cstl-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38984

CASTLE BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0701774
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

505 S. Friendswood Drive, Suite 401, Friendswood, Texas						77546
(Address of principal executive offices)						(Zip Code)

(866) 788-9007

(Registrant’s telephone number, including area code)

820 S. Friendswood Drive, Suite 201

Friendswood, Texas 77546

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	CSTL	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2021, there were 25,056,411 shares of common stock, $0.001 par value per share, issued and outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Condensed Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020	1
	Unaudited Condensed Statements of Operations and Comprehensive (Loss) Income for the Three Months Ended March 31, 202 1 and 20 20	2
	Unaudited Condensed Statements of Stockholders’ Equity for the Three Months Ended March 3 1 , 202 1 and 20 20	3
	Unaudited Condensed Statements of Cash Flows for the Three Months Ended March 3 1 , 202 1 and 20 20	4
	Notes to the Unaudited Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	68
Item 6.	Exhibits	68
SIGNATURES		70

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CASTLE BIOSCIENCES, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)



	March 31, 2021		December 31, 2020
ASSETS	(unaudited)
Current Assets
Cash and cash equivalents	$	406,981	$	409,852
Accounts receivable, net	14,292		12,759
Inventory	2,310		2,217
Prepaid expenses and other current assets	3,087		4,766
Total current assets	426,670		429,594

Long-term accounts receivable, net	1,121		1,096
Property and equipment, net	7,780		7,102

Other assets – long-term	1,761		1,536
Total assets	$	437,332	$	439,328

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	2,172	$	2,098
Accrued compensation	5,208		9,108
Medicare advance payment	8,178		6,615
Other accrued liabilities	2,020		3,055
Total current liabilities	17,578		20,876
Noncurrent portion of Medicare advance payment	172		1,735
Deferred rent and other liabilities	995		1,026
Total liabilities	18,745		23,637
Commitments and Contingencies (Note 8)
Stockholders’ Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of March 31, 2021 and December 31, 2020; no shares issued and outstanding as of March 31, 2021 and December 31, 2020.	—		—
Common stock, $0.001 par value; 200,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 25,054,513 and 24,812,487 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.	25		25
Additional paid-in capital	485,338		478,162
Accumulated deficit	(66,776)		(62,496)
Total stockholders’ equity	418,587		415,691
Total liabilities and stockholders’ equity	$	437,332	$	439,328

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

CASTLE BIOSCIENCES, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

(in thousands, except per share data)


	Three Months Ended March 31,
	2021		2020
NET REVENUES	$	22,813	$	17,418
COST OF SALES	3,028		2,391
Gross margin	19,785		15,027
OPERATING EXPENSES
Research and development	5,908		2,913
Selling, general and administrative	18,161		11,078

Total operating expenses	24,069		13,991
Operating (loss) income	(4,284)		1,036
Interest income	4		298
Interest expense	—		(764)


(Loss) income before income taxes	(4,280)		570
Income tax expense	—		—
Net (loss) income and comprehensive (loss) income	$	(4,280)	$	570




(Loss) earnings per share:
Basic	$	(0.17)	$	0.03
Diluted	$	(0.17)	$	0.03

Weighted-average shares outstanding:
Basic	24,912		17,372
Diluted	24,912		18,734

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

CASTLE BIOSCIENCES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
BALANCE, JANUARY 1, 2020	—	$	—	17,130,907	$	17	$	137,308	$	(52,212)	$	85,113
Stock compensation expense	—	—		—	—		1,577		—		1,577
Exercise of common stock options	—	—		32,602	—		71		—		71
Issuance of common stock under the employee stock purchase plan	—	—		39,987	—		603		—		603
Net loss	—	—		—	—		—		570		570
BALANCE, MARCH 31, 2020	—	$	—	17,203,496	$	17	$	139,559	$	(51,642)	$	87,934

BALANCE, JANUARY 1, 2021	—	$	—	24,812,487	$	25	$	478,162	$	(62,496)	$	415,691
Stock compensation expense	—	—		—	—		4,913		—		4,913
Exercise of common stock options	—	—		171,315	—		991		—		991
Issuance of common stock under the employee stock purchase plan	—	—		70,711	—		1,233		—		1,233
Public offering of common stock, adjustment to offering costs	—	—		—	—		39		—		39
Net loss	—	—		—	—		—		(4,280)		(4,280)
BALANCE, MARCH 31, 2021	—	$	—	25,054,513	$	25	$	485,338	$	(66,776)	$	418,587

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

CASTLE BIOSCIENCES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three Months Ended March 31,
	2021		2020
OPERATING ACTIVITIES
Net (loss) income	$	(4,280)	$	570
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation	233		91
Stock compensation expense	4,913		1,577

Amortization of debt discounts and issuance costs	—		224

Other	33		—
Change in operating assets and liabilities:
Accounts receivable	(1,558)		161
Prepaid expenses and other current assets	1,679		(129)
Inventory	(93)		19
Other assets	(225)		(77)
Accounts payable	(40)		56
Accrued compensation

SEC Form 10-Q filed by Castle Biosciences, Inc.