Castle Biosciences, Inc.
Q4 2020 Earnings Call Transcript

Published: 8 Mar 2021

[Operator:]

Good afternoon, and welcome to Castle Biosciences' Fourth Quarter and Full Year 2020 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'd like to turn the call over to Frank Stokes, Chief Financial Officer. Please go ahead, sir.

[Frank Stokes:]

Thank you, operator, and good afternoon, everyone. Welcome to Castle Biosciences' fourth quarter and full year 2020 financial results conference call. Joining me today is Castle's Founder, President, and Chief Executive Officer, Derek Maetzold. Information recorded on this call speaks only as of today, March 8, 2021.

[Derek Maetzold:]

Thank you, Frank. Good afternoon, everyone. Thank you for joining us today. This afternoon, I will discuss highlights from our significant achievements during 2020, recap select fourth quarter results, provide thoughts on current trends, and then close on why we remain confident in our ability to create near and long-term growth. And then Frank will provide additional detail on our financial performance. But before we get started this morning, I would like to discuss the announcement we made today regarding the launch of our DecisionDx-Melanoma integrated test result. We believe this launch represents a significant step forward in the care of patients diagnosed with cutaneous melanoma. Specifically DecisionDx-Melanoma now outputs an integrated test result calculated by an independently validated artificial intelligence-based algorithm, what we call i31-GEP to provide a more precise prediction of sentinel lymph node positivity in order to guide discussions and recommendations for the sentinel lymph node biopsy surgical procedure.

[Frank Stokes:]

Thank you, Derek. We're pleased to report solid financial results. And along with the significant progress we made on our growth initiatives, we believe we are well positioned for near and long-term growth. We reported revenue of $17.3 million in the fourth quarter of 2020, compared to $17.6 million in the fourth quarter of 2019, which included $3.5 million in positive revenues related to prior periods, compared to $4.3 million of such revenues in the fourth quarter of 2019. Our full year 2020 revenue was $62.6 million, an increase of 21% over 2019, primarily due to higher per unit revenues and increased overall test volume, partially offset by reduced positive revenue adjustments related to prior periods. Our full year 2020 revenue includes positive adjustments related to test delivered in prior periods of $0.2 million, compared to $2.5 million for 2019. We were able to successfully scale the organization in 2020 achieving our internal expansion goals and headcount moved from 135 on December 31, of 2019 to 201, as of December 31, 2020, representing growth of close to 50%. And in 2021, as of March the second, we had 224 employees and continue to fill open positions. In 2020, we maintain strong gross margins and for the fourth quarter and full year both our gross margin was 85% compared to 89% and 86%, for the fourth quarter and full year of 2019 respectively, reflecting the expansion of laboratory staff in preparation for both launches of DecisionDx-SCC and DiffDx-Melanoma, as well as in preparation of anticipated further volume growth for DecisionDx-Melanoma. As a reminder, a significant portion of our cost of sales expense represents fixed costs associated with our testing operations. Accordingly, our cost of sales expense will not necessarily increase or decrease commensurately, with the change in net revenue from period to period. Our operating expenses for the fourth quarter and year ended December 31, 2020, were $17.7 million and $59.5 million, respectively, compared to $13 million and $37.2 million for the comparable 2019 periods. The increase was driven primarily by higher SG&A, which increased by $5.1 million for the quarter, and $18.3 million for the year, attributable in part to the expansion our sales and marketing teams for the launch of our DiffDx-Melanoma tests, administrative support functions and higher personnel costs associated with our increased headcount, which includes salaries, bonuses, benefits and stock based compensation. R&D expense increased by $5.9 million in 2020 compared to 2019, it was primarily associated with increases in personnel costs attributable to additional headcount and costs incurred in our clinical study. As Derek discussed earlier, the acceleration of R&D efforts is a key growth initiative. And we expect to further increase R&D expense as we continue to fill critical roles, progress key clinical studies, including the two Derek just mentioned, and continue to invest in activities that support our products, pipeline investment and position as well for continued growth. Our recognition of other operating income of $1.9 million in the fourth quarter of 2020 is attributable to a favorable change in requirements associated with the provider relief funds program under the CARES Act. Interest expense decreased $1.9 million in 2020, compared to 2019, primarily due to interest on the convertible promissory notes that were outstanding in 2019. These notes converted into common stock in connection with the IPO in July of 2019. The decrease also reflects lower interest expense on our banking term loan facility, primarily due to at lower average balances outstanding. We terminated and repaid all amounts due on the term loan facility in December 2020 and currently have no debt. We recorded an extinguishment loss of $1.4 million during the year ended December 31, 2020 related to the early repayment and termination of our banking term loan facility. 2019 included certain non-operating items primarily related to debt conversion and mark-to-market activity leading up to the IPO. These items had a net positive effect of income on $2.3 million for the year ended December 31, 2019. Non cash stock based compensation expense, which is allocated among cost of sales, R&D and SG&A totaled $8.3 million for the year ended December 31, 2020 compared to $1.2 million for the year ended December 31, 2019. We expect material 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 growth in our headcount. Our net loss for the 12 months ended December 31, 2020, was $10.3 million compared to net income of $5.3 million for the 12 months ended December 31, 2019. Diluted loss per share attributable to common stockholders for 2020 was $0.54 a share, compared to diluted loss per share attributable to common stockholders of $0.21 for 2019. Operating cash flow for the three months into December 31, 2020, was negative $0.4 million, compared to positive $4.5 million for the same period in 2019. Adjusted operating cash flow, non-GAAP measure for the three months ended December 31, 2020, was $1.5 million. And the 12 months ended December 31, 2020, we generated $9.9 million of operating cash flow compared to $7 million during the same period in 2019. As a reminder, our operating cash flow for the full year 2020 benefited from an advance payment of $8.3 million from CMS, which will be applied against future Medicare claims that we submit for reimbursement. Recruitment will begin in April 2021 and continue for a period of up to 17 months. We have excluded receipt of the advance payment from adjusted operating cash flow but as future claims are submitted for reimbursement and applied against this balance, we expect to include the advanced payment and adjusted operating cash flow as it recouped. Excluding the $8.3 million payment, our adjusted operating cash flow for the 12 months ended December 31, 2020, was $1.5 million, compared to $7 million for the same period in 2019. Cash using investing activities was 4.8 million in 2020, compared to $0.9 million in 2019 due to additional capital expenditures primarily related to expansion of our facilities. Net cash provided by financing activities was $305.9 million in 2020 primarily reflecting proceeds from the two public offerings of common stock, partially offset by debt repayments, compared to $88.3 million cash provided by financing in 2019, the majority of which was attributable to the IPO. Finally, we ended 2020 with a fortified balance sheet. We had cash and cash equivalents at December 31, 2020 of $410 million and zero debt. As we continue to make progress positioned ourselves as the leader in dermatologic genomic testing, our near and long-term capital allocation priorities remain unchanged, and we believe allow us to continue creating shareholder value. They include first acceleration of our R&D efforts to build our expansive body of evidence that supports our marketed tests, as well as to develop our robust pipeline of tests, and second, the continued expansion of our sales and marketing team. Turning to our 2021 outlook, due to the uncertainties regarding COVID-19, and the related impact on the diagnoses in melanoma, we're not providing formal revenue guidance at this time. Although, we can't predict the trajectory of any recovery, our core business and underlying fundamentals remain strong. We are excited about the opportunities that lie ahead and remain committed to building a dermatologic diagnostics company focused on making a positive impact on patient outcomes. I'll now turn the call back to Derek.

[Derek Maetzold:]

Thank you, Frank. In summary, our team's resilience and strength allowed us to deliver strong results and achieve all of our milestones for 2020 despite the unique challenges we all faced. As we continue to build our dermatology franchise in 2021 and beyond, we will continue to put the patient at the center of everything we do. Before we move on to Q&A, I want to again express my gratitude to our employees, they drive our success. We thank to rely on them to continue to innovate, execute, and focus on improving the lives of patients diagnosed with skin cancer. This concludes our remarks. Thank you for your continued interest in Castle. Operator, we are now ready for Q&A.

[Operator:]

Our first question comes from the line of Puneet Souda from SVB Leerink.

[PuneetSouda:]

Yes. Hi, Derek, Frank thanks for the questions. So first one is on the guide. I appreciate you pointing out softness in the first quarter in cutaneous melanoma volumes given the pandemic, but just wondering in terms of the step down here, should that be in line with what the step down we have seen low-to-mid single-digit step down that we have seen here in third quarter to the fourth quarter? Is that the right magnitude to think about it, and then just broadly when we think about the full year, you obviously have a number of growth drivers here and commercial salesforce that's expanded headcounts in commercial that's expanded significantly and vaccinations are ongoing. So, sort of maybe if you can provide us maybe what penetration in terms of cutaneous melanoma should we be expecting for the year if you can provide us the volume for the year?

[DerekMaetzold:]

Thanks Puneet. Just to clarify. When you are talking about step down, are you talking about volume sequentially just through the quarter or I want to make sure I understand what you're looking for.

[PuneetSouda:]

Yes, sequentially for the first quarter, yes.

[FrankStokes:]

Yes, so recall, Puneet, typically fourth quarter to the first quarter is sort of flattish. There are a number of factors that drive that. We think we understand what most of them are. I mean, I think a lot of them are. There's an impact of patients’ deductibles resetting in January. And so, you take the December holidays in Q4, you take that dynamic in Q1. We typically see flattish performance when you go back and look year-over-year, the sequential quarter performance looks flattish. This year, we've got continued COVID impact, and we've also got some weather dynamics this quarter. So, although it's early and we weren't able to quantify it does look like we're going to see some sequential softening in volumes, just based on the continued macro factors facing physician visits. Now, as it relates to penetration, the difficulty there is just trying to predict how many melanoma diagnoses there are going to be this year. Having said that, we're going to very soon have a much larger megaphone for the physician audience. And we have been optimistic that we are timing that with a corresponding resumption of normal commerce as we get through this vaccine cycle and get through some of the broader reopenings. And as we've said, before a year ago, I think we all sort of felt like maybe a switch would get flipped, and everything would go back to normal uniformly, but we're clearly seeing regional differences and we're seeing differences within the regions. So I think getting a normalization of commerce will get back to that normal rate of diagnoses, and then we can be a little bit more predictive in terms of what penetration --what growth is going to look like.

[DerekMaetzold:]

That being said, as we noted Puneet, despite what doesn't seem to be a recovery from the normal rate of diagnosis of melanoma in the first quarter, at least from third party data; we aren't seeing a commensurate softening in revenues at this point in time. So, I would delink those two slightly. But the other question here, which is when would those estimated 26,000 patients who were not diagnosed last year begin showing up, and I think the worst thing we can do from a public standpoint is to aggressively assume they all come back quickly, but those melanomas aren't going away; they're going to be diagnosed at some point in time. I don't know if that really starts at the beginning of third quarter this year, a little bit, the second quarter or fourth, but certainly you would think of the next year and a half, you would see a return to a normal cadence for the diagnosis of melanoma from a year-over-year standpoint.

[PuneetSouda:]

Okay, thanks. And then Frank, in terms of the prior period, we obviously saw a pickup here. How should we think about that prior period quarters going forward? Because I think the expectation initially was, as the penetration rises, as the prior period revenue numbers should be declining over time. So maybe just give us a view as to what -- how you're viewing revenue on that line?

[FrankStokes:]

Puneet, I think we're going to continue to see the prior period number come down as we get more and more accurate in our accrual rates for our cutaneous melanoma business. Now having said that, that's going to be offset somewhat by the new products that are being launched, because the revenue there will be -- will almost all that will be prior period as we collect on that just due to the appeal cycle. So, it should converge us on the CM business, and then if we are quite successful on the launch products, then you could see that continue to be a factor in the revenue line.

[PuneetSouda:]

Okay, and then my last one is on the sales reps, can you maybe give us a sense of mix of the sales reps that are doing face-to-face detailing with the docs today versus those that are online or maybe how much of the time is face-to-face versus online today? And obviously expectation here would be that they would -- that would turn face-to-face in the second half of the year. Thanks.

[DerekMaetzold:]

Yes, so I'll come on the last half first. So, I think you're right, I think our expectation is that I don't know what the percentage of face-to-face visits versus say having a really engaged conversation over the phone or email and text was in 2019 as we didn't quite capture data that way, but I would think that we would see, based upon current trajectories a relative beginning of normalcy in kind of third and fourth quarter, as you said. We haven't pulled data for the first quarter yet, but we just came off of two semi national sales meetings the last two weeks. And it seems to me as Frank kind of mentioned earlier, it's regional and basis right now, and you see a strong opening in areas where there's a lower level of case numbers and maybe more of an opening up society there as vaccines roll away through health care providers are largely taking care, of course. And so, our representatives are doing more and more vaccine or post vaccine environment. We’d expect them to open up slowly I would think in the second quarter, and as you've kind of indicated, all the macro press seems to assume that we'll be back into sort of a closer normalcy in the second half of 2021.

[Operator:]

Our next question comes from the line of Paul Knight from KeyBanc.

[PaulKnight:]

Thanks for taking the time. The DecisionDx test, obviously, on squamous getting some traction. Can you talk about what your reception in the market was? And obviously a nice sequential bump there and what you're thinking about as Q1 and the year rolls out?

[DerekMaetzold:]

Paul, are you thinking about the squamous cell carcinoma test specifically?

[PaulKnight:]

Yes.

[DerekMaetzold:]

Yes, I think the reception of this of this -- of the squamous cell carcinoma test has been higher than our expectations were from kind of a forecast standpoint. And that's despite having us really sell the product or introduce it behind the DecisionDx DiffDx-Melanoma test. So even though it's a launch product, we actually tried to orient the field forces to basically continue to go ahead and talk first about the melanoma test and then secondly, as there's time to squamous cell test. So even though that dynamic was there, we were quite pleased with the uptake. And it was, again ahead of our internal estimate. So why is that? I think that there's a mixture of two things. And I don't know which is more important to be honest at this point in time. But clearly, an important factor is that there's such a great unmet need for clinicians and their patients to make a shared decision about the next course of action when you've been diagnosed with a squamous cell carcinoma. The skin that has one or more high risk features, because the accuracy of just pathology staging alone is just not that great. So I think one as identified several years ago with our actually our current melanoma customers, significant unmet clinical need, I think the test is meeting the expectations clinically. I think the other part of it though, again, which I don't know which is more important is the fact that the we anticipate that the ordering clinician, the ordering customer for squamous cell carcinoma test is likely to have what 90% overlap at the end of the day with current melanoma customers. So I think the fact that these dermatologists and Mohs surgeons and MPs and PAs know the company, if they are ordering our melanoma tests, they hopefully have thought through how to incorporate the results of our DecisionDx-Melanoma test in the patient care when we walk in. And that reputation that expectation that I know how to use the test translates over once you start talking about squamous cell carcinoma. So again, I don't know which one of those two factors is more important, except that certainly if there was no need, clinically, you shouldn't expect any test orders to come in the door. But certainly having a hopefully what I believe is a very positive reputation among the melanoma customers I think translates pretty quickly too. Okay, I get it. I can see the need now let's talk about the patient population that could benefit.

[PaulKnight:]

And then could you talk a little bit about the competitive environment alternative tests out there. Our impression is it's probably you're in a better position than you were based on our competitor review, but any thoughts there?

[DerekMaetzold:]

For the squamous cell test again, same thing?

[PaulKnight:]

For melanoma specifically.

[DerekMaetzold:]

On the DecisionDx-Melanoma test. So we don't believe we have at this point in time any direct competitors in the US offering test today. We do anticipate having one or one of two of the smaller private European companies might be able to launch their test later this year, maybe next year. But as of now, the real competitor is really standards of care. And helping clinicians appreciate that after 26 peer reviewed publications, there's a significant weight of evidence that supports the use and value of our tests and moving from point A to point B. Now, it's interesting pre-COVID, we had staffed up in December of 19 to 23 sales representatives, I'm sorry 32 from 23. And they were trained largely in December, and we sort of therefore had kind of a 50% expansion in the first quarter of 2020, ahead of COVID, really impacting medical commerce, and we saw significant promotion responsiveness. I believe that as we scale our organization from 32 dermatology facing sales representatives to just above 60, in the next couple of months that will enter into the second half of the year in the same kind of response petition that we saw a year ago this time.

[Operator:]

Our next question comes from the line of Sung Ji Nam from BTIG.

[SungNam:]

Hi, thanks for taking the questions. Just a couple of quick ones; one on the integrated test results. Obviously, that sounds very intriguing. Would you be able to talk about, I'm not sure if it's too early, but what's the magnitude of improvement adding that component to the overall test results from a performance characteristic standpoint? I don't know if that's the right way to think about it.

[DerekMaetzold:]

Yes. Let's see here. So I don't have an answer. That's going to be quite that direct, Sung Ji, sorry about that. If I think about sort of using clinical pathologic features alone, for clinicians to decide who to rule in and who to rule out for a sentinel lymph node biopsy procedure, if you then incorporate using continuous variables, wherever you can find them our test itself, Breslow thickness, mytotic rate, et cetera. We can reshuffle those patients both upwards and downwards that does result in the majority of patients being able to fall below a 5% likelihood of sentinel lymph node positivity. So that's a significant reduction of what you would have with clean pathologic features alone. As I mentioned, in that example, that we talked about on the conference call, we also can do the opposite now with much more precision. So we can take somebody who falls below the sort of threshold for thinking about performing a sentinel lymph node biopsy procedure, and by using this integrated test results score, we could actually find people who would be recommended for sentinel lymph node biopsy consultation, should you decide to incorporate the tumor biology on top of pathology. So that to me is a tremendous opportunity to both rule out where appropriate with very, very high precision and also rule in at the same time.

[SungNam:]

Got you, that's helpful. And then just on the obviously seeing very good initial volumes for squamous cell carcinoma this SCC test, and I know you guys are targeting your existing DecisionDx-Melanoma customers, but are there cases where I don't know if it's, again, too early to tell, are there cases where some of the early adopters of SCC, you might be able to turn them into more robust users of DecisionDx-Melanoma? Or if you think about kind of down the road could that also be tried? Yes.

[DerekMaetzold:]

I think the answer is yes. So right now, there are probably several 100 physicians who are Mohs surgeons who are not ordering clinicians of our DecisionDx-Melanoma test. Now why is that? It could be access point, lack of promotion responsiveness because we haven't been able to promote to them, could be because they are inside of a larger dermatology practice and they do mainly Mohs surgery full time and don't really think about the melanoma patients they might be doing excision work on but think maybe that's a medical dermatology partner orders are melanoma tests. We go and talk to them about the squamous cell carcinoma test. And in most cases, the Mohs surgeon is the one who's seeing these patients with one or more high risk factors or features, we would hope that we would see the same kind of back benefit in terms of having them assessed our squamous cell test and hopefully then also be open and be listening to the melanoma test in terms of where they could actually take charge of that from the ordering standpoint. So we do expect both the dermatologist who uses our melanoma test to be the adopter of our squamous cell test, we expect to see a minority of clinicians probably mainly Mohs surgeons who would begin to be interested in hopefully adopter of squamous cell tests to get back into seeing the clinical utility of our melanoma tests, so I think both ways benefit us going forward.

[Operator:]

Our next question comes from the line of Catherine Schulte from Baird.

[CatherineSchulte:]

Hey, guys, thanks for the questions. I guess first, you've talked about the salesforce incentives for SCC being focused on ordering clinicians rather than volumes. Can you just comment on what kind of yardstick they're being measured against? Could 30% of your existing Derm customers be ordering SCC by the end of 2021? Or just how would you judge success there in terms of ordering clinicians by the end of the year?

[DerekMaetzold:]

Sounds like a more than the less answer. You want to comment on that?

[FrankStokes:]

I don't know, Catherine, I don't know if it's -- I don't know if we can give our precision in terms of target for number. Butt we -- what's interesting, and what's exciting is that when you have a physician that embraces and understands the value of gene expression profile testing, for one disease state, it's quite easy to get them to see that value in another. And so while we have certainly seen the success of melanoma, make the launch of squamous cell more exciting, I think we're going to see the reverse improvement as well, I think you're going to have physicians who order squamous cell first who say I see this value, and by the way, I've also got melanoma patients, and I want the same value there. So I guess aspirationally, I think all of the physician should order both, Catherine. But that's probably a bit hopeful. But I do think there will be continued to be significant overlap and as we said, most of the orders for squamous came from physicians who were using -- who were users of melanoma. So I think we'll continue to see those two numbers grow fairly in lockstep, I would think.

[DerekMaetzold:]

Yes. I don't know what the specific target bonuses are set up in terms of number of new ordering doctors per SCC in 2021. Just to be frank, I guess you should say you should know that number I don't know. But I think our expectation is that of a 4,500 clinicians who roughly ordered our tests in 2020, I guess it was third quarter data maybe, anybody who's seeing invasive cutaneous melanoma is likely to also be seeing squamous cell carcinoma, probably two and a half to three full times that number. So it would be very surprising that at the end of the day, not the end of 2021 mind you, at the end of the day, the majority of those decisions DecisionDx-Melanoma customers are not also going to be adopting SCC. I think in a sort of funny period of coming out of limited face-to-face meetings in the first quarter of this year, probably tailing in the second quarter. What that really means for kind of full year in person visits, we'll see continued acceleration, I would hope. But our business plan calls for having us to educate as many clinicians as possible about the value of our DecisionDx-SCC test in 2021. So we enter with a much wider base of ordering doctors than we would if we just focused on sort of finding the higher volume physicians only at being satisfied with the same number of orders coming in, I think that's an important distinction in terms of how our company introduces a test, which is clearly going to be transformational in terms of patient care. And that has I think for having a wider base of ordering clinicians at the end of 2021, sets out in a far nicer position to grow hard in 2022 to 2024, post Medicare coverage.

[CatherineSchulte:]

Got it. And then you've talked about the potential to launch these three to five new tests by the end of 2025. When this year, could we learn about what those indications are? And when do you think we could potentially see the first of those tests launch?

[DerekMaetzold:]

First of the test launch? I would say pick 2025. And then you can rotate around that. It could be that we see a very nice scale up of the R&D efforts of a couple of our earlier protocols here and this year or next year such that maybe they -- you would might see one or two launch as early as 2024, but I think safety wise 2025, at this point in time is a good thing to kind of go around. In terms of timing, for sure discussing specific targets, we're waiting on a couple of data points internally. And then thought, we would have those conversations here later on in the first part of the year, I believe.

[CatherineSchulte:]

Okay, and then last one for me just on the personalized study, and what's the expected enrollment for that study? And when do you think that study could complete and read out?

[DerekMaetzold:]

I think it's a couple of years until we would see a readout and could come as early as later on or in 2022 or later this year. But that's probably an aggressive statement to be honest. So I wouldn't put that in hard to hit target wise. This is essentially a study which is taking people who can be treated on label with PD1 inhibitors and assessing the impact of our test to help predict outcomes and those patients, when patients aren't on therapy, the time to recurrence is about what 1.2 - 1.3 years I think from the time of diagnosis for stage three patients through recurrent. So it shouldn't be that long of a study in terms of reaching the endpoint. But it's too early to kind of make a hard projection there. And part of that, of course, depends upon sort of new patient flow in the sort of COVID time period. We're able to get up and running a number of targeted sites last year, were quite pleased with that, but to have patients come back for routine blood exams, et cetera takes a bit of time for that to mature out. I think that'll open up quite a bit in the middle of the year going forward.

[Operator:]

Thank you. Our next question comes from the line of Max Masucci from Canaccord Genuity.

[MaxMasucci:]

Hey, thanks for taking the questions. First one, just Q1 commentary. Can you just give us a sense even just directionally for the step-up you're seeing in DecisionDx-Melanoma reimbursement under the expanded LCD? And are there any factors that might make the modeling exercise for DecisionDx-Melanoma ASPs in 2021, just more complicated than being sort of a black and white process?

[FrankStokes:]

Yes, Max, So we are in the early days here. We are seeing that the expanded LCD criteria cover a little over 90% of the Medicare population. So that's consistent with where we were -- where are we expected it to be. So that's good to see. And so that means that of the 45 or so of every 100 patients that are Medicare we're getting paid on your low 40s of those in general. On the commercial side, it continues to be slow progress. We have -- we still do not have positive policy from the big large major, the five big players there. But we are making progress on the regional players. And as we continue our track record of publications and evidence development, we expect to continue to push those over. But as we said before, it won't be a giant stepwise improvement, it's going to continue to be blocking and tackling.

[MaxMasucci:]

Okay. Great. And then another just bigger picture one. Just on the AI-based integrated DecisionDx-Melanoma test result. I'm assuming that this is something that your existing customers may have been asking for? And then second part, does the launch of a mobile app sort of suggests that you're positioning the company for success in a post-pandemic world when some of the virtual tools that are in place to help provide continued access to health care might remain in place?

[DerekMaetzold:]

A few questions in there I think they the last one is yes. I think that we've seen increased, well, in the prior Covid within dermatology, there are some clinicians who would never pull out their iPhone and phone on something to patients sitting across them in their practice and some that would. We do see though, for instance, in the case of dermatologists there are many clinicians use a an online app to determine if Mohs is an appropriate excision approach for people with basil cells or squamous cell carcinoma so that's kind of a routine app which is used clinically with patients by the way we see that with other disease states in dermatology. So part of the sort of feedback that we got even pre-COVID was that when you guys get enough data to provide an integrated report like this, that really takes all the features we think about clinical app logic and gene expression profiling using your test. And you roll it into a more precise report, we'd love to see that available in terms of an online and a phone based portal system so that we can make use of that time with our patients or seeing them in person. So I think that's a way going forward, especially with clinicians under 45, under 50 years of age who grown up in medical school, with that approach in terms of education being part of their life. So that's a thing working with the trend. We do expect that as we gather data with our other tests, and we would continue to roll those into the same platform so that we could provide more and more precise data. The other earlier part of your comment, I think of our call, but I'll have you redirect me here, when I take a breath was that we believe there's a certain approach one should take to developing a diagnostic or prognostic class test, like what Castle does, and the first thing is to see if you can go from using population based outcome data like stating clinical or pathologic features. And if the development of a micro diagnostic test, in our case, the gene expression profile test, actually adds value to what you have in front of you. So what that means independent of what the doctor and patient already have, that I think that moves you from a population base to more personalized base of health care management, which is fantastic is moving you closer and closer to precision based medicine. I think as we were able to go ahead and successfully generate more prospective consecutively tested patient data in the last year, year and a half, two years, we were able to validate with an independent sample set, the first rollout of integrated test report in terms of predicting the sentinel lymph node positivity rate of an individual patient based on using all these continuous factors, both the gene expression profile score as well as the clinical and pathologic factors. And that's a naturally moving, I think, from personalized to more precise management approach. And that's the feedback that we have received through market research earlier this year. In terms of introducing this new rollout this new a way to think about moving again from personalized and much more precision based medicine. So I think this will be a welcome improvement or next step, I guess you would say in our -- in the melanoma test. We have more to do certainly, but it represents a really significant clinical, jump forward to really help provide a much more precise, single number recommendation with high confidence about what the patient may or may not be facing.

[Operator:]

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Derek Maetzold, CEO for one final statement.

[Derek Maetzold:]

Thank you, operator. This concludes our fourth quarter and full year 2020 earnings call. Again I want to thank you for joining us today and for your continued interest in Castle Biosciences.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.