Good afternoon, and welcome to Castle Biosciences' First Quarter 2021 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 would like to turn the call over to Camilla Zuckero, Executive Director, Investor Relations & Corporate Communications. Please go ahead..

Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences' first quarter 2021 financial results conference call. Joining me today is Castle's Founder, President, and Chief Executive Officer, Derek Maetzold and Chief Financial officer, Frank Stokes. Information recorded on this call speaks only as of today, May 10, 2021.

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 information discussed today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company, including expectations and assumptions related to the impact of the COVID-19 pandemic, and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties, and there could 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-Q for the year ended March 31, 2021 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. I'll now turn the call over to Derek..

Thank you, Camilla, and good afternoon, everyone. This afternoon, I will discuss highlights of our first quarter results and provide an overview of development on our key priorities. Frank will then provide additional detail on our financial results and company performance.

I would like to start today's call by taking the Castle team for their dedication and commitment to improving the lives of patients with skin cancer and other dermatological diseases with high unmet clinical need.

They continue to execute our growth strategy at a very high level, including furthering our evident development, progressing on our commercial team expansion, advancing our pipeline and providing strategic support for the pending acquisition of the Myriad’s myPath Melanoma laboratory. We are off to great start for the year.

We delivered excellent top line growth with first quarter revenue of $22.8 million, a 31% increase over the first quarter of 2020. As we look forward to our growth potential in 2021 and although they remains continued uncertainty relative to the impact of COVID-19 with regard to the timing of the return to historical levels of skin cancer diagnoses.

We feel confidence in providing 2021 revenue guidance of $80 million to $83 million. We expect continued investments in our growth initiatives including our commercial team expansion of our body of evidence and acceleration of our R&D efforts to support our continued growth.

In the first quarter 2021, we delivered 5,142 total gene expression profile test reports, and we are encouraged that we believed to be positive recovery trends. Although melanoma diagnoses have not yet returned to pre-COVID levels.

As we discussed in the past, we expected the majority of the estimated 26,000 patients who were not diagnosed in 2020, as well as those who were not diagnosed in early 2021 to be diagnosed later this year or in 2022, which can be impacted by the timing of both COVID vaccinations and a continued return to in person medical care.

And as such, we anticipate continued improvement to our volume growth rate for the second half of 2021 and into 2022. I cannot predict the rate of progression of a full return to the in-office visits or when all representatives will be allowed to visit all of their clinicians offices.

We are seeing increased levels of in-person visits by our commercial team with just over 75% of our sales calls being live and in-person. We're also seeing a return of in-person peer-to-peer activities.

Despite the impact of COVID on both diagnoses of melanoma, in-office, in-person visits, we delivered 4,060 DecisionDx-Melanoma test reports in the first quarter. Importantly though, we saw order volume for DecisionDx-Melanoma, increased by approximately 30% in March 2021, compared to January 2021.

And in March clinicians ordered DecisionDx-Melanoma more times than any other previous March. And the positive trend have continue through April, with April order volume exceeding that in March. Turning to our DecisionDx-SCC tests for patients diagnosed with high risk squamous cell carcinoma and one or more risk factors.

We delivered 527 test reports for those tests. We launch DecisionDx SCC on last state August in 2020. And in the fourth quarter of 2020, we delivered 428 test reports. As you may recall, we are focusing our commercial incentives on our DecisionDx-Melanoma test. Within this context, we remain extremely pleased with this early adoption.

As a DecisionDx SCC test continues to exceed our expectations, we believe that performance is due in part to the high unmet clinical need that this test is filling. Equally important now, is the value that we are seeing through leveraging our dermatologic commercial channels.

Specifically, more than 80% of clinicians who have ordered this test for SCC have also ordered our DecisionDx-Melanoma tests within the last two and a half years.

In other words, we believe being able to walk into an office of a current customer, one has adopted DecisionDx-Melanoma as an important tool in the management of their patients with melanoma, makes it easier for us to lay out the clinical need and the value of our DecisionDx SCC test in those patients with high risk squamous cell carcinoma.

Technical assessment dossier for DecisionDx SCC test was submitted to Palmetto and Iridium in the second quarter of 2020. We received confirmation of acceptance of the submission as being complete in the third quarter of 2020. And believe, although there can be no assurances that a draft LCD should be posted in 2021.

We believe that the LCD could be posted in 2021. But I remind you there is no specific timeframe under which Palmetto and Iridium must operate. Now let's discuss our comprehensive test solutions for difficult-to-diagnose melanocytic lesions. In the first quarter of 2021, we delivered 218 DecisionDx DiffDx-Melanoma test reports.

Similar to what we are seeing with DecisionDx SCC, the early uptake of our DiffDx-Melanoma test is exceeding our expectations. And you may have seen our important milestone announcement from April 27, regarding the definitive agreement, we signed to acquire the Myriad myPath Melanoma Laboratory.

We believe this acquisition will add incremental value to both myPath Melanoma and DiffDx-Melanoma by leveraging the strength of these two validated tests. Through this acquisition, we believe that more patients will receive actionable results more of the time, enabling a more confident diagnosis and a clearer treatment path.

We expect this transaction to close in late May 2021. Evans development remains a key component of our near and long term growth strategy, which stands at our significant body of evidence in 2020 with 11 supportive peer reviewed publications, published for our proprietary gene expression profile tests.

And in the first quarter of 2021, we added two additional articles for DecisionDx-Melanoma, which is now supported by 30 peer-reviewed publications. In March, you may recall that we announced our Integrated Test Result or ITR for DecisionDx-Melanoma.

The ITR is calculated by the independently validated, integrated 31-GEP, or i31-GEP algorithm, designed to provide a more precise and personalized prediction of sentinel lymph node positivity in order to guide discussions and recommendations with incurrence risk based guidelines for the settlement of biopsy surgical procedure.

i31-GEP is an artificial intelligence based neural network algorithm that integrates the DecisionDx-Melanoma test result with the patient's traditional clinical and pathologic features. The algorithm has been validated in a cohort of 1,674 tested patients with T1 to T4 cutaneous melanoma.

We present data on a validation study at the World Congress in Melanoma in April.

The independent validation phase show that the i31-GEP test provides a highly important prediction of sentinel lymph node positivity rate, compared to the actual observed rates, with a linear regression slope of 0.999 with a slope of 1.0, representing complete importance.

Additionally, a patient's originally classified with a 5% to 10% likelihood of sentinel lymph node positivity using clinical or pathologic features only. The i31-GEP was able to reclassify 63% of those patients whose actual risk of sentinel lymph node positivity was either below 5% for about 10%.

Finally, the i31-GEP has a high negative predictive value of 98% in patients with T1 to T4 melanomas. We plan to continue investing in development for all of our GEP tests, as it remains a key component of our growth strategy, supporting adoption of our tests, both by clinicians, as well as reimbursement by commercial payers.

We are a data driven evidence based company, and we invest heavily in evidence development, supporting not only our existing tests, but also our pipeline tests as well. And earlier today, we announced one of our innovative pipeline programs.

The program's initiative is to develop and validate a genomic test aimed at predicting systemic therapy response for patients with moderate to severe psoriasis, atopic dermatitis and related conditions. Essentially those patients with inflammatory skin conditions that have reached the severity of disease to be considered for systemic therapy.

With our industry-leading position as the only diagnostics company with a suite of commercially available tests for dermatologic cancer, we have demonstrated our ability to successfully develop, validate and bring to market clinically actionable, innovative genomic tests. We start by identifying dermatologic diseases with high unmet clinical need.

We then use the gene expression profile, the individual patient's biology, in effort to develop a gene expression profile test, designed to assist clinicians and their patients by better informing treatment to optimize both health outcomes and reduce healthcare costs.

This pipeline test has the potential to expand our reach into non-skin cancer, medical dermatology diseases and is expected provide additional value for clinical customers and their patients.

We recently lost [ph] the 4,800 patients prospective multicenter trial, develop and validate this pipeline test and plan to enroll approximately 50 centers with leading experts in the field. This pipeline tests along with our other pipeline products has the potential to increase our U.S. total addressable market to slightly more than $5.5 billion.

Another important component of our growth strategy is expansion of our commercial team.

I'm pleased to say that we have completed our expansion ahead of schedule with all new outsides their sales territories field, and we expect to enter the third quarter of 2021 with a total of 60 to 65 sales representatives, all calling on dermatologist as a primary call point, followed by most surgeons, surgeons who work in skin cancer, including surgical oncologists, and head neck surgeons and dermatopathologist.

This expansion will nearly double our dermatology focus sales efforts compared to the 32 outside sales territories we had before the expansion and in time for the expected continuing positive trends of offices opening back up for in-person sales calls, and in-person peer-to-peer programs.

We expected each of our 60 to 65 sales representatives will sell all four dermatologic tests, DecisionDx-Melanoma, DecisionDx SCC, myPath Melanoma, and DiffDx-Melanoma. Additionally, we have seen that our market is promotionally responsive.

So we expect that as offices open more fully, our Salesforce expansion efforts have a positive impact on our 2021 exit volume and to position as well for growth in 2022. Before I turn the call over to Frank, let me summarize our takeaways. We delivered an excellent quarter of financial performance with strong execution on our growth initiatives.

We increase investments in these initiatives during COVID to ensure resiliency and are seeing the benefits of those actions, which we believe furthers our position at the leading dermatologic diagnostics company, strengthening our value proposition and continuing to create shareholder value.

I will now turn the call over to Frank, who'll provides additional details relating to financial results..

Thank you, Derek. As Derek stated, we're pleased that the investments we've made in our growth initiatives, along with solid execution from the team enabled us to develop deliver a strong start to the year. We reported revenue of $22.8 million in the first quarter 2021, compared to $17.4 million in the first quarter of 2020, a 31% increase.

Primarily due to higher revenue adjustments related to prior periods and higher per unit revenues and partially offset by lower test report volumes for DecisionDx-Melanoma and DecisionDx-UM. Positive prior period revenue adjustments for the first quarter of 2021 were $5.3 million, compared to $3.2 million for the same period in 2020.

Our gross margin in the first quarter was 87% compared to 86% for the first quarter of 2020. Our operating expenses for the quarter ended March 31, 2021 were $24.1 million, compared to $14 million for the same period last year.

This increase was driven primarily by higher SG&A expense, which increased by $7.1 million for the quarter attributable in part to the expansion of our sales and marketing teams for the launch of our DiffDx Melanoma test, 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 $3 million in 2021, compared to 2020. It was primarily associated with increases in personnel costs attributable to additional headcount and costs incurred in our clinical studies.

We expect our R&D expense to increase further as we continue to invest in activities that support our commercial products, and pipeline initiatives and position us well for near and long term growth.

Non cash stock-based compensation expense, which is allocated among cost of sales, R&D and SG&A, total $4.9 million for the quarter ended March 31, 2021, compared to $1.6 million for the quarter ended March 31, 2020.

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 our growth in headcount. Our net loss for the first quarter of 2021 was $4.3 million, compared to net income of $0.6 million for the first quarter of 2020.

Diluted loss per share attributable to common stockholders for the first quarter of 2021 was $0.17, compared to diluted earnings per share attributable to common stockholders of $0.03 for the first quarter of 2020.

Operating cash flow for the three months ended March 31, 2021, was negative $3.6 million, compared to negative $0.3 million for the same period in 2020. Finally, we had cash and cash equivalents at March 31, 2021, a $407 million and no debt.

Although we can't predict the trajectory of continued COVID recovery, our core business and underlying fundamentals remain strong. And we are initiating 2021 revenue guidance of $80 million to $83 million.

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 over to Derek..

Thank you, Frank. In summary, we delivered strong execution in the first quarter with strong top line growth and significant positive trends in order volume in March 2021, compared to January 2021.

We saw excellent progress on our key growth initiatives, including expanding our body of evidence, completion of our commercial team expansion, and initiation of our development, and validation study for psoriasis, atopic dermatitis, and related conditions, pipeline tests.

Before we move on to Q&A, I want to again express my gratitude to our employees for their hard work, and dedication to improving the lives of patients with skin cancer, and other dermatology disease with high unmet clinical needs. This concludes our remarks. Thank you for your continued interest in Castle. Operator, we are now ready for Q&A..

Thank you. [Operator Instructions] Our first question comes from a line of Thomas Flaten with Lake Street Capital Markets. Your line is now open..

Good afternoon, and thanks for taking the questions. Frank, just a quick clarification on the guidance.

Does that include any contribution from myPath? Or is it was that a TBD at this point?.

We're including a little bit of contribution there. Keep in mind we'll own that business little more than six months this year. And we'll be new with it. But yes, we do have a little bit of benefit from myPath..

And then flipping to the new pipeline product. I'm just out of curiosity, could you share maybe some thoughts on what the overlap in potential gene expression? I think you characterize that between the two disease states.

Are there significant numbers of genes that are present in both disease states? And are those -- is gene expression, typically the vehicle you would use? Or are there other, for example, non coding regions that would be important in better understanding those diseases?.

Hi, Thomas, this is Derek. I think we'll have an answer for that question, specifically, towards the end of 2022. Our belief is that there's enough literature out there to go ahead and demonstrate that there is a -- that we should be able to identify a gene expression profile signature that will assist in predicting treatment response.

I don't know how much overlap we're going to see between sort of classical atopic dermatitis, as well as classical psoriasis. But I think that if we view these as sort of inflammatory syndrome or inflammatory skin diseases, rather than sort of partial isn't the two different programs.

Initially, our belief in working with our Steering Committee is that the approach that we should be taking is let's go after this in a significant manner, which is why we are initiating this with roughly just under 5,000 patients study, to go and answer those questions.

So today, I don't have a definitive answer for you, except that we've seen a good proof-of-concept work in the literature in our own hands and say, we can move forward here..

And then just one quick one to finish up on the field force. Congrats on getting that done early. I was curious if you had any anecdotal feedback from the sales reps that have been carrying all three products in the bag to date.

What are common objections? What are the kind of unique selling points? I know you touched on a little bit in the prepared comments, but I'm just curious to get some qualitative understanding of how they've kind of experienced that in the field today?.

Yes. Let me separate one comment there. We have 32 dermatologically focus sales representative.

So maybe 80% call volume is on dermatologists, which would include dermatological physicians, NPs and PAs who work in their practices, most surgeons, and then the remaining part of our calls are largely on surgeons who do skin cancer work, like surgical oncologist, and a smattering of dermatopathology and medical oncology, Moore's information.

And they're only covering two tests today. So they're only offering the DecisionDx-Melanoma test and the DecisionDx SCC test. So in that context, I think maybe answer your question here, which I think you were asking.

What we find is that when we are introducing the DecisionDx SCC test, after we've gone through our melanoma tests, you sort of get head nodding, there's an agreement that there is a significant unmet clinical need in these patients with one or more risk factors, that there are sort of a wide range of treatment options, everything to kind of do nothing to do everything.

And that's the tools they have pathologically and clinically aren't that good. And so you sort of get head nodding along with the unmet clinical need, the limitations of current staging features, and the conversation more quickly goes into now. Let's talk about the right patients to use your test in.

What are my peers doing in terms of adjusting treatment plan decisions. So we are seeing a nice leverage effect off of our melanoma reputation, those same practice. I think that's also why we're seeing about 80% of the physicians who have ordered our DecisionDx SCC test have ordered the DecisionDx-Melanoma testing last couple of years.

The other small sales force of 10 individuals, we trained up and let them go in early November of 2020. just focusing on our DiffDx-Melanoma tests with two dermatopathologist.

And the reason for that was to introduce carefully that test to that specialty group and then following this expansion, that kind of 60 to 65 representatives will then have each individual representative selling all three products in a smaller geography. So that question want to hold off till we get past July 1..

Great. Thank you..

You're welcome..

Thank you. Our next question comes from the line of Catherine Schulte with Baird. Your line is now open..

Hey, guys, congrats on the quarter. And thanks for taking my questions, I guess first on guidance.

Can you just walk through what that assumes for the rebound you'll see in volumes in the second quarter, maybe how melanoma diagnoses improved for the balance of the year and what's baked in there for the impact of the newly expanded Salesforce?.

Hey, Catherine Thank you. So, we're assuming that the current, I guess, environment or climate is steady state. We'll get some of the misdiagnoses coming in over time. We don't expect a big rush or tend to see that true-up all at once. And so. we're optimistic that things will continue to thaw and get better and better.

And of course, its very regional around the country. Some places are catching up with others. As it relates to Salesforce, we have always assumed sort of a six-month ramp to average productivity. And so, with the with the new folks starting, now we'll see some benefit from their efforts. But we certainly won't see full effort.

So we would expect that the benefit of that expansion will start to be felt in the back half of 2021 and then be nicely felt in 2022..

Okay, great. And then I think the NCCN non-melanoma skin cancer panel is meeting this month.

How should we think about the path to guideline inclusion there for SCC? And is there any data that you've submitted to the panel for this meeting?.

So, we think that the pathway is similar to I guess, other disease states and tests. The NCCN, SCC panel is relatively new. I can't remember when they started reviewing SCC individually, but it's not more than a couple of years ago. And they're still trying to kind of wrestle with how do you bucket or been different risks groups.

We are pleased to go ahead and see the increased clarity that came about in January 2021, when they sort of went from just a low risk bucket and a high risk bucket to now having a low risk, a high risk and what they call a very high risk bucket.

And it just so happens that if you happen to have an aggressive Class 2B test result from our DecisionDx SCC test. Your risk of metastasizing is like your very, very high risk of the fact that already been stratified, a little more finer going from two to three bands I think will be helpful for us.

We have engaged as part of our normal investigator work and publication work with a number of the NCCN [Indiscernible] SCC. And -- but ones we have talked to our favorably disposed to looking at rolling in genomic testing information, to help provide high clarity on our accuracy improvements.

Unlike melanoma, where I think there historically was -- is a higher barrier, because they've been -- pathologists have been looking at melanoma for several decades that really --- and that sort of level of sort of legacy ownership is really not there and squamous cell carcinoma, there really happens to be in tumor, which just has the pathology and clinical features just aren't as informative, as you see now into these things.

So I think the opportunity to have that move quicker is certainly there. And I think the team, if they have already, they'll be submitting shortly the packet for the upcoming review cycle. I think I answer the question..

Yep. Very helpful. And then last one for me. Pretty strong quarter for prior period collections. Any movement on the commercial payer side.

And any thoughts on the outlook there for incremental coverage decisions?.

Yes. So it released the prior period revenue, Catherine. We did have a larger amount than we have had on trend. And we wouldn't expect that to be continued. There were some reasonable buckets of appeals that we had negotiated with payers that were, I guess, we were successful.

And so, although those tests were from last year of largely speaking, we were able to successfully collect on those through the appeals process in a sort of a basket fashion. That of course doesn't impact commercial payer policy. We continue to just chip away at those and make small progress.

And what's important, I think is as important is not only those policy progress and the policy moves we're winning, but continued success on appeals..

Okay. Thank you..

Thank you. Our next question comes from a line of Max Masucci with Canaccord Genuity. Your line is now open..

Hi. Thanks for taking the questions.

First one, did you expanded the Medicare payments for DecisionDx-Melanoma cash flow into the model as expected in Q1? And if so, how should we think about any sort of sequential increase we could see in DecisionDx-Melanoma ASPs in Q2 and beyond?.

Yes, Max. It did flows as we expected. We are getting paid on the percentage of those cases that we had expected to. So that trend is playing out as we'd anticipated. So there was a nice ASP increase. If you just look at in-period revenue and volume, those are nice ASP increase four to one, Q4 to Q1.

Certainly improvements to the rest of this year will be more measured. I don't think we'll see additional significant stepwise increases there. So, more steady and more typical for our historical progress through the rest of the year..

Great. And then maybe a big picture question. Great to learn more about the tests and your development pipeline.

Can you just walk us through, how you arrived at inflammatory skin disease as a new category of interest for your product portfolio? And at this point in time, I imagine that precision oncology hasn't quite made its way into inflammatory skin disease the way it has for some other disease categories, which would make this another somewhat first of its kind market opportunity.

Does that logic sound correct?.

Correct. So hey, Matt, it's Derek here. One is that we've been looking at the inflammatory sort of skin diseases there as one of our potential pipeline opportunities once we got past the IPO.

And that original recommendation came from some of our current customers and some KOLs is that we see counsel from around dermatologists saying, we've got some significant issues here. You've got this march of biologics and systemic therapies with psoriasis. psoriatic arthritis.

In clinical trials, they perform remarkably well yet the majority of people actually end up switching for variety of reasons, either it didn't quite work as well in the real world that does in a control trial. It could be side effects, it could be cost or access issues.

But the way we were using these new therapies as it sort of as market share wins, whatever I use before I kind of use now. And maybe that's the right way to approach it. But right now, we really have no objective data to make a better choice. And they've got so many options now in psoriasis and more coming down in atopic dermatitis.

If you could assist us like you do in melanoma with figuring out, Drug D may be a better choice than Drug A, even though Drug A if you go to drug, and that could help do what? Say patients an extra quarter two of not getting full efficacy, significance sort of wasting of healthcare dollars, if they don't respond well, et cetera, et cetera.

So I think the opportunity here to really go in hard the next couple of years, and come out of the other end, hopefully with a clinically validated test that will really help dermatologists take a more baffles little negative there.

Much more objective, informed decision making process to get it right the first time hopefully rather than third time, has tremendous payback, developed patient benefits, health care system cost reductions, improves satisfaction among dermatologists, that when they prescribe a therapy for patient A, and it happens to be Drug A.

There's a much higher chance. That's a good match versus trying to figure it out directly. So, we're quite excited about this. We've done some proof-of-concept work over the last couple of months and feel like our approach in terms of securing the actual specimen is a nice viable approach that flows well in the practice setting.

So we're excited to go and kick this off..

That's great. Thanks for taking the questions..

Thank you. [Operator Instructions] Our next question comes from a line of Puneet Souda with SVB Leerink. Your line is now open..

Yes. Hi, Derek. Frank, thanks for taking my question. So first one, just wanted to apologize, this was covered. I just wanted to get in terms of the pipeline expansion for atopic dermatitis and related conditions.

And how are you thinking about that data -- that large study? When do you expect that to read out? What should we expect in terms of the updates in terms of the data here?.

Yes. Good questions there. So maybe the last one first.

So I think we anticipate here that at this point in time and kind of first quarter of 2021, I think we should assume that our clinical research group could go ahead and Marshal up enrollment as we planned such that as we work through this large, nearly 5,000 patient program, we should be able to have a test the marketplace, we would think by the end of 2025, that could turn out to be conservative.

But I think that's an -- that fits what we've been talking about the last six months or so. We'll know more as we get working through the summer and fall in terms of recruitment opportunities.

I think taking a step closer today, when we can we get sort of indication of early data readouts? I think we'll have some genomic profiling work and discovery work nailed down by maybe in the first half of 2022. Maybe there's some preliminary data we'll discuss publicly in the second half of 2022.

I don't think it comes really earlier than that just based upon how the protocols would be follow in patients that are better manage on sequential systemic therapies. So we would to want to get a couple of cycles of that and non patients in.

But I think what's exciting from our perspective, in terms of competence around the clinical trials is that nearly every clinical research site that we work with in our squamous cell carcinoma studies, in our DecisionDx-Melanoma studies, and our DiffDx-Melanoma studies. Number one, do clinical research and dermatology conditions.

And number two, a far more prevalent condition happens to be psoriasis and array topic derms. So I think we feel quite bullish that way as this -- as sites get up and running. We'll be working largely with centers.

We've worked with last about five, six, 10 years, and we hopefully will know which ones to pick and can be good horses for us, and which ones might take a bit longer. So that feels very exciting in terms of trial execution at this point in time..

Okay, That's very helpful Derek.. Thanks for that.

In terms of the access, I think you mentioned the 75% number today, with the reps sort of being in person, do you expect that to -- given what you're seeing? Do you expect that to recover completely to in-person sort of by the summer time? Or anything you can provide in terms of continued improvement of that rep access to the physicians, to the dermatologist and the broader physician community that you're serving?.

Yes. So one interesting, before you know, we all know that we had spell a file that a word called COVID. We were more interested in looking at interactions in the course of a day, it didn't really care if they were a really long phone call for an in-person visit as long as it was really moving customers from point A to point B.

And now of course, last nine months, we've been thinking about this sort of virtual versus telephone versus in-person mix.

So I don't have a good sort of 2019 data that I can rely upon to say, what's 100% look like? Is that really 95% or not? I think I wouldn't be as aggressive as saying that our models show that by July 1, we're back to whatever 100% looks like, I think we should probably assume that summer works its way through maybe around Labor Day, it would be -- we hopefully get back whatever it used to be.

And I'd say that only because we're going to have different states with differences of regional openness happening, but -- so that -- so next five months seems like a reasonable approach to think about, and that will have to be timed well with our new representatives kind of hitting about six months in the field.

So I'm going to be able to tell you, which is the chicken or the egg, just that we've got both in the hand, which is a good thing, of course, the end of the day. I think we were really, really pleased to go ahead and see that three quarters of our sales calls in the first quarter already were in-person. And I think that's a reflection of both.

They hopefully of the quality and the value that we bring to our dermatological and surgery customers. But I think it's also a reflection that clinicians value interactions. And after nine months, there's only so much more time they're going to spend in front of their laptop at their office, talking over a video cam or a telephone.

So we see encouraging interest in what, I'm willing to go ahead and see you, my staff wanting to see you, I'm willing to come out with you. So if you have a peer-reviewed program going on, let me know about that. So it's a very interesting, nice dynamic of our clinical base to saying.

hey, this is one way I can show that I'm actually practicing medicine like I did before 2020..

Okay. That's great. And then last one, Frank, maybe this for you. And just as we think about the second quarter, given what you're seeing as three-fourths of the reps in-person, and the recovery and the conversation so that you're having.

Anything you can provide in terms of the 2Q volume pickup that we should be thinking about? And then, broadly that accelerating through the year.

And then lastly, Derek, could also, I don't know if this was covered, but just a gauge on how are you approaching the commercial payers today after having solid reimbursement and thinking about the broader pipeline as well? Thank you..

Sure. So I think Puneet, we're hopeful that we see physician interactions as it relates to skin cancer at least continue at the same pace. And it would be great if they accelerated some. If that happens, we're confident our commercial team can go out and continue to take increased penetration of those patient encounters or diagnoses.

Tough to really put a line in the sand on exactly what that pace will be. I know that other areas of the economy have seen nice acceleration here in terms of recovery. So we're -- I guess, the best I can say is, we're optimistic or hopeful that medical commerce will have the same experience when you talk about commercial.

So, on the commercial payer side, Puneet, we're continuing to just, I guess, politely overwhelm them with evidence.

And the strategy is just to at some point have so much clinical evidence that there's just no way a straight face party cannot realize that there's real benefit to patients, benefit to their physicians and cost savings to the healthcare system by using our tests in our skin cancer indication, and that's -- we all know We know what's good for patients.

And it's a real shame that being good for patients isn't enough for the commercial payers. But unfortunately, they're less interested in what's good for patients and more interested in what's good for them..

Yes. Got it guys. Thank you..

Thank you. There are no further questions. I will now turn the call back to Derek Maetzold for closing remarks..

So in summary, we delivered strong execution in our first quarter, with strong top line growth has been positive trends in order volume in March 21 prior to January 21, with March being our highest ever order volume month for DecisionDx-Melanoma and April we're exceeding that. This concludes our first quarter earnings for 2021.

We thank you again for joining us today and for your continued interest in Castle Biosciences..

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect..