Castle Biosciences Inc (NASDAQ:CSTL) Q2 2019 Earnings Conference Call Transcript

Sep 03, 2019 • 04:30 pm ET

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Castle Biosciences Inc (NASDAQ:CSTL) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Catherine Schulte with Baird. Your line is now open.

Analyst
Catherine Schulte

Hey guys, congrats on the quarter and thanks for the question. I guess first looking at the new order in physician, you had a big acceleration in that number this quarter. It sounds like you largely attribute that to your sales force expansion from earlier in the year. How is that new cohort of reps doing relative to your expectations? And then how do you expect the pace of new doc additions to trend going forward?

Executive
Derek J. Maetzold

Okay. Thank you, Catherine, as we guess, it was a strong quarter. The sales force expansion, just as a reminder, we hired the expanded team effective early February of this year. Our internal model is based upon our past experience and some benchmarking suggested that we thought it would take six months to nine months to have them fully seized and become fully effective. So to be quite frank, we were nicely caught-off guard with the rate of growth in new order and physician capture rate in second quarter. We obviously are in the middle of the third quarter right now, looking forward to seeing how the information flow comes out after that. But as of right now, certainly our expansion shows that I think, there was a promotion responsiveness in this marketplace that we are missing by being constrained with having 14 outside sales territories, expanding to 20, [Technical Issues] at least some of that opportunity will have to go ahead and see towards the end of this year what the next step and expansion will look like.

Analyst
Catherine Schulte

All right, great. And then you have far more penetration with ordering docs and then overall volume market share. I believe they're about 30% penetrated amongst docs, but only about 10% from a volume perspective, for your sales force today. How much of that focus is on reaching more ordering docs versus increasing call frequency to drive up order rates with existing docs?

Executive
Derek J. Maetzold

Excellent question. So those numbers are approximately correct in terms of 30% penetration of what we believe are the targetable clinician community who is seeing and diagnosing cutaneous melanoma and roughly 10% is what we think our current penetration is in terms of the incidence of patients that are proper to be tested.

We try to balance our sales force roughly 50-50, 50% hunting and educating clinicians who've not ordered in the past and 50% moving clinicians to seeing greater utility of our tests in their patient population. We think, that is the right mix over time. Some of these publications that we've been generating in 2019, the most recent of which was the July 2019 SKIN Publication, provide additional data for clinicians who had maybe a pigeonholed us in a smaller part of their patient population and a larger part to really see the opportunity to get good utility of our tests by expanding the population within our current practice base.

Analyst
Catherine Schulte

All right. And then last