NEW YORK – Castle Biosciences reported after the close of the market on Monday that its third quarter revenues skyrocketed 300 percent year over year due to growth in the firm's DecisionDx- Melanoma test report volume.
For the three months ended Sept. 30, the skin cancer test developer reported total revenues of $14.8 million, up from $3.7 million during the same period a year earlier and beating analysts' average estimate of $9.5 million.
The company delivered 4,482 total DecisionDx-Melanoma and DecisionDx-UM proprietary test reports, about 30 percent more than the 3,447 tests delivered in Q3 2018. DecisonDx-Melanoma test reports alone grew about 32 percent year over year, with the firm providing 4,126 test reports in Q3 2019 compared to 3,136 reports during Q3 2019. Castle also provided 356 DecisionDx-UM test reports in Q3 compared to 324 in the same period last year.
Castle noted that new ordering clinicians grew 26 percent in the quarter, compared to the same period in 2018.
During the quarter, Medicare administrative contractor Noridian aligned its draft coverage terms with Palmetto's draft local coverage determination to cover DecisionDx-Melanoma, which gauges the expression of 31 genes to determine a melanoma patient's risk of metastatic disease, for patients with cancers 0.3 mm or greater, or for those with smaller cancers when certain conditions are met.
"We are pleased with our strong third quarter performance, driven by solid growth in our DecisionDx-Melanoma test report volume," Castle President and CEO Derek Maetzold said in a statement. "Based upon our results, we have decided to execute our commercial expansion plans in December 2019."
As part of these plans, the firm will include nine new additional sales territories and "commensurate increases in commercial and medical affairs support roles."
On a conference call with analysts following the release of the earnings, Maetzold noted that pending successful validation, the firm's DecisonDx-SCC and suspicious pigmented lesion tests are in position to launch in the second half of 2020.
"We believe that these two late stage pipeline products will increase our estimated total addressable US market by more than $1.4 billion, for an estimated total addressable US market of $2.0 billion for current and pipeline products," Maetzold said.
Castle recorded a Q3 net profit attributable to common stockholders of $5.8 million, or $.05 per share, compared to a net loss of $3.4 million, or $2.33 per share, in Q3 2018. Analysts on average had expected a loss of $.30 per share.
During the quarter Castle completed an initial public offering that the company said in its Q2 earnings statement resulted in net proceeds of approximately $66 million.
Castle's Q3 R&D costs rose about 15 percent to $1.5 million from $1.3 million in the year-ago quarter, and its SG&A expenses jumped 82 percent to $7.1 from $3.9 million.
The company ended the quarter with $94.5 million in cash and cash equivalents.
In a note to investors, SVB Leerink analyst Puneet Souda said he believes that test volumes for the firm's DecisionDx-Melanoma will ramp up in 2020, despite the Q4 seasonality.
Castle's shares rose about 10 percent to $24.00 in Tuesday morning trading on the Nasdaq.