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Castle Biosciences to Expand Range of Dermatology Diagnostics Beyond Cancer

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NEW YORK – Castle Biosciences plans to expand its menu of dermatological diagnostic tests beyond skin cancer.

On a conference call on Monday to discuss the firm's first quarter earnings, CEO Derek Maetzold announced an initiative to develop a genomic test aimed at predicting systemic therapy response in patients with moderate to severe psoriasis, atopic dermatitis, and related conditions.

"This pipeline test has the potential to expand our reach into non-skin cancer, medical dermatology diseases," Maetzold said, and the goal is to launch the test by the end of 2025.

Castle is primarily known as a dermatologic cancer diagnostics company — it markets gene expression profiling tests for cutaneous melanoma, uveal melanoma, and cutaneous squamous cell carcinoma — and the company certainly isn't stepping back from that part of its portfolio. If anything, it is doubling down on melanoma diagnostics: Maetzold made sure to highlight the company's pending acquisition of the Myriad myPath Melanoma test and laboratory from Myriad Genetics for $32.5 million and said it "enables us to provide the most comprehensive offerings for patients with skin cancer and difficult-to-diagnose melanocytic lesions."

The firm plans to use the same method of development, validation, and marketing that it used to create its skin cancer tests in its inflammatory disease test development, Maetzold noted.

"We start by identifying dermatologic diseases with high unmet clinical need. We then use the gene expression profile, the individual patient's biology, in an effort to develop a gene expression profile test, designed to assist clinicians and their patients by better informing treatment to optimize health outcomes and reduce healthcare costs," he said.

There are several parameters that Castle has yet to determine for the test, he noted. While there is enough evidence in the literature for a gene expression profile signature that could assist in predicting treatment response, Maetzold said, it is still unclear how much difference overall there will be in gene expression between the various skin conditions. As of now, the company views this as one overall inflammatory skin disease diagnostic development program, rather than multiple programs for multiple skin diseases, he added.

The company has initiated a 4,800-patient prospective multicenter trial and expects to recruit about 50 centers across the US to develop and validate the test and to answer these types of questions, he added. The company is expecting to complete the genomic profiling and discovery work for the trial in the first half of 2022 and expects to be able to publicly discuss preliminary data in the second half of 2022.

Castle believes the new test will add approximately $1.9 billion to its current estimated US total addressable market, or TAM, bringing its overall TAM, including its current products, to approximately $5.5 billion.

In a note to investors on Tuesday, SVB Leerink analyst Puneet Souda wrote he believes the company will continue to reign over the skin cancer diagnostics market for some time, especially given the acquisition of the myPath Melanoma franchise. And while the new inflammatory skin test will have little to no impact in the near term, he added, it sets Castle up for long-term growth.

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