Castle Biosciences, Inc. (NASDAQ:CSTL) Q3 2023 Earnings Call Transcript

And certainly, the laboratories in both Phoenix and Pittsburgh already are New York State permitted. So I think we feel pretty comfortable that what we have will be more than adequate to go ahead and make it a smooth process for all of the tests.

Puneet Souda: Got it. Okay, thank you.

Operator: Our next question comes from Catherine Schulte with Baird. Catherine, please go ahead. Your line is open.

Catherine Schulte: Hi, guys. Thanks for the questions. I guess first, just can you clarify what guidance assumes regarding squamous cell reimbursement in the fourth quarter? Can you confirm you’re continuing to receive payments from Novitas as of today? And then you raised guidance by $20 million, but as Puneet mentioned earlier, I don’t think the prior guide included any SCC revenue in the back half. So was there any guidance raised on the non-SCC portfolio, or was it mostly upside from SCC in the third quarter?

Frank Stokes: Hey, Catherine, thanks for the question. We don’t break out guidance by product. We just give total revenue guidance. And as we said, we were reimbursed appropriately for the value of the test in the third quarter. And given the feedback we have gotten, we have taken that out for our guidance going forward. So we are not assuming SCC revenue forward-looking from here.

Catherine Schulte: Okay, got it. And then I know you’re still waiting for the final LCD for Novitas on DecisionDx-SCC. But if it turns out it’s unchanged versus the draft, would that change at all your thoughts on the appropriate sales force side for your derm portfolio? And would you scale back investments until you had better line of sight to reimbursement?

Derek Maetzold: Yes, I’ll handle that one, Catherine. Derek here. We believe that our current sales force, which is sitting at around 65, 70 people today, is appropriately sized for the dermatology marketplace as of today. So even if we only had one test versus two tests in the area managers’ bags, that wouldn’t change sizing at all from our perspective. I think that’s the question, right. Yes.

Catherine Schulte: Okay, great. Thank you.

Operator: Our next question comes from Mason Carrico with Stephens. Please go ahead. Your line is open.

Mason Carrico: Hey, guys. Thanks of the questions here. Congrats on the quarter. So on the strong TissueCypher volumes, could you give some color on maybe where capacity stands today and how that compares to your expectation of where TissueCypher volumes could be next year?

Frank Stokes: Hey, Mason, thanks. Yes. Today, capacity for TissueCypher exceeds what we are running. And our expectation and plan is to make sure that that capacity exceeds what we are running all through next year. So we have got good targets on what we want to accomplish there and we are ahead of where we need to be to be able to run – to satisfy demand for the test.

Mason Carrico: Okay, great. And given the demand you guys have seen there, any updated thoughts on the commercial team and how many reps you potentially want to add to that team over the next 12 months or so?

Frank Stokes: Yes. On TissueCypher, we do think there is an opportunity to expand the sales effort there given the strong demand for the test. I think that as we discussed before, the reception by physicians has been as positive as we expected it to be when we were in the diligence process. And so now that we’ve got some improvement in the capacity of the lab and we’ve got an option to expand that lab as well, so we feel good about some modest investment in an expanded sales force. Probably first half of next year is when I would target that and get those reps online and beginning to be productive. It’s a great test, and the current sales team is doing a great job in explaining the clinical value to physicians and they are obviously embracing that value. So we’ll be cautious and we’ll be judicious, but we do believe there will be an opportunity to add more resources to the marketing effort in our GI franchise.

Mason Carrico: Great. Thanks, Frank. Thanks, guys.

Operator: Our next question comes from Kyle Mikson with Canaccord Genuity. Kyle, please go ahead. Your line is open.