside sales force approximately doubled in size to the mid <unk> and each of our sales representatives selling all 3 of our skin cancer diagnostic product lines.
Utilizing our existing sales channels and calling on dermatologists as our primary call point, followed by most surgeons surgeons, who work in skin cancer, including surgical oncologist and had net surgeons and or matter of pathologists.
We have seen that our market is promotional responsive and we believe that our continued increase in the market penetration is being positively impacted by 3 promotional variables.
Number 1 nearly 90% of our calls in the second quarter were in person on.
From just over 75% in the first quarter of 2021.
Number 2 the number of average calls per day per sales reps continues to improve and specifically more than doubled in the second quarter of 2021.
<unk> to the second quarter of 2020.
Although it is still below the pre COVID-19 first quarter levels of 2020 by approximately 20%.
And number 3 we are seeing of continued to return to in person peer to peer programs to the extent that for the first half of 2021, we've already exceeded our total for all of 2020.
Thus, we believe that we are well positioned for continued growth for the remainder of 'twenty 1 due to the 3 variables combined with the doubling of our dermatology focused sales team.
Turning to our decision Dx SCC test for patients diagnosed with high risk cutaneous squamous cell carcinoma, and 1 on more risk factors. We delivered 784 test reports in the second quarter of 2021.
We remain extremely pleased with the rate of adoption for this test.
We believe 1 clear differentiator for castle is our position as the leader in Dermatologic GDP tests.
We have seen and expect to continue to see value through leveraging our established dermatologic commercial channels for FCC as well as for our comprehensive diagnostic test offering.
Third party data shows that over 90% of dermatologists and most surgeons diagnosed.
The <unk>, providing us with leverage that we're seeing in the field.
And more specifically for the first 6 months ended June 30 of 2021, approximately 70% of clinicians who order decision Dx SCC also order decision Dx melanoma.
We are a data driven evidence based company and we invest heavily in evidence development.
At this year's American head and neck Society, 10th International Conference on head and neck cancer, we presented new data demonstrating that decision Dx SCC complements current risk assessment methods and patients with cutaneous squamous cell carcinoma of the head and neck.
Archival primary tumor specimens and associated data from a cohort of 278 patients from 33 different clinical sites were included in the study.
The patients had high risk FCC located on the head or neck, and 54 patients are 19% overall develop regional <unk> distant metastasis.
Patients received either a castle class 1 low risk biological test result.
The class II moderate biological risk test result, or a class to be high biological risk test result has significantly different 3 year metastatic free survival rates of 92, 1% 76, 1% or 44, 4%, respectively with a P value of less than zero point.
0001.
Furthermore, as expected using multivariate Cox regression analysis the decision of the SCC test was found to be an independent predictor of metastasis when compared to age ACC staging. Additionally.
Additionally, and I would say more importantly decision Dx SCC had a substantially higher hazard ratio 9.07 compared to $2.5 1 with AJC staging demonstrated on the increase in risk ratification compared to age ACC staging of low.
We continue we plan to continue investing in evidence development for all of our gene expression profile of tests as it remains a key component of our growth strategy supporting both the adoption of our tests by clinicians and reimbursement by commercial payers.
As we previously discussed the technical assessment dossier for our decision Dx SCC test was submitted to Palmetto and meridian in the second quarter of 2020.
We received confirmation of acceptance of the submission is being complete in the third quarter of 2020 and a low there can be no assurances. We continue to plan for a draft local coverage determination of our LCD to be posted in 2021, but I'll remind you that there is no specific timeframe under which come at Owens Iridium must on.
Operator.
Now, let's discuss our comprehensive diagnostic test offering for difficult to diagnose melanocytic lesions also called unequivocal uncertain or suspicious.
As you May recall in April we announced our plans to acquire <unk> melanoma and the deal closed in late May.
The <unk> melanoma and decision Dx diff Dx melanoma or gene expression profile of tests designed to provide an objective and comprehensive diagnostic test offering to a dramatic ethologists and dermatologists and characterizing these difficult to diagnose <unk> lesions is likely to be benign.
Malignant.
Or in rare cases intermediate risk for malignancy.
Let me remind you of this estimate of <unk> over 2 million biopsies of suspected melanoma annually in the U S.
Thankfully approximately 85% of these biopsies receive a definitive diagnosis of either benign or malignant as determined by dramatic pathologists using traditional microscopic analysis.
Thus up to 300 lesions or 15% are not constantly diagnose with traditional histopathology.
The difficult to diagnose <unk> lesions do require additional or ancillary testing for definitive diagnosis can be reached it is important to reduce the diagnostic uncertainty. So the patient's treatment plan can be determined and implemented in the case of of benign lesions. The treatment plan is generally.
Do nothing on that lesion, whereas in the case of malignant lesion on the commission would at the minimum preferred of wide local excision and depending on the depth and other characteristics pursue a settlement of biopsy procedure as well.
So let's talk about our acquisition of the myriad My path laboratory and the myriad my path tests, Microsoft melanoma test.
As you may recall.
A few years ago, we began development on our own <unk> melanoma test to address this unmet medical need to provide improved clarity around difficult to diagnose lesions.
In addition to developing of test with high sensitivity and specificity.
Our target product profile include of the criteria of having both a low technical failure rate.
That is being able to report of test result out of more than 95% of orders as.
As well as a small intermediate test result.
Our assessment of the published literature and market research was that while clinicians on the amount of pathologists valued the <unk> melanoma test they perceive the technical failure rates and intermediate rate of of tests as being high.
As you know we succeeded in achieving our target product profile.
However, we also knew that we would be investing additional performance studies, including additional work in pediatrics to serve our customers and build market share on penetration, while competing with <unk> for the same patient population.
Not to mention that we would also have an estimated 18 to 24 month wait for Medicare coverage.
Myriad announced its intention to divest my path melanoma in the fourth quarter of 2020, just as we were making our <unk> melanoma test available for clinical use.
We determined that the housing both gene expression profile of tests for difficult to use.
For difficult on it for use in difficult to diagnose lesions and providing structure to ordering could enable us to serve more patients more quickly significantly.
The advanced the combined evidence development and move forward reimbursement and the significant manner.
I am pleased to announce that even though we only had 1 full month of offering the combined diagnostic test offering that is June we're able to deliver 627 test reports from Ipass melanoma and <unk> melanoma combined from the second quarter a record number of test reports delivered for a suspicious pigmented lesion.
Offering for a quarterly period. Furthermore, we are also successful meeting our objective of upgrading the <unk> melanoma test the ability to provide clinically actionable results from less of them, 80% when offered as a standalone test to more than 95% when offered in combination with <unk> melanoma. This.
The fantastic achievement and result in more patients getting the actual test result, more of the time.
In addition of this performance. It's also worth noting are pointing out of the national comprehensive cancer network or end CCN guidelines support the use of ancillary testing, including gene expression profile of tests for in determinant Melanocytic neoplasms. Following histopathology, meaning those tests are supported by the NCC guidelines.
As you should.
Expect our reimbursement team is already focused on focusing on driving appropriate payments from commercial payers through the use of both a more extensive base of evidence and the NCC guidelines support.
In summary, we delivered an excellent quarter of financial performance with our strong execution on our growth initiatives delivering on our commitment to our stakeholders and continuing to create value for patients and stockholders I will now turn the call over to Frank who will provide additional details relating to our financial results.
Thank you Derek and good afternoon, everyone. We are pleased with the investments we have made in our growth initiatives along with solid execution from the castle team enabled us to deliver a strong quarter, we reported revenue of $22.8 million on the second quarter of 2021.
Compared to $12.7 million in the second quarter of 2020 of 79% increase overall.
Overall, the increased revenues reflect higher report volumes for both decision Dx melanoma and decision Dx Uveal melanoma and higher per unit rates, partially offset by lower positive revenue adjustments related to tests delivered in prior periods.
Our gross margin during the second quarter was 83% essentially flat to the second quarter of 2020 are.
Our adjusted gross margin, excluding the effects of intangible asset amortization and revenue associated with test reports delivered in prior periods was 84%.
Compared to 79% for the second quarter of 2020.
Going forward, we expect amortization of the acquired intangible asset to be approximately $700000 per quarter.
Our total operating expenses, including cost of sales for the quarter ended June 32021 were $31.6 million.
Compared to $13.4 million for the same period last year.
The largest driver of the increase was higher SG&A, which increased by $10.4 million for the 3 months ended June 32021, compared to the same period in 2020.
Attributable in large part to higher personnel costs associated with our increased head count, which includes salaries bonuses benefits and stock based compensation.
These higher personnel costs were primarily attributable to the expansion of our sales and marketing teams as well as administrative support functions.
The remainder of the increase in SG&A was primarily associated with conferences and training events as well as higher travel costs as our commercial team returns to in person events as Derek mentioned.
R&D expense increased by $4.1 million in the second quarter of 2021 compared to 2020. It was primarily associated with costs incurred in our clinical studies and associated increases in personnel costs attributable to additional head count to manage and run the studies.
As we have discussed the investments we are making in our R&D activities are a key part of our growth initiatives. We expect our R&D expense to increase further as we continue to support our commercial products and pipeline initiatives, which we believe position us well for near and long term growth.
Total non cash stock based compensation expense, which is allocated among cost of sales R&D and SG&A totaled $4.8 million for the quarter ended June 32021, compared to $1.6 million for the quarter ended June 32020.
We expect further increases in stock based compensation expense in future periods, reflecting both higher post IPO stock option valuations as well as additional awards outstanding due to gross in our head count.
Our net loss for the second quarter of 2021 was $8.8 million.
Compared to a net loss of $1.4 million for the second quarter of 2020.
Diluted loss per share attributable to common stockholders for the second quarter of 2021 was <unk> 35, a share compared to diluted loss per share attributable to common stockholders of <unk> of share for the second quarter of 2020.
Operating cash flow for the 6 months ended June 32021 was negative $10.1 million compared.
Compared to positive $13.3 million for the same period in 2020 and was primarily attributable to the net loss.
Increases in working capital requirements and.
And recruitment of a portion of the Medicare advance patient payment, partially offset by noncash charges.
Youll recall that the prior year operating cash flow benefited from the seat the receipt of $8.3 million.
Associated with the Medicare advanced payment this.
This year beginning in April recruitment of the advanced payment began as of June 32000, $21 million to $2 million has been applied to the balance in recruitment.
Investing cash flows during the 6 months ended June 32021 were primarily associated with the $33 million payment for the acquisition of <unk> melanoma.
Finally, we had cash and cash equivalents at June 32021 of $368 million and no debt.
As we look to the rest of the year, we have raised our annual revenue guidance to 89% to $93 million to reflect the performance of the company over the first half of the year and the belief that the current recovery trends should continue for the remainder of the year.
We continue to invest aggressively in our growth plans, which revolve around our commercial team expansion evidence development and progression of our pipeline tests all in order to continue to create value for clinicians patients and stockholders I will now turn the call back to Darren.
Thank you Frank.
In summary, we are extremely pleased with our second quarter performance across the entire company on.
On commercial execution, coupled with continued evidence development enabled us to drive record test report volume for each of our proprietary gene expression profile of tests and this translated into our second highest GAAP revenue and record adjusted revenue in a single quarter.
I'd like to emphasize that our strong second quarter results and continued momentum can be attributed to our purpose driven castle team their.
Their dedication and commitment to have taken us to the next level on our business and continue to make an impact on the lives of patients with skin cancer and other dermatologic diseases with high unmet clinical needs. This.
This concludes our remarks. Thank you for your continued interest in castle.
Operator, we are now ready for Q&A.
Certainly we will now begin the Q&A session.
Like to ask a question. Please press star followed by 1 on your Touchtone keypad. If for any reason you would like to remove that question. Please press star followed by 2.
Again to ask a question press star 1.
As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question, we will pause here briefly to allow questions to generating Q.
The first question is from Katherine scope with RW Baird. Please proceed.
Hey, guys congrats on the quarter and thanks for the questions I guess first.
First can we just get your thoughts on the Delta Varian impact on melanoma diagnoses and Rep access is what kind of trends did you see in July and what are your assumptions embedded in your guidance for the balance of the year.
So we haven't pulled July just closed last week, our our qualitative feedback is that across the country, we arent seeing anything necessarily in terms of rep access although there is.
<unk> and corners, as you would expect to see.
And it's way too early to look at third party diagnosis of Liza Dado of purchase in terms of predicting July. So at this point in time, we're assuming that there could be a modest impact we're not assuming anything like it goes back to second quarter third quarter last year.
On lower assuming that with between the improvement that we saw in <unk> 'twenty 1 of our <unk> 21 in terms of accessing calls per day as.
As well as even though diagnoses are down still about 12% compared to 19, we can't see how the how we're going to.
Shutdown of medical Commerce, I guess that would <unk>.
Significantly alter our guidance right now of that being said, we could be surprised here in a few months in terms of the severity of of reaction, but as of right. Now we are hearing about that but it's still early Kathryn.
Okay, Great and then for the reopen decision Dx melanoma LCD and how did those open meetings go and are you confident that multi app has the data that they need to reaffirm your existing coverage criteria.
So maybe last question first so.
I think the position that was put into the to the draft LCD in there of posted back on the second quarter sort.
Wraps up I presume, we're where Medicare in Palmetto and Meridian WPS GSE themselves, which is that you have a couple of critical articles here, but we don't see anything that that should result in the change in coverage and I think thats, we don't have any other and intelligence that would say otherwise the point in time I think in terms of the of the actual meeting.
<unk> that we attended participated in.
There is no negative discussions or questions or presentations I think we had an opportunity to get across quite.
Succinctly by using a number of existing customers as well as ourselves too to reinforce the strong wealth of data of what 31.32 publications out there that support the covers that they made a year year and a half ago now so I think the the.
Meetings went well.
No indication of any different than I guess, I would say from our perspective, frankly, 1 of any comments on Henry.
Okay, maybe last 1 from me. Your 10-Q, you noted that you recently started 2 additional disease studies for pipeline tests for new indications any color you can share on on what those new indications are.
Yes Catherine.
We'll look at the right time, when we think it's.
Appropriate to talk a little bit more detail about that but for now we're not disclosing the indications just from competitive reasons.
Alright, great. Thank you.
Thank you Ms. Nicole next question is from Thomas Flaten with Lake Street Capital markets. Please proceed.
Hey, guys. Thanks for taking the questions and congrats on the quarter as well just I was wondering if you guys could give us a quick progress report on the psoriasis project that you have ongoing in terms of bringing new sites and et cetera.
Yes.
Yes.
Sure qualitative only.
Not quantitative here so.
<unk>.
Completing the input from not only our steering committee by the number of other.
Thoughtful clinical scientists dermatologists back on the first half of the year.
The protocol was completed locked up through our central IRB.
Our.
In the process of recruiting sites and the opening up of centers under contracts and IRB approval I would say that maybe on a qualitative basis.
We've been kind of skin cancer diagnostics I guess now we are quite small on 2010 of 11, so maybe it doesn't count, but I would say that our clinical research operations team has never seen the kind of interest in the velocity of people raise their hand up saying can I be involved.
With any of our program, so far and I think we've done some exciting things not only with the cutaneous melanoma, but also the high risk squamous cell test. So that tells me that we.
We're correct on our assessment of the input that we're getting from some of our Kols advisors that there is such a huge unmet need here if you could solve this.
Going to be a fantastic gain in patient care, which should be for hours. So I would say.
Perhaps next time, we go on chat will provide some numbers in terms of progression in terms of centers in the sites and patients enroll but so far it's early and we're seeing nothing but things that are actually exceeding our internal targets in terms of recruitment.
Great and then just 1 more from me.
Given everything that's going on and I know, you've only had the new field team and out there for 5 to 6 weeks or so do you of any thoughts on when we might expect to see that new expanded field team of kind of.
A run rate performance of production given that Theres, a lot of new folks out there.
12 to 18 months, yes, the Lee.
Yeah, so historically and non Covid times.
I would say, we would sort of expect to have people kind of 1.
100% effective or fully effective probably what Frank 5.6 months in post higher. So these individuals' largely came on board of thinking kind of the April may ish time period. So completed the sort of their phase III training just before the fourth of July we had a national meeting here in July to kind of regrouping.
Higher field force together in March out hard beginning August 1.
I think we while I would say, we should be able to move that up I don't have any data for that so I would still think that our sort of revised guidance includes the positive impact of that group, which we'd probably see more so in the fourth quarter than the third quarter, just based on assumptions of timing.
But the flip side of that to go back to Catherine's question would be are we going to be.
Surprise of there's kind of a retrenchment on rep access or patient visits by doctors.
That we don't account for so so I think I would I would assume we're going to see continued progression of <unk> compared to second quarter and <unk> compared to third quarter of the question would be.
How hard do we hit 2022 running are we seek and I see continued impacts on promotional access or not no. So far we are seeing that as I commented earlier, but I think thats of plus or minus there, but probably 456 months out as 1 of you should start seeing a real drilling right Frank.
I agree.
Alright, thanks, guys congrats on the quarter.
Thanks Thomas.
Thank you Mr. Flatten. The next question is from Sanjay <unk> with <unk>.
Please proceed.
Hi, Thanks for taking the questions and congrats on the quarter.
4 of Mitek melanoma of the 50.
Dx platform, obviously very impressive volume there already with the 1 month contribution from.
Might have melanoma is that with your backlog heading into that or.
The acquisition or is this how we could model.
In terms of the volume.
Cadence for the rest of the year.
<unk>.
If you could talk about it also the mic.
Might be able to talk about the split between my path.
50 acts in and if not then we'd love to hear kind of if it's playing out as you guys are expecting in terms of how you are.
<unk> the <unk>.
Cash available.
Yes, so I don't have the split in front of me here or not probably as much.
Going forward will be less relevant.
I don't think there was a backlog of testing of that being said, we our field force is did not mention the impending acquisition I don't take myriad sources, it either but I don't know if that meant people were kind of waiting at all I don't have any kind of sense on that so on G. So maybe there is some pent up demand there, but im not sure of that.
The case.
But going forward on how we position. These tests so our perspective was too.
The focus on the on the core of what's best for the patient first.
And I think that what does that mean for US now that we kind of have both of these assets and can do something better than we could before just doing it alone I think that there is clearly more evidenced that was developed by myriad.
Over the years.
They.
They had statistics overall on accuracy of that I don't think it was much better than our different from in fact, I would argue of ours could be slightly better, but they had more data.
And more of our published and we launched our <unk> melanoma test back in November we are uncomfortable with the level of pediatric data that we had in our validation set so we chose not to even test the pediatric population until we develop additional data so.
So I think overall, how we present those to our customers, which are both dramatic <unk> and beginning this month also dermatologists as to say Hey, if you have an uncertain diagnosis or you're scratching your head to the difficult to diagnose and you don't want to.
I don't want to call of benign in case, you're wrong, but it's also a big leap to call up malignant melanoma.
Our test of an option for you know we'd like to do unless you object to US is to go ahead and run the <unk> melanoma test first why is that just based on the Mount of data no. Other reason.
And if the Mitek <unk> melanoma test sales to report of test result, which is around what I think what 11, 12% of the time of published literature.
Go ahead and offer you to run our <unk> melanoma test as a backup to that.
Or if we hit on in determinant score for the intermediate result out of the <unk> melanoma test. We can also run our <unk> melanoma test so rather than having US give you an actionable report result, which we would think would be benign or malignant.
75% to 80% of the time when we were able to go ahead and show even just in the month of June was able to take that and make it above 95% that's a pretty good.
The upgrade to the ability to have clarity around uncertain diagnoses wouldn't you agree doctor.
And so thats the discussion that we're having with physicians I think it's the right call to make because it does the best for patient care and as long as we rely on thats. Good for US now on the back end of that.
On the <unk> melanoma test already has an existing LCD as you know it already is established as the ADL tests as well so that does pull through.
Reimbursement for us at least on the Medicare side quite substantially so all around.
It's a good outcome for patient care of reorganize test ordering the process I just told you and at the end of the day I would expect the the bulk of the of the differential test orders to probably be the <unk> melanoma test for the time being on <unk>.
Minority being the <unk> it would be those really that are that are that are non reported because of test failure or they have an intermediate my path of result.
Now as we develop additional evidence we may find out that maybe they are of populations, where our <unk> melanoma test outperforms. The bypass test in which case, we will make adjustments in the very transparent fashion of the customers.
That answer the questions.
So perhaps on modeling wise, sorry, yes, since the modeling wise.
Of course, you would say of course, we would say this derek but I guess I would I would not go ahead and jump from first quarter of second quarter, I will probably let us get us to get third quarter numbers out on that probably becomes more tangible going forward.
Got you.
Super Helpful. And then I guess of 1 more follow up just thought we'd love to hear the progress you're making with the with the commercial payers, especially you mentioned the mtc on guideline inclusion for the <unk> Dx in light of melanoma.
Received within the.
The.
The SC for the SEC.
Our decision Dx SCC getting the Kols the expert panel recommendation.
For that test as well just kind of would love to hear kind of how the conversations are progressing with the private payers.
GAAP. So so first of all on the on the <unk>.
Differential side of the business of our comprehensive diagnostic offering which includes both of my path and our <unk> melanoma test.
We only begin those interactions I guess call of late June probably July on the kind of things got moved over well we could run the test in.
The reporting it out well to customers. So I think it's too early to see.
How we impact of that now.
My sense is is that is that.
Since the Mitek melanoma tests of Ben.
Offered up for strategic divestments since last fall is that there wasn't much attention paid by the.
The myriad managed care folks on moving that test for because of lead time on at least that's our belief. So I think we're kind of starting from from ground zero to something of an interesting. So I think as we move through the third and fourth quarter. My hope would be that that pointing to not only Medicare coverage of substantial database, but also.
NCC and guideline inclusion should accelerate against kind of a fairly low base, but I think it's too early to comment on success or failure on that 1 <unk>.
Except that.
Certainly as a heavy focus of our team.
But that only started here late June early July.
In terms of squamous cell carcinoma.
We are moving forward on that effort as well our sort of internal models was that we would be successful in appealing and getting paid on a 1 off basis by a claim by claim basis in 2021, and that's part of the reason why we arent accruing revenue.
Our historical perspective would be.
Sort of significant commercial players are likely to want to hold back until they see something from Medicare and that that could be a draft. LCD for example, being posted so I think theres an opportunity in 'twenty 2 to have of see progress, but I would say that still is early on I would agree with you that was the very nice article in terms of early <unk>.
Looking at sort of some influential kols on high volume physicians to be Frank.
Coming together and recognizing that we need something better than this looks to be like a better solution.
Great. Thank you so much.
Thank you Ms. Ma'am there are no additional questions waiting at this time I will now pass it back to the Derrick for closing remarks.
Yeah.
Thanks.
This concludes our second quarter 2020 of our earnings call.
You again for joining us today and for your continued interest in castle Biosciences.
Yes.
Yes.
Yes.
That concludes the castle Biosciences second quarter 2021 conference call enjoy the rest of your day.
Yes.