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Item 1. Business

2022-02-28 compared with 2021-03-11 · 526 added, 416 removed, 475 unchanged (66% of the section changed)

As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Castle Biosciences,” “the Company,” “we,” “us,” and “our” refer to Castle Biosciences, Inc., a Delaware Corporation.

We are a commercial-stage dermatological cancer company focused on providing physicians and their patients with personalized, clinically actionable genomic information to make more accurate treatment decisions.

We believe that the traditional approach to developing a treatment plan for certain cancers using clinical and pathology factors alone is inadequate and can be improved by incorporating personalized genomic information.

Our non-invasive products utilize proprietary algorithms to provide an assessment of a patient’s specific risk of metastasis or recurrence of their cancer, allowing physicians to identify patients who are likely to benefit from an escalation of care as well as those who may avoid unnecessary medical and surgical interventions.

Our lead product, DecisionDx®-Melanoma, is a proprietary multi-gene expression profile, or GEP, test that predicts the risk of metastasis or recurrence for patients diagnosed with invasive cutaneous melanoma, a deadly skin cancer.

This test has two current clinically actionable uses.

The first use immediately following diagnosis predicts a patient’s likelihood of having a sentinel lymph node negative biopsy result so that physicians and patients can discuss the risk and benefit of undergoing sentinel lymph node biopsy, or SLNB, surgery.

The second use is to inform the appropriate treatment plan, regardless of the decision to undergo or avoid the SLNB surgery.

We estimate more than 130,000 patients are diagnosed with invasive cutaneous melanoma each year in the United States.

Castle Biosciences is improving health through innovative tests that guide patient care.

For the diseases that our portfolio of tests cover, we believe the traditional approach to developing a treatment plan for cancers and other diseases using clinical and pathology factors alone is inadequate and can be improved by incorporating the personalized information our diagnostic and prognostic tests provide.

Vision and Foundational Strategy

Since our inception in 2008, it has been our vision to transform disease management by keeping people first:

patients, clinicians, employees and investors.

This foundational strategy remains the guidepost for the direction of our company and the basis of long-term value creation.

Our foundational strategy focuses on executing four principles:

Address Areas With Unmet Clinical Need.

Our commercial and pipeline tests address many treatment plan challenges facing physicians by providing physicians and their patients with a laboratory report that contains clinically actionable and personalized information from our proprietary tests to inform the treatment plan for each patient.

Leverage Advanced Technologies For Innovative Tests.

We focus on multi-analyte assays with algorithmic analysis (“MAAAs”) that enable us to characterize an individual patient’s tissue biology to improve risk-stratification, improve diagnostic certainty and predict therapy response.

Our expectation is that incorporating our personalized test results into the shared decision-making between a patient and their clinician should result in improved treatment plan decisions and lead to optimized health outcomes with a reduction in healthcare costs.

Due to the biological complexity of the diseases we target, we believe that MAAAs are the optimal approach to precision testing.

Provide Robust Data To Support The Clinical Value Of Our Tests.

We conduct extensive clinical utility and validity studies to support the adoption of, and reimbursement for, our products.

This growing set of data is key in educating physicians and patients about the consistent value of our commercial products.

Regarding our lead product, DecisionDx-Melanoma, in 2015, we published our initial two peer-reviewed manuscripts.

As of February 28, 2022, we have more than 35 peer-reviewed publications supporting the clinical utility and validity of DecisionDx-Melanoma, including multiple prospective studies and two systematic reviews with meta-analyses involving over 6,000 unique patients.

We anticipate analyzing more than 20,000 additional patients’ data in cutaneous melanoma studies in 2022.

Across our testing portfolio, we currently have 16 ongoing clinical research studies and as of December 31, 2021 we had 341 committed/contributing clinical research sites and 7,800

patients enrolled in studies.

In order to maintain our competitive advantage and increase sales of our products, we will continue to generate additional clinical data to support the use of our products.

Accelerate Test Adoption Through Commercial Excellence.

Our commercial team focuses on educating clinicians on the value of incorporating the results of MAAA tests to make more informed treatment plan decisions.

In the field of dermatology, this approach has resulted in established relationships with clinicians that allow us to optimize our interactions, increase adoption of our current products and identify areas of unmet clinical need to efficiently launch additional, complementary products.

Our significant investment in developing evidence of the value of our tests has resulted in rigorous scientific support and peer-reviewed publications in leading journals, which allows our commercial team to have substantive, in-depth dialogues with physicians.

Through these established relationships, we have been able to integrate our products into physicians’ workflows and identify further educational programs, which we believe fosters adoption of our products.

We believe our history of commercial success in dermatology will translate into other markets, including ocular oncology and gastroenterology.

Our Test Portfolio

We map out the continuum of diagnostic test services as starting with (i) screening of healthy individuals, to (ii) supporting diagnostic clarity in patients with signs or symptoms of disease, to (iii) risk-stratification or prognosis, to (iv) response to treatment for specific treatment selection and to (v) late-stage testing for use in resistant metastatic disease.

We currently focus our investments on innovative test services that assist in providing diagnostic clarity in patients with signs or symptoms of disease, risk-stratification and response to treatment.

We have five commercially available proprietary tests that assist physicians and patients along this continuum and focus on answering clinical questions arising during the treatment of dermatologic cancers, uveal melanoma and Barrett’s esophagus (“BE”):

DecisionDx-Melanoma, DecisionDx-SCC, DecisionDx DiffDx-Melanoma, myPath Melanoma, DecisionDx-UM and TissueCypher Barrett’s Esophagus Assay.

Together, we believe these commercial products support an estimated total addressable market (“TAM”) of $3.0 billion in the United States.

Currently, our revenue is primarily generated by our DecisionDx®-Melanoma risk stratification test for cutaneous melanoma and our DecisionDx®-UM risk stratification test for uveal melanoma.

In 2021, we announced the launch of our innovative pipeline initiative to develop a genomic test aimed at predicting response to systemic therapy in patients with moderate to severe psoriasis, atopic dermatitis and related inflammatory skin conditions.

If successful, this inflammatory skin pipeline test has the potential to add approximately $1.9 billion to our current estimated U.S.

In 2021, we formed a steering committee comprised of leading experts in the field, received Institutional Revenue Board (“IRB”) approval and enrolled our first patient in the development and validation study for this genomic test.

We believe we are on track to launch this test by the end of 2025.

We have initiated work on additional pipeline tests which branch out upstream, downstream and parallel to our commercial tests, within or adjacent to our established dermatology commercial call points.

Operational Pillars Supporting Castle’s Growth

Our near and long-term growth plans are focused on three operational pillars:

our strong core dermatology business, pipeline initiatives and strategic opportunities.

Strong Core Dermatology Business

The foundation of our business is our dermatologic cancer franchise, and our lead product is DecisionDx-Melanoma.

DecisionDx-Melanoma is a proprietary multi-gene expression profile (“GEP”) risk stratification test that predicts the risk of metastasis, or recurrence, for patients diagnosed with invasive cutaneous melanoma, a deadly skin cancer.

In the management of melanoma, as with nearly all diseases, treatment plans are directed by patient risk-stratification.

This test has two distinct, complementary clinically actionable uses.

The first revolves around predicting the likelihood of having a sentinel lymph node (“SLN”) negative biopsy result so that physicians and patients can discuss the risk and benefit of undergoing the SLN biopsy (“SLNB”) surgical procedure.

The second use is to inform the appropriate treatment plan during the initial five years post-diagnosis, regardless of the decision to undergo or avoid invasive SLNB surgery.

In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive cutaneous melanoma in the United States.

We launched DecisionDx-Melanoma in May 2013.

On August 31, 2020, we commercially launched our cutaneous squamous cell carcinoma, or SCC, proprietary GEP test, DecisionDx®‑SCC, and on November 2, 2020, we commercially launched our proprietary GEP test for suspicious pigmented lesions, DecisionDx® DiffDx™-Melanoma.

These two indications are areas of high clinical need in dermatological cancer and, together, represent an addressable population of approximately 500,000 patients in the United States.

We also market DecisionDx®-UM, which is a proprietary GEP test that predicts the risk of metastasis for patients with uveal melanoma, a rare eye cancer.

Based on the substantial clinical evidence that we have developed, we have received Medicare coverage for DecisionDx-Melanoma, which represents approximately 50% of the addressable patient population for this test.

In 2021, we initiated a collaboration with the National Cancer Institute (“NCI”) to link Surveillance, Epidemiology, and End Results (“SEER”) Program registries’ data on cutaneous melanoma cases with DecisionDx-Melanoma testing data.

The analysis of the first subset of data from patients 65 years and older confirmed the performance of our test to risk stratify the likelihood of progression.

The analysis also showed that patients tested with DecisionDx-Melanoma had improved overall survival rates compared to untested patients.

In addition to confirming results from previous studies, this data from a large, real-world and unselected patient population, confirmed that patients who received a DecisionDx-Melanoma test result lived longer than patients whose clinicians relied solely on traditional clinicopathologic factors.

The first phase of the collaboration links SEER cutaneous melanoma registries that were diagnosed between 2013 and 2018 with DecisionDx-Melanoma results and additional clinicopathologic information from patients tested between 2013 and 2018.

We expect that the peer-reviewed publication will be available in 2022.

The next planned phase of the collaboration with the NCI is to link the SEER registries’ cutaneous melanoma cases diagnosed post-2018.

We expect further data read outs later in 2022 and beyond.

On August 31, 2020, we commercially launched our cutaneous squamous cell carcinoma (“SCC”) proprietary GEP test, DecisionDx®‑SCC, for use in patients with one or more risk factors (also referred to as “high-risk” SCC).

On November 2, 2020, we commercially launched our proprietary GEP test for difficult-to-diagnose melanocytic lesions, DecisionDx® DiffDx™-Melanoma for use in patients with a melanocytic lesion and uncertainty related to the malignancy of the lesion.

believe that these two additional skin cancer tests address areas of high clinical need in dermatological cancer and, together, represent an estimated addressable population of approximately 500,000 patients in the United States.

We further expanded our commercially available dermatologic portfolio in May 2021 when we acquired Myriad myPath, LLC (“Myriad myPath Laboratory”) from Myriad Genetics, Inc.

for a cash purchase price of $32.5 million.

myPath Melanoma is a clinically validated GEP test that addresses the same unmet clinical need as our DecisionDx DiffDx-Melanoma test.

Today, we offer both our myPath Melanoma test and our DecisionDx DiffDx-Melanoma test under an offering that we refer to as our comprehensive diagnostic offering (“CDO”) of molecular testing solutions.

By offering both of these tests in a single offering, we believe we have demonstrated the ability to improve the test result performance for patients with difficult-to-diagnose melanocytic lesions.

Pipeline Initiatives

We identify areas of significant unmet clinical needs in the treatment of skin cancer and other diseases and leverage our expertise in genomics and other advanced technologies, data analytics and artificial intelligence to develop clinically actionable products.

We focus first on confirming the unmet clinical needs of clinicians treating skin cancer and other diseases, which we gather from in-depth conversations with our customers and thought leaders as well as feedback our sales and medical affairs representatives receive from clinicians.

Once we have generated a pipeline test that we believe will address an unmet clinical need, we work to validate the product candidate through extensive testing of patient tissue samples, many of which will be housed in Castle’s own biorepository and annotated with clinical outcomes data.

We use our extensive data bank of patient tissue samples and clinical outcomes data to conduct development and validation studies, as well as clinical studies to collect new samples in additional diseases.

We have significant expertise in developing proprietary algorithms, conducting clinical studies and using the necessary instrumentation required for efficiently developing our pipeline products.

alone, there are approximately 18 million patients diagnosed with psoriasis and atopic dermatitis.

Approximately 450,000 of these patients annually are eligible for systemic therapies.

If successful, this inflammatory skin disease pipeline test has the potential to add approximately $1.9 billion to our current estimated U.S.

In 2021, we initiated a 4,800 patient, prospective, multi-center clinical study to develop and validate this pipeline test, and have 50 committed centers, out of the initial target of 50.

Based upon our current development and validation timelines, we expect to launch this pipeline test by the end of 2025.

Although we are still in the early stages of development, we believe that, utilizing our existing sales channels, we could launch three to five new tests by the end of 2025, potentially adding approximately $1.7 billion to our current U.S.

Strategic Opportunities

A key pillar of our growth plan is to identify targeted, complementary strategic opportunities.

Our M&A philosophy includes entering markets where we expect our history of commercial success in the field of dermatology will translate well.

Further, we seek opportunities where we expect to leverage advanced technologies to bring innovative tests to clinicians and patients, where there is an opportunity to transform disease management in areas with unmet clinical need and provide actionable information to answer clinical questions, and where we have the potential to create a suite of tests for use by a single clinician.

We further expanded our commercially available dermatologic portfolio in May 2021, when we completed the acquisition of the Myriad myPath Laboratory, as mentioned above.

In December 2021, we extended our commercial portfolio of proprietary tests into the gastroenterology market through our acquisition of Cernostics, Inc.

(“Cernostics”) and the TissueCypher® platform.

The TissueCypher platform focuses on unlocking, in the case of the initial test for use in patients with BE, the importance of the location of the expression of proteins or lack thereof within the morphology of the disease (also known as spatialomics).

This “spatialomic” information is then interpreted using artificial intelligence approaches to predict the likelihood of progression to high-grade dysplasia and/or esophageal cancer in patients with non-dysplastic, indefinite or low-grade dysplasia BE.

We believe the addition of expertise in the spatialomics area positions us for continued growth and success in the diagnostics space, complementing our first-to-market dermatologic franchise and our proprietary test for uveal melanoma.

Our History of Transforming Disease Management

In addition to our dermatologic franchise and our initial entry into the gastroenterology market with our TissueCypher test for BE, we also market tests for patients diagnosed with uveal melanoma (“UM”), a rare cancer of the eye.

DecisionDx®-UM is a proprietary GEP test that provides risk-stratification information for patients with UM.

We believe DecisionDx-UM is the standard of care in the management of newly diagnosed UM in the majority of ocular oncology practices in the U.S., and it is estimated that nearly 8 in 10 patients diagnosed with UM in the U.S.

receive the DecisionDx-UM test as part of their diagnostic workup.

We launched DecisionDx-UM in January 2010.

Based on the substantial clinical evidence that we have developed, we have received Medicare coverage for DecisionDx-Melanoma and DecisionDx-UM, representing approximately 50% of the addressable patient population for both of these tests.

We have processed over 70,000 clinical samples since our inception.

Our revenue for the year ended December 31, 2020 was $62.6 million, compared to $51.9 million for 2019 and $22.8 million for 2018.

Information on our test report volumes by year is presented below:

Based on the substantial clinical evidence that we have developed, we received Medicare coverage for DecisionDx-UM, which represents approximately 50% of the addressable patient population as well as widespread commercial payor coverage.

Test Adoption

The number of test reports we generate is a key indicator that we use to assess our business.

A test report is generated when we receive a sample in our laboratory, and then the relevant test information is entered into our Laboratory Information Management System, the expression of the biomarkers is measured, then a proprietary algorithmic analysis of the combined biomarkers is performed to generate a report providing the results of that analysis, which is sent to the clinician who ordered the test.

The numbers of GEP test reports delivered by us and our net revenues during the past five years are presented in the table below:

Years Ended December 31,

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DecisionDx‑SCC (1)

DecisionDx DiffDx-Melanoma 73 — — —

Total Proprietary Dermatologic GEP Tests

3,510 485 — — —

2,662 73 — — —

Dermatologic Total

26,500 16,790 15,529 12,032 9,300

DecisionDx-UM

1,618 1,395 1,526 1,413 1,314

Total 18,185 17,055 13,445 10,614

Our Competitive Advantages

We are focused on providing actionable genomic information to physicians and their patients.

We believe our key competitive advantages are due in part to the following factors:

• Development of our products required our machine learning expertise, artificial intelligence and our proprietary algorithms, which are complex and difficult to replicate.

We develop our products using our machine-learning expertise and artificial intelligence to analyze clinical specimens with associated long-term outcomes data to identify genomic patterns in tumor biology that we believe will accurately predict the risk of metastasis and recurrence.

We then validate these genomic patterns, by refining and locking down algorithms to enable additional studies to validate the accuracy of our tests and subsequently document the clinically actionable changes made by physicians when they incorporate our test results into their treatment plan decisions.

• We have demonstrated the ability to provide clinically actionable information despite the complex genomics of skin cancer.

In the diagnosis and prognosis of cancer, there is significant current interest in DNA driver mutations as being a predictor of the behavior of cancers.

We believe that while the behavior of some cancers may be elucidated by DNA analysis and the response to certain targeted therapies, the majority of skin cancer behavior will best be understood at the gene expression level.

Specifically, while DNA mutations of a specific gene are important for tumor behavior, the impact of other genes, epigenetic changes to the gene and the non-tumor environment which cannot be discerned by the mutation that a gene carries are critical to the understanding of tumor behavior.

We believe that focusing on the expression of the gene or how the gene behaves will be more accurate than the mutation of the gene itself.

• Our growing repository of tumor samples and associated data, some including long-term outcomes, positions us well for improvement of current products and accelerated development of new ones.

The development and validation of accurate tests is a complex process that requires access to tumor tissue specimens and long-term outcomes data.

Such material and associated data is not readily available for skin cancer, which creates a barrier to rapid test development and validation.

However, over the last decade we have accrued a sample bank comprised of approximately 60,000 samples, including 6,000 well-annotated samples that we have used in our clinical studies to date.

We have been able to use this sample bank to expand the clinical use of our products, evaluate improvements in new and existing proprietary genomic algorithm approaches and develop new products.

In addition to these historical uses, we are exploring other opportunities involving the use of these data.

• We have generated, and will continue to generate, robust clinical validity and utility data supporting the use of our products.

For example, DecisionDx-Melanoma has been studied in more than 5,700 patient samples, including 28 published studies since 2015.

We also are making significant investments in further clinical studies to continue to support DecisionDx-Melanoma, DecisionDx-UM, DecisionDx-SCC and DecisionDx DiffDx-Melanoma.

This growing set of data is significant in educating physicians and patients about the value of our products and supporting reimbursement of our products by third-party payors.

• We have established relationships with physicians that allow us to optimize our interactions, increase adoption of our current products and identify areas of unmet clinical need to efficiently launch additional products.

We have published rigorous clinical data, which allows our sales and medical affairs representatives to have substantive, in depth dialogues with physicians.

We can also leverage these relationships to identify areas of significant unmet medical need and efficiently launch additional dermatologic products.

• We have experience in navigating the reimbursement landscape.

In the molecular diagnostics industry securing reimbursement for new tests is a long, complex and uncertain process.

We have developed significant expertise to assist in securing reimbursement for our products.

We intend to build upon our position as a leading provider of genomic information for dermatological cancers.

To realize this objective, we plan to:

• Expand adoption of our currently marketed products and educate physicians and their patients on the need for our products to make a more informed treatment plan decision.

We believe that cancer treatment plans will be most effective if decisions are personalized for each patient based on the biology of their specific tumor, instead of a one-size-fits-all approach.

We will continue to educate physicians and their patients on the diagnostic discordance that leads to over- and under-treatment.

• Continue to generate evidence supporting the clinical utility and validity of our products.

We have conducted extensive clinical utility and validity studies to support the adoption of, and reimbursement for, our products.

In order to maintain our competitive advantage and increase sales of our products, we will continue to generate additional clinical data to support the use of our products.

• Execute planned expansion of our commercial channel.

We plan to increase sales of our products by adding new physicians to our customer base as well as increasing orders by physicians already using our products.

We increased the number of sales and medical affairs representatives in the first quarter of 2019 with a second expansion occurring in December 2019.

Further, we expanded our sales organization headcount in the third quarter of 2020 in preparation for the commercial launch of our DecisionDx DiffDx-Melanoma test.

We are planning additional expansion in the first half of 2021.

We will continue to evaluate the needs of our customers and may make additional commercial investments to better support the educational needs of our customers with our currently marketed products as well as support the launch of additional products.

• Expand coverage and reimbursement for our products.

We plan to further increase dialogue with third-party payors to highlight our clinical utility and patient outcomes data.

We believe these data will validate the benefit of our products for patients and will persuade more third-party payors to provide coverage and reimbursement.

Additionally, we will continue to emphasize our ability to reduce overall cost to the healthcare system by appropriately classifying high-risk patients and removing the need for unnecessary invasive products and procedures for low-risk patients.

• Utilize our development expertise and commercial channel insight to provide additional solutions.

We are continuing to develop products that address the challenges facing physicians.

We have initiated work on a number of pipeline tests which branch out upstream, downstream and parallel to our currently marketed tests.

Although we are still in the early stages of development, we believe we could launch three to five new tests by the end of 2025, utilizing our existing sales channels, potentially adding approximately $3.6 billion to our current U.S.

total addressable market, or TAM.

We expect to provide additional details on these pipeline products before the end of 2021.

Dermatologic Cancer Market Overview

Grand Total 28,118 18,185 17,055 13,445 10,614

Net Revenues (in thousands) $ 94,085 $ 62,649 $ 51,865 $ 22,786 $ 13,754

(1) We commercially launched DecisionDx-SCC on August 31, 2020.

(2) Includes DecisionDx DiffDx-Melanoma, which we commercially launched on November 2, 2020, and myPath Melanoma, which we began offering following our acquisition of Myriad myPath Laboratory on May 28, 2021.

We offer both our myPath Melanoma and DecisionDx DiffDx-Melanoma under our CDO.

Dermatologic Franchise Overview

Skin cancer is the uncontrolled growth of abnormal skin cells.

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We do not, at this time, have an active focus on basal cell carcinomas.

Pre-cancers include suspicious pigmented lesions, which are unusual-looking lesions that may be melanoma, and actinic keratosis, also known as a solar keratosis.

TAM = Total addressable market based on estimated patient population assuming average reimbursement rate among all payors.

Pre-cancers include suspicious pigmented lesions, which are unusual-looking lesions that may be melanoma, and actinic keratosis.

The estimated TAM for our dermatologic commercial products, which is based on estimated patient population assuming average reimbursement rate among all payors, is set forth below:

incidence for Stage I, II or III melanoma estimated at 130,000;

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incidence for suspicious pigmented lesion biopsies estimated at 2,000,000 with addressable market limited to the 15% with an indeterminant biopsy.

Clinicians who ordered DecisionDx-Melanoma in last twelve months (as of 12/31/2020)

Pathologists who provided clinical specimens for DecisionDx-Melanoma in last twelve months (as of 12/31/2020)

MCR = Medicare.

MCRA = Medicare Advantage;

current customer estimates based on last twelve months.

Cutaneous Melanoma

Melanoma tumors originate in the pigment-producing melanocytes in the basal layer of the epidermis.

Approximately half of all melanomas are diagnosed prior to expanding into the dermis and are classified as in situ or non-invasive melanomas and DecisionDx-Melanoma is not used in this population.

Worldwide statistics suggest that there were nearly 300,000 new cases of melanoma diagnosed worldwide with the U.S.

Surveillance, Epidemiology, and End Results, or SEER, database estimating that approximately 96,000 invasive cutaneous melanomas are diagnosed in the United States annually.

However, multiple publications show that diagnosis of melanoma is underreported by between 30% and 72%.

Using the mean of the underreporting of these four studies, we estimate the annual incidence to be 130,000, representing an estimated U.S.

Published statistics suggest that there were nearly 300,000 new cases of melanoma diagnosed worldwide, with the U.S.

Surveillance, Epidemiology, and End Results (“SEER”) database estimating that approximately 96,000 invasive cutaneous melanomas are diagnosed in the United States annually, however, multiple publications report that melanoma diagnoses are underreported by between 30% and 72% annually in the United States.

Using the mean of the underreporting of these four studies, we estimate the annual incidence of cutaneous melanoma to be 130,000, representing an estimated U.S.

TAM of $540 million.

According to these publications, underreporting reflects the fact that the majority of diagnoses are made by community-based dermatologists and dermatopathologists rather than institutional-based specialists who more typically have tumor registry support.

According to these publications, the underreporting of melanoma diagnoses reflects the fact that the majority of diagnoses are made by community-based dermatologists and dermatopathologists rather than institutional-based specialists who more typically have tumor registry support.

Based on currently available data, we estimate the targetable clinician base is between 11,000 and 15,000.

Additionally, the incidence of melanoma has steadily increased annually over the last several decades, with an estimated growth in the United States of more than 50% during the past ten years.

After a diagnosis of invasive cutaneous melanoma, healthcare providers have traditionally used clinical and pathology factors from the initial biopsy to estimate the patient’s risk of metastasis.

This estimation process, or staging, is used to determine nearly all treatment decisions.

Invasive melanoma is staged as Stage I through Stage IV.

Tumors characterized as Stage I have invaded the dermis but are thin, with less than or equal to 2.0 mm invasion into the dermis if not ulcerated or less than or equal to 1.0 mm invasion into the dermis if ulcerated.

Stage I tumors have the lowest population risk of metastasis and death from melanoma.

After a diagnosis of invasive cutaneous melanoma, healthcare providers have traditionally relied solely on clinical and pathology factors from the initial biopsy to estimate the patient’s risk of metastasis to then determine a risk-based treatment plan.

This estimation or “staging” process is then used to determine nearly all treatment decisions.

Invasive melanoma tumors are staged as Stage I through Stage IV.

Stage I tumors have invaded the dermis but are thin, with less than or equal to 2.0 mm invasion into the dermis if not ulcerated, or less than or equal to 1.0 mm invasion into the dermis if ulcerated.

Stage I tumors have the lowest population-based risk of metastasis and death from melanoma.

Stage II tumors, though localized, are thicker than 2.0 mm if not ulcerated or greater than 1.0 mm if ulcerated.

Stage III tumors have evidence of regional metastasis, such as palpable metastasis at the regional lymph node basin, in-transit or satellite disease, or melanoma cell(s) in the SLN but without evidence of distant metastatic spread.

Stage IV tumors are those in which distant metastasis, such as to the lung or brain, has been detected.

All patients who are diagnosed with an invasive cutaneous melanoma will undergo a wide local excision procedure with the surgical margins determined by the depth of the tumor.

The invasive SLNB surgery is recommended to be considered for patients with melanomas greater than or equal to 0.8 mm thick or thinner melanomas in the presence of an adverse pathologic feature such as the presence of ulceration, high mitotic rate, and transected base.

It is believed that tumors with these anatomic based features have a likelihood of an SLN-positive biopsy result 5% or more of the time.

Invasive SLNB surgery is generally recommended to be considered for patients with melanomas greater than or equal to 0.8 mm thick or for thinner melanomas accompanied by an adverse pathologic feature such as ulceration, high mitotic rate or transected base.

Tumors with these anatomic based features are believed to result in an SLN-positive biopsy result 5% or more of the time.

If the SLNB surgery is performed, then the wide local excision is performed at that time.

As noted in the prior paragraph, an SLN-positive biopsy result, meaning that at least one melanoma cell was seen in the SLN tissue, leads to re-staging the patient as Stage III.

Guideline committees do not recommend an SLNB if the likelihood of a positive SLN result is <5%.

They recommend discussion and considering an SLNB if the likelihood of a positive SLN falls between 5% and 10% and recommend discussing and offering an SLNB if the likelihood is >10%.

Guideline committees have selected the 5% threshold due to a reported regional false negative rate of the SLNB surgery at 5% (meaning that 5% of the time, or more, the guideline committees expect a patient with an SLN-negative biopsy result will subsequently develop lymph node metastasis).

As noted above, an SLN-positive biopsy result, meaning that at least one melanoma cell was seen in the SLN tissue, leads to re-staging the patient as Stage III.

Guideline committees do not recommend SLNB surgery if the likelihood of a positive SLN result is less than 5%.

They recommend discussing and considering SLNB surgery if the likelihood of a

positive SLN result falls between 5% and 10%, and recommend discussing and offering SLNB surgery if the likelihood exceeds 10%.

Guideline committees have generally converged on the 5% threshold due to a reported regional false negative rate of the SLNB surgery of 5% (meaning that 5% of the time, or more, the guideline committees expect a patient with an SLN-negative biopsy result will subsequently develop SLN metastasis).

However, the published literature documents a median regional false negative rate of 18% and an 11% surgical complication rate.

Cutaneous Squamous Cell Carcinoma

Cutaneous squamous cell carcinoma, the second most common form of skin cancer, is an uncontrolled growth of abnormal cells arising from the squamous cells in the epidermis, the skin’s outermost layer.

Approximately one million patients are diagnosed with SCC each year in the United States.

Worldwide data on SCC is inconsistently reported but the incidence outside the United States is estimated to be greater than two million diagnoses annually.

Historically, SCC has been classified as one of the “non-melanoma skin cancers” with a clinical focus on curative primary surgery.

However, high risk SCC is now recognized as a significant cause of morbidity and mortality and due to the rate of increased incidence, more patients are now estimated to die annually from SCC in the United States (approximately 15,000 patients) than from cutaneous melanoma.

Similar to melanoma, treatment plan decisions are based upon a patient’s estimated risk of recurrence or metastasis.

However, unlike melanoma, the estimates are based upon small patient cohorts and our research shows that most clinicians rely upon individual clinical and pathologic features rather than a staging “group” for guiding treatment plan decisions.

Our DecisionDx-SCC test, which we launched on August 31, 2020, is for use in the estimated 200,000 patients who present with one or more high risk features, representing an estimated U.S.

TAM of $820 million.

Suspicious Pigmented Lesions

Suspicious pigmented lesions are unusual-looking lesions that may be melanoma.

There are approximately two million skin biopsies performed specifically for the diagnosis of melanoma in the United States.

Approximately 15% of these biopsies are classified as indeterminate, in which case a pathologist cannot make a definitive diagnosis as to whether the biopsy is benign or malignant.

We estimate the U.S.

TAM at $600 million for our DecisionDx DiffDx-Melanoma test, which we launched on November 2, 2020.

Uveal Melanoma Market Overview

The incidence of uveal melanoma has remained relatively constant over time with approximately 1,600 to 1,700 patients diagnosed per year in the United States, representing an estimated U.S.

TAM of $7.0 million.

Uveal melanomas arise from the three tissues comprising the uveal tract and vary by location with approximately 90% occurring in choroid, 5% in the ciliary body and 5% in the iris.

Uveal melanoma may also be referred to as ocular melanoma.

Significant Limitations of Current Clinical and Pathology Staging Systems for Skin Cancer

The skin cancer disease market has significant unmet clinical needs, as clinical and pathology staging systems have traditionally applied a population-wide approach to estimate an individual patient’s risk of metastasis and have not incorporated the genomics of a patient’s tumor biology.

This is unlike the diagnostic process applied to other solid tumors, such as breast and prostate cancer, where the broader use of genomics to understand tumor biology has led to individualized patient treatment

Not incorporating tumor biology leads to a discordance between the estimated and actual risk of metastasis, which results in over- and under-treatment as well as increased healthcare costs.

Cutaneous Melanoma

The clinical and pathology staging system for invasive cutaneous melanoma is based upon the anatomic findings of the melanoma;

The “regional false negative rate” measures the rate that metastasis to the regional lymph node in patients with a negative SLNB surgical result.

The traditional clinical and pathology staging system for invasive cutaneous melanoma is based upon the anatomic findings of the melanoma;

that is what the pathologist can see under the microscope from an initial tumor biopsy and what the physician can feel or see during a clinical exam or upon imaging.

While this staging system provides population-based risk of metastasis estimates it does not evaluate nor incorporate the biology of the patient’s primary tumor.

Importantly, while it was formerly believed that the SLNB surgery improved melanoma specific survival, the landmark, prospective, randomized multi-center study conducted by the National Cancer Institute, the MSLT-I study, showed that death from melanoma was the same in patients who were randomized to the SLNB surgery or observation, indicating that the SLNB surgery is prognostic, and not therapeutic, as it relates to the risk of death from melanoma.

While this staging system provides population-based risk of metastasis estimates based on clinical and pathology factors, it does not evaluate nor incorporate the biology of the patient’s primary tissue biology.

Importantly, while it was formerly believed that SLNB surgery improved melanoma specific survival, the NCI conducted a landmark, prospective, randomized multi-center study (“the MSLT-I study”) which showed that the death rate from melanoma was the same in patients who were randomized to the SLNB surgery and those who merely underwent observation, indicating that SLNB surgery is prognostic, and not therapeutic, as it relates to the risk of death from melanoma.

On average, 12% of patients undergoing the SLNB surgery will have an SLN-positive biopsy result and 88% will not.

The invasive SLNB surgery carries significant healthcare burden.

For instance, the overall complication rate of SLNB was shown to be 11.3% in a systematic review of 21 articles representing 9,047 patients.

Invasive SLNB surgery carries significant healthcare burden.

For example, the overall complication rate of SLNB surgery was shown to be 11.3% in a systematic review of 21 articles representing 9,047 patients.

A separate review reported that the regional false negative rate of the SLNB surgery ranged from 5% to 21%, with a median rate of 18%.

Regional false negative rate is defined as the rate that metastasis to the regional lymph node in patients with a negative SLNB surgical result.

Both the complication and false negative rates are above the recommended 5% and 10% thresholds proposed by guideline committees.

Further, the SLNB surgery requires the use of general anesthesia and nearly half of the surgeries are performed in an in-patient setting, leading to an average reimbursed cost of $20,000 to $24,000.

Finally, the 88% SLN-negative rate carries significant patient and healthcare system implications.

This means that 88% of the time, patients undergoing an SLNB will have no change in their treatment plan and no change in their staging but are still exposed to the complications from the surgery, including general anesthesia risks, cost and a median false negative rate of 18%.

Thus, while it is true that patients who are SLN positive, or re-staged to Stage III, have a higher population-based rate of metastasis and death from melanoma, the SLNB surgery does not improve melanoma-specific survival, carries risk of complications, a high false negative rate and significant costs.

In addition to the significant clinical issues involved in only using the traditional clinical and pathology factors to determine SLNB eligibility, a discordance exists between an individual’s stage and their risk of metastasis or death from melanoma.

Based on data from SEER and the American Joint Committee on Cancer, or AJCC, of the patients diagnosed with Stage I, II or III cutaneous melanoma, 80% of melanomas are classified as the lowest risk, Stage I, and 12% are classified as next lowest risk, Stage II.

However, these data show that patients with melanomas that are initially diagnosed as Stage I or II represent 60% of all deaths in patients initially diagnosed as Stage I, II or III.

Furthermore, while patients with Stage III melanoma are at a higher population risk of metastasis and death from melanoma, the five-year melanoma-specific survival rate for these patients is 77%.

The limitations of the current staging system not only result in unnecessary SLNB surgeries for certain low-risk patients, but we believe also leads to overtreatment with adjuvant immune-oncology and targeted therapies for certain patients with Stage III melanoma.

In summary, the risk of metastasis determines the treatment plans in newly diagnosed patients, including the recommendation for the SLNB surgery, decisions around the initiation of advanced imaging for active surveillance, frequency and specialty for clinical follow-up, initiation of adjuvant therapy and discussion of clinical trial enrollment opportunities.

The top portion of the graphic below summarizes decision points that DecisionDx-Melanoma impact.

The lower portion summarizes the limitations of solely relying upon risk of metastasis based upon clinical and pathology features alone as it relates to SLNB surgery and the subsequent treatment plan decisions.

Both the complication and false negative rates are above the recommended 5% and 10% positivity rates proposed by guideline committees as thresholds at which physicians should either consider (5%) or offer (10%) the procedure to their patients.

Further, the SLNB surgery requires the use of general anesthesia, and nearly half of these surgeries are performed in an in-patient setting, leading to an average reimbursed cost of $20,000 to $24,000.

Finally, the 88% SLN-negative rate in these surgeries carries significant patient and healthcare system implications because 88% of patients undergoing an SLNB surgery will have no change in their treatment plan or their staging, but are still exposed to the complications from the surgery, including general anesthesia risks, high medical costs and a median false negative rate of 18%.

Thus, while it is true that patients who are SLN positive, or re-staged to Stage III, have a higher population-based rate of metastasis and death from melanoma, invasive SLNB surgery does not improve melanoma-specific survival, carries risk of complications, a high false negative rate and significant costs.

In addition to the significant clinical issues involved in only using traditional clinical and pathology factors to evaluate the appropriateness of SLNB surgery, there is a discord between an individual’s “stage” and their actual risk of metastasis or death from melanoma.

Based on data from SEER and the American Joint Committee on Cancer (“AJCC”), out of the cutaneous melanoma tumors diagnosed as Stage I, II or III, 80% are classified as Stage I (the lowest risk) and 12% are classified as Stage II (the next lowest risk).

However, these data also show that melanomas initially diagnosed as Stage I or II under the traditional staging framework account for 60% of all deaths in patients receiving Stage I, II or III diagnoses.

Furthermore, while patients with Stage III melanoma are at a higher population risk of metastasis and death from melanoma than Stage I or II, the five-year melanoma-specific survival rate for Stage II patients is 77%.

We believe that the limitations of the current staging system not only result in unnecessary SLNB surgeries for certain low-risk patients, but also lead to overtreatment with adjuvant immune-oncology and targeted therapies for certain patients with Stage III melanoma.

In summary, risk-stratification, or the risk of metastasis, determines the treatment plans in newly diagnosed patients, including the recommendation for the SLNB surgery, decisions around the initiation of advanced imaging for active surveillance, frequency and specialty for clinical follow-up, initiation of adjuvant therapy and discussion of clinical trial enrollment opportunities.

The top portion of the graphic below summarizes the two decision points that DecisionDx-Melanoma impacts.

The lower portion summarizes the limitations of relying on clinical and pathology factors alone to determine risk of metastasis that informs SLNB surgery and subsequent treatment plan decisions.

AJCC v7 J Clin Oncol 2009;

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Cutaneous Squamous Cell Carcinoma

Cutaneous SCC the second most common form of skin cancer, is an uncontrolled growth of abnormal cells arising from the squamous cells in the epidermis, the skin’s outermost layer.

Approximately one million patients are diagnosed with SCC annually in the United States.

While worldwide data on SCC diagnoses are inconsistently reported, the incidence outside the United States is estimated to be greater than two million diagnoses annually.

Historically, SCC has been classified as one of the “non-melanoma skin cancers” with a clinical focus on curative primary surgery.

However, high risk SCC is now recognized as a significant cause of morbidity and mortality, and due to the rate of increased incidence, more patients are now estimated to die annually from SCC in the United States (approximately 15,000 patients) than from cutaneous melanoma.

Similar to melanoma, treatment plan decisions are based solely upon clinical and pathology factors from the initial biopsy to estimate a patient’s risk of recurrence or metastasis.

However, unlike melanoma, which uses population-based risk analysis of these factors, the estimates are based upon small patient cohorts, and our research shows that most clinicians rely upon individual clinical and pathologic features rather than a staging “group” for guiding treatment plan decisions.

Our DecisionDx-SCC test, which we launched on August 31, 2020, is intended for guiding the

treatment of the estimated 20% of SCC patients, or 200,000 annually, who present with one or more high risk features, representing an estimated U.S.

TAM of $820 million.

Identifying high risk SCC presents challenges for physicians.

Unlike in cutaneous melanoma, where longitudinal databases were developed in an attempt to align population-based risk of metastasis with clinical and pathology factors, the same level of effort has not been given to SCC.

There have been as many as three SCC staging systems in the United States, each with widely divergent classifications for high- and low-risk patients.

For example, a 2014 study compared the AJCC version 7 and National Comprehensive Cancer Network, or NCCN, systems to assess concordance between the AJCC and NCCN systems.

Unlike in cutaneous melanoma, where longitudinal databases were developed in an attempt to align population-based risk of metastasis with particular clinical and pathology factors, the same level of organization has not been given to SCC.

To date, there has been a lack of reliance on the two primary staging systems in the United States, the AJCC version 8 and the Brigham and Women’s Hospital (“BWH”) system, which are marked by widely divergent classifications for its two risk categories (high and low).

Further, the National Comprehensive Cancer Network (“NCCN”) staging method organizes clinical and pathology features into three risk categories (low, high and very high) based on their association with recurrence risk.

A 2014 study compared the then-current AJCC version 7 and NCCN systems to assess concordance between the two.

The AJCC system classified 82% as low risk while the NCCN system classified 13% as low risk.

As such, this level of discordance results in the risk assessment staging systems minimally impacting treatment plans, with patients frequently being over- and under-treated.

Today, in addition to NCCN high-risk criteria, there are two principal staging systems for SCC:

the AJCC version 8 (which is limited to head and neck SCC) and the Brigham Women’s Hospital, or BWH, version.

All three systems rely upon a combination of clinical or pathology factors to stage or classify risk of metastasis.

In general, NCCN identifies the majority of patients who do go on to metastasize, but it suffers from the lowest PPV of the three systems.

Because of the level of discordance among the risk assessment staging systems for SCC, and the lack of available databases, these staging systems end up minimally impacting treatment plans, with patients frequently being over- and under-treated, because of hesitancy by physicians to rely on them.

The two principal staging systems for SCC, AJCC (which is limited to head and neck SCC) and BWH, both classify patients according to the tumor (T), node (N) and metastasis (M) staging method and rely upon a combination of clinical or pathology factors to stage or classify risk of metastasis.

The NCCN’s staging method identifies the majority of patients who do go on to metastasize, but its system suffers from the lowest positive predictive value (“PPV”) compared to the AJCC and BWH staging methods.

Our initial clinical validation study of 321 patients was focused on patients with one or more high-risk features.

Within this study, NCCN demonstrated a sensitivity of 96% while PPV was 7% and NPV was 90.5%.

The low PPV means that 93 out of 100 NCCN high risk SCC’s did not actually metastasize.

AJCC and BWH demonstrated a sensitivity of 38.5% and 25%, respectively, PPV of 33% and 35%,

respectively and NPV of 88% and 86%, respectively.

If one relies just upon NCCN, the low PPV means that developing an adjuvant treatment plan that includes radiation, or chemotherapy or complete lymph surgical dissection, or a combination of these, for a high-risk patient may be appropriate for the one out of fourteen high-risk patients who will metastasize but not for the remaining thirteen patients who would not have metastasized.

For AJCC and BWH, the PPV does improve but it also means that two out of three patients would be recommended for an adjuvant treatment plan who will not benefit.

These accuracy metrics have created significant discordance in the approach to managing patients with high-risk features, from one end of the spectrum being intervention for all high-risk patients to “watch and wait” for all high-risk patients.

Within this study cohort, using the risk criteria established within the NCCN guidelines demonstrated a sensitivity of 96% while PPV was 7% and negative predictive value (“NPV”) was 90.5%.

The low PPV means that 93 out of 100 SCC instances labeled as high risk by the NCCN criteria did not actually metastasize.

The AJCC and BWH guidelines demonstrated a sensitivity of 38.5% and 25%, respectively, PPV of 33% and 35%, respectively and NPV of 88% and 86%, respectively.

A physician that relies solely upon NCCN criteria, given the low PPV, may end up developing an adjuvant treatment plan that includes radiation, or chemotherapy or complete lymph surgical dissection, or a combination of these, for a “high-risk” patient that is ultimately appropriate for only one out of fourteen high-risk patients who will metastasize, but not for the remaining thirteen patients who would not have metastasized.

The AJCC and BWH staging systems do demonstrate stronger PPV but would still recommend that two out of three patients undergo an adjuvant treatment plan who will not benefit.

These accuracy metrics have created significant discordance in the approach to managing patients with high-risk features, from one end of the spectrum advocating surgical intervention for all high-risk patients to another extreme calling for a “watch and wait” approach for all high-risk patients.

The end result is an unacceptable clinical discordance in the approach to treatment plans and significant over- and under-treatment for a diagnosis that leads to the most skin cancer deaths in the United States.

Suspicious Pigmented Lesions

DecisionDx-SCC was developed to improve upon the PPV of the current staging systems for SCC.

The test has been shown to be an accurate and independent predictor of recurrence risk in a cohort of 420 cutaneous SCC tumors and demonstrated a PPV of greater than 50% in that cohort.

We believe that integrating DecisionDx-SCC can drive risk-appropriate treatment management decisions for physicians and patients.

Difficult-to-Diagnose Melanocytic Lesions

Difficult-to-diagnose melanocytic lesions are pigmented lesions are unusual-looking lesions that may be melanoma.

There are approximately two million skin biopsies performed annually specifically to rule in or rule out a diagnosis of melanoma in the United States.

Approximately 15% of these biopsies are classified as indeterminate, in which case a pathologist cannot make a definitive diagnosis as to whether the biopsy is benign or malignant.

A pigmented lesion biopsy that is difficult to diagnose may lead to an indeterminate diagnosis, in which case the treating physician generally leans towards making a conservative decision and assumes that the lesion is melanoma.

A definitive diagnosis of invasive cutaneous melanoma results in a treatment plan that involves wider margins for the definitive wide local excision surgery, consideration of the SLNB surgery and post-diagnosis management plans, including frequent, high intensity surveillance using advanced imaging, frequent clinical visits and encouragement to enroll in clinical studies.

If the indeterminate lesion was benign, then the recommendation in the majority of cases would be no additional intervention.

If the indeterminate lesion was benign, the recommendation in the majority of cases would be no additional intervention.

Thus, the tendency of physicians to treat an indeterminate diagnosis as melanoma leads to significant over-treatment decisions, complications and increased healthcare costs.

Uveal Melanoma

Approximately 97% of patients with uveal melanoma have no evidence of metastatic disease at the time of diagnosis and the success rate for definitive treatment of the primary tumor surpasses 90%.

myPath Melanoma and DecisionDx DiffDx-Melanoma are independent GEP tests that together comprise Castle’s CDO of molecular testing solutions for difficult-to-diagnose melanocytic lesions.

Our CDO has robust diagnostic resolution for melanocytic lesions with unknown malignant potential, with validation studies demonstrating accurate diagnosis of benign and malignant lesions for 97% of cases tested.

We estimate the U.S.

TAM at $600 million for our CDO, comprised of myPath Melanoma and DecisionDx DiffDx-Melanoma.

Uveal Melanoma Overview

The incidence of uveal melanoma has remained relatively constant over time with approximately 2,000 patients diagnosed annually in the United States, representing an estimated U.S.

TAM of $8.0 million.

Uveal melanomas arise from the three tissues comprising the uveal tract and vary by location with approximately 90% occurring in the choroid, 5% in the ciliary body and 5% in the iris.

Uveal melanoma may also be referred to as ocular melanoma.

Approximately 97% of patients with uveal melanoma have no evidence of metastatic disease at the time of diagnosis and the success rate for definitive treatment of the primary tumor is over 90%.

However, within three years, approximately 30% of all patients will experience metastases.

Prior to commercial availability of DecisionDx-UM, other clinical staging and molecular diagnostic tests existed for uveal melanoma, but the lack of prospective studies, coupled with low accuracy, resulted in these tests primarily being used for research purposes rather than for clinical management of patients in the United States.

Prior to commercial availability of DecisionDx-UM, other clinical staging and molecular diagnostic tests for uveal melanoma had been commercialized, but due to the lack of prospective studies, coupled with their low accuracy, tests were primarily used for research purposes rather than for clinical management of patients in the United States.

As a result, nearly all U.S.

centers grouped patients into a single, high-risk treatment plan that included frequent, high intensity surveillance using advanced imaging, frequent clinical visits and encouragement to enroll in clinical studies.

We use the gene expression profile of an individual patient’s tumor biology to inform specific prognosis of metastasis or recurrence and aid the decision-making process of the treating physician and their patient to help optimize health outcomes and reduce healthcare costs.

Due to the biological complexity of skin cancer, developing accurate products takes scientific diligence, stringent clinical protocols, machine learning expertise, proprietary algorithms and significant investments of time and capital.

In addition, the underlying tissue samples and associated outcomes data required to develop and validate these products are difficult to obtain.

Once successfully developed and validated, commercial success requires the generation of ongoing evidence such as clinical use documentation to support appropriate physician adoption, reimbursement success and guideline inclusion.

We currently market three proprietary dermatologic products:

DecisionDx-Melanoma, DecisionDx-SCC and DecisionDx DiffDx-Melanoma.

We also market DecisionDx-UM, a proprietary GEP test designed to identify the risk of metastasis in patients diagnosed with uveal melanoma.

Multiple studies for our products have been published since completion of the initial clinical validation studies and have confirmed the accuracy of our products.

Also, multiple clinical impact studies have demonstrated a significant impact on physician decisions to alter their treatment plan when the results of our test are considered in concert with the traditional clinical and pathology factors.

DecisionDx-Melanoma and DecisionDx-UM are currently reimbursed by Medicare under positive coverage policies.

In addition, we have received widespread positive private payor coverage and positive guideline inclusion for DecisionDx-UM, our first melanoma test.

Since our inception, we have processed more than 70,000 clinical patient samples.

DecisionDx-UM is our proprietary GEP test that helps healthcare providers predict the risk of metastasis in patients with uveal melanoma.

The test has been shown to have higher prognostic accuracy than chromosomal testing, mutation analysis or clinical features of the tumor, and is recommended by the NCCN for prognosis of uveal melanoma tumors.

Barrett’s Esophagus Overview

There are approximately 4 million patients in the U.S.

currently diagnosed with BE and approximately 400,000 endoscopies are performed annually on BE patients—either for initial diagnosis or repeat endoscopy for assessing possible progression of BE (active surveillance).

We estimate the U.S.

TAM at $1 billion for our TissueCypher Barrett’s Esophagus Assay test, which we acquired through our acquisition of Cernostics on December 3, 2021.

384,000 upper GI endoscopies/year with confirmed dx of BE (ND, IND, LGD) x $2,513 = U.S.

only TAM of ~$1 billion

The TissueCypher Barrett’s Esophagus Assay is a protein-based MAAA test that was designed and developed to address these limitations in the current standard of care for risk stratification of patients with BE.

TissueCypher guides clinical management of BE by:

Identifying patients who are at high risk of developing EAC but are currently missed due to reliance on traditional histopathology and clinical variables.

This should enable early therapeutic intervention to prevent EAC, or increase surveillance for early detection of EAC at a treatable stage;

Identifying patients who are at low risk of developing EAC, enabling extension of surveillance intervals and reduction in unnecessary procedures.

Our Testing Solutions

We use MAAA to characterize an individual patient’s tissue biology to inform specific prognosis of tumor development, death due to disease, metastasis or recurrence and aid the decision-making process of the treating physician and their patient to help optimize health outcomes and reduce healthcare costs.

Due to the biological complexity of diseases, developing accurate products takes scientific diligence, stringent clinical protocols, machine learning expertise, proprietary algorithms and significant investments of time and capital.

In addition, the underlying tissue samples and associated clinical outcomes data required to develop and validate these products are difficult to obtain.

Once successfully developed and validated, commercial success requires generating ongoing evidence, such as clinical use documentation, to support appropriate physician adoption, reimbursement success and guideline inclusion.

We currently market five proprietary MAAA tests for use in the dermatologic, ocular and gastroenterology fields:

DecisionDx-Melanoma, DecisionDx-SCC, our CDO, DecisionDx-UM and TissueCypher Barrett’s Esophagus Assay.

The accuracy of each product in our portfolio is supported by multiple studies published in peer-reviewed journals since completion of the initial clinical validation studies.

Also, multiple clinical impact studies have demonstrated a significant impact on physician decisions to alter their treatment plan when the results of our tests are considered in concert with the traditional clinical and pathology factors.

DecisionDx-Melanoma, DecisionDx-UM, TissueCypher and myPath Melanoma are currently reimbursed by Medicare.

In addition, we have received widespread positive private payor coverage and positive guideline inclusion for DecisionDx-UM, our first melanoma test, launched in January 2010.

Since our inception, we have processed more than 100,000 clinical patient samples across our product portfolio.

Our products are designed to provide the following benefits:

• Clinically Actionable Information for Physicians.

We provide physicians and their patients with a report that contains clinically actionable information to inform the treatment plan for each individual patient.

Our commercial tests provide physicians and their patients with reports that contain clinically actionable information to inform the treatment plan for each individual patient.

Our reports are updated as new clinical data is generated that may enable additional clinical decisions to be made.

Based on four studies that we have conducted on clinical actionability of our DecisionDx-Melanoma test, utilizing the results of our test reports, physicians changed a patient’s treatment in approximately 50% of cases, indicating physician confidence in the evidence underlying our reports.

Studies show that clinicians use our test results to make treatment plan changes.

For example, four studies were initially conducted to evaluate the clinical actionability of our DecisionDx-Melanoma test, physicians utilizing the results of our test reports changed a patient’s treatment in approximately 50% of cases, indicating physician confidence in the evidence underlying our reports.

• Informed Patient Care.

The clinical evidence shows that our products are accurate predictors of a patient’s specific risk of metastasis or recurrence of their cancer based upon the gene expression profile of their tumor, independent of available clinical and pathology factors.

Physicians use this information to identify patients who are likely to benefit from an escalation of care as well as those who may avoid unnecessary treatments, such as medical and surgical interventions.

The clinical evidence shows that our products are accurate predictors of a patient’s specific risk of progression to cancer, or metastasis or recurrence of their cancer based upon the gene expression profile of an ocular or dermatologic tumor or, in the case of our BE test, the spatial assessment of biomarkers, independent of available clinical and pathology factors.

Physicians use this information to identify patients who are likely to benefit from an escalation of care as well as those who may avoid unnecessary treatments, such as medical, surgical and radiation interventions.

• Reduced Healthcare Costs for Payors.

We believe our products have the potential to reduce overall healthcare costs by enabling physicians and their patients to avoid unnecessary medical and surgical interventions, including the SLNB surgery.

We believe our products have the potential to reduce overall healthcare costs by enabling physicians and their patients to avoid unnecessary medical and surgical interventions.

As an example, without DecisionDx-Melanoma, 88% of patients who receive the SLNB surgery, which has an average in-patient reimbursed cost of $20,000 to $24,000, are found to be SLN-negative and remain classified as low risk.

If all patients eligible for the SLNB surgery were tested and their test results were acted upon, we estimate the potential savings to the U.S.

If all patients eligible for the SLNB surgery were tested with DecisionDx-Melanoma and their test results were acted upon, we estimate the potential savings to the U.S.

healthcare system could be up to $250 million, after considering the cost of DecisionDx-Melanoma.

We currently market three proprietary dermatologic products, DecisionDx-Melanoma, DecisionDx-SCC and DecisionDx DiffDx-Melanoma.

We also market DecisionDx-UM, a proprietary GEP test designed to identify the risk of metastasis in patients diagnosed with uveal melanoma.

Together, we believe these four commercial products support an estimated total addressable market of $2.0 billion in the United States.

We have received positive local coverage determinations, or LCDs, providing Medicare coverage for DecisionDx-Melanoma and DecisionDx-UM.

These LCDs facilitate reimbursement from Medicare, which represents approximately 50% of the addressable patient population.

We also have third-party payor coverage for over 100 million lives for DecisionDx-UM and over 21 million lives for DecisionDx-Melanoma.

DecisionDx-Melanoma

We developed and market DecisionDx-Melanoma to healthcare providers for use with patients diagnosed with invasive cutaneous melanoma.

Without the use of DecisionDx-Melanoma, these patients are classified in low- and high-risk categories based on population-wide clinical and pathology features, which impact a physician’s treatment plan recommendations, including whether or not to offer the invasive SLNB surgery, frequency and use of clinical imaging and follow-up frequency, adjuvant therapy and clinical trial enrollment.

Unfortunately, these clinical and pathology features do not incorporate the genomics of an individual patient’s tumor biology, which often leads to a misclassification of a patient’s risk of metastasis or recurrence.

To address this need for a more accurate predictor of metastatic risk, we discovered, developed and completed validation for DecisionDx-Melanoma.

This product is designed to help physicians identify high-risk patients with Stage I and II melanomas based on biological information, or expression, from 31 genes within their tumor tissue.

DecisionDx-Melanoma does not change a physician’s standard diagnostic workflow for suspicious pigmented lesions, which includes performing the initial biopsy procedure and placing the biopsied tissue in formalin.

The dermatopathologist then embeds the specimen in a paraffin block, cuts sections that are stained for viewing under a microscope and makes a diagnosis of invasive melanoma.

We then extract and purify RNA from sections of the remaining specimen to run our test.

We report test results in two classes and two subclasses.

Class 1A represents the lowest risk group, Class 1B/2A represents an increased risk group and Class 2B represents the highest risk group.

In March 2021, we announced that DecisionDx-Melanoma now utilizes an Integrated Test Result, or ITR, designed to provide more precise risk prediction in patients with Stage I, II or III melanoma.

The ITR is calculated by an independently validated algorithm (i31-GEP), designed to provide a more precise and personalized prediction of SLN positivity in order to guide discussions and recommendations, within current risk-based guidelines, for the SLNB surgical procedure.

i31-GEP is an artificial intelligence-based neural network algorithm (independently validated in a cohort of 1,674 prospective, consecutively tested patients with T1-T4 cutaneous melanoma) that integrates the DecisionDx-Melanoma test result with the patient’s traditional clinicopathologic features.

DecisionDx-Melanoma is our proprietary risk stratification GEP test developed to identify the risk of metastasis for patients diagnosed with invasive cutaneous melanoma.

As of February 28, 2022, we have received orders from more than 9,300 clinicians for an aggregate of more than 90,000 tests.

Under the traditional staging methods, melanomas are classified into low or and high-risk categories based on population-wide clinical and pathology features, and risk of recurrence guides a physician’s treatment plan recommendations about whether or not to offer invasive SLNB surgery, frequency and use of clinical imaging and follow-up, and/or adjuvant therapy consideration.

Limitations of the current AJCC staging recommendations, and the NCCN recommendations for patient management, are demonstrated by the statistic that nearly 60% of the patients who die each year from melanoma are initially diagnosed with Stage I or II melanoma (the two lowest categories of risk).

This reflects a need for better risk-stratification or prognostic markers to identify high-risk patients.

To address this need for a more accurate predictor of metastatic risk, we discovered, developed, validated and continue to support the performance of the DecisionDx-Melanoma test.

This product is designed to help physicians identify high-risk tumors from among patients receiving a Stage I, II or III diagnosis based on the expression of 31 genes in the primary tissue.

DecisionDx-Melanoma does not change the standard diagnostic workflow followed when performing a biopsy of a suspicious lesion, and utilizes the formalin-fixed, paraffin embedded biopsy or wide local excision tissue used to diagnose melanoma and determine AJCC stage.

An additional biopsy is not needed.

Test results are reported as GEP main classes (Class 1 (low risk) or Class 2(high risk)) or as subclasses (Class 1A represents the lowest risk group, Class 1B/2A represents an increased risk group and Class 2B represents the highest risk group), based on a continuous score ranging from 0-1.

In March 2021, we announced that DecisionDx-Melanoma utilizes an Integrated Test Result (“ITR”), designed to provide more precise risk prediction for patients with Stage I, II or III melanoma.

The ITR is calculated by an independently validated algorithm (“i31-GEP”) that uses the DecisionDx-Melanoma continuous score in combination with clinical and pathology factors to provide a precise and personalized prediction of SLN positivity.

In October 2021, we announced the completion of independent validation of a new, separate algorithm that integrates the DecisionDx-Melanoma continuous score to provide a prediction of an individual patient’s risk of metastasis and recurrence (“ROR”).

This new i31-GEP algorithm for ROR includes the additional endpoints of recurrence-free survival (“RFS”) and distant metastasis-free survival, which are not currently provided by the American Joint Committee on Cancer Eighth Edition staging system.

These endpoints are anticipated to be helpful when determining appropriate treatment pathways for each patient’s disease.

Results generated by the i31-GEP algorithm guide discussions and recommendations, within current risk-based guidelines, for the SLNB surgical procedure or for surveillance methodologies.

i31-GEP to predict SLN metastasis is an artificial intelligence-based neural network algorithm (independently validated in a cohort of 1,674 prospective, consecutively tested patients with T1-T4 cutaneous melanoma) that integrates the DecisionDx-Melanoma test result with the patient’s traditional clinical and pathology features, such as Breslow thickness, ulceration, mitotic rate and age.

i31-GEP for ROR combines the 31-GEP continuous score with tumor thickness, ulceration status, mitotic rate, SLN status, age and tumor location to predict likelihood of recurrence, distant metastasis and melanoma specific death within 5 years of the melanoma diagnosis.

The algorithm was developed using 1,581 tumors from patients diagnosed with melanoma and was validated in 523 patients.

We expect to launch an app based on i31-GEP and the ITR later in 2022.

Clinical Validation

We have published 13 clinical validation studies of DecisionDx-Melanoma, which we believe is the largest clinical validation program of the metastatic risk of cutaneous melanoma ever conducted.

Based on our published data, we have shown that

DecisionDx-Melanoma is an accurate independent predictor of the risk of metastasis or recurrence, showing an aggregate melanoma-specific five-year survival rate of 99% for patients who receive the Class 1A test result.

We have published more than 35 peer-reviewed articles demonstrating the analytical validity, clinical validity and clinical utility of DecisionDx-Melanoma, and we believe the clinical validation studies represent the largest clinical validation program of the metastatic risk of cutaneous melanoma ever conducted.

Based on our published data, we have shown that DecisionDx-Melanoma is an accurate independent predictor of the risk of metastasis or recurrence.

Our first study, published in January 2015, analyzed 104 patients with Stage I, II and III melanoma from an independent cohort with long-term outcomes data.

This study reported a five-year disease-free survival rate of 98% for patients with Stage I and II melanoma who received a Class 1 test result.

This study reported a five-year disease-free survival rate of 98% for patients with Stage I and II melanoma who received a DecisionDx-Melanoma Class 1 test result.

In addition, the study also reported that only 2% of patients with a Class 1 test result were SLN-positive.

Our January 2019 study published in the Journal of the American Academy of Dermatology reviewed data on 690 patients with Stage I, II and III melanoma from all three previously published long-term archival publications, and enabled analysis of clinically important subgroups.

Overall, the study reported a five-year melanoma specific survival rate of 99% for patients with Stage I, II or III melanoma who received a Class 1A test result.

Our long-term outcomes study data shows that we can provide a more specific individual risk of metastasis and death from melanoma that is distinct from the AJCC stage approach that limits prediction to clinical and pathology factors.

The only endpoint reported by the AJCC is death from melanoma.

For patients diagnosed with Stage I melanoma, DecisionDx-Melanoma predominantly identifies patients with a risk of death from melanoma that is similar to a patient with Stage IIIA melanoma, with the remaining group having a 99.6% likelihood of being alive from melanoma at five years.

For patients with an intermediate risk Stage II melanoma, DecisionDx-Melanoma can distinguish between patients who have a very low risk of death from melanoma (>99% likelihood of being alive at 5-years) from those who have a higher risk of death from melanoma that is similar to a patient with Stage IIIA/IIIB melanoma.

For patients with a Stage III melanoma, DecisionDx-Melanoma can identify patients who have a likelihood of death from melanoma similar to a patient with Stage IIA melanoma, with the remainder having a risk similar to a patient with Stage IIIC melanoma.

The ability of DecisionDx-Melanoma to improve the risk of recurrence or risk of death from melanoma accuracy of these patient populations is clinically significant as NCCN guidelines recommend that the duration and frequency of follow-up and intensity of cross-sectional imaging be based on a patient’s individual conditional probability of recurrence.

Our January 2019 study published in the Journal of the American Academy of Dermatology reviewed data on 690 patients with Stage I, II and III melanoma from three previously published long-term archival publications, and enabled analysis of clinically important subgroups considered low-risk based on staging criteria.

Overall, the study reported a five-year melanoma specific survival rate of 99% for patients with Stage I, II or III melanoma who received a DecisionDx-Melanoma Class 1A test result.

Our long-term outcomes study data shows that DecisionDx-Melanoma can provide a more specific individual risk of metastasis and death from melanoma that is distinct from the AJCC staging approach that limits prediction to clinical and pathology factors.

The only endpoint reported by the AJCC staging approach is death from melanoma.

Within patients diagnosed with Stage I melanoma, a DecisionDx-Melanoma Class 2B result predominantly identifies a patient with a risk of death that is similar to a patient with Stage IIIA melanoma (see graph below).

By comparison, DecisionDx-Melanoma Class 1A results indicate a 99.7% likelihood of survival from melanoma at five years.

Within patients diagnosed with Stage II melanoma, DecisionDx-Melanoma can distinguish between patients who have a very low risk of death from melanoma (>97.1% likelihood of survival at 5-years) from those who have a higher risk of death from melanoma that is similar to a patient with Stage IIB melanoma.

Within patients diagnosed with Stage III melanoma, DecisionDx-Melanoma can identify patients who have a likelihood of death from melanoma similar to a patient with Stage IIA melanoma, with the remainder having a risk similar to a patient with Stage IIIC melanoma.

The ability of DecisionDx-Melanoma to accurately reclassify the risk of recurrence or risk of death is clinically significant because NCCN guidelines recommend that the duration and frequency of follow-up and intensity of cross-sectional imaging be based on a patient’s individual conditional probability of recurrence.

The NCCN guideline cut-point for these decisions is between Stage I-IIA versus Stage IIB-III.

For example, the chart below demonstrates that a patient with a Stage I melanoma but a DecisionDx-Melanoma Class 2B test result has a melanoma specific survival rate of 89.5%, which is a higher risk than if the patient had a Stage IIIA melanoma.

Today, patients with a Stage III melanoma are recommended to have an increased follow-up schedule, undergo routine cross-sectional imaging, consider initiation of adjuvant therapy, such as an anti-PD1 inhibitor, and consider enrollment in a clinical trial.

None of these options would be considered in a patient with a Stage I melanoma in the absence of a DecisionDx-Melanoma test result.

The first prospective, multi-center study of 322 patients with Stage I, II and III melanoma was published in August 2017.

This interim analysis reported a recurrence free survival rate of 97% and overall survival rate of 99% for patients with Stage I, II and III melanoma who received a Class 1 test result.

The most recent, independent, prospective, multi-center study of 86 patients with Stage IB and II melanoma was published in February 2019 in the Journal of The European Academy of Dermatology and Venereology.

This study reported a recurrence

free survival rate of 100% for patients with Stage IB and II melanoma who received a DecisionDx-Melanoma Class 1 test result.

An independent, prospective, single-center study of 159 patients with Stage I, II and III melanoma was published in March 2019 in Cancer Medicine.

Of patients who recurred, the median time to recurrence was 13 months.

Of patients who did not recur, the median follow-up time was 45 months.

This study reported that the DecisionDx-Melanoma test was an independent predictor of recurrence (p=0.0001) and the most significant predictor of recurrence with a hazard ratio of 9.2 compared to hazard ratio of 3.5 for SLNB status and 1.2 for Breslow thickness.

The DecisionDx-Melanoma test was also an independent predictor for distant metastasis and the most significant with a hazard ratio of 19.0 compared to 3.75 for SLNB status (Breslow thickness was not statistically independent).

NPV for Class 1 for distant metastasis-free survival was 99%.

For example, the chart below demonstrates that a patient diagnosed with Stage I melanoma but who has received a DecisionDx-Melanoma Class 2B test result has a melanoma specific survival rate of 92.8%, which is similar to the risk for a patient diagnosed with Stage IIIA melanoma.

Today, patients diagnosed with Stage III melanoma are recommended to have an increased follow-up schedule, undergo routine cross-sectional imaging, consider initiation of adjuvant therapy, such as an anti-PD1 inhibitor, and consider enrollment in a clinical trial.

The first prospective, multi-center study of 322 patients diagnosed with Stage I, II and III melanoma was published in August 2017.

This initial analysis reported a RFS rate of 97% and overall survival rate of 99% for patients with Stage I, II and III

melanoma who received a DecisionDx-Melanoma Class 1 test result.

Since that time, six prospective studies have been published and each consistently demonstrate the accurate and independent prognostic value provided by DecisionDx-Melanoma for identifying low- and high-risk melanoma tumors.

When evaluating DecisionDx-Melanoma, one of the most important criteria is whether the test adds new information that is independent of the traditional clinical and pathology factors.

The formal statistical method used to evaluate independence is the Cox multivariate analysis.

Outputs of the Cox multivariate analysis include statistical significance, measured by p-value, as well as the power of the result, measured by Hazard Ratio, or HR.

Outputs of the Cox multivariate analysis include statistical significance, measured by p-value, as well as the power of the result, measured by Hazard Ratio (“HR”).

A p-value of less than 0.05 indicates statistical significance and thus independence.

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The table below shows the Cox multivariate analysis of the disease-free survival, melanoma-specific survival and recurrence free survival from the four performance studies noted above.

The American Academy of Dermatology and other organizations use the Strength of Recommendation Taxonomy, or SORT, system to evaluate prognostic tests such as DecisionDx-Melanoma.

The American Academy of Dermatology and other organizations use the Strength of Recommendation Taxonomy (“SORT”) system to evaluate prognostic tests such as DecisionDx-Melanoma.

The SORT system ranks evidence of clinical validity as levels 1, 2 or 3, and assigns a strength of recommendation as levels A, B or C.

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The meta-analysis and the prospective studies satisfied the level 1 ranking of good quality studies and the consistency of DecisionDx-Melanoma data across these studies satisfied the level A strength of recommendation.

Thus, the authors concluded that DecisionDx-Melanoma achieved a 1A level of evidence of clinical validity and strength of recommendation under the

Furthermore, as shown below, the multi-variate analysis for recurrence-free survival found DecisionDx-Melanoma to be the strongest predictor of risk of recurrence compared to the evaluable clinical and pathology factors.

In addition, we conducted a prospective, multi-center study of 1,421 patients, which was published in Future Oncology in January 2019 which focused on the performance of DecisionDx-Melanoma to predict metastasis to the SLN.

This study found that patients with a Class 1A test result with melanomas less than or equal to 2.0 mm thick, which represents 86% of all melanomas, have a 95% probability for an SLN-negative biopsy result.

Thus, the authors concluded that DecisionDx-Melanoma achieved a 1A level of evidence of clinical validity and strength of recommendation under the SORT system.

Furthermore, as shown below, the multi-variate analysis for RFS found DecisionDx-Melanoma to be the strongest predictor of ROR compared to the evaluable clinical and pathology factors.

In addition, we conducted a prospective, multi-center study of 1,421 patients, which was published in Future Oncology in January 2019, that focused on the performance of DecisionDx-Melanoma to predict metastasis to the SLN.

This study found that patients with a DecisionDx-Melanoma Class 1A test result with melanomas less than or equal to 2.0 mm thick, which represents 86% of all melanomas, have a 95% probability for an SLN-negative biopsy result.

Analyzing this data by age shows that patients 65 years of age or older have a 98% NPV, those between 64 and 55 years of age have a 95% NPV and patients under 55 years of age have a 92% NPV.

For physicians and patients evaluating whether to use DecisionDx-Melanoma to guide decision-making on the SLNB surgery, the impact on melanoma specific survival is an important consideration if the SLN status is not known.

To address this, we analyzed the long-term outcome data from our Gastman 2019 publication and showed that patients of all ages with a melanoma less than or equal to 2.0 mm thick and a Class 1A test result have a five-year melanoma specific survival rate of 99.6%, while similar patients 55 years or older had a melanoma specific survival rate of 99.3%.

To address this, we analyzed the long-term outcome data from our Gastman 2019 publication and showed that patients of all ages with a melanoma less than or equal to 2.0 mm thick and a DecisionDx-Melanoma Class 1A test result had a five-year melanoma specific survival rate of 99.6%, while similar patients 55 years or older had a melanoma specific survival rate of 99.3%.

This study showed that use of DecisionDx-Melanoma for patients with melanomas of less than or equal to 2.0 mm thick could potentially result in 74% fewer SLNB surgeries.

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and modeling of prospective cohort.

Building on our clinical utility evidence, in October 2020, the publication in Future Oncology of a retrospective study, titled “Integrating the melanoma 31-gene expression profile test to surgical oncology practice within national guideline and staging recommendations,” shows that DecisionDx-Melanoma impacted management decisions for patients diagnosed with AJCC 7th edition stage I – III melanoma.

Building on our clinical utility evidence, in October 2020, the publication in Future Oncology of a retrospective study, titled “Integrating the melanoma 31-gene expression profile test to surgical oncology practice within national guideline and staging recommendations,” showed that DecisionDx-Melanoma impacted management decisions for patients diagnosed with Stage I – III melanoma under the AJCC framework.

Study authors developed a recommended melanoma patient care algorithm that incorporates DecisionDx-Melanoma to help inform frequency and duration of follow-up visits, blood work and surveillance imaging in line with predicted metastatic risk.

Patients’ DecisionDx-Melanoma test result was found to have an impact on the number and duration of follow-up and surveillance visits, and patients assessed as having a high risk of metastasis (designated by a DecisionDx-Melanoma Class 2 test result) received more intensive management than patients assessed as having a low risk

(designated by a DecisionDx-Melanoma Class 1 test result).

The patients’ DecisionDx-Melanoma test result was found to have an impact on the number and duration of follow-up and surveillance visits, and patients assessed as having a high risk of metastasis (designated by a DecisionDx-Melanoma Class 2 test result) received more intensive management than patients assessed as having a low risk (designated by a DecisionDx-Melanoma Class 1 test result).

Clinicians using the test were shown to adjust patient management in a risk-appropriate direction, within recommendations of national guidelines.

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Health Economics

We believe that the use of DecisionDx-Melanoma can reduce the number of SLNB surgeries, which has an average in-person reimbursed cost of between $20,000 and $24,000, thereby reducing overall cost of patient treatment for invasive cutaneous melanoma.

If all patients eligible for the SLNB surgery were tested and their test results were acted upon, we estimate the potential savings to the U.S.

We believe our products have the potential to reduce overall healthcare costs by enabling physicians and their patients to avoid unnecessary medical and surgical interventions.

If all patients eligible for the SLNB surgery were tested using DecisionDx-Melanoma and their test results were acted upon, we estimate the potential savings to the U.S.

healthcare system could be up to $250 million, after considering the cost of DecisionDx-Melanoma.

In addition, DecisionDx-Melanoma can be used to make more informed decisions on advanced imaging, frequency of clinical visits, referral to medical oncology, adjuvant therapy initiation and clinical trial enrollment.

In some cases, the DecisionDx-Melanoma test result may guide an appropriate reduction in these decisions based upon a low risk of metastasis and in others it will guide an appropriate increase with the end result being improved use of healthcare resources.

The American Medical Association’s, or the AMA’s, Current Procedural Terminology Editorial Panel accepted Castle’s application for a Category I Multianalyte Assays with Algorithmic Analyses, or MAAA, Current Procedural Terminology, or CPT, code for its DecisionDx-Melanoma test.

The CPT Editorial Panel is an independent group of expert volunteers representing various sectors of the health care industry.

In some cases, a DecisionDx-Melanoma test result may guide an appropriate reduction in these decisions based upon a low risk of metastasis, while in others

it will guide an appropriate increase in medical or surgical intervention with the end result being improved use of healthcare resources.

The American Medical Association’s (“the AMA’s”) Current Procedural Terminology Editorial Panel accepted Castle’s application for a Category I MAAA, Current Procedural Terminology (“CPT”) code for its DecisionDx-Melanoma test.

The CPT Editorial Panel is an independent group of expert volunteers representing various sectors of the healthcare industry.

Its role is to ensure that code changes undergo evidence-based review and meet specific criteria.

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DecisionDx-SCC

The current treatment pathway for patients identified as having high-risk SCC suffers from a low PPV for risk of metastasis or recurrence.

The current treatment pathway (staging systems that rely on combination of clinical or pathology factors to stage or classify risk of metastasis) for patients identified as having high-risk cutaneous SCC suffers from a low PPV for risk of metastasis or recurrence.

As a result, many patients categorized as high risk received adjuvant therapy and other unnecessary medical and surgical interventions even though they would not have gone on to metastasize.

Conversely, there are also many patients categorized as high risk who are placed in “watchful waiting” who could benefit from adjuvant therapy.

To address this clinical need in SCC, we developed DecisionDx-SCC, a proprietary 40-gene expression profile test that uses an individual patient’s tumor biology to predict individual risk of squamous cell carcinoma metastasis for patients with one or more risk factors.

Conversely, the low predictive accuracy of current methods to identify high-risk patients can lead to undertreatment if patients with a truly high biologic risk are missed.

Because these patients cannot currently be identified, they will miss the opportunity to receive the most aggressive of today’s therapeutic options.

To address this clinical need in SCC, we developed DecisionDx-SCC, a proprietary 40-gene expression profile test that uses an individual patient’s tumor biology to predict individual risk of SCC metastasis for patients with one or more risk factors.

The test result, in which patients are stratified into a Class 1, 2A or 2B risk category, predicts individual metastatic risk to inform risk-appropriate management.

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We commercially launched DecisionDx-SCC on August 31, 2020.

Four peer-reviewed publications have demonstrated that DecisionDx-SCC is an independent predictor of metastatic risk and that integrating DecisionDx-SCC with current prognostic methods can add positive predictive value to clinician decisions regarding staging and management.

In 2020, development and validation data was published in the Journal of the American Academy of Dermatology in an article titled “Validation of a 40-Gene Expression Profile Test to Predict Metastatic Risk in Localized High-Risk Cutaneous Squamous Cell Carcinoma.” The study findings indicate that DecisionDx-SCC demonstrated strong independent prognostic value in multivariate analysis compared to the BWH and AJCC v8 staging systems.

Nine peer-reviewed publications have demonstrated that DecisionDx-SCC is an independent predictor of metastatic risk and/or that integrating DecisionDx-SCC with current prognostic methods can add positive predictive value to clinician decisions regarding staging and management.

In 2020, development and validation data on DecisionDx-SCC was published in the Journal of the American Academy of Dermatology in an article titled “Validation of a 40-Gene Expression Profile Test to Predict Metastatic Risk in Localized High-Risk Cutaneous Squamous Cell Carcinoma.” The study findings indicate that DecisionDx-SCC demonstrated strong independent prognostic value in multivariate analysis compared to the traditional BWH and AJCC staging systems.

More recently, further validation results of a cohort of 420 patients with high-risk SCC from 33 U.S.

centers were published in Future Oncology .

The study titled, “Enhanced Metastatic Risk Assessment in Cutaneous Squamous Cell Carcinoma With the 40-Gene Expression Profile Test,” upheld previous results demonstrating that DecisionDx-SCC demonstrated significant prognostic value, and that cases with a Class 1 result had metastasis rates near the general SCC population while Class 2B patients had rates greater than 50%.

Additionally, a study focused on tumors of the head and neck region also showed strong stratification of risk by DecisionDx-SCC in that cohort, and independent value added to risk prognosis by the test in multivariable models that include other risk factors.

We have ongoing multi-center studies involving more than 75 U.S.

DecisionDx DiffDx-Melanoma

Comprehensive Diagnostic Offering

Of the two million suspicious pigmented lesions biopsied annually in the U.S., we estimate that approximately 300,000 of those cannot confidently be classified as either benign or malignant through traditional histopathology methods.

A biopsy of a pigmented lesion may lead to an indeterminate diagnosis, in which case the treating physician generally leans towards making a conservative decision and assumes that the lesion is melanoma.

To address this clinical need, we developed DecisionDx DiffDx-Melanoma, a proprietary GEP test designed to be used as an adjunct to histopathology when the distinction between a benign lesion and melanoma is uncertain.

To address this clinical need, we developed DecisionDx DiffDx-Melanoma, a proprietary 35-GEP test designed to be used as an ancillary tool to histopathology when the distinction between a benign lesion and melanoma is uncertain.

We commercially launched this product on November 2, 2020.

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Validation of this test included a variety of benign and malignant lesions.

DecisionDx DiffDx-Melanoma, in tandem with myPath Melanoma, enables us to provide our CDO of molecular testing solutions for difficult-to-diagnose melanocytic lesions.

In 2020, two studies were published in SKIN:

The Journal of Cutaneous Medicine.

The development and validation study, “Development and Validation of a Diagnostic 35-Gene Expression Profile Test for Ambiguous or Difficult-To-Diagnose Suspicious Pigmented Skin Lesions,” showed that the DiffDx-Melanoma test had a technical success rate of 97%, meaning that a test result was successfully generated, and achieved accuracy metrics that could alleviate uncertainty in difficult-to-diagnose lesions leading to decreased unnecessary procedures while appropriately identifying at-risk patients.

The clinical utility study, “A 35-Gene Expression Profile Test for Use in Suspicious Pigmented Lesions Impacts Clinical Management Decisions of Dermatopathologists and Dermatologists,” concluded that the diagnosis of challenging melanocytic neoplasms and subsequent clinical management decisions were influenced by DiffDx-Melanoma results in alignment with the test result.

The development and validation study, “Development and Validation of a Diagnostic 35-Gene Expression Profile Test for Ambiguous or Difficult-To-Diagnose Suspicious Pigmented Skin Lesions,” showed that our DecisionDx DiffDx-Melanoma test had a technical success rate of 97%, meaning that a test result was successfully generated, and achieved accuracy metrics that could alleviate uncertainty in difficult-to-diagnose lesions leading to decreased unnecessary procedures while appropriately identifying at-risk patients.

The clinical utility study, “A 35-Gene Expression Profile Test for Use in Suspicious Pigmented Lesions Impacts Clinical Management Decisions of Dermatopathologists and Dermatologists,” concluded that the diagnosis of challenging melanocytic neoplasms and subsequent clinical management decisions were influenced by DecisionDx DiffDx-Melanoma results in alignment with the test result.

The utility of the test may provide the opportunity for clinicians to deliver more informed patient management plans.

Similar to DecisionDx DiffDx-Melanoma, myPath Melanoma is a proprietary GEP test that we acquired from Myriad Genetics, Inc.

in May 2021, following rigorous validation in cutaneous melanocytic lesions to accurately differentiate between benign and malignant melanocytic lesions of unknown potential.

myPath Melanoma has over 35,000 clinically resulted cases and 9 publications supporting the accurate diagnosis of benign or malignant lesions by the test.

The test evaluates the expression of 23 genes using standard quantitative qRT-PCR and provides an accurate and objective classification suggestive of benign, intermediate, or malignant lesions.

We currently offer both myPath Melanoma and DecisionDx DiffDx-Melanoma in an integrated workflow to enhance both accuracy and technical reliability of diagnostic testing.

This comprehensive diagnostic workflow leverages the strengths of both diagnostic GEP tests to provide improved diagnostic clarity.

This offering is supported by 12 peer-reviewed publications.

DecisionDx-UM

At the time of diagnosis nearly all patients with uveal melanoma have no evidence of metastasis yet approximately 30% of uveal melanoma goes on to metastasize within three years and nearly 50% of uveal melanoma goes on to metastasize, overall.

Traditional clinical staging and molecular diagnostic tests exist for uveal melanoma, but the lack of prospective studies of these tests, coupled with low accuracy, has resulted in these tests primarily being used for research purposes rather than for clinical management of patients in the United States.

As a result, nearly all U.S.

centers group patients into a single, high-risk treatment plan that included frequent, high intensity surveillance using advanced imaging, frequent clinical visits and encouragement to enroll in clinical studies.

DecisionDx-UM is a proprietary GEP test that helps healthcare providers predict the risk of metastasis in patients with uveal melanoma.

At the time of diagnosis nearly all patients with uveal melanoma have no evidence of metastasis yet, approximately 30% of uveal melanoma patients will metastasize within five years and nearly 50% of uveal melanoma patients will metastasize at some point.

Traditional clinical staging and molecular diagnostic tests for uveal melanoma have been commercialized, but until recent years the lack of prospective studies of these tests, coupled with low accuracy, resulted in these tests primarily being used for research purposes rather than for clinical management of patients in the U.S.

As a result, before commercial availability of DecisionDx-UM, nearly all U.S.

DecisionDx-UM is our proprietary GEP test that helps healthcare providers predict the risk of metastasis in patients with uveal melanoma.

We licensed the intellectual property for DecisionDx-UM from The Washington University in St.

Louis, Missouri, or WUSTL, completed analytical validation and began marketing DecisionDx-UM in late 2009 for use in patients diagnosed with uveal melanoma without evidence of metastatic disease.

DecisionDx-UM identifies which patients are at low risk for progression of their disease so that their physicians can appropriately de-escalate the level of care provided.

Louis, Missouri (“WUSTL”).

and completed analytical validation and began marketing DecisionDx-UM in late 2009 for use in patients diagnosed with uveal melanoma without evidence of metastatic disease.

DecisionDx-UM identifies patients at low risk for progression of their uveal melanoma so that their physicians can appropriately de-escalate the level of care provided.

DecisionDx-UM is delivered to approximately 1,600 patients annually, representing approximately 80% of the patients diagnosed in the United States.

Sixteen peer-reviewed publications supporting the clinical validity and utility of DecisionDx-UM have been conducted.

The Kaplan-Meier plot from the initial prospective, multi-center Collaborative Ocular Oncology Group, or COOG, study found a 97% NPV for risk of metastasis.

This study also compared DecisionDx-UM to the traditional clinical and pathology factors as well as chromosome 3 status, which is an alternative molecular test to predict the risk of metastasis in uveal melanoma.

As is shown in the Cox multivariate analysis, the only statistically significant factor in predicting a likelihood of metastasis was DecisionDx-UM.

The data from the COOG study, as well as the consistency shown from the additional clinical validity studies, has supported wide-spread adoption of DecisionDx-UM with more than 90% of the ocular oncology institutions in the United States ordering this test.

Twenty-one peer-reviewed publications involving more than 3,000 patients support the clinical validity and utility of DecisionDx-UM.

The Kaplan-Meier plot from the initial prospective, multi-center Collaborative Ocular Oncology Group (“COOG”) study found that a DecisionDx-UM Class 2 result was more strongly associated with metastasis than any other clinical, pathological or molecular factor, and the negative predictive value for patients with a DecisionDx-UM Class 1 result was 99%.

This study also

compared DecisionDx-UM to the traditional staging based on clinical and pathology factors, and chromosome 3 status (an alternative molecular test to predict the risk of metastasis in uveal melanoma), using Cox multivariate analysis, and found that the only statistically significant factor in predicting a likelihood of metastasis was DecisionDx-UM.

The data from the COOG study, as well as the consistency shown from the additional clinical validity studies, has supported widespread adoption of DecisionDx-UM with more than 90% of the ocular oncology institutions in the United States ordering this test.

DecisionDx-UM has been used to guide treatment plan decisions regarding the intensity of a patient’s surveillance and management plan as well as clinical trial enrollment.

The current NCCN Guidelines for Uveal Melanoma (last updated January 2021) incorporate DecisionDx-UM as the first risk of distant metastasis predictor to guide systemic imaging.

Development Engine and Pipeline

We identify areas of significant unmet medical needs in the treatment of dermatologic diseases and leverage our expertise in genomics, data analytics and artificial intelligence to develop clinically actionable products.

We focus first on previously unanswered medical questions, which we often identify as the result of the in-depth conversations our sales and medical affairs representatives have with physicians.

We leverage our deep understanding of dermatologic diseases and clinical treatment pathways to identify areas of unmet medical need where better information can improve, and potentially transform, patient outcomes.

Next, our team of scientists and laboratory technologists use the latest genomic methods to discover RNA-based gene expression profiles that are likely to impact treatment pathway decisions.

Our bioinformatics team works collaboratively with our scientists to build proprietary algorithms based on machine-learning techniques to predict the risk of metastasis or recurrence based on the genomics of each individual patient’s tumor biology.

Once we have generated a product candidate that we believe will address an unmet medical need, we work to validate the product candidate through extensive testing of patient tissue samples combined with clinical outcomes data.

We use both our extensive data bank of patient tumor samples and clinical outcomes data to run development and validation studies and conduct clinical studies to collect new samples in additional diseases.

We publish our data regularly to drive adoption, reimbursement and guideline inclusion.

We have significant expertise in developing proprietary algorithms, conducting clinical studies and using the necessary instrumentation required for efficiently developing our pipeline products.

We have initiated work on a number of pipeline tests which branch out upstream, downstream and parallel to our currently marketed tests.

Although we are still in the early stages of development, we believe we could launch three to five new tests by the end of 2025, utilizing our existing sales channels,

potentially adding approximately $3.6 billion to our current U.S.

We expect to provide additional details on these pipeline products before the end of 2021.

The current NCCN Guidelines for Uveal Melanoma (last updated June 2021) incorporate DecisionDx-UM as the first risk of distant metastasis predictor and recommend that class result be used to guide frequency and intensity of systemic imaging.

Esophageal cancer is one of the fastest-growing cancers (by incidence) in the world.

The incidence of this once rare cancer has increased by more than 500% since the 1970s.

Esophageal cancer remains highly lethal, with a five-year survival rate of 19%.

Chronic reflux in the esophagus causes changes to the molecular and cellular features of the esophagus, which often results in a condition called BE.

BE is a serious complication of GERD and a risk factor for the development of esophageal cancer.

There are approximately 4 million patients in the U.S.

diagnosed with BE, and annually, approximately 400,000 endoscopies are performed on BE patients.

The TissueCypher Barrett’s Esophagus Assay, which is supported by eight peer reviewed publications, addresses an unmet need in BE, as it is designed to objectively and accurately predict progression from non-dysplastic, indefinite for dysplasia and low-grade dysplasia BE to high-grade dysplasia or esophageal adenocarcinoma (“EAC”).

This is critical, as EAC is highly lethal, and endoscopic eradication therapy in patients with BE has been proven to reduce progression to EAC.

As of February 28, 2022, two abstracts for GI conferences (podium presentations at European Society of Gastrointestinal Endoscopy Days 2022 and Digestive Disease Week 2022) and one peer-reviewed publication have been accepted.

BE is the only known precursor to EAC, which is highly lethal and has a five-year survival rate of 19%, according to Cancer Facts and Figures, ACS 2020.

Treatment options, particularly for advanced EAC, are limited, and early detection is critical for optimal patient management.

As a result, an estimated 4 million patients with BE in the U.S.

are in active surveillance programs, which involve periodic endoscopic surveillance of the esophagus with the goal of detecting malignant progression at a treatable stage.

During the endoscopy, biopsies are obtained from the affected tissue, and BE is graded based upon pathology features (histologic assessment) of these biopsies into High-Grade Dysplasia (“HGD”), Low-Grade Dysplasia (“LGD”), Indefinite Dysplasia (“IND”) and Non-Dysplastic (“ND”).

Generally, patients with HGD undergo esophageal eradication therapy, which may include ablation or surgical removal of the BE lesions.

Patients with LGD generally undergo either endoscopic surveillance every three to six months or endoscopic eradication therapy, while patients with IND or ND generally undergo endoscopic surveillance every three months to five years.

While treatment decisions, including surveillance timing, are

directed by pathology grading, this approach is limited by significant inter-observer variation (pathology discordance) in the grading of tissue biopsies.

This discordance is found between community pathologists, as well as pathologists who specialize in BE in large academic centers.

Furthermore, molecular and cellular changes associated with progression to cancer often precede the morphologic changes that pathologists can evaluate using histology.

Additionally, while patients with ND, IND and LGD do have a lower rate of progression to EAC than HGD, due to the higher incidence of ND, IND and LGD, these patients represent approximately 63% of patients who may progress to EAC.

Since endoscopic eradication therapy is performed with the expectation that it will reduce or stop progression to EAC, the fact that the majority of patients who progress are not graded as having HGD represents a significant unmet clinical need.

In addition, the recommendations for the frequency of endoscopic surveillance are based upon low to moderate quality evidence.

Together, these limitations in the current standard of care for risk assessment of patients with BE leads to overuse of endoscopies and imprecise use of endoscopic eradication therapy procedures, adding unnecessary costs that fail to reduce the incidence and mortality associated with EAC.

TissueCypher guides clinical management of BE by:

Identifying patients who are at high risk of developing EAC but are currently missed due to reliance on traditional histopathology and clinical variables.

This should enable early therapeutic intervention to prevent EAC, or increase surveillance for early detection of EAC at a treatable stage;

Identifying patients who are at low risk of developing EAC, enabling extension of surveillance intervals and reduction in unnecessary procedures.

The TissueCypher Barrett’s Esophagus Assay is a laboratory developed test (“LDT”) provided as a testing service to healthcare providers across the United States, and provides automated, objective risk stratification for patients with ND, IND and LGD BE.

It is the only commercially available test providing prognostic risk assessment from esophageal pinch biopsies.

Our Commercial Channel

Sales and Marketing

Our sales and marketing efforts are currently focused on the United States skin cancer market.

We employ a direct sales and marketing strategy to educate dermatologists, surgeons and other physicians on the clinical and economic benefits of our products.

Our sales and marketing efforts are primarily focused on the United States skin cancer and gastroenterology markets.

We employ a direct sales and marketing strategy to educate clinicians on the clinical and economic benefits of our products.

Our sales approach is highly technical, and our team is trained to articulate the scientific and clinical evidence behind our products and how they influence the clinical care pathway and ultimately improve patient outcomes.

Our sales force is focused on educating and informing the entire patient care team, which consists of treating clinicians, nurses, laboratory and pathology personnel, and finance administrators, on the appropriate use and value of our tests.

In December 2018, our customer-facing commercial and medical affairs group was staffed in the low 20s.

We successfully executed two expansions (in the first quarter of 2019 and in December 2019) bringing the total to the low 50s.

Our customer-facing team is focused on leading high clinical impact discussions with the treating clinician’s areas of interest, including clinical utility, patient outcomes, and supporting evidence.

We saw significant promotion responsiveness in 2019.

We increased our outside sales territories from 14 to 23 in the first quarter of 2019 and also added supporting inside sales associates, medical affairs and marketing staff.

We believed that this increase in customer-facing personnel would increase the adoption of our products as we would be able to educate more physicians on the clinical benefits of our products.

We did see the promotion responsiveness that we anticipated and conducted a second expansion in December 2019 that brought our outside sales territories to 32.

In the third quarter of 2020, we expanded our commercial team to create a dedicated sales force of ten territories to support the launch of our DecisionDx DiffDx-Melanoma test to dermatopathologists, while our existing sales team remains focused on DecisionDx-Melanoma and DecisionDx-SCC.

We ultimately believe that our DecisionDx DiffDx-Melanoma test will be ordered by both dermatopathologists and dermatologists.

Thus, it is our intention, to fold this new dedicated team into the existing sales team as well as further expand in the first half of 2021 bringing us to approximately 60 outside sales territories.

However, we will also continue to evaluate our mix of outside sales territories, inside sales support, marketing and medical affairs in the context of our dermatologic tests and adjust our investments based upon these evaluations.

The principal focus of our current commercial efforts is to educate clinicians and pathologists on the value of our molecular diagnostic testing products through our direct sales force in the U.S.

In dermatology, we began 2020 with 32 outside sales territories.

In the third quarter of 2020, we expanded our dermatologic commercial team to create a dedicated sales force of ten territories to support the launch of our DecisionDx Diff-Dx Melanoma test to dermatopathologists.

During the first half of 2021, we folded this dedicated team into our existing sales team and completed a further expansion, bringing our dermatologic sales force to the mid-60s.

In connection with our acquisition of Cernostics in December 2021, we hired an initial commercial team of approximately 14 outside sales territories, along with commensurate internal sales associates and medical science liaisons, to support our launch of the TissueCypher Barrett’s Esophagus Assay.

This dedicated team focuses on gastroenterology specialists that diagnose and manage patients with BE.

However, we will continue to evaluate our mix of outside sales territories, inside sales support, marketing and medical affairs in the context of our dermatologic tests and gastroenterology tests and adjust our investments based upon these evaluations.

In 2021, we entered into an agreement with Modernizing Medicine (“ModMed”) that established an interface with ModMed’s electronic health records system, EMA®.

The interface is designed to enable dermatologic clinicians to order our DecisionDx skin cancer tests from directly within a patient’s medical record in EMA.

Our full suite of dermatologic tests is now available to order within EMA.

DecisionDx-UM addresses a small cancer market, and patients are managed by a small group of ocular oncology surgeons, generally ophthalmology or retina trained specialists.

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We also deploy an experienced medical affairs group to assist education of treating physicians and key opinion leaders, to identify and engage sites for our sponsored clinical studies and to evaluate collaborative study opportunities.

Our medical affairs strategy complements our sales and marketing and clinical research operations efforts.

Our medical affairs strategy complements our sales, marketing and clinical research operations efforts.

Reimbursement

The primary source of revenue for our products is reimbursement from third-party payors, which includes government payors, such as Medicare, and commercial payors, such as insurance companies.

The primary source of revenue for our products is reimbursement from third-party payors, which includes government payors, such as Medicare and the U.S.

General Services Administration (“GSA”), and commercial payors, such as insurance companies.

Achieving broad coverage and reimbursement of our current products by third-party payors and continued Medicare coverage are key components of our financial success.

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Medicare coverage is limited to items and services that are within the scope of a Medicare benefit category and that are reasonable and necessary for the diagnosis or treatment of an illness or injury.

LCDs are made through an evidence-based process by Medicare Administrative Contractors, or MACs, with opportunities for public participation.

Palmetto GBA MolDX, or Palmetto, the MAC responsible for administering MolDX, the program that assesses molecular diagnostic technologies, issued a final LCD for DecisionDx-Melanoma, which became effective on December 3, 2018.

Noridian Healthcare Solutions, LLC, or Noridian, the MAC responsible for administering claims for laboratory services performed in Arizona, adopted the same coverage policy as Palmetto on that date, and subsequently issued a final LCD on February 10, 2019.

Local coverage determinations (“LCDs”) are made through an evidence-based process by Medicare Administrative Contractors (“MACs”) with opportunities for public participation.

Palmetto GBA MolDX (“Palmetto”) the MAC responsible for administering MolDX, the program that assesses molecular diagnostic technologies, issued a final LCD for DecisionDx-Melanoma, which became effective on December 3, 2018.

Noridian Healthcare Solutions, LLC (“Noridian”), the MAC responsible for administering claims for laboratory services performed in Arizona, adopted the same coverage policy as Palmetto on that date, and subsequently issued a final LCD on February 10, 2019.

This LCD provided for coverage for patients who are eligible for the SLNB surgery with cutaneous melanoma tumors of 2.0 mm in thickness or less, and patients with clinically negative SLN basins who are being considered for the SLNB surgery to determine eligibility for adjuvant therapy.

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Palmetto issued a final expanded LCD for DecisionDx-Melanoma, effective November 22, 2020.

With this expanded LCD and the accompanying billing and coding articles, we estimate that a significant majority of the DecisionDx-Melanoma tests performed for Medicare patients will meet the coverage criteria.

With this expanded LCD and the accompanying billing and coding articles, in 2021 approximately 96% of the DecisionDx-Melanoma tests performed for Medicare patients have met the coverage criteria.

Noridian has adopted the same coverage policy as Palmetto and also issued an expanded final LCD for DecisionDx-Melanoma, effective December 6, 2020.

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On May 17, 2019, CMS determined that DecisionDx-UM meets the criteria for “existing advanced diagnostic laboratory test” status, also referred to as “existing ADLT” status.

Accordingly, in 2021 the DecisionDx-UM Medicare rate will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Note that our rate for 2020 was set by Noridian, our local MAC, but our rate for 2021 for DecisionDx-UM will be $7,776 based on the median private payor rate.

For 2020, our rate was set by Noridian, our local MAC, but effective in 2021 our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Our rate for 2021 was $7,776 and will remain at $7,776 for 2022, in each case based on the calculation of the median private payor rate.

Also, on May 17, 2019, CMS determined that DecisionDx-Melanoma meets the criteria for “new ADLT” status.

Accordingly, from July 1, 2019 through March 31, 2020, the Medicare reimbursement rate was equal to the initial list price of $7,193.

From April 1, 2020 through December 31, 2021, CMS notified us that the rate will also be $7,193, which was calculated based upon the median private payor rate for DecisionDx-Melanoma from July 1, 2019 to November 30, 2019.

B eginning in 2022, the rate for both DecisionDx-Melanoma and DecisionDx-UM will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

From April 1, 2020 through December 31, 2021, the rate was also $7,193, which was calculated based upon the median private payor rate for DecisionDx-Melanoma from July 1, 2019 to November 30, 2019.

CMS has informed us that the rate for 2022 will continue to be $7,193, based on the median private payor rate.

myPath Melanoma is currently covered under a MolDX LCD policy through Noridian that oversees laboratories in both Utah and Arizona.

Noridian issued an LCD that became effective in June 2019.

On September 6, 2019, myPath Melanoma was approved as a new ADLT.

The rate for 2022 will be $1,950.

TissueCypher is performed in our Pittsburgh, Pennsylvania laboratory and falls under the Medicare jurisdiction that is managed by Novitas Solutions (“Novitas”).

Novitas previously reviewed TissueCypher and we are receiving payments for claims according to the Clinical Lab Fee Schedule (“CLFS”).

For 2022, CMS published in its CLFS a payment amount of $2,513 for the test.

B eginning in 2023, the rates for the DecisionDx-Melanoma, DecisionDx-UM, and myPath Melanoma tests will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

For example, the rate for 2023 will be set using median private payor rate data from January 1, 2021 to June 30, 2021.

In the second quarter of 2020, we submitted our technical assessment dossier for DecisionDx-SCC to Palmetto and Noridian.

The dossier was accepted as complete in the third quarter of 2020.

In early 2021, we submitted our technical assessment dossier for DecisionDx DiffDx-Melanoma.

We expect that draft LCDs for each of these tests will be posted in 2021.

However, there is no assurance that the timing of any draft LCD or final LCD will match our expectations or our historical experience with LCDs for our other tests.

The dossier was accepted as complete in the first quarter of 2021.

We expect that draft LCDs for DecisionDx-SCC and DecisionDx DiffDx-Melanoma could potentially be posted by the end of the second quarter of 2022 resulting in potentially final LCDs effective in 2023.

However, there is no assurance that the timing of any draft or final LCD will match our expectations or our historical experience with LCDs for our other tests.

In the second quarter of 2021, Palmetto and the other MACs that participate in the MolDX program posted a revised draft LCD for DecisionDx-Melanoma.

The draft LCD includes commentary about two publications regarding the clinical utility of GEP tests and was posted to give providers an opportunity to comment.

Each of the draft LCDs include an assessment stating that the MAC does not believe that the new data is sufficient to change the coverage criteria.

We have submitted comments on the draft LCD.

The comment period on the last of these draft LCDs closed on August 8, 2021.

We are unable to predict when the final draft LCD will be posted.

Federal Supply Schedule, also known as the GSA Schedule and the Multiple Award Schedule, is a long-term government-wide contract with commercial companies.

In August 2021, we were awarded a five-year GSA contract from the Veterans Health Administration for our DecisionDx-Melanoma GEP test.

Commercial Third-Party Payors

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Implementing our strategy includes our managed care and medical affairs teams educating third-party payors regarding our strong clinical utility and outcomes data, which we believe validates the value of our products and will persuade more third-party payors to provide value-based reimbursement.

We have broad positive policy coverage for our DecisionDx-UM test, we have executed contracts with certain commercial payors and anticipate further increases in contracting.

We have broad positive policy coverage for our DecisionDx-UM test, have executed contracts with certain commercial payors and anticipate further increases in contracting.

We also have positive policy recommendations from many third-party technical assessment review groups.

We began, following the Medicare LCD, engaging commercial third-party payors for positive coverage for DecisionDx-Melanoma and have seen some positive coverage policies.

In 2021, we received payment on approximately 93% of all claims for this test.

We began engaging commercial third-party payors for positive coverage for DecisionDx-Melanoma and have seen some positive coverage policies.

With the continued evidence development, we anticipate additional positive coverage policies occurring.

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however, these plans often base reimbursement decisions on common guidelines which can influence multiple plans simultaneously.

We are focused on providing high value diagnostic and prognostic solutions for dermatological cancers.

We believe, today, that there is limited existing competition for our products that provide evidence-based genomic solutions to physicians and their patients.

We are focused on improving health through innovative tests that guide patient care.

We believe, today, that there is limited existing competition for our products that provide evidence-based genomic and proteomic solutions to physicians and their patients.

We believe the principal competitive factors in our target markets include:

• Proprietary, disciplined approach to genomic analysis including the use of proprietary deep learning, machine learning, artificial intelligence and other techniques to identify and optimize gene selection and algorithmic approaches to answer the clinically important questions with accurate tests.

• Proprietary, disciplined approach to genomic and proteomic analysis including the use of proprietary deep learning, machine learning, artificial intelligence and other techniques to identify and optimize biomarker selection and algorithmic approaches to answer the clinically important questions with accurate tests.

This involves the ability to design and efficiently conduct the right clinical studies at the right time;

• Research and development investments to document the quality, quantity, consistency and strength of the clinical validity data, the impact our products have on clinical use, and demonstration of net health outcome improvement that reduce health system costs;

• Maintaining a strong reputation with the treating physician by providing consistent, transparent, clinically relevant information that will improve the appropriate management of their patients;

• Ease of use in accessing our products, reimbursement support for the physician and their patient and laboratory reports that clearly communicate the clinically relevant data points;

• Maintaining a strong reputation with the treating physician by providing consistent, transparent, and clinically relevant information that will improve the appropriate management of their patients;

• Ease of use in accessing our products, reimbursement support for our patients and laboratory reports that clearly communicate the clinically relevant data points;

• Demonstrated ability to work with, and secure coverage and reimbursement from, governmental and commercial payors;

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While some clinical and pathology criteria have changed over time, this approach has been the standard of care in the United States for many years, and physicians may be unwilling to accept the validity of the published data and adopt our test until it has become incorporated into national guidelines.

In addition, we may, in the near future, face competition from a limited number of companies who are working in this disease space, such as Neracare and SkylineDx.

In addition, we may, in the near future, face competition from a limited number of companies who are working in this disease space, such as SkylineDx and Neracare.

We are unaware of late-stage work being performed to develop and validate a product that would compete with DecisionDx-SCC.

We believe that the current primary competitor for DecisionDx-SCC is existing traditional clinical and pathology staging criteria.

We are aware of competitors that likely compete with our DecisionDx DiffDx-Melanoma, such as Myriad Genetics.

We expect our product to compete favorably with these competitors.

DecisionDx-UM competes with a subsidiary of LabCorp and several academic laboratories all of which have had tests available for several years.

To date, our data has demonstrated that DecisionDx-UM is clinically and statistically superior to these products.

Today, principal competition for the TissueCypher Barrett’s Esophagus Assay is existing traditional clinical and pathology assessment.

In the future this assessment may include the use of immunohistochemical evaluation of individual protein biomarkers as an aid to pathology.

While some clinical and pathology criteria have changed over time, this approach has been the standard of care in the United States for many years, and physicians may be unwilling to accept the validity of the published data and adopt our test until this has become incorporated into clinical guideline recommendations from gastrointestinal clinical societies, or other national guidelines.

In addition, we may in the near future, face competition from a limited number of companies who are working in this disease space, such as Interpace Diagnostics.

Other companies actively engaged in GERD screening to diagnose BE may also look to develop prognostic assays for patients diagnosed with BE, and these could compete with TissueCypher in the future.

Laboratory Operations

The Laboratory Developed Tests, or LDTs, that we commercialize are conducted in our CAP accredited, CLIA-certified primary facility in Phoenix, Arizona, which we moved into in April 2016.

In 2020, we doubled our footprint to approximately 23,500 square feet by adding a new laboratory facility in close proximity to our primary facility to support our growth and provide certain operational redundancy.

In 2021, we further expanded this facility to include approximately 3,600 additional square feet.

We perform all laboratory procedures involved in our tests from receiving a requisition form to issuance of the final test result in these facilities.

Our prior capacity plan analysis indicated that we could process up to 60,000 proprietary GEP test orders annually, with a single shift.

Our LDTs, consisting of DecisionDx-Melanoma, DecisionDx-SCC, our CDO and DecisionDx-UM, are currently performed in our College of American Pathologists (“CAP”) accredited, Clinical Laboratory Improvement Amendments of 1988 (“CLIA”)-certified laboratory in Phoenix, Arizona, which went operational in April 2016.

As of 2021, we have an approximately 29,700 square feet of facility space supporting our growth and providing certain operational redundancy.

We currently perform all laboratory procedures involved in our tests from receiving a requisition form to issuance of the final test result in these facilities.

We performed more than 28,000 proprietary GEP tests in 2021.

We are able to provide our proprietary DecisionDx-Melanoma, DecisionDx-SCC, DecisionDx DiffDx-Melanoma and DecisionDx-UM products for patients in all fifty states including those that require specific, additional, out-of-state lab licenses or qualifications such as New York, California, Pennsylvania, Maryland, and Rhode Island.

We provide our proprietary DecisionDx-Melanoma, DecisionDx-SCC, myPath Melanoma, DecisionDx DiffDx-Melanoma and DecisionDx-UM products for patients in all fifty states including those that require specific, additional, out-of-state lab licenses or qualifications such as New York, California, Pennsylvania, Maryland, and Rhode Island.

Upon receipt, orders and samples are processed through an automated laboratory information management system which, in addition to tracking sample chain of custody, initiates and tracks accessioning, sample eligibility, technical data generation, algorithmic analysis and results reporting.

The majority of samples are received as paraffin embedded sections from a formalin fixed tissue specimen.

Most of samples are received as paraffin embedded sections from a formalin fixed tissue specimen.

We have a laboratory and associated facilities totaling approximately 8,100 square feet of space in Pittsburgh, Pennsylvania, for the purpose of producing TissueCypher, an LDT with utility in the BE disease space.

While this lab is CLIA-certified and positioned to operate in all states except New York, we are working to achieve anticipated CAP accreditation and New York Permitted Lab status in 2022.

Our expanded laboratory footprint should also enable us to use this facility to process our dermatology tests, as or if needed.

Our laboratory facilities house all functions related to quality control and assurance, licensing, accreditation and regulatory compliance.

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Through this program, we promote a philosophy of continuous improvement based upon adherence to validated standards.

Our Phoenix facilities also house our clinical research operations and local information technology support.

Our Phoenix facilities houses our clinical research operations and local information technology support, with a similar focus of operation in our Pittsburgh facility.

Raw Materials and Suppliers

We procure reagents, equipment, chips/cards and other materials used to perform our tests from sole suppliers such as ThermoFisher Scientific, Inc., and Qiagen, Inc.

We procure certain reagents, equipment, chips/cards and other materials used to perform our tests from sole suppliers such as ThermoFisher Scientific, Inc.

and Qiagen, Inc.

Some of these items are unique to these suppliers and vendors.

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License Agreement with The Washington University

In November 2009, we entered into a license agreement, or the License Agreement, with WUSTL to license certain patent rights and technical information from WUSTL for the development of melanoma products, or the Products, and services, or the Services.

In November 2009, we entered into a license agreement (“the License Agreement”) with WUSTL to license certain patent rights and technical information from WUSTL for the development of melanoma products (the “Products”), and services (the “Services”).

The rights licensed under this agreement are used in DecisionDx-UM only.

Under the License Agreement, we obtain an exclusive, worldwide, royalty-bearing license to certain patent rights owned by WUSTL, or the Patent Rights, and a non-exclusive, worldwide license to certain technical information and research property owned by WUSTL, with the right to grant sublicenses under certain conditions, to develop the Products and Services.

Under the License Agreement, we obtain an exclusive, worldwide, royalty-bearing license to certain patent rights owned by WUSTL (“the Patent Rights”) and a non-exclusive, worldwide license to certain technical information and research property owned by WUSTL, with the right to grant sublicenses under certain conditions, in order to develop the Products and Services.

WUSTL retains the right to use the Patent Rights for research purposes.

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manufacturers.”

Under the License Agreement, we are required to use best efforts to carry out the activities under an agreed-upon development plan, or the Development Plan, and meet any and all milestones set forth in the Development Plan.

Under the License Agreement, we are required to use best efforts to carry out the activities under an agreed-upon development plan (“the Development Plan”) and meet any and all milestones set forth in the Development Plan.

We are required to make milestone payments to WUSTL upon successful completion of development and commercialization milestones as set forth in the Development Plan.

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Using this technology, we are able to provide a more accurate prediction of a patient’s metastatic risk as compared to other methods.

We have secured and continue to pursue intellectual property rights globally, including through patent protection covering analysis of metastasis in cutaneous melanoma, as well as treatment of cutaneous squamous cell carcinoma.

We also rely on trademarks, trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our proprietary position.

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Methods of diagnosing and treating patients with cutaneous squamous cell carcinoma 2 10 12

Method of predicting risk for recurrence for soft tissue sarcoma 1 — 1

Determining Prognosis and Treatment based on Clinical-Pathologic Factors and Continuous Multigene-Expression Profile Scores 1 — 1

Genes and gene signatures for diagnosis and treatment of melanoma 5 29 34

Method for automated tissue analysis 2 3 5

Systems and compositions for diagnosing BE and methods of using same 3 13 16

Methods of predicting progression of BE 2 16 18

Licensed Portfolio from WUSTL

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Total 22 89 111

Included in the table above are five issued U.S.

Included in the table above are 12 issued U.S.

patents and 60 issued international patents.

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Generally, patents issued for regularly filed applications in the United States are granted a term of 20 years from the earliest effective non-provisional filing date.

In addition, in certain instances, a patent term can be extended to recapture a period due to delay by the United States Patent and Trademark Office, or USPTO, in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period.

In addition, in certain instances, a patent term can be extended to recapture a period due to delay by the United States Patent and Trademark Office (“USPTO”) in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period.

However, as to the FDA component, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval.

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As of the date of this Annual Report on Form 10-K, our U.S.

trademark portfolio contained eight trademark registrations.

trademark portfolio contained 13 trademark registrations.

We rely upon trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our competitive position.

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In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

To the extent that our commercial partners,

collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Government Regulation and Product Approval

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To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with program standards.

Because we are a College of American Pathologists, or CAP, accredited laboratory, CMS does not perform this survey and inspection and relies on our CAP survey and inspection.

Because our Phoenix, Arizona laboratory is a CAP accredited laboratory, CMS may defer the survey and inspection to those conducted by CAP.

We may also be subject to additional unannounced inspections.

The regulatory and compliance standards applicable to the testing we perform may change over time, and any such changes could have a material effect on our business.

The regulatory and compliance standards applicable to the testing we perform change periodically, and any such changes are published by CAP.

Our SOPs documents & records are updated accordingly and as needed.

Any such changes may have a material effect on our business.

Penalties for non-compliance with CLIA requirements include suspension, limitation or revocation of the laboratory’s CLIA certificate, as well as directed plan of correction, state on-site monitoring, civil money penalties, civil injunctive suit or criminal penalties.

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In addition to federal certification requirements of laboratories under CLIA, CLIA provides that states may adopt laboratory regulations and licensure requirements that are more stringent than those under federal law.

Such laws, among other things, establish standards for the day-to-day operation of a clinical reference laboratory, including the training and skills required of personnel and quality control.

We currently provide laboratory services in all 50 states and maintain out-of-state laboratory licenses in New York, California, Maryland, Pennsylvania and Rhode Island.

Multiple states require the licensure of out-of-state laboratories that accept specimens from those states.

Because we receive specimens from New York, our clinical reference laboratory is required to be licensed by New York, under New York laws and regulations.

New York law also mandates proficiency testing for laboratories licensed under New York state law, regardless of whether such laboratories are located in New York.

If a laboratory is out of compliance with New York statutory or regulatory standards, the New York State Department of Health, or NYSDOH, may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license, or assess civil money penalties.

We have received formal approval from NYSDOH to offer our proprietary DecisionDx-Melanoma, DecisionDx-UM and DecisionDx-PRAME products in New York.

Additionally, we have been granted conditional permission by NYSDOH to offer our DecisionDx-SCC and DecisionDx DiffDx-Melanoma tests in New York while our applications are under review.

If we were to be found out of compliance with New York laboratory requirements, we could be subject to such sanctions, which could harm our business.

Such laws, among other things, establish standards for the day-to-day operation of a clinical reference laboratory, which includes ensuring personnel have the adequate knowledge of training to maintain quality control.

We currently provide laboratory services in all 50 states.

Additionally, we maintain licenses in New York, California, Maryland, Pennsylvania and Rhode Island which require specific licensure for out-of-state laboratories that accept specimens from those states.

Because we receive specimens from the state of New York, our clinical reference laboratory is required to be licensed by New York, have a lab director with a specific certificate of qualification and is subject to biennial New York state inspections to ensure the lab is compliant with New York licensing standards.

New York regulations also mandate proficiency testing for laboratories licensed under New York state law, regardless of whether such laboratories are located in New York.

If a laboratory is out of compliance with New York statutory or regulatory standards, the New York State Department of Health (“NYSDOH”) may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license, or assess civil money penalties.

We have received formal approval from NYSDOH to offer the following of our proprietary assays to New York patients:

DecisionDx-Melanoma, DecisionDx-CMSeq, DecisionDx-UM, DecisionDx-PRAME, DecisionDx-UMSeq, DecisionDx-SCC, DecisionDx DiffDx-Melanoma and myPath Melanoma.

Additionally, we are working through the NYSDOH submission and approval process for our newly acquired laboratory and product, TissueCypher, which has utility in the BE disease space.

Federal Oversight of Laboratory Developed Tests

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Clinical laboratory tests are regulated under CLIA, as administered by CMS, as well as by applicable state laws.

In addition, the Federal Food, Drug and Cosmetic Act, or FDCA, defines a medical device to include any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.

In addition, the Federal Food, Drug and Cosmetic Act (“FDCA”) defines a medical device to include any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.

Our in vitro testing products are considered by the FDA to be subject to regulation as medical devices.

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Although the FDA has statutory authority to assure that medical devices are safe and effective for their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable regulations with respect to in vitro diagnostics that are designed, manufactured, and used within a single laboratory for use only in that laboratory.

These tests are referred to as LDTs.

As a result, we believe our diagnostic services are currently subject to the FDA’s enforcement discretion and are not subject to the FDA’s oversight.

These tests are referred to

As a result, we believe our diagnostic services are currently subject to the FDA’s enforcement discretion and are not currently subject to the FDA’s oversight.

However, reagents, instruments, software or components provided by third parties and used to perform LDTs may be subject to regulation.

In recent years, FDA has stated its intention to modify its enforcement discretion policy with respect to LDTs.

In recent years, the FDA has stated its intention to modify its enforcement discretion policy with respect to LDTs.

For example, on July 31, 2014, the FDA notified Congress of its intent to modify, in a risk-based manner, its policy of enforcement discretion with respect to LDTs.

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Although we currently market our proprietary testing products as LDTs, which are currently subject to enforcement discretion, we could be subject to more onerous FDA compliance obligations in the future.

Specifically, if the FDA begins to actively regulate LDTs, then, unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or approval from the FDA of a premarket approval, or PMA, application.

Both the 510(k) clearance and PMA processes can be resource intensive, expensive, and lengthy, and require payment of significant user fees.

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Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to a set of FDA regulations, referred to as the General Controls for Medical Devices, which require compliance with the applicable portions of the FDA’s Quality System Regulation, facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.

Class I devices are those with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to a set of FDA regulations, referred to as the General Controls for Medical Devices, which require compliance with the applicable portions of the FDA’s Quality System Regulation, facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.

Some Class I devices also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

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The Investigational Device Process

In the United States, absent certain limited exceptions, human clinical trials intended to support medical device clearance or approval require an investigational device exemption, or IDE, application.

Some types of studies deemed to present “non-significant risk” are deemed to have an approved IDE once certain requirements are addressed and Institutional Review Board, or IRB, approval is obtained.

Some types of studies deemed to present “non-significant risk” are deemed to have an approved IDE once certain requirements are addressed and IRB approval is obtained.

If the device presents a “significant risk” to human health, as defined by the FDA, the sponsor must submit an IDE application to the FDA and obtain IDE approval prior to commencing the human clinical trials.

application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.

The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.

Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate IRBs at the clinical trial sites.

Submission of an IDE will note necessarily result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.

Submission of an IDE will not necessarily result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.

All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

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The FDA requires each manufacturer to determine whether the proposed change requires a new submission in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.

Many minor modifications are accomplished by a letter-to-file in which the manufacture documents the change in an internal letter-to-file.

Many minor modifications are accomplished by a letter-to-file in which the manufacturer documents the change in an internal letter-to-file.

The letter-to-file is in lieu of submitting a new 510(k) to obtain clearance for such change.

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If it is, the FDA will accept the application for filing and begin the review.

The FDA has 180 days to review a filed PMA application, although the review of an application more often occurs over a significantly longer period of time.

During this review period, the FDA may

request additional information or clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA.

The FDA has 180 days to review a filed PMA application, however, in practice the application review process often exceeds this deadline.

During this review period, the FDA may request additional information or clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA.

Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not approve it.

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We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law, and to comparable state laws.

Together these restrictions generally prohibit us from billing a patient or any governmental or private payer for certain designated health services, including clinical laboratory services, when the physician ordering the service, or any member of such physician’s immediate family, has a financial interest, such as an ownership or investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.

Together these restrictions generally prohibit us from billing a patient or any governmental or private payor for certain designated health services, including clinical laboratory services, when the physician ordering the service, or any member of such physician’s immediate family, has a financial interest, such as an ownership or investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.

Sanctions for a Stark Law violation include the following:

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These prohibitions apply regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral.

In addition, knowing violations of the Stark Law may also serve as the basis for liability under the federal False Claims Act, or the FCA, which can result in additional civil and criminal penalties.

In addition, knowing violations of the Stark Law may also serve as the basis for liability under the federal False Claims Act (“the FCA”), which can result in additional civil and criminal penalties.

Federal and State Anti-Kickback Laws

The federal Anti-Kickback Statute, or the AKS, makes it a felony for a person or entity, including a clinical laboratory, to knowingly and willfully offer, pay, solicit or receive any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in order to induce business that is reimbursable under any federal health care program.

The federal Anti-Kickback Statute (“the AKS”) makes it a felony for a person or entity, including a clinical laboratory, to knowingly and willfully offer, pay, solicit or receive any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in order to induce business that is reimbursable under any federal healthcare program.

A violation of the AKS may result in imprisonment for up to ten years and fines for each violation and administrative civil money penalties, including an additional amount of up to three times the amount of the remuneration paid.

Convictions under the AKS result in mandatory exclusion from federal health care programs for a minimum of five years.

Convictions under the AKS result in mandatory exclusion from federal healthcare programs for a minimum of five years.

In addition, The U.S.

Department of Health and Human Services, or HHS, has the authority to impose civil assessments and fines and to exclude health care providers and others engaged in prohibited activities from Medicare, Medicaid and other federal health care programs.

Department of Health and Human Services (“HHS”) has the authority to impose civil assessments and fines and to exclude healthcare providers and others engaged in prohibited activities from Medicare, Medicaid and other federal healthcare programs.

In addition, the government may assert that a claim that includes items or services resulting from a violation of the AKS constitutes a false or fraudulent claim under the FCA, which is discussed in greater detail below.

Additionally, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Although the AKS applies only to items and services reimbursable under any federal health care program, a number of states have passed statutes substantially similar to the AKS that apply to all payors.

Although the AKS applies only to items and services reimbursable under any federal healthcare program, a number of states have passed statutes substantially similar to the AKS that apply to all payors.

Penalties of such state laws include imprisonment and significant monetary fines.

Federal and state law enforcement authorities scrutinize arrangements between health care providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to induce patient care referrals or induce the purchase or prescribing of particular products or services.

Federal and state law enforcement authorities scrutinize arrangements between healthcare providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to induce patient care referrals or induce the purchase or prescribing of particular products or services.

Generally, courts have taken a broad interpretation of the scope of the AKS, holding that the statute may be violated if merely one purpose of a payment arrangement is to induce referrals or purchases.

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Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances.

Other Federal and State Health Care Laws

In addition to the requirements discussed above, several other health care fraud and abuse laws could have an effect on our business.

For example, provisions of the Social Security Act permit Medicare and Medicaid to exclude an entity that charges the federal health care programs substantially in excess of its usual charges for its services.

The Eliminating Kickbacks in Recovery Act

The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a laboratory;

or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in exchange for an individual using the services of that laboratory.

EKRA was enacted to help reduce opioid-related fraud and abuse.

However, EKRA defines the term “laboratory” broadly and without reference to any connection to substance use disorder treatment.

EKRA applies to all payors including commercial payors and government payors.

The law includes a limited number of exceptions, some of which closely align with corresponding AKS exceptions and safe harbors, and others that materially differ.

Currently, there is no regulation interpreting or implementing EKRA, nor any guidance released by a federal agency regarding the scope of EKRA.

Other Federal and State Healthcare Laws

In addition to the requirements discussed above, several other healthcare fraud and abuse laws could have an effect on our business.

For example, provisions of the Social Security Act permit Medicare and Medicaid to exclude an entity that charges the federal healthcare programs substantially in excess of its usual charges for its services.

The terms “usual charge” and “substantially in excess” are subject to varying interpretations.

The FCA prohibits, among other things, a person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval and from, making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim in order to secure payment or retaining an overpayment by the federal government.

In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud.

In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud, through the FCA’s “qui tam” or whistleblower provision.

Because the complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action.

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A person who offers or provides to a Medicare or Medicaid beneficiary any remuneration, including waivers of co-payments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable under the civil monetary penalties statute.

Moreover, in certain cases, providers who routinely waive copayments and deductibles for Medicare and Medicaid beneficiaries, for

example, in connection with patient assistance programs, can also be held liable under the AKS and FCA.

Moreover, in certain cases, providers who routinely waive copayments and deductibles for Medicare and Medicaid beneficiaries, for example, in connection with patient assistance programs, can also be held liable under the AKS and FCA.

One of the statutory exceptions to the prohibition is non-routine, unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection efforts.

The Office of Inspector General of HHS, or the OIG, emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular patient.

The Office of Inspector General of HHS (“the OIG”) emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular patient.

Although this prohibition applies only to federal healthcare program beneficiaries, applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud, may also be implicated for similar practices offered to patients covered by commercial payor.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of, or payment for, healthcare benefits, items or services.

Like the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The Physician Payments Sunshine Act, enacted as part of the ACA, as amended among other things, also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians and teaching hospitals, and certain other healthcare professionals beginning January 1, 2022 for payments and transfers of value provided during the previous year;

as well as ownership and investment interests held by physicians and their immediate family members.

The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.

Any failure to comply with these reporting requirements could result in significant fines and penalties.

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We cannot assure you, however, that the government will agree with our determination, and a determination that we have violated these laws and regulations, or a public announcement that we are being investigated for possible violations, could adversely affect our business, prospects, results of operations or financial condition.

State equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers.

If our operations are found to be in violation of any of the fraud and abuse laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal, civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, integrity oversight and reporting obligations, diminished profits and future earnings, and the curtailment or restructuring of our operations.

State equivalents of each of the above federal laws, such as anti-kickback and false claims laws, may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers.

reputational harm, integrity oversight and reporting obligations, diminished profits and future earnings, and the curtailment or restructuring of our operations.

International Regulations

Many countries in which we may offer any of our testing products in the future have anti-kickback regulations prohibiting providers from offering, paying, soliciting or receiving remuneration, directly or indirectly, in order to induce business that is reimbursable under any national health care program.

In situations involving physicians employed by state-funded institutions or national health care agencies, violation of the local anti-kickback law may also constitute a violation of the U.S.

Foreign Corrupt Practices Act, or FCPA.

In situations involving physicians employed by state-funded institutions or national healthcare agencies, violation of the local anti-kickback law may also constitute a violation of the U.S.

Foreign Corrupt Practices Act (“FCPA”).

The FCPA prohibits any U.S.

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Other countries, including the United Kingdom and other OECD Anti-Bribery Convention members, have similar anti-corruption regulations, such as the United Kingdom Anti-Bribery Act.

When marketing our testing products outside of the United States, we may be subject to foreign regulatory requirements governing human clinical testing, prohibitions on the import of tissue necessary for us to perform our testing products or restrictions on the export of tissue imposed by countries outside of the United States or the import of tissue into the United

States, and marketing approval.

These requirements vary by jurisdiction, differ from those in the United States and may in some cases require us to perform additional pre-clinical or clinical testing.

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Health Insurance Portability and Accountability Act

Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, HHS has issued regulations to protect the privacy and provide for the security of protected health information, or PHI, used or disclosed by certain entities including health care providers, such as us.

HIPAA also regulates standardization of data content, codes and formats used in certain health care transactions and standardization of identifiers for health plans and providers.

Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) HHS has issued regulations to protect the privacy and provide for the security of protected health information (“PHI”) used or disclosed by certain entities including healthcare providers, such as us.

HIPAA also regulates standardization of data content, codes and formats used in certain healthcare transactions and standardization of identifiers for health plans and providers.

Penalties for violations of HIPAA and HITECH laws and regulations include significant civil and criminal penalties.

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HIPAA and HITECH impose civil and criminal penalties against covered entities and business associates for noncompliance with privacy and security requirements.

Further, various states, such as California and Massachusetts, have implemented similar privacy laws and regulations that impose restrictive requirements regulating the use and disclosure of health information and other personally identifiable information, or PII.

Numerous other federal, state and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of patient health information.

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Depending on the billing arrangement and applicable law, we must bill various third-party payors, such as insurance companies, Medicare, Medicaid, and patients, all of which have different billing requirements.

Compliance with

applicable laws and regulations as well as internal compliance policies and procedures adds further complexity to the billing process.

Compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further complexity to the billing process.

CMS establishes new procedures and continuously evaluates and implements changes to the reimbursement process for billing the Medicare program.

To receive reimbursement from third-party payors, we bill our tests using a variety of CPT codes, as defined by the AMA.

For those genetic tests we conduct that do not have a dedicated CPT code, test may be billed under a miscellaneous code for an unlisted molecular pathology procedure.

For those genetic tests we conduct that do not have a dedicated CPT code, tests may be billed under a miscellaneous code for an unlisted molecular pathology procedure.

Because these miscellaneous codes do not describe a specific service, the third-party payor claim may need to be examined to determine the service that was provided, whether the service was appropriate and medically necessary and whether payment should be rendered.

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We believe all of our products provide significant clinical value and reduction in downstream healthcare spend, as evidenced in research studies and clinical publications, which we believe will continue to support and drive third-party payor reimbursement.

Under Medicare, payment for products like ours is generally made under the Clinical Laboratory Fee Schedule, or CLFS, with payment amounts assigned to specific procedure billing codes.

In April 2014, Congress passed the Protecting Access to Medicare Act, or PAMA, which included substantial changes to the way in which clinical laboratory services will be paid under Medicare.

Under Medicare, payment for products like ours is generally made under the CLFS with payment amounts assigned to specific procedure billing codes.

In April 2014, Congress passed the Protecting Access to Medicare Act (“PAMA”), which included substantial changes to the way in which clinical laboratory services will be paid under Medicare.

Under PAMA, certain laboratories were required to report to CMS private payor payment rates and volumes for their tests.

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We bill Medicare for our products, and therefore we are subject to reporting requirements under PAMA.

On May 17, 2019, CMS determined that DecisionDx-UM meets the criteria for “existing ADLT” status.

Accordingly, in 2021 the DecisionDx-UM Medicare rate will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Note that our rate for 2020 was set by Noridian, our local MAC, but our rate for 2021 for DecisionDx-UM will be $7,776 based on the median private payor rate .

Also, on May 17, 2019, CMS determined that DecisionDx-Melanoma meets the criteria for “new ADLT” status.

Accordingly, from July 1, 2019 through March 31, 2020, the Medicare reimbursement rate was equal to the initial list price of $7,193.

B eginning in 2022, the rate for both DecisionDx-Melanoma and DecisionDx-UM will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

For example, the rate for 2022 will be set using median private payor rate data from January 1, 2020 to June 30, 2020.

In the second quarter of 2020, we submitted our technical assessment dossier for DecisionDx-SCC to Palmetto and Noridian.

In early 2021, we submitted our technical assessment dossier for DecisionDx DiffDx-Melanoma.

We expect that draft LCDs for each of these tests will be posted in 2021.

However, there is no assurance that the timing of any draft LCD or final LCD will match our expectations or our historical experience with LCDs for our other tests.

See “Reimbursement—Government Payors” above for additional information.

PAMA also authorizes the adoption of new, temporary billing codes and/or unique test identifiers for FDA-cleared or approved tests as well as ADLTs.

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Healthcare Reform

In March 2010, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the ACA, became law.

The ACA contains a number of provisions that are expected to impact our business and operations, some of which in ways we cannot currently predict, including those governing enrollment in state and federal healthcare programs, reimbursement changes and fraud and abuse, which impact existing state and federal health care programs and will result in the development of new programs Among other things, the ACA required each medical device manufacturer to pay a sales tax equal to 2.3% of the price for which such manufacturer sells its medical devices, and began to apply to sales of taxable medical devices after December 31, 2012, but was suspended in 2016.

In March 2010, the ACA became law.

Among other things, the ACA required each medical device manufacturer to pay a sales tax equal to 2.3% of the price for which such manufacturer sells its medical devices, and began to apply to sales of taxable medical devices after December 31, 2012, but was suspended in 2016.

Further, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the medical device tax and “Cadillac” tax on high-cost employer-sponsored health coverage and, effective January 1, 2021, also eliminates the health insurer tax.

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Congress have taken action to roll back certain provisions of the ACA.

It is unknown what actions, if any, the current administration and the U.S.

Congress may take regarding the ACA.

Additionally, on December 14, 2018, a Texas U.S.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the tax penalty on certain individuals who fail to maintain qualifying health coverage for all or part of a year, commonly referred to as the “individual mandate.” Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit ruled that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

The United States Supreme Court is currently reviewing this case, but it is unclear when a decision will be made.

It is also unclear how the Supreme Court ruling, other such litigation and the healthcare reform measures of the Biden administration will impact the ACA.

For example, on June 17, 2021 the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

Thus, the ACA will remain in effect in its current form.

Prior to the U.S.

Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is possible that the ACA will be subject to judicial or Congressional challenges in the future.

It is also unclear how such challenges and the healthcare reform measures of the Biden administration will impact the ACA.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.

For example, on August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 which, due to subsequent legislative amendments to the statute including the Infrastructure Investment and Jobs Act, will remain in effect through 2031, unless additional Congressional action is taken.

The Coronavirus Aid, Relief and Economic Security Act enacted on March 27, 2020 (“the CARES Act”) and other COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2022.

Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester.

Further, Congress is considering additional health reform measures as part of other reform initiatives.

We anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial third-party payors to reduce costs while expanding individual healthcare benefits.

Certain of these changes could impose additional limitations on the prices we will be able to charge for our products and the coverage of or the amounts of reimbursement available for our products from third-party payors, including government and commercial payors.

In addition, it is possible that additional governmental action will be taken in response to the COVID-19 crisis in the future.

Human Capital Resources

Our vision is to transform disease management by keeping people first:

patients, clinicians, employees and investors.

We understand the importance of maintaining a strong corporate culture with our employees at the center, based on the cornerstones we laid in 2008 at our inception:

trust, excellence, collaboration, integrity, innovation and excitement.

We strive to find members of our team who embody the values of our company.

As of December 31, 2021, we had 345 employees, of whom 342 were full-time employees.

During the year ended December 31, 2020, our employee count grew by 66 persons, or 48.9%.

We face competition for experienced, qualified personnel in our industry, particularly for highly skilled scientists, laboratory technicians and salespeople.

During the year ended December 31, 2021, we added 144 employees to our team, a 71.6% increase from 2020.

We face competition for experienced, qualified personnel in our industry, particularly for highly skilled scientists, laboratory technicians and salespeople versed in diagnostic and prognostic testing services.

The tables below provide information on the distribution of our employees by functional area and by location as of December 31, 2021:

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Phoenix, Arizona 111

Pittsburgh, Pennsylvania 15

Home-based throughout the U.S.

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We consider our relationship with our employees to be good.

Diversity and Inclusion

We recognize the importance of diversity and inclusion in recruiting, developing and retaining the best available talent.

We are committed to further understanding and building upon our existing diversity and inclusion strengths and are in the process of identifying opportunities and developing related initiatives.

Diversity, Equity and Inclusion

We recognize the importance of diversity, equity and inclusion in recruiting, developing and retaining the best available talent.

We are committed to further understanding and building upon our existing diversity, equity and inclusion strengths and are in the process of identifying opportunities and developing related initiatives.

As of December 31, 2021, our employees were 64.6% female and 35.4% male.

Our overall employee population as of December 31, 2021 was 64.3% White, 7.2% Hispanic or Latino, 4.6% Asian, 3.5% Black or African-American and 20.4% two or more races (not Hispanic or Latino) and other.

In executive positions, which we define as Executive Director or Regional Business Director level and above, our employee population as of December 31, 2020 was 86.4% White, 4.6% American Indian or Alaska Native, 4.6% Hispanic or Latino and 4.4% two or more races (not Hispanic or Latino).

In executive positions, which we define as Executive Director or Regional Business Director level and above, our employee population as of December 31, 2021 was 75.0% White, 3.6% Hispanic or Latino and 21.4% other (not Hispanic or Latino).

Females represented 35.7% of employees in executive positions.

We are continuing to further assess and understand additional measures of diversity.

In December 2021, we adopted an affirmative action plan which includes annual compensation analyses and ongoing reviews of our selection and hiring practices alongside a continued focus on building and maintaining a diverse workforce.

We are continuing to further assess and understand additional measures that can advance diversity, equity and inclusion at Castle.

Compensation, Benefits and Professional Development

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• an annual bonus opportunity;

• equity compensation, including stock options, restricted stock units and an employee stock purchase plan;

• equity compensation, including stock options and/or restricted stock units and an employee stock purchase plan;

• medical, dental and vision plans;

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We provide performance reviews at least once per year, with pay raises commensurate with market and performance indicators.

Our turnover remains low for the year ended December 31, 2021.

We prioritize and encourage internal growth and professional development of our employees.

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Information contained on, or accessible through, our website is not considered part of this Annual Report on Form 10-K or our other filings with the SEC.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

This Annual Report on Form 10-K contains references to our trademarks and to trademarks belonging to other entities.

Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, endorsement of or sponsorship of us by, any other companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business