Q2 2023 Castle Biosciences Inc Earnings Call
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Okay.
Good afternoon, I'm well couldn't change.
Life Sciences second quarter 2023 conference calls.
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'd like tactical neither cheap commodity chicken, Vice President Investor Relations and corporate.
Thank you operator, good afternoon, everyone welcome to Castle Biosciences second quarter 2023 financial results Conference call. Joining me today is castle's founder President and Chief Executive Officer, Derek methyl <unk> and Chief Financial Officer, Frank Stokes.
[noise] formation recorded on this call speaks only as of today August 2nd 2023 there.
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 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, Pam 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 2023 total revenue and our 2023 to 2025 outlook, our expectations regarding reimbursement for our products and the impact of our investments in growth initiatives and expanded commercial.
Jim.
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 annual report on Form 10-K for the year ended December 31, 2023 under the heading risk factors 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.
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 and assessing our revenue and operating performance Rex.
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. As you saw from our announcement a few minutes ago Castle Biosciences delivered yet another strong quarter growing revenue by 44%.
Total test report volume by 52% compared to the second quarter of 2022.
Based on strong first half execution and confidence in our business.
With our expectations for the second half of 2023, we are raising our full year revenue guidance and currently expect to deliver at least $180 million an increase of at least 31% over 2022.
Before I get into accordingly highlights, let me address some of the excitement around our decision Dx SCC test.
First let's talk about coverage.
Were reviewed by the Medicare contract or <unk> in the first quarter of 2022.
And receive coverage since April of 2022.
Separately <unk> published on July 27, 2023, a proposed LCD entitled genetic testing for oncology.
This proposed LCD attempts to encompass genetic tests that are used in oncology and includes language that proposals non coverage decision Dx SCC among a number of other laboratory tests the column period closes on September nine 2023.
Separately on June eight 2023, both Palmetto <unk> and Meridian posted proposed LCD is recommending non coverage for decision Dx SCC.
Common peering for these Medicare contractors or the proposed LCD ended on July 22023.
We were extremely pleased to see that the division of new technology.
<unk> completed its review of our application for advanced diagnostic Laboratory test status also known as a D. L. T status as we expected we were granted <unk> status effective June 30 of 2023 there.
There are four criteria that need to be met to achieve <unk> status one.
One of the criteria means that we have proven that our decision Dx SCC test yields a test result that predicts the probability of the specific S cc patients developing metastasis.
That is our test works.
Another criteria means that we have also proven that our decision Dx SCC test provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests.
That is our test is independent of all of their clinical pathologic risk factors or any other test or accommodation of tests that predict metastasis.
We view this incredible achievement as a marker of our mission to develop innovative tests that improve patient care.
And then looking at tests that have received <unk> status.
<unk> has five tests that have been designated as <unk> stated differently. One third of all ADL Ts are offered by US Castle Biosciences, clearly demonstrating that we do develop innovative tests that improve patient care beyond what is clinically available.
Now I mentioned <unk> status, because while it is not used for the purposes of coverage through a local Medicare contractor meeting. These two criteria that I mentioned lays out some of the positions that we have and we'll be communicating as it release to the analyses contained in the two affirmation proposed LCD.
Separately as part of our comments Tamale Dx and our upcoming comments on <unk>. We were very pleased to present results from our recently completed large multicenter cohort study that included analyses in the value of our test to identify patients who are eligible for adjuvant radiation therapy undercurrent end CCN guidelines.
Specifically our question was.
What value can we provide in a ruling in ruling out adjuvant radiation therapy to this high risk population.
I cannot emphasize enough the critical importance of this question.
There are three significant areas to think about.
The first is from the perspective of the known accuracy limitations, if one relies upon clinical and pathologic staging features alone and informing which eligible patients may benefit at which may not the.
The second is does our test provides an indication of not just who may have a high enough risk of metastasis to Warren.
Consideration of adjuvant therapy, but can we find patients whose outcomes could be improved with adjuvant radiation therapy, and finally, the healthcare cost impact of vaginal radiation therapy is enormous.
In fact, our data shows that patients who receive adjuvant radiation therapy with our highest risk class to be test result.
Roughly 50% reduction in their five year metastasis rate compared to matched patients who did not receive adjuvant radiation therapy, but also had a class <unk> test result, and.
And creating a weighted average cost using data from both <unk> as well as published cost of treatment data.
It looks like adjuvant radiation therapy runs around $60000 per patient.
Not to mention the potential long term complications if a patient was overtreated in the first place.
This cost data is important and when you recognize that the majority of tests results are class one or class two a.
And these patients did not see a treatment benefit from adjuvant radiation therapy.
We expect the study to even publish in the near future and look forward to sharing the results in greater detail with our clinician customers are Medicare contractors and of course you.
While there are clearly some current unknowns regarding future coverage.
We identified a significant unmet clinical need we were successful in developing and validating not only analytic validity clinic.
Clinical validity and clinical utility for our decision Dx SCC test, but can also now see outcome differences in patients who receive adjuvant radiation therapy.
Given that we believe there are roughly 200000 patients diagnosed each year with high risk SCC and who are eligible fragile radiation therapy per current MCC and guidelines the potential impact on improved outcomes and reduced healthcare cost is tremendous.
Now let me take you through the remaining execution and strategy highlights from the quarter and then Frank will provide highlights for the period, including with your questions.
Let's start with our core dermatology business.
Our decision Dx melanoma and decision Dx SCC combined.
Test volume was 11278.
A 33% year over year and 13% from the prior quarter.
We continue to see new clinicians order our tests for the very first time with approximately 567, new ordering clinicians and more than 2016 total regulations for all three dermatologic tests during the quarter.
Our decision Dx melanoma, we delivered 8597 tests reported in the second quarter, an increase of 21% over the second quarter of 2022.
We continue to believe the most significant drivers of our strong growth are there clinical impact our tests can contribute to the management of melanoma and strong evidence supporting our test.
Coupled with our prior commercial expansion investments intended to educate our customer base.
Our decision Dx SCC, we delivered 2681 test reports in the second quarter, an increase of 99% over the second quarter of 2022.
As with our growth decision Dx melanoma, we believe that our strong growth in volume for decision Dx SCC is due in large part to the combination of the high unmet clinical need for FCC, coupled with the value our test provides clinicians and their patients.
As you recall a pillar of our growth strategy is the continued development of evidence to support critical use of our tests, including impacting outcomes.
Key studies were published in the second quarter I'm going to focus my remarks on just one of them that is the study data related to our collaboration with the National Cancer Institute Seer program registries published in J C O precision oncology.
We are very pleased with this large unselected patient population study and Thats. The real world data showed testing with decision Dx melanoma provided significant prognostic information regardless of survival outcomes specifically.
Specifically patients who were clinically tested with decision Dx melanoma head and associated lower melanoma specific and overall mortality relative to those patients who did not have the benefit of decision Dx melanoma testing that as they were in the untested group.
And that is they live longer.
In fact decision Dx melanoma testing was associated with a 29% lower melanoma specific mortality and a 17% lower overall mortality relative to patients who did not receive decision Dx melanoma testing.
As you would expect we will be sharing the full publication with our clinician customers as well as providing them to the NCC in melanoma panel.
Now, let's turn to our Gastroenterology franchise.
During the quarter, we delivered 1447 tissue side for test reports compared to 352 in the second quarter of 2022.
We also announced during the quarter, new data demonstrating the value of our tissue cyber tests and providing objective risk stratification information that can inform improved manager decisions for patients with bare <unk>. Additionally.
Additionally tissue side for was selected as the winner of the best use of artificial intelligence and Healthcare award and the seventh annual Med Tech Breakthrough Awards program.
As you will recall, we acquired tissue cycle from certain optics in December 2021, giving us a leading risk stratification test designed to predict the future development of esophageal cancer in patients with various esophagus.
<unk> esophagus is the only known risk factor for the development of esophageal cancer, one of the fastest growing cancers in the U S with a five year survival rate of less than 20%.
Since the acquisition, we've made considerable progress with our integration efforts and process improvements we moved into our new laboratory in Pittsburgh during the second quarter of 2023 and are seeing strong adoption from the gas neurology community.
So much so that our orders have outpaced our forecast.
And current operational capacity.
Such reelected in July temporarily pause accepting additional clinical orders for the test in order to bring our process improvements and additional instrumentation and personnel online. We are currently working through these efforts and believe that we will be able to begin accepting new orders prior to the end of the third quarter.
Despite this temporary pause in ordering we expect to report volume for the second half of 2023 to increase compared to the first half.
Turning to our mental health franchise, we delivered 2681 I'd to your next test reports in the second quarter of 2023.
From 827, a year ago and up 25% from the prior quarter.
As a reminder, during the second quarter of 2022 Castle only deliver test reports from April 26, the day.
We acquired the test through June 30.
We continue to be pleased with the momentum we are seeing thus far in fact, we recently announced real World study data demonstrating that the use of <unk> to guide medication management can significantly improve medication response and remission rates in patients diagnosed with moderate to severe depression compared to current standard of care treatment.
Ada was consistent with our previously published randomized controlled trial.
Additionally, equity an independent nonprofit organization, improving safety quality and cost effectiveness of care across all health care settings.
We recently concluded its genetic tests assessment of <unk> with a four out of five rating.
As commercial payers utilize equity valuations to assist them in making coverage decisions. We believe this is another important metric to encourage payors to recognize the benefits of our <unk> test.
We believe our IV genetics testing solution has the potential to accelerate our impact on patient care in an area of high unmet clinical need by offering incremental value to patients and clinicians over the standard trial and error approach.
With this comprehensive genetic test analysis to help clinicians match patient with the right medication, including identification of drug drug interactions and drug gene interactions with lifestyle factors to improve medication responser emission rates.
<unk> offers a truly compelling and personalize benefit for mental health treatment.
I will now turn the call over to Frank who will provide details relating to our financial results and outlook.
Thank you Derek and good afternoon, everyone.
Second quarter revenue was $50 1 million, an increase of 44% over the second quarter of 2022 overall the increase primarily reflects strong growth in revenues from decision Dx melanoma and decision Dx SCC.
Adjusted revenue, which excludes the effects of revenue adjustments related to tests delivered in prior periods was $52 million, an increase of 47% over the second quarter of 2022.
Our gross margin during the second quarter was 73, 5% compared to 71, 9% in the second quarter of 2022 or.
Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and revenue associated with test reports delivered in prior periods was 78% for the quarter compared to 77, 6% for the same period in 2022.
Turning to expenses, our total operating expenses, including cost of sales for the quarter were $71 3 million compared to $38 $8 million for the second quarter of 2022.
Affecting comparability with the prior year was a $24 million benefit where 78 per share during the three months ended June 32022 for the change in fair value of contingent consideration related to the some aspects acquisition. There was no similar items in the current year.
After considering that item the largest driver of the increase in total operating expenses with SG&A expenses, which increased by $7 $2 million compared to 2022 attributable in large part to higher personnel costs, including salaries and stock based compensation, primarily within our sales and marketing functions.
Cost of sales expense increased by $3 $4 million, primarily due to higher laboratory related costs associated with the higher test report volume.
R&D expense increased by $1 4 million in the second quarter compared to the second quarter of 2022, which was attributable to higher personnel costs, driven primarily by expansions in head count in support of our growth and other costs associated with clinical studies we.
We plan to diligently manage expenses, while also prudently investing to grow the business in the long term such as our operating expenses would decrease as a percentage of revenue and over time increase at a lower rate than revenue.
Total noncash stock based compensation expense, which is allocated among cost of sales R&D expense and SG&A expense totaled $12 8 million for the second quarter compared to $8 $8 million for the second quarter of 2022.
The increase was primarily attributable to our annual equity awards granted in December of 2022.
The payments totalling $17.7 million that are not expected record and the remainder of 2023.
Net cash provided by investing activities was $1.2 million for the six months ended June 32000, twenty-three and consisted primarily of the maturity of marketable investment securities of $95 million, partially offset by purchases of marketable investment securities of $86.4 million in purchases of property and equipment of $7.4 million.
Our balance sheet remains strong we ended the quarter with cash cash equivalents and marketable securities of $225.5 million and no debt.
Together with anticipated cash generated from sales of our tests, we expect that our cash operating runway will extend through 2025.
As Derek mentioned, we are raising 2023 revenue guidance to at least $180 million. Additionally, we are reaffirming that we expect to achieve $255 million to $330 million at 2025, we expect to achieve this result by driving test report volume growth across our entire portfolio and further market penetration reimbursement progress into a <unk>.
For extent aspie growth supporting our longer rates targets for ISP improvements. We note that we had multiple successes for castles test with commercial health plans and expect to continue making progress over time.
A combination of growing the top line and driving margin leverage should contribute to our reaching our 2025 target of net operating cash flow positivity.
Further we believe we have the ability to pull various operating levers primarily on discretionary spend in sales and marketing and R&D without materially impacted long term growth prospects of the company.
We continue to believe that our current growth initiatives and associated expenses are important to sustain top line growth and just as importantly, expand our competitively great stickiness across all our current tests and renew our pipeline for long term success and value creation and.
In summary, our fundamentals remains strong there's plenty of runaway for growth across our entire test portfolio and we believe our ability to create value for shareholders in the near and long term remains intact I'll now turn the call back over to Derek.
Thank you Frank.
In summary, our second quarter results were excellent.
[noise] delivered strong era year growth in revenue in total test report volume driven by continued execution on our long term growth plans.
I would like to conclude today by thanking our castle team.
Wouldn't be here without their dedication and commitment. Thank you for your continued interest in castle.
Now we will be happy to take your questions operator.
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If you would like to ask a question <unk> give me one on your telephone keypad.
If you change your mind anytime keeps messing gotcha.
Pecan pie musky compile it came out of my system.
Yeah that you will say, let me just have one question and I need one <unk>. If you have additional questions. Please return to the key.
We have our first question from cough Nixon kind of card.
He may proceed.
Hey, guys. Thanks for taking the questions congrats on the great quarter.
So Derek on the Nova Test L. C. D. You know it's been withdrawn Henry posted already maybe you just provide your your view on the additional kind of steps you need to take care of going forward. What you can do I guess and then separately just.
Alrighty and is another option I gotta, possibly.
Maybe talk about you should have an easy life getting reimbursement through.
C N N also going to be.
Going off that's why is the process potentially different for nobody in it and maybe I could kind of.
Yeah, I'm in Jackson confidence or optimism in this whole situation.
Yeah, Hi, cog in here for Ya I guess I guess, maybe top line here is that we did provide some.
I think rather extensive detail on our filing a few minutes ago as well as in the remarks system.
A cigar or so.
Don't have anything specific around and I have to talk to a vanilla toss and stuff from an Iranian question perspective.
Keep in mind that Meridian is under a joint operating agreement with Palmetto is multi X program. So that will go through them all the ex program for me a coverage perspective.
Mm Okay is there.
Is there any chance that you could kind of.
You know cause I have multiple labs across the country I'm just wondering if you can kind of like.
Yeah, I'd be more or less covered covered for us you see through that.
Rather than the one in Pittsburgh.
Yeah, I I would.
Or maybe change the answer or answer a slightly different question. If that's okay call.
I think based upon the data that's been developed since we developed our validated test first place data we presented over the course of the springtime. This.
Benefit to that we're now seeing in our test to helps identify people, who could really have a cough significant clinical benefit from adjuvant radiation therapy.
Should all aid one I would hope if one doesn't evidence base review.
About the value of our test and really helping to improve not only treatments selection by the outcomes in the Medicare beneficiary population I would help that is that data is being reviewed by.
Whatever Medicare contractor always reviewing after that would that would have an impact on saying that this covering our tests benefit Medicare patients.
And if it does you should cover.
That's that's our expectation on on on the outcome at the end of the day.
Okay that looks great and then if I could squeeze another woman on melanoma up against for for guidelines.
I believe there wasn't as you see in tunnel and like you need July .
You just confirm Derek if you were able to submit each of the application and after that meeting could could those folks.
See that data basically and what are the next steps in the timing going forward pleasure for like an update from them.
So so yes, we did submit both the Dylan managed if that was published in April .
By those three.
Academic centers, Cleveland clinic, northwestern and I'll H S U and we did also Samantha the NCIC or publication and of course, both of those shell.
A nice association with if you use our test people actually live longer compared to not using our test clinically we would hope that wasn't part of an accurate discussion with the N C. C N group.
On a timing perspective, they've been pretty consistent for the last four or five years, even through COVID-19.
I wouldn't expect to see anything posted publicly until kind of of December January time period that you usually about five or six month cadence. After they have their maybe you're meeting is when they go ahead and post an update.
Okay perfect. Thanks, so much I appreciate it.
We now have Sunshine.
<unk>.
Hi, Thanks for taking the question I just another question on the N T. I C. R data congratulations on the public take care.
If there are additional study that might be underway, what additional information you might be gathering.
Gathering there or do you think you'd have to pay.
To kind of sway the decision makers <unk> and other guidelines escape.
You mean additional studies with the N C I and the senior program or in general.
Specifically with NCIC era, but if there are other side effects.
Oh, so compelling.
Okay, Yeah. So.
Our collaboration is ongoing.
I think I think the NCI group of of the senior program kind of update the tumor registry files, maybe once a year.
Re merge up for next year's data.
And so one of the expectations that we do have from this call are ongoing collaboration as a fee.
Multiple publications in as a patient numbers and the matching grows and we have longer term outcomes will be able to look at things like I mean for example.
Subgroups.
Even though the.
The first paper was able to go and look at groups of patients by staging up and down.
How does this test perform in terms of the Medicare patient population of for example, do you end up seeing.
A significant improvement in overall survival amount almost make survival.
And the Medicare age population, who gets to use our test currently versus those untested. So there are are analyses are mass groups like that but I think we will continue to see rolling out an ongoing basis hopefully the next couple of years to be honest.
We do have other studies that are ongoing and some that were planning still one of our core tenants. As you know is that I don't think one has ever done proving.
Time, and time again, the value of our test for patient care.
One of the things that was recently published hear him or is this first quarter last fall was our decide study an early look at that data set.
Looks at a at.
At a prospective patients who are.
Using our test initially to decide.
Going forward with a somewhat of a biopsy procedure or not and then what happens on outcomes with those exact same patients. So we publish the.
An early analysis I would call it probably analysis one.
Maybe six months ago, or so and you can bet there'll be further data coming out now I think as we see those outcomes improvements all that data NCI, there's still on paper.
The side of the protocols, we haven't discussed publicly should hopefully keep keep raising the bar that.
Our tests make a difference in patient outcomes.
Great. Thank you and did you say.
On the inflammatory indeed pipeline just kind of curious what the the latest update as in.
What the next milestones Nike Thank you.
Contador skin disease.
Yeah, we hadn't.
Plan on discussing elements of that here I think back on the end of the first quarter we discussed.
That we have but we are very very pleased with our enrollment so far.
We have 57 committed sites, who are investigator sites I think all within the U S, but could be wrong about one or two overseas and enrolled just over 750 patients to date and we're chewing through the initial discovery and development data now and we expect to.
Update.
The street here in the second half of this year is not going to be obviously today.
But we are working through the analysis of that data and hopefully we can go and have a public discussion about that shortly.
So proud of him.
I guess it would be.
Okay.
We now have stomach flat.
Capital markets can.
He's kind of hectic.
Yeah. Good afternoon, congrats on the quarter frankly, I was wondering if you could maybe walk through some of the thinking on the guide at $180 million that would be a second half slightly lower than the first half. So I'm curious if you could comment on some of the conservatism there or.
Or apparent concern yellow.
Yep No change there Thomas we as we said back in June we we're not we're not assuming SCC revenue in our guidance and forward looks here. So.
That continues to be the case.
Got it and then I was wondering if you could maybe share specific to Dx melanoma.
Is this a <unk> is this a depth or breadth player. Both I I know you mentioned, some new prescriber counts, but if we could narrow that down a dx melanoma I'm curious if this is coming more from new docks or increasing the depths within dos that are already on board.
I think we're still see in both.
We are continuing to penetrate with new physicians, which is which is terrific and we're continuing to have physicians order.
All of our tests for more and more of their patients and.
The other thing that we always.
Remind remind us that.
Melanoma is are not.
A community dermatologist isn't seeing a melanoma everyday so once you convert that doctor there is sort of a lead time as their volume billed just as their patient flows flows come through so.
We're seeing I've called it same store growth and new store growth in the past and we're still seeing both on melanoma and we.
We think as I said in my conclusion, we still think we've got.
Just.
Long runway there before we're through penetrating melanoma, just a long way to go on it.
And then just.
Related to that.
Do you give us a sense of how many you docs ordering both Dx melanoma NFC C.
I don't think we gave a specific number but but we have said that we do and we definitely continue to see.
We continued to see <unk>.
Big overlap there, which was our thesis that was that was a big part of our our strategy was that we would be able to leverage the sales effort across both products very effectively.
When I look at the growth through I look at the volumes and melanoma for.
For the quarter.
Just confirms for us that.
We can grow.
Squamous cell product without losing momentum and melanoma without without cannibalizing, if you will that growth as well.
Excellent appreciate you taking the questions Sir.
Okay.
And Ah filing.
70% of the of the clinicians ordering decision Dx FCC are also customers and deficiency X melanoma.
The current ratio that we're looking at there we would never expect that to get.
Maybe about 80% because there are <unk>.
Many many most surgeons who has a sub specialty of dermatology that do most surgery by definition, who don't really do work or don't do surgery on people with invasive melanoma, so 70% as of today I think reflects a very very high.
Cross.
Fertilization recognition of value cross both both cancer types.
Excellent thanks, guys.
We now have access.
<unk>.
Hey, Derek Frank Uhm, Thanks for taking the questions. So.
First of all congrats on the quarter and really on the ADL payment.
Marketable as one of the highest in the industry.
But.
For a minute, leaving the coverage decisions.
And complexities aside just talking about the ADL payment I think I heard Frank saying, you're not expressing S. C S.
S E C.
Payments in the second half.
Wondering if you can talk about two things number one have you did you receive any payment essentially July 1st.
When this was effective and then how should we think about 2024.
The payments here for four FCC and I know it said.
Complex issue given all the coverage in scenarios there, but whenever you can provide there would be helpful.
Just a clarification there what I what I've said is that our guide did not include in the SEC revenue. So.
Just to just to clarify that okay. Yeah.
Yep, We would is Derek said the evidence is pretty overwhelming.
And.
When you see the ability to correctly guide some of this treatment like agile radiation therapy.
It's a compelling benefit to pay it to patients so.
We really believe the evidence is clear and that eventually.
This test will receive appropriate coverage.
Not necessarily for the benefit of castle, but the benefit of patient. This is something that the patient group needs.
Go.
And.
If I <unk>.
When you talk about.
Further data generation sort of can you talk a little bit about the level of data that is needed for this test in order to really highlight the clinical utility so that.
A sophisticated Mac such as small Dx that has done some rigorous reviews of clinical evidence and potentially covered this.
Test down.
Down the road again timing is tough to call out on that but wondering.
If that is part of the strategy.
Longer term to generate that data and submitted to Mull Dx for.
Coverage.
So.
Regarding the proposed Mull Dx.
L C D on FCC.
When I read through that.
It looks to me that there are our core.
Issues.
Issues in terms of the knowledge of how squamous cell carcinomas treat it today and.
And that led this sort of not quite interpreting are published data so far as.
As well as as I think missing some core and key references. So for example, the premise was.
Of the <unk> team I think was that we don't think adjuvant radiation therapy is actually useful in people with.
With FCC, but adjuvant radiation therapy recommended it for every high risk patient by every relevant guideline committee from AED to NCC and.
American College of radiology to Astro. So it's a funny thing that the reviewer reviewers that multi X fell they could make a conclusion that adjuvant radiation therapy is not useful and used in.
In.
And the Medicare population for SCC. So if you if you start with that argument then you say well what's the use of your test of an app part the rest of it kind of flows together. So our perspective is that is that we would help that.
With our submissions to multi active you would hope that with the addition of.
Several key present key publications, including our second validation cohort, including the adjuvant radiation therapy, including analysis two of our prospective clinical utility study that that there would be enough evidence during the course of the next year to have.
The mall Dx group realize that may be there maybe the evidence.
Analysis could be refreshing updated.
And lead to continued coverage.
We believe we have the evidence needed to to.
To meet Medicare.
Requirements.
Thank you.
Now have <unk>.
Hey, guys congrats on the quarter.
<unk> for me given the irregularities, we've seen in that process stealing sick the draft to follow the standard 12 months timeline from draft. The Finalization is there a chance it could be finalized sooner.
I don't know if we have any inside their mason.
To add that would just be speculation.
Okay and.
And then on the tissue safer operational constraint, how should we think about.
The capacity that will come online whenever you guys begin accepting clinical orders again, and how that will trend or scale as we progress throughout the remainder of the year.
Yes.
We we believe that we will get that.
So by the end of the quarter, we think will have.
Be back online and I think we'll continue to see the nice growth we've seen there we.
We had.
Interesting timing here with this quarters you know we opened our our.
Pittsburgh Lab, and how to move there and so we just want to make sure that we are offering appropriate turnaround times for our customers and their patients. So.
I think we'll see what we.
We certainly expect to see the return of growth what's your take those orders.
Startup borders again.
Got it okay. Thanks, guys.
Thank you.
<unk>.
Hey, guys think that's on the corner and thank for questions I guess.
Following up on that.
Assist you safer can you just talk about learning.
Sam capacity, there or how much of the revenue had planned it that and disruption, causing any frustration and you're ordering.
The I think as as we said in our remarks, there I think put into the file.
Filing too.
The primary item here was that the adoption of.
Of.
Tests for patient care.
Hello ran our forecasts on the upside and so that was the decision was that we should treat our customers honestly and directly.
And just say hey until we can have these post lab movie efficiencies be implemented in scale up properly. We should just tell your bliss kind of put a put on pause for a few weeks here and we will come back to you in terms of the feedback from the field.
I'm unaware of a single on a happy customer in fact most were.
Can't believe you guys actually did this upfront we've never seen companies and the Gis space that actually treatise honestly. So I don't think that'll be any kind of an issue for us to sort of say hey, we're ready to go ahead and begin accepting orders and we're at a turnaround time that we think maximizes patient care.
What can we do.
How do you want us to help you get restarted again, that's that I think will be a non issue Kathryn.
Maybe just sign back.
<unk> <unk>.
Doesn't assume SBC reimbursement going forward can you just confirm that so we're getting paid by now.
<unk> is it your understanding that you're most likely keep getting paid until a potential fine I'll CD becomes effective.
Yes, we we do have reimbursement for the test now Kathryn.
Beyond that we would we would be guessing if we've made any other predictions.
Alright, great. Thank you.
Thank you.
We now have Mark last night.
P T Nike keeps going ahead and Mikey.
Mhm.
Thanks for taking my question.
Two five.
Mhm.
Yeah.
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I'm in <unk>.
Sometimes.
About likelihood on SEC.
Including guidelines maybe.
Maybe.
Okay.
So you're you're asking a question relative to the Nova cost LCD.
Okay. So.
Okay. So the so the NIH database.
And the Sloan Kettering database reference in that proposed LCD only review.
Individual gene mutations so individual gene analyses, they're more like.
Aggregating.
Curating data basis they.
They don't review RNA based tests, and certainly not multiple gene tests. So that those two groups would never review any of the sort of Mull Dx reviewed kind of test right gene expression profile test.
An end CCN.
I believe they met in late April early May.
We did submit a package as you would expect US to go ahead and do that as a relatively new committee.
Established may be in 16, 17, 70, 18, maybe three or four or five years ago.
If we go back and track the time between their sort of spring meeting and the time they update guidelines that varies quite a bit last year, where they met and I think it was early may they posted updates I think earlier in the first quarter of this year. So that was kind of an eight or nine months cycle time compared to the melanoma group, which is always about five or six <unk>.
Months or so so I don't know we can predict your provider any.
Any factual kind of guidance about saying when we expect something and say in September versus December that would be based on any kind of analysis to be honest.
Okay. Thanks, so much for that.
Oh, that's fine.
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The absence of us.
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Five.
Long-term of items what are the potential.
Com components accuracy, Montana.
Yeah. Thank you. We we did reiterate R 2025 long term targets and indicated we expect to be able to achieve those without.
SEC.
Part of our part of our business.
But having said that again, we do think that the evidence is very strong and so we would we would certainly hope to have a better outcome in them.
Alright.
Awesome.
I can confirm we have many sides of the questions on the ninth.
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Thank you operator. This concludes our second quarter of 2023 earnings call. We thank you again for joining us today and for your continued interest in castle Biosciences have a great evening.
Thank you for joining today's crew.
You may now disconnect your lines from changing to reconnect with your account.
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