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Item 1. Business

2023-02-28 compared with 2022-02-28 · 574 added, 417 removed, 584 unchanged (63% 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.

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.

Castle Biosciences is applying innovative diagnostics to inform disease management and improve patient outcomes.

Vision and Foundational Strategy

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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.

We have three strategic guideposts that create value for customers, patients and stockholders:

Exceptional Employees - We hire and keep the right people, by Castle’s commitment to doing the right thing for employees and nurturing our thriving culture.

Continuous Evolution & Improvement - We are an industry leader by challenging the status quo with deep scientific expertise, unique value insight and robust data development.

Customer & Solution Centric - We value best-in-class customer experience at all points along the testing journey, and we leverage multiple solutions for a single customer to provide a single source of high quality molecular diagnostic tests.

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.

Currently, our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma, although each of our other commercial tests do contribute to our overall revenue.

We map out the patient journey 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 the following areas along the patient journey:

providing diagnostic clarity in patients with signs or symptoms of disease, risk stratification and response to treatment.

We have seven commercially available proprietary tests that assist clinicians and patients along this continuum.

Our commercially available proprietary tests focus on answering clinical questions arising during the treatment of:

• Dermatologic cancers—DecisionDx-Melanoma, DecisionDx®-SCC, MyPath® Melanoma and DiffDx®-Melanoma

• Uveal melanoma (“UM”)—DecisionDx®-UM

• Barrett’s esophagus (“BE”)—TissueCypher® Barrett’s Esophagus Test

• Mental health conditions—IDgenetix®

Together, we believe these commercial products support an estimated TAM of $8.0 billion in the United States.

TAM based on estimated patient population assuming average reimbursement rate among all payors.

2) Annual U.S.

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

incidence for squamous cell carcinoma estimated at 1,000,000 with addressable market limited to carcinomas with one or more high risk features;

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

3) 415,000 upper GI endoscopies/year with confirmed dx of BE (ND, IND, LGD, EXCLUDING HGD) x $2,513 = U.S.

only TAM of ~$1 billion.

In 2022, we developed expanded evidence supporting portfolio of innovative tests through the acceptance/publication of 14 peer-reviewed studies across all franchises.

As of December 2022, over 100 peer-reviewed articles have been published demonstrating the analytical validity, clinical validity and clinical utility of our tests.

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.

We currently have Medicare coverage for DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma, DecisionDx-UM, TissueCypher and IDgenetix.

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

De novo coverage by government and third-party payors for our pipeline tests will be important over time.

For further detail, see "—Reimbursement" below.

Commercial Launches

We launched DecisionDx-UM in January 2010, a proprietary, risk stratification gene expression profile (“GEP”) test that predicts the risk of metastasis 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 United States.

Based on the substantial clinical evidence that we have developed, we have received Medicare coverage for DecisionDx-UM, and we believe patients 65 years of age and older represents approximately 45% of the addressable patient population for this test.

We estimate approximately 2,000 patients in the United States are diagnosed annually with UM.

We launched DecisionDx-Melanoma in May 2013, a proprietary risk stratification GEP test that predicts the risk of metastasis or recurrence for patients diagnosed with invasive cutaneous melanoma.

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 first revolves around predicting the likelihood of having a sentinel lymph node (“SLN”) negative biopsy result so that clinicians 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.

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.

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

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

We commercially launched DiffDx-Melanoma in November 2020, our proprietary GEP test for use in patients with difficult-to-diagnose melanocytic lesions, meaning there is uncertainty related to the malignancy of the biopsied lesion.

We believe that these two 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.

From time to time, we may consider strategic opportunities and engage in transactions such as acquisitions of businesses, assets, products or technologies, as well as technology licenses or investments in complementary businesses.

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.

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

Initially, we offered both our MyPath Melanoma test and our DiffDx-Melanoma test under an offering that we referred to as our Diagnostic GEP offering to leverage the strength of both tests.

Our internal data indicates that we have improved the technical performance of MyPath Melanoma such that it is now comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

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, for total consideration of $49.0 million, consisting of cash consideration of $30.7 million and contingent consideration with an acquisition date fair value of $18.3 million.

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 (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) 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 UM.

In April 2022, we completed our acquisition of AltheaDx, Inc.

(“AltheaDx”), a commercial-stage molecular diagnostics company specializing in the field of pharmacogenomic (“PGx”) testing services that are focused on certain mental health diagnoses, and the provider of IDgenetix, a PGx test for mental health conditions, for a total consideration of $47.6 million, consisting of cash consideration of $30.5 million and equity consideration of $17.1 million.

Traditional PGx tests focus on drug-gene interactions where our IDgenetix test also incorporates drug-drug interactions and lifestyle factors into the final patient report, which we believe offers additional value to clinicians and patients.

This acquisition enabled us to offer a testing solution that we believe has the potential to accelerate our impact on patient care in an area of high unmet clinical need, significantly expanded our in-market estimated U.S.

TAM by approximately $5 billion and offer incremental value to patients and clinicians over the standard of care trial-and-error approach.

A randomized controlled trial showed that patients diagnosed with depression, who were

assessed with the IDgenetix test, showed a 2.5 times improvement in remission rates compared to those who did not have their genes tested.

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.

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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.

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.

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 received Medicare coverage for DecisionDx-UM, which represents approximately 50% of the addressable patient population as well as widespread commercial payor coverage.

Test Adoption

In 2021, we initiated a 4,800 patient, prospective, multi-center clinical study to develop and validate this pipeline test and ended 2022 with more than 50 active clinical study sites, exceeding our initial target.

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

Test Report Volume and Revenue

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:

The numbers of 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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5,967 3,510 485 — —

Diagnostic GEP offering (2)

3,561 2,662 73 — —

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1,711 1,618 1,395 1,526 1,413

TissueCypher Barrett’s Esophagus Test (3)

2,128 27 — — —

IDgenetix (4)

3,249 — — — —

Grand Total 44,419 28,145 18,185 17,055 13,445

Net Revenues (in thousands) $ 137,039 $ 94,085 $ 62,649 $ 51,865 $ 22,786

(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

(1) On August 31, 2020, we commercially launched our cutaneous SCC proprietary GEP test for use in patients with one or more risk factors.

(2) Includes MyPath Melanoma and DiffDx-Melanoma.

On November 2, 2020, we commercially launched our DiffDx-Melanoma test.

We began offering MyPath Melanoma following our acquisition of the Myriad MyPath Laboratory on May 28, 2021.

We offered both MyPath Melanoma and DiffDx-Melanoma under our Diagnostic GEP offering until February 2023 when we suspended the clinical offering of DiffDx-Melanoma, as discussed above.

(3) We began offering the TissueCypher Barrett’s Esophagus Test on December 3, 2021, following the completion of our acquisition of Cernostics.

(4) We began offering the IDgenetix test on April 26, 2022, following our acquisition of AltheaDx.

Includes both single-gene and multi-gene tests.

Our Markets Overview

Our current test portfolio serves the markets for dermatologic cancers, UM, BE and mental health conditions.

The sections that follow provide an overview of each of these markets.

Dermatologic Market Overview

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

DecisionDx-Melanoma is a proprietary 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 SLN negative biopsy result so that clinicians and patients can discuss the risk and benefit of undergoing the 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.

We launched DecisionDx-Melanoma in May 2013.

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.

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;

incidence for squamous cell carcinoma estimated at 1,000,000 with addressable market limited to carcinomas with one or more high risk features;

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

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

Cutaneous Melanoma

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

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.

Melanoma is a malignancy of the pigment-producing melanocytes in the basal layer of the epidermis and is growing in incidence in the United States.

Published statistics suggest that there were nearly 300,000 new cases of melanoma diagnosed worldwide, and an estimated annual incidence of 130,000 in the United States, representing an estimated U.S.

TAM of $540 million.

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 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 estimated annual incidence number is based upon a calculation using data from the U.S.

Surveillance, Epidemiology, and End Results (“SEER”) registries and subsequently adjusted for the documented underreporting of melanoma diagnoses which range from 30%-72%.

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

After a diagnosis of invasive cutaneous melanoma, healthcare providers have traditionally relied solely on clinical and pathological 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 tissue 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.

Invasive melanoma tumors are staged as Stage I through Stage IV based on thickness of tumor (Breslow thickness), presence of ulceration, and presence of regional or distant disease spread.

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.

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 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 base recommendations for the invasive SLNB surgery on an estimated risk of the likelihood of positivity determined by Breslow thickness and ulceration and the presence of certain adverse pathologic features, such as high mitotic rate or transected base.

If the likelihood of a positive SLN result is less than 5%, SLNB surgery is not recommended.

If the likelihood of a positive SLN result falls between 5% and 10%, then consideration of an SLNB surgery is recommended, and if the likelihood exceed 10%, then discussing and offering SLNB surgery is recommended.

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.

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 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.

Invasive SLNB surgery carries significant healthcare burden.

Clinicopathologic staging factors provide an imprecise population-based estimation of risk of SLN positivity and do not evaluate nor incorporate the biology of the patient’s primary tissue biology.

A positive SLN biopsy result, meaning that at least one melanoma cell was seen in the SLN tissue, leads to re-staging the patient from stage I or II to stage III, indicating regional spread of disease.

Importantly, the National Cancer Institute (the “NCI”) recently completed 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 compared to those who merely underwent observation, indicating that SLNB surgery is prognostic, and not therapeutic.

On average, 12% of patients undergoing the SLNB surgery will have an SLN-positive biopsy result, indicating that 88% of patients will not derive clinical benefit from the procedure.

The 88% SLN-negative rate in these surgeries carries significant patient and healthcare system implications.

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%.

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.

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

The SLNB surgery requires the use of general anesthesia leading to an average reimbursed cost of $20,000 to $24,000.

Thus, patients undergoing SLNB surgery are exposed to the complications from surgery, including general anesthesia risks, high medical costs and a median false negative rate of 18%.

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%.

While Stage I and II patients have a lower population-based estimated risk of melanoma specific death, due to the higher incidence of these ‘lower risk’ stage groups, these lower risk stages account for 60% of all deaths in patients receiving Stage I, II or III diagnoses.

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;

SEER data release 2017;

Morton et al.

N Engl J Med 2014;

Whiteman et al.

J Invest Dermatol 2015;

Shaikh et al.

J Natl Cancer Inst 2016;

Poklepovic and Carvajal.

Oncology 2018;

Sondak and Zager.

Ann Surg Oncol 2010.

Euro Jrnl Surg Onc 2017.

Cutaneous Squamous Cell Carcinoma

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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.

However, high risk SCC is now recognized as a significant cause of morbidity and mortality, and due to the 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.

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.

Identifying high risk SCC presents challenges for clinicians.

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).

To date, there has been a lack of reliance on the two primary staging systems in the United States, the AJCC Eighth Edition staging system 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.

A 2014 study compared the then-current AJCC Seventh Edition staging system 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.

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 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%.

Our initial clinical validation study for DecisionDx-SCC

included 321 patients, of which 93% had one or more high-risk features.

Within this study cohort, 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.

A clinician 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.

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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.

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.

Difficult-to-diagnose melanocytic lesions are pigmented 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 pigmented lesion biopsy that is difficult to diagnose may lead to an indeterminate diagnosis, in which case the treating clinician 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, 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.

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.

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

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

MyPath Melanoma and DiffDx-Melanoma are independent GEP tests that together comprised Castle’s Diagnostic GEP offering of molecular testing solutions for difficult-to-diagnose melanocytic lesions, representing an estimated U.S.

TAM of $600 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%.

Our internal data indicates that we have improved the technical performance of MyPath Melanoma such that it is now comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

Uveal Melanoma Market Overview

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

TAM of $9.3 million.

UM 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.

UM may also be referred to as ocular melanoma.

Approximately 97% of patients with UM 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 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.

Prior to commercial availability of DecisionDx-UM, other clinical staging and molecular diagnostic tests for UM 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.

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

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

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 UM tumors.

Barrett’s Esophagus Market Overview

Barrett’s esophagus is a protective response to chronic acid reflex resulting in the replacement of normal esophageal squamous mucosa with specialized intestinal metaplasia that is more resistant to acidic environments and is the only known precursor to esophageal adenocarcinoma (“EAC”), which is one of the fastest increasing

cancers in incidence in the United States with a five-year survival rate of approximately 20%.

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

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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.

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

Patients with BE symptoms undergo an endoscopic biopsy procedure to both visualize lesions that may be present in a patient’s esophagus as well as collect one or more biopsy specimens.

These biopsy specimens serve as the diagnostic specimens to determine if the patient has BE, perhaps esophageal cancer, another disease or no diagnosed disease.

The extent of BE dysplasia, which represents the extent of abnormality detected in the tissue that may precede development of cancer, is graded by the pathologist as either non-dysplastic (“NDBE”), IND, LGD or HGD.

Treatment plans for BE are risk stratified according to these grades.

Patients with HGD and many LGD patients receive esophageal eradication therapy with the intent of eliminating the BE lesion.

They may also receive varying levels of repeat endoscopic biopsy procedures, which can occur at frequent or less frequent intervals, with the goal of detecting progression to HGD or EAC.

Similar to the staging limitations that are seen in cutaneous melanoma, at least half of the patients who progress to HGD or esophageal cancer are originally diagnosed as ND or IND patients at lower risk for disease progression based on pathological assessment alone due to the high relative incidence of ND/IND diagnoses relative to LGD/HGD diagnoses.

This highlights the poor sensitivity of diagnosis by histology in predicting progression and inadequacy of surveillance to detect progression in patients originally diagnosed with low-risk NDBE.

Thus, improvement is needed in the assessment of the risk of progression in patients with Barrett’s esophagus to better inform risk-aligned treatment plans.

415,000 upper GI endoscopies/year with confirmed dx of BE (ND, IND, LGD, excluding HGD) 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.

Mental Health Market Overview

Finding an optimal medication for patients diagnosed with a mental illness has traditionally relied on trial and error, often times resulting in inadequate therapy response, low remission rates, and a high rate of adverse drug events.

Using current standard-of-care treatment approaches, less than half of patients with major depressive disorder achieve an adequate response to first line treatment and nearly 3 of 4 do not achieve remission.

There is a high prevalence of adverse drug events and increasing rates of discontinuation with repeated medication trials.

This frustration has led to a need in the mental health community for more personalized care with selection of an optimal therapy the first time, achieving a fast response/remission with few to no side effects and at a low out of pocket cost.

For the approximately 50 million patients experiencing mental health illness in the United States, meeting these expectations could require a new approach to medication selection.

PGx can help improve medication selection and avoid the need for multiple medication trials.

A traditional PGx test is designed to assess a patient’s DNA to identify variances that result in drug-gene interactions.

These interactions can lead to variation in medication responses by altering drug metabolism or impacting how the body responds to a drug.

In addition to drug-gene interactions, our IDgenetix test also incorporates drug-drug interactions and lifestyle factors into the final patient report, which we believe offers additional value to clinicians and patients.

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.

We use multi-analyte assays with algorithmic analysis (“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 clinician 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.

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

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

DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma, DecisionDx-UM and TissueCypher.

We also offer our proprietary PGx test, IDgenetix, to guide optimal drug treatment for patients diagnosed with depression, anxiety and other mental health conditions.

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

Also, multiple clinical impact studies have demonstrated a significant impact on clinician 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-SCC, DecisionDx-UM, TissueCypher, MyPath Melanoma and IDgenetix 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 140,000 clinical patient samples across our product portfolio.

Data as of Dec.

One TissueCypher study involves patients and ~250 physicians.

Number reflects studies that span Castle’s dermatology, ophthalmology and gastroenterology portfolios.

SEER cancer registries linked CM cases diagnosed from 2013-2018 to data for patients with stage I-III CM tested with the 31-GEP as of Dec.

includes patients in studies not yet published.

SEER cancer registries linked UM cases diagnosed in 2018 for patients with primary uveal melanoma tested with the 15-GEP;

includes patients in studies not yet published.

Our products are designed to provide the following benefits:

• Clinically Actionable Information for Physicians.

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

• Clinically Actionable Information for Clinicians.

Our commercial tests provide clinicians 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.

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• Informed Patient Care.

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.

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 GEP 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.

Clinicians 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.

We believe our products have the potential to reduce overall healthcare costs by enabling clinicians 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.

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DecisionDx-Melanoma

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).

DecisionDx-Melanoma is our proprietary risk stratification GEP test developed to identify the risk of metastasis, or recurrence, for patients diagnosed with invasive cutaneous melanoma, a deadly skin cancer.

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

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.

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.

This product is designed to identify tumors at high risk for metastasis from patients receiving a Stage I, II or III diagnosis.

DecisionDx-Melanoma is administered from the formalin-fixed, paraffin embedded biopsy or wide local excision tissue used to diagnose and stage melanoma and assesses the expression of 31 genes to result in classification of metastatic risk as Class 1A (lowest risk), Class 1B/2A (increased risk) and Class 2B (highest risk).

DecisionDx-Melanoma has been validated to provide additional information on a patient’s risk of metastasis not obtainable from staging alone and can improve the accuracy of risk stratification beyond traditional staging approaches.

The results of the test have been incorporated into clinical practice to inform important decisions about recommendation for invasive SLNB surgery, use of advanced imaging for active surveillance, and frequency and specialty for clinical follow-up.

As of February 28, 2023, we have received orders from more than 11,200 clinicians for an aggregate of more than 120,000 tests.

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

The ITR uses an independently validated algorithm (“i31-SLNB”) that integrates the DecisionDx-Melanoma continuous score with clinical and pathological features, including Breslow thickness, ulceration, mitotic rate and age 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 with Breslow thickness, ulceration, mitotic rate, SLN status, age and tumor location to provide a prediction of an individual patient’s risk of metastasis and recurrence (“i31-ROR”).

This new i31-ROR algorithm includes the additional endpoints of recurrence-free survival (“RFS”) and distant metastasis-free survival, which are not currently provided by the AJCC 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-ROR algorithm guide discussions and recommendations, within current risk-based guidelines, for the SLNB surgical procedure or for surveillance methodologies.

Two intended uses for DecisionDx-Melanoma

Whitman et al.

Jarell et al.

In 2021, we initiated a collaboration with the NCI to link SEER Program registries’ data on cutaneous melanoma cases with DecisionDx-Melanoma testing data.

Data from this large, real-world and unselected patient population found that when controlling for clinicopathologic as well as socioeconomic factors, patients who received DecisionDx-Melanoma as part of their clinical care had improved melanoma-specific survival compared to patients who did not have the DecisionDx-Melanoma test as part of their clinical care.

We expect that the peer-reviewed publication will be available in 2023.

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 in the first half of 2023 and beyond.

Clinical Validation

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.

More than 40 peer-reviewed articles have been published demonstrating the analytical validity, clinical validity and clinical utility of DecisionDx-Melanoma.

We believe the clinical validation studies represent the largest clinical validation program of the metastatic risk of cutaneous melanoma ever conducted.

In 2022, we developed expanded evidence supporting DecisionDx-Melanoma through the acceptance/publication of seven peer-reviewed studies.

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 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 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.

Across multiple validation studies including more than 10,000 patients, DecisionDx-Melanoma has demonstrated improved prognostication of recurrence, distant metastasis, and melanoma-related death independent of traditional clinical and pathological factors defined by the AJCC and NCCN and clinical utility in improving risk-aligned management, indicating the test adds information and can be used as an adjunct to AJCC staging to further risk stratify within stages.

DecisionDx-Melanoma has over 70% sensitivity for predicting distant metastasis and death, even in node-negative (Stage I-II) patients.

Moreover, a low-risk Class 1A result is associated with excellent survival outcomes (~99% melanoma-free survival).

Our long-term outcomes 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.

Within patients diagnosed with Stage I melanoma, a DecisionDx-Melanoma high-risk Class 2B result 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 low-risk Class 1A results

indicate a 99.7% likelihood of survival from melanoma at five years.

Within patients diagnosed with Stage II melanoma, a high-risk Class 2B result is associated with a higher risk of death from melanoma that is similar to a patient with Stage IIB melanoma, whereas a low-risk Class 1A result can identify patients who have a very low risk of death from melanoma (>97.1% likelihood of survival at 5-years).

Within patients diagnosed with Stage III melanoma, high-risk Class 2B results can identify patients who have a risk of death from melanoma similar to a patient with Stage IIIC melanoma, whereas a low-risk Class 1A likelihood of death from melanoma is similar to a patient with Stage IIA 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.

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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 (“HR”).

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

If statistical significance is reached, then the HR indicates the power of the result, with a higher HR indicating greater outcome prediction.

For example, an HR of nine means that patients with a high-risk test result are nine times more likely to experience metastasis or death than a low-risk test result.

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.

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 1A test result.

An update to this study published in 2021 that included long-term outcomes of these patients demonstrated consistent findings, with patients with a Class 1A result maintaining significantly improved survival outcomes over patients with Class 2B results.

Moreover, this study demonstrated that patients diagnosed with early stage I-IIA disease that received a Class 2B result had risk of recurrence and death from melanoma similar to that of patients with stage IIB-III disease for whom NCCN guidelines recommend increased intensity of management, indicating the level of risk associated with a high-risk result is meaningful and actionable.

A total of 8 publications from 6 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.

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

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A systematic review and meta-analysis was published in the Journal of the American Academy of Dermatology in 2020 in an article titled “Molecular risk prediction in cutaneous melanoma:

a meta-analysis of the 31-gene expression profile prognostic test in 1,479 patients.” This meta-analysis reviewed multiple peer-reviewed published clinical validation studies of DecisionDx-Melanoma, including prospective studies.

a meta-analysis of the

31-GEP prognostic test in 1,479 patients.” This meta-analysis reviewed multiple peer-reviewed published clinical validation studies of DecisionDx-Melanoma, including prospective studies.

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.

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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.

For clinicians 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 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%.

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Clinical Utility

We completed and published four consecutive studies between September 2016 and March 2018 documenting how DecisionDx-Melanoma impacts treatment plan decisions.

We completed and published six clinical utility studies documenting how DecisionDx-Melanoma impacts treatment plan decisions.

Based on the results of our DecisionDx-Melanoma test reports, physicians changed their treatment plan recommendations approximately 50% of the time.

This change in the management of patient treatment plan recommendations compares favorably to leading molecular diagnostic tests as well as to the SLNB surgery, which only changes clinical decision-making approximately 12% of the time.

Study Design # of Patients % Change in Management

This change in the management of patient treatment plan

recommendations compares favorably to leading molecular diagnostic tests as well as to the SLNB surgery, which only changes clinical decision-making approximately 12% of the time.

Study Design # of Patients Results

Yamamoto et al.

CMRO 2023 Prospective, multi-center study evaluating impact of GEP and clinical and pathological features in impacting decision to perform SLNB 193 85% of decisions relating to SLNB performance were influenced by test results

Dillon et al.

CMRO 2022 Long term follow-up of prospective, multi-center study evaluating pre-test and post-test management.

509 51% of patients had a change in management

Berger et al.

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Retrospective pre-test / post-test management.

156 53% of patients had a change in management

Dillon et al.

SKIN J Cutan Med 2018 Prospective, multi-center:

pre-test / post-test management.

evaluating pre-test / post-test management.

247 49% of patients had a change in management

Farberg et al.

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patient vignettes with pre-test / post-test management.

n/a 47-50% of patients had a change in management

Schuitevoerder et al.

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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,” showed that DecisionDx-Melanoma impacted management decisions for patients diagnosed with Stage I – III melanoma under the AJCC framework.

91 52% of patients had a change in management

In 2022, additional follow-up from a prospective, multi-center study evaluated 5-year management plan changes for lab work, frequency of clinical visits and imaging in 509 patients pre- and post-31-GEP results.

After receiving results, 51% of patients had a change in management plans in clinical visits, lab work or surveillance imaging.

The changes were risk-aligned with GEP result in 76.1% of Class 1 results and 79% of Class 2 results.

In early 2023, a publication of a prospective, multi-center study evaluating the impact of DecisionDx-Melanoma to guide SLNB decisions showed the test influenced 52% of clinical decisions to forego SLNB and 33% of decisions to perform SLNB.

Compared to the baseline rate of SLNB performance in a contemporary cohort, there were 29% less SLNB procedures performed in patients with a Class 1A result.

Building on our clinical utility evidence, in October 2020, the publication in Future Oncology of a retrospective study, titled “Integrating the melanoma 31-GEP 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.

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

These studies illustrate how physicians use DecisionDx-Melanoma to inform the treatment pathway for patients who have been diagnosed with invasive cutaneous melanoma.

These studies illustrate how clinicians use DecisionDx-Melanoma to inform the treatment pathway for patients who have been diagnosed with invasive cutaneous melanoma.

Our DecisionDx-Melanoma test informs two initial treatment decisions:

(1) to determine whether to offer and recommend the SLNB surgery to patients with melanomas less than or equal to 2.0 mm thick, and (2) following this decision, to guide the appropriate post-SLNB surgery treatment plan for their patients, including decision-making regarding advanced imaging, frequency of clinical visits, referral to medical oncology, adjuvant therapy, clinical trial enrollment, and watchful waiting.

From 2020 – 2022, three independent expert physician panels published consensus guidelines on incorporation of the DecisionDx-Melanoma test into clinical practice based on this evidence.

Health Economics

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.

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

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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, 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.

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.

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DecisionDx-SCC

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.

DecisionDx-SCC has been validated to improve prediction for the risk of metastasis in patients with cutaneous SCC and one or more risk factors, as identified by clinical and pathological staging criteria.

The current staging systems that rely on a combination of clinical or pathological factors to stage or classify risk of metastasis suffer from a low PPV for risk of metastasis.

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.

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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.

To address this clinical need in SCC, we developed DecisionDx-SCC, a proprietary 40-GEP 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.

The test is designed to provide a better PPV while maintaining similar NPV.

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 clinicians and patients.

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

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.

Fourteen peer-reviewed publications support the analytic validity, clinical validity and clinical utility of DecisionDx-SCC.

In 2022, we developed expanded evidence supporting DecisionDx-SCC through the acceptance/publication of five peer-reviewed studies.

Clinical validation studies demonstrate that DecisionDx-SCC is an independent predictor of metastatic risk and that integrating with prognostic methods can add PPV to clinician decisions regarding staging and management.

Clinical Validation

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.

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

centers were published in Future Oncology .

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

Comprehensive Diagnostic Offering

Clinical Utility

Prospective studies including nearly 600 physicians have consistently demonstrated that DecisionDx-SCC delivers clinically actionable results that can change clinician assessment of risk of metastasis and potentially change patient management plans in a risk-aligned manner within NCCN guideline recommendations.

In 2022, Hooper et al.

published “Real-world evidence shows clinicians appropriately use the prognostic 40-GEP test for high-risk cutaneous squamous cell carcinoma patients”.

This study was a real-world clinical study involving

clinicians (n=34) who have adopted the DecisionDx-SCC test for patients with one or more high risk factors and shows that integrating the DecisionDx-SCC test result significantly impacted recommended patient treatment plans in a risk-aligned manner within the context of the NCCN guidelines, including changes to surveillance imaging, nodal assessment, and adjuvant radiation.

In addition, an initial analysis of a prospective, multi-center clinical utility study was published by Saleeby et.

al., titled “A prospective, multi-center clinical utility study demonstrates that the 40-gene expression profile (40-GEP) test impacts clinical management for Medicare-eligible patients with high-risk SCC”.

In this study, the DecisionDx-SCC was the single most influential factor in determining management plans for 42% of Medicare patients and resulted in a pre-test to post-test management change in 24% of patients.

These data demonstrate clinical actionability on par with other contemporaneously developed molecular diagnostic tests used to guide similar clinical decisions, particularly in disease states, such as breast and prostate cancer.

Diagnostic GEP 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 35-GEP test designed to be used as an ancillary tool to histopathology when the distinction between a benign lesion and melanoma is uncertain.

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

DecisionDx DiffDx-Melanoma is 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.

DiffDx-Melanoma classifies these lesions as benign (gene expression profile suggestive of benign neoplasm);

DiffDx-Melanoma classifies these lesions as benign (GEP suggestive of benign neoplasm);

intermediate-risk (gene express profile cannot exclude malignancy);

or malignant (gene expression profile suggestive of melanoma).

or malignant (GEP suggestive of melanoma).

Interpreted in the context of other clinical, laboratory and histopathologic information, DiffDx-Melanoma is designed to add diagnostic clarity and confidence for dermatopathologists while helping dermatologists deliver more informed patient management plans.

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 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.

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

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 13 publications supporting the accurate diagnosis of benign or malignant lesions by the test.

DiffDx-Melanoma, in tandem with MyPath Melanoma, were provided under our Diagnostic GEP offering of molecular testing solutions for difficult-to-diagnose melanocytic lesions.

Our Diagnostic GEP offering had robust diagnostic resolution for melanocytic lesions with unknown malignant potential, with validation studies demonstrating accurate diagnosis of benign and malignant lesions for greater than 98% of cases tested.

Our internal data indicates we have improved the technical performance of MyPath Melanoma such that it is now comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

Clinical Validation

The development and validation study of DiffDx-Melanoma titled “Development and Validation of a Diagnostic 35-Gene Expression Profile Test for Ambiguous or Difficult-To-Diagnose Suspicious Pigmented Skin Lesions,” showed that our 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 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.

MyPath Melanoma was developed in a training cohort of 464 melanocytic lesions and subsequently validated in three separate cohorts comprised of more than 1,300 melanocytic neoplasms, independent from the training cohort.

These clinical validation studies utilized both histopathologic interpretation by experts and actual patient outcomes as reference standards, and MyPath Melanoma demonstrated strong diagnostic accuracy against both reference standards.

Across multiple

validation studies, MyPath Melanoma differentiated malignant melanoma from benign nevi with a sensitivity of 90-94%, and accurately classified benign nevi with a specificity of 89-96%.

Clinical Utility

Clinical utility has been demonstrated by DiffDx-Melanoma and MyPath Melanoma.

Four studies have been published demonstrating that dermatopathologists use diagnostic GEP testing to improve diagnostic accuracy and impact treatment recommendations, and that dermatologists incorporate test results to adjust treatment plans, including reduction of re-excisions in 63-76% of cases with benign results.

These tests provide opportunities for clinicians to deliver more informed patient management plans.

The offering of both MyPath Melanoma and DiffDx-Melanoma in an integrated workflow to enhance both accuracy and technical reliability of diagnostic testing is supported by 15 peer-reviewed publications.

Our internal data indicates we have improved the technical performance of MyPath Melanoma such that it is now comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

DecisionDx-UM

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.

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

Traditional clinical staging and molecular diagnostic tests for UM 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.

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

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

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.

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.

Louis, Missouri (“WUSTL”) and completed analytical validation and began marketing DecisionDx-UM in late 2009 for use in patients diagnosed with UM without evidence of metastatic disease.

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

We launched DecisionDx-UM in January 2010.

Based on the substantial clinical evidence that we have developed, we received Medicare coverage for DecisionDx-UM, which represents approximately 45% of the addressable patient population as well as widespread commercial payor coverage.

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 United States, and it is estimated that nearly 8 in 10 patients diagnosed with UM in the United States receive the DecisionDx-UM test as part of their diagnostic workup.

As of December 31, 2022, 24 peer-reviewed publications involving more than 3,600 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 NPV 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 UM), 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 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.

The current NCCN Guidelines for UM (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.

We expect that the second ongoing COOG study, commonly referred to as COOG2, will report findings in 2023 that continue to support DecisionDx-UM as the strongest prognostic factor for identifying patients at high risk of metastasis and mortality from UM.

We anticipate that these results may inform clinical improvements in the value of our UM test.

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

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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”).

BE is a serious complication of gastroesophageal reflux disease (“GERD”) and a risk factor for the development of esophageal cancer.

There are approximately 4 million patients in the United States diagnosed with BE, and annually, approximately 435,000 endoscopies are performed on BE patients.

The TissueCypher Barrett’s Esophagus Test addresses an unmet need in BE, as it is designed to objectively and accurately predict progression from ND, IND and LGD BE to HGD 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.

As of February 28, 2023, nine peer-reviewed publications have demonstrated the clinical validity and utility of the TissueCypher Barrett’s Esophagus Test.

Recent presentations at major gastroenterology conferences have further supported the validity and utility of the TissueCypher Barrett’s Esophagus Test.

At Digestive Diseases Week 2022, results from a new study were presented showing that TissueCypher outperforms pathologist diagnoses when predicting progression in patients diagnosed with BE with LGD.

A presentation at the American College of Gastroenterology 2022 annual meeting reported that use of the TissueCypher test results to guide patient management decisions significantly increased the likelihood of BE patients with LGD receiving appropriate management per their known outcome, and use of the test results also improved the consistency of management decisions for BE patients with LGD by reducing the impact of variable pathology review.

An independent, peer-reviewed article published by investigators at the Mayo Clinic in the journal Clinical Gastroenterology and Hepatology reinforced the ability of TissueCypher to significantly improve

predictions of progression to esophageal cancer in patients with BE, compared to predictions based on clinical and pathology variables alone, allowing for more informed disease management decisions.

In the study, a TissueCypher high-risk score independently predicted increased risk of progression to HGD/esophageal cancer, with improved accuracy over expert pathologist diagnoses of LGD and IND.

Further, a TissueCypher high-risk score was associated with a strong independent risk of progression in NDBE patients.

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.

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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”).

During the endoscopy, biopsies are obtained from the affected tissue, and BE is graded based upon pathology features (histologic assessment) of these biopsies into HGD, LGD, IND and 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.

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.

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 the majority 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.

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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.

The TissueCypher Barrett’s Esophagus Test 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:

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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.

Finding an optimal medication for patients diagnosed with a mental illness has traditionally relied on trial and error, resulting in inadequate therapy response, low remission rates, and a high rate of adverse drug events.

There is a high prevalence of adverse drug events and increasing rates of discontinuation with repeated medication trials.

For the 50 million patients experiencing mental health illness in the United States, meeting these expectations will require a new approach to medication selection.

PGx can improve medication selection and avoid the need for multiple medication trials.

Traditional PGx tests are designed to assess a patient’s DNA to identify variances that result in drug-gene interactions.

These interactions can lead to variation in medication responses by altering drug metabolism or impacting how the body responds to a drug.

In addition to drug-gene interactions, our IDgenetix test

incorporates drug-drug interactions and lifestyle factors into the final patient report, which we believe offers additional value to clinicians and patients.

Following our acquisition of AltheaDx in April 2022, we began offering a proprietary PGx test service focused on mental health, IDgenetix, a PGx test for depression, anxiety and other mental health conditions designed to analyze a patient’s genetic make-up to guide timely and evidence-based decisions on the optimal drug for each patient.

IDgenetix is designed to provide important genetic information to clinicians to help guide personalized treatment plans for their patients, with the potential to help patients achieve a faster therapeutic response and improve their chances of remission by identifying appropriate medications more efficiently than the standard of care trial-and-error approach.

IDgenetix is supported by a published, peer-reviewed randomized controlled trial that demonstrated clinical utility over the standard of care when physicians used IDgenetix prior to prescribing a medication.

The trial was conducted across 20 independent clinical sites within the United States specializing in Psychiatry, Internal Medicine, Obstetrics & Gynecology, and Family Medicine.

A total of 685 patients were randomized by disease and severity and allocated in a 1:1 ratio to the experimental group (guided by the IDgenetix test) or control group (using standard of care) and followed for a period of twelve weeks.

Medication changes in the experimental group were aligned with the report recommendations 70% of the time, as compared to only 29% alignment in random selection in the control group.

More importantly, clinical decision-making based on IDgenetix resulted in a two-fold increase over the control group for response (p=0.001) and a 2.5x increase over the control group for remission (p=0.02).

Collectively, these data speak to the ability of the IDgenetix test to guide provider decision making and to significantly improve clinical outcomes.

IDgenetix is currently reimbursed by Medicare for the following eight mental health conditions:

major depressive disorder, schizophrenia, bipolar disorder, anxiety disorders, social phobia, obsessive-compulsive personality disorder, post-traumatic stress disorder, and attention deficit hyperactivity disorder.

Our Commercial Channel

Sales and Marketing

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 and marketing efforts are primarily focused on the United States skin cancer, gastroenterology and mental health markets.

We employ a direct sales and marketing strategy to educate clinicians, nurses, laboratory and pathology personnel, and finance administrators 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.

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.

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 DiffDx-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.

In September 2022, we established a new commercial sales team dedicated to our Diagnostic GEP offering, with the current dermatologic commercial team shifting to focus primarily on DecisionDx-Melanoma and DecisionDx-SCC.

We expect the new sales team to be fully integrated into our commercial operations by the second quarter of 2023.

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 September 2022, we added additional outside territories for our TissueCypher Barrett’s Esophagus Test.

In April 2022, we added a mental health commercial team covering approximately 20 outside sales territories through our acquisition of AltheaDx.

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.

We serve these patients and their clinicians by providing highly technical interactions that focus on optimizing the appropriate use of our proprietary and ancillary products.

We will continue to assess market response in determining further commercial expansions.

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.

We serve these patients and their physicians by providing highly technical interactions that focus on optimizing the appropriate use of our proprietary and ancillary products.

Our full suite of dermatologic tests is now available to order within EMA with our integrated accounts.

Medical Affairs

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.

We also deploy an experienced medical affairs group to assist education of treating clinicians 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, 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 the U.S.

General Services Administration (“GSA”), 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 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.

De novo coverage by government and third-party payors for our pipeline tests will be important over time.

We bill third-party payors and patients for the tests we perform.

The majority of our revenue collections is paid by third-party insurers, including Medicare.

We have received Medicare coverage for our DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma, DecisionDx-UM, TissueCypher and IDgenetix tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries, representing approximately 60 million covered lives.

The Medicare rates discussed below are prior to giving effect to applicable sequestration in effect from time to time as described in further detail under "Government Regulation and Product Approval—Healthcare Reform" included in Part 1, Item 1, “Business”, in this Annual Report on Form 10-K.

A ‘‘covered life’’ means a subscriber, or a dependent of a subscriber, who is insured under an insurance carrier’s policy.

Government Payors

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.

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.

Melanomas less than or equal to 2.0 mm thick represent 86% of all melanomas.

The median age at diagnosis is 63 years old, therefore the Medicare eligible population represents close to 50% of the addressable market.

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

Coverage and payment may also be obtained from MACs through medical review and pricing in absence of an LCD.

Palmetto GBA MolDX (“Palmetto”) is the MAC responsible for administering MolDX, the program that assesses molecular diagnostic technologies.

Noridian Healthcare Solutions, LLC (“Noridian”) is the MAC responsible for administering claims for laboratory services performed in Arizona and California laboratories.

Novitas Solutions (“Novitas”) is the MAC responsible for administering claims for laboratory services performed in Pennsylvania laboratories.

Advanced Diagnostic Laboratory Tests

Advanced Diagnostic Laboratory Test (“ADLT”) status is a designation granted by CMS for clinical diagnostic laboratory tests covered under Medicare Part B that is offered and furnished only by a single laboratory.

Additionally, an ADLT cannot be sold for use by a laboratory other than a single laboratory that designed the test or a successor owner, and must meet one of the following criteria:

• Is an analysis of multiple biomarkers of DNA, RNA or proteins:

When combined with an empirically derived algorithm, yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or respond to a particular therapy or therapies;

• Provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests;

• May include other tests.

The test is cleared or approved by the FDA.

Laboratories requesting ADLT status under this criterion are required to submit documentation of premarket approval or premarket notification from the FDA.

DecisionDx-Melanoma

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

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.

Separately, Palmetto issued a final LCD for DecisionDx-UM, which became effective in July 2017, and Noridian issued a similar LCD that became effective in September 2017.

The Noridian LCD provides for coverage to determine metastatic risk in connection with the management of a patient’s newly diagnosed uveal melanoma and to guide surveillance and referral to medical oncology for those patients.

Similar to cutaneous melanoma, the median age at diagnosis for uveal melanoma is estimated at 58-62 years old, therefore the Medicare eligible population represents close to 45% of the addressable market.

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.

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

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 included commentary about two publications regarding the clinical utility of GEP tests and included an assessment stating that the new data is not sufficient to change the coverage criteria.

There was an open public comment period, and we submitted comments in support of Medicare coverage.

The comment period ended on August 8, 2021.

Palmetto issued a final LCD on May 19, 2022 with Noridian issuing the same on June 16, 2022.

The final LCDs did not result in any change in coverage.

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

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

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

Beginning in 2022, the rate for DecisionDx-Melanoma has been 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 was set using median private payor rate data from January 1, 2021 to June 30, 2021.

Our rate for 2022 was $7,193 per test and will continue to be $7,193 per test for 2023.

DecisionDx-UM

Palmetto issued a final LCD for DecisionDx-UM, which became effective in July 2017, and Noridian issued a similar LCD that became effective in September 2017.

The Noridian LCD provides for coverage to determine metastatic risk in connection with the management of a patient’s newly diagnosed UM and to guide surveillance and referral to medical oncology for those patients.

Similar to cutaneous melanoma, the median age at diagnosis for UM is estimated at 58-62 years old.

The Medicare eligible population represents close to 45% of the addressable market.

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.

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, 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.

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

Our rate for 2021 was $7,776 per test.

Our rate remained at $7,776 per test for 2022 and will remain at $7,776 per test for 2023.

Diagnostic GEP Offering

Our Diagnostic GEP offering included MyPath Melanoma and DiffDx-Melanoma.

We began offering MyPath Melanoma following our acquisition of the Myriad MyPath Laboratory on May 28, 2021.

Our internal data indicates that we have improved the technical performance of MyPath Melanoma such that it is now comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

MyPath Melanoma

MyPath Melanoma is currently covered under a MolDX LCD policy.

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.

The rate for 2022 was $1,950.

Beginning in 2023, the rates for our MyPath Melanoma test 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 was set using median private payor rate data from January 1, 2021 to June 30, 2021.

The rate for 2023 is set at $1,755 per test based on data submitted by the predecessor owner of the Myriad MyPath Laboratory relating to the first half of 2021.

Rates for our MyPath Melanoma test will continue to be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

DiffDx-Melanoma

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

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.

In June 2022, Palmetto and Noridian each posted a draft LCD that would provide coverage criteria for DiffDx-Melanoma, and each of the comment periods closed during the third quarter of 2022.

We believe the LCD for DiffDx-Melanoma will be finalized by the end of the second quarter of 2023.

However, there is no assurance that any draft or final LCD will match our expectations, be posted in a timeframe consistent with our historical experience or will be posted at all.

In the second quarter of 2022, we obtained a Proprietary Laboratory Analyses (“PLA”) code for DiffDx-Melanoma.

DiffDx-Melanoma will go through CMS’s Gapfill pricing process in 2023, which we expect to conclude in late 2023.

DecisionDx‑SCC

We issue our DecisionDx-SCC tests from our Arizona and Pittsburgh labs, with a majority of tests being issued from our Pittsburgh lab.

As previously discussed, the Palmetto MolDX program oversees MAAA tests that are reported from our Arizona laboratory and Noridian is the MAC responsible for administering claims for test reports issued by our Arizona laboratory.

Novitas is the MAC responsible for administering claims for test reports issued by our Pittsburgh laboratory.

On June 9, 2022, Novitas posted a draft oncology biomarker LCD that proposes to rely upon evidentiary reviews sourced from three databases for all oncology biomarker tests:

ClinGen, OncoKB and NCCN.

We believe the purpose of the proposals in this draft LCD are to streamline future reviews.

Two of the databases do not review GEP tests and NCCN has not yet, to our knowledge, reviewed DecisionDx-SCC.

If finalized as proposed, then DecisionDx-SCC would not be included as a covered test in the associated billing and coding article.

The comment period for the draft LCD ended on September 6, 2022.

We cannot predict whether this draft LCD will be finalized as proposed or what the timing of any final LCD might be.

In the second quarter of 2022, following the completion of a requested medical review and pricing of our DecisionDx-SCC test by Novitas, we obtained a PLA code and began receiving reimbursement from Novitas for DecisionDx-SCC at a rate of approximately $3,800 per test.

In November 2022, CMS set our rate of reimbursement for DecisionDx-SCC at $3,873 per test.

DecisionDx-SCC will go through CMS’s Gapfill pricing process in 2023, which we expect to conclude in late 2023.

We expect our current rate of $3,873 per test to be maintained through the Gapfill process and for the Gapfill rate to go into effect in 2024.

Palmetto MolDX

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

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

To date, Palmetto has not issued a draft LCD for DecisionDx-SCC.

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.

TissueCypher is processed in our Pittsburgh, Pennsylvania laboratory and falls under the Medicare jurisdiction managed by Novitas which previously reviewed TissueCypher.

We receive payments for claims according to the published CLFS rate.

For 2022, the published CLFS payment rate was $2,513 for the test.

On March 24, 2022, CMS determined TissueCypher meets the criteria for “new ADLT” status.

ADLT status exempts TissueCypher from what is called the “14-day rule,” which simplifies the billing process for Medicare patients.

From April 1, 2022 through December 31, 2022, CMS set the initial period rate equal to the original list price of $2,350.

Effective January 1, 2023, the published CLFS rate for TissueCypher is $4,950, which will remain effective through December 31, 2024.

This rate is based on the median private payor rates received between April 1, 2022 and August 31, 2022.

Our IDgenetix test was processed in our San Diego laboratory until the lab’s closure in December 2022.

We intend to process future tests in our Arizona laboratory.

As previously discussed, Noridian is the MAC responsible for administering claims for laboratory services performed in Arizona and California laboratories.

IDgenetix is currently covered under an LCD policy through MolDX and an accompanying billing and coding article through Noridian.

The Medicare coverage includes depression and the following seven additional mental health conditions beyond major depressive disorder:

schizophrenia, bipolar disorder, anxiety disorders, social phobia, obsessive-compulsive personality disorder, post-traumatic stress disorder and attention deficit hyperactivity disorder.

The IDgenetix multi-gene panel is currently reimbursed by Medicare at approximately $1,500 per test.

IDgenetix has historically been billed to Medicare using a multi-test unspecified CPT code along with the IDgenetix test-specific MolDX Z-code (the “IDgenetix Z-Code”).

In February 2023, MolDX notified us that as part of its annual CPT code updates IDgenetix should shift billing to a different multi-test generic gene sequencing CPT code (the “New CPT Code”) and continue using the IDgenetix Z-Code beginning in March 2023.

The New CPT Code is currently contractor priced at $917 while it goes through CMS’s Gapfill pricing process in 2023.

The New CPT Code does not describe all of the components of the IDgenetix test.

We, therefore, do not believe the New CPT Code, in conjunction with the IDgenetix Z-Code, provides additional specificity and thus we believe the New CPT Code is not appropriate for IDgenetix.

Commercial Third-Party Payors

We are actively engaged in efforts to achieve broad coverage and reimbursement for our products, followed by contracting with commercial payors.

Achieving positive coverage reduces the need for appeals and reduces failures to collect from the patient’s commercial payor.

Achieving positive coverage reduces the need for appeals and reduces failures to collect from the patient’s commercial insurance payor.

Even with positive coverage decisions, we still experience delays in time to payment.

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

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.

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Dependence on Third-Party Payors

We receive a substantial portion of our revenue from a small number of third-party payors, primarily Medicare, BlueCross BlueShield affiliates and Medicare Advantage plans.

Our revenue from patients covered by Medicare, Medicare Advantage plans, and BlueCross BlueShield plans, as a percentage of total revenue, was 57%, 28% and 7%, respectively, for the year ended December 31, 2021.

BlueCross BlueShield plans and Medicare Advantage plans represent an aggregation of multiple payors making independent reimbursement decisions;

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

We receive a substantial portion of our revenue from a small number of third-party payors.

Our revenue from patients covered by Medicare as a percentage of total revenue, was 53% for the year ended December 31, 2022.

Additionally, there is a commercial payor from which 12% of our revenue from patients was derived for the year ended December 31, 2022.

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

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

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• 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, and clinically relevant information that will improve the appropriate management of their patients;

• Maintaining a strong reputation with the treating clinician 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;

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Today, our principal competition for DecisionDx-Melanoma is existing traditional clinical and pathology staging criteria.

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.

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 clinicians 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 SkylineDx and Neracare.

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

In the future, we may face competition from SkylineDx who has been working to develop a diagnostic test.

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.

Today, principal competition for the TissueCypher Barrett’s Esophagus Test 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.

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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.

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

With respect to IDgenetix, our competition arises from other parties using the same or similar methods as well as alternative methods of PGx testing.

IDgenetix competes with Myriad Genetics’s GeneSight test, Genomind’s PGx test, and test from numerous small commercial and academic laboratories.

Laboratory Operations

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 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.

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.

Our quality management program ensures the quality of our laboratory services and products through continuous monitoring of a broad range of key performance indicators including technical, customer service and cybersecurity metrics.

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

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

In 2022, we operated laboratory facilities in Phoenix, Arizona;

Pittsburgh, Pennsylvania;

and San Diego, California.

All of our facilities are Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified, College of American Pathologists (“CAP”) accredited labs, most recently the Pittsburgh facility.

We manage these laboratories to produce the volume of testing required to cover our portfolio of products while maintaining efficiencies, redundant capabilities, and business continuity.

Our facilities are positioned to operate in all 50 states, including those requiring additional licenses or certifications such as California, Pennsylvania, Rhode Island, Maryland and New York.

As of December 2022, we have folded operations from our San Diego lab into the Phoenix facility and permanently closed our California location.

Raw Materials and Suppliers

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

While we have developed alternate sourcing strategies for these materials and vendors, and while we have experienced no business interruption due to an inability to source these materials, we cannot be certain whether these strategies will be effective or whether alternative sources will be available when we need them.

If these suppliers can no longer provide us with the materials we need to perform our test services, they do not meet our quality specifications, or we cannot obtain acceptable substitute materials, our business would be negatively affected.

While we have developed alternate sourcing strategies for these materials and vendors and have experienced no business interruption due to an inability to source these materials, we cannot be certain whether these strategies will be effective or whether alternative sources will be available when we need them.

License Agreement with The Washington University

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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 (“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.

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 the Services.

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

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

For each Product or Service that receives FDA approval, premarket approval or premarket notification, we are obligated to make a milestone payment to WUSTL in the mid-four digits.

For each Product or Service that receives FDA approval, premarket approval (“PMA”) or premarket notification, we are obligated to make a milestone payment to WUSTL in the mid-four digits.

For the issuance of the first U.S.

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Under the License Agreement, we were obligated to pay WUSTL an initial license issue fee in the low-five digits.

We are also obligated to make royalty payments to WUSTL equal to (i) a percentage in the mid-single digits of our and any of our affiliates’ or sub-licensees’ net sales of Products and (ii) a percentage in the low-single digits of our and any of our affiliates’ or sub-licensees’ revenue from Services.

We are also obligated to make royalty payments to WUSTL equal to (i) a percentage in the mid-single digits of our and any of our affiliates’ or sub-licensees’ net sales of the Products and (ii) a percentage in the low-single digits of our and any of our affiliates’ or sub-licensees’ revenue from the Services.

We are also obligated to make royalty payments to WUSTL in the low-to-mid single digit percentage of net sales, with minimum royalty payments to WUSTL every six-month period following the first commercial sale.

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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 SCC.

We have secured and continue to pursue intellectual property rights globally, including through patent protection covering analysis of metastasis in cutaneous melanoma, the treatment of cutaneous SCC, BE and gastroenterology, and PGx for mental illness.

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 predicting progression of BE 2 23 25

Expression profiling using microarrays 1 — 1

Strategies for gene expression analysis 1 — 1

Licensed Portfolio from WUSTL

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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 (“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 (the “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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These agreements may be breached, and we may not have adequate remedies for any breach.

We additionally seek to preserve the integrity and confidentiality of our data and trade secrets, such as our proprietary algorithms, by maintaining the physical security of our premises and physical and electronic security of our information technology systems.

We additionally seek to preserve the integrity and confidentiality of our data and trade secrets, such as our proprietary algorithms, by maintaining the

physical security of our premises and physical and electronic security of our information technology systems.

While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach.

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

Clinical Laboratory Improvement Amendments of 1988 (“CLIA”)

Clinical Laboratory Improvement Amendments of 1988

As a clinical reference laboratory, we are required to hold certain federal, state and local licenses, certifications and permits to conduct our business.

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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.

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

State Laboratory Licensing

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, which includes ensuring personnel have the adequate knowledge of training to maintain quality control.

We currently provide laboratory services in all 50 states.

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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.

If a laboratory is out of compliance with New York statutory or regulatory standards, the New York State Department of Health (the “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 the 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, MyPath Melanoma, DiffDx-Melanoma and IDgenetix.

Additionally, we have submitted and are working through the NYSDOH approval process for our Pennsylvania laboratory and TissueCypher.

We are able, under an allowed process, to offer the test service to New York patients while undergoing review.

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 (“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 (the “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.

Among other things, pursuant to the FDCA and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market clearance or approval, marketing and promotion, and sales and distribution of medical devices in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses.

In addition, the FDA regulates the export of medical devices manufactured in the United States to international markets.

Among other things, pursuant to the FDCA and its

implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market clearance or approval, marketing and promotion, and sales and distribution of medical devices in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses.

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

These tests are referred to as Laboratory Developed Tests (“LDTs”).

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.

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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 (“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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The safety and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and Special Controls described above.

Therefore, these devices are subject to the PMA application process, which is generally more costly and time-consuming than the 510(k) process.

Therefore, these devices are subject to the PMA

application process, which is generally more costly and time-consuming than the 510(k) process.

Through the PMA application process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction.

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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.

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 (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 (“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.

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.

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Any failure to comply with these reporting requirements could result in significant fines and penalties.

Because we manufacture our own LDTs solely for use by or within our own laboratory, we believe that we are exempt from these reporting requirements.

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.

Because we and other companies with LDTs are considered healthcare providers rather than device manufacturers, and LDTs do not require approval or clearance from the FDA, we believe that we are exempt from these reporting requirements.

We cannot assure you, however, that the government will agree with our determination.

Despite maintaining it has clear regulatory authority over LDTs, the FDA generally has not regulated them and has traditionally exercised enforcement discretion, choosing not to enforce applicable statutory and regulatory requirements.

Therefore, most of these tests have neither undergone premarket review nor received FDA clearance, authorization or approval for marketing.

We will continue to monitor the FDA’s position as changes in this respect could materially 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, 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.

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.

International Regulations

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Violations of the FCPA’s anti-bribery provisions for corporations and other business entities are subject to a fine of up to $2 million and officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000 and imprisonment for up to five years.

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.

Other countries, including the United Kingdom (“UK”) 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.

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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.

To receive reimbursement from third-party payors, we bill our tests using a variety of CPT codes, as defined by the AMA CPT Editorial Panel.

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.

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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.

The AMA’s CPT Editorial Panel has approved a proposal to create a new section of billing codes to facilitate implementation of this section of PAMA.

These proprietary laboratory analyses codes may be requested by a clinical laboratory or manufacturer to specifically identify their test.

The AMA’s CPT Editorial Panel now issues PLA codes in support of this section of PAMA.

These PLA codes may be requested by a clinical laboratory or manufacturer to specifically identify their test.

If approved, the codes are issued by the AMA on a quarterly basis.

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Our DecisionDx-Melanoma test was granted a Category I MAAA CPT code and was effective January 1, 2021.

Our MyPath Melanoma test was granted a PLA CPT code prior to our May 2021 acquisition of the Myriad MyPath Laboratory.

Our TissueCypher test was granted a PLA CPT code prior to our December 2021 acquisition of Cernostics .

Our DecisionDx-SCC and DiffDx-Melanoma tests were granted PLA CPT codes effective April 1, 2022.

Healthcare Reform

In March 2010, 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 healthcare 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.

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.

The ACA also contains a number of other provisions, including provisions governing enrollment in federal and state healthcare programs, reimbursement matters and fraud and abuse, which we expect will impact our industry and our operations in ways that we cannot currently predict.

This law substantially changed the way healthcare is financed by both government and commercial third-party payors, and significantly impacted our industry.

Among other things, the ACA required medical device manufacturers 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.

Since 2016, there have been efforts to repeal all or part of the ACA, and the previous administration and the U.S.

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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.

Further, there have been a number of health reform measures by the Biden administration that have impacted the ACA.

For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”), into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

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.

It is unclear how any additional healthcare reform measures of the Biden administration will impact the ACA and our business.

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 and, 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.

Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% 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.

Certain of these changes could impose additional limitations on the prices we will be able to charge for our products, the coverage of or the amounts of reimbursement available for our products from third-party payors, including government and commercial payors.

Human Capital Resources

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Pittsburgh, Pennsylvania 31

Home-based throughout the U.S.

Home-based 249

Total as of December 31, 2022

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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.

We are committed to fostering, cultivating and preserving a culture of diversity, equity and inclusion (“DEI”).

We are a company whose mission is improving health through innovative tests that guide patient care.

Keeping people first—patients, clinicians, employees and investors—highlights a critical part of the patient-centric work we do.

Our DEI initiatives are applicable—but not limited—to our practices and policies on recruitment and selection;

compensation and benefits;

professional development and training;

social and recreational programs;

terminations;

and the ongoing cultivation of a work environment built on the premise of equity and belonging for employees of all backgrounds.

We are committed to maintaining:

• Respectful communication and cooperation between all employees

• Teamwork and employee participation that enables the representation of all groups and employee perspectives

• Employer and employee contributions to the communities we serve to promote a greater understanding and respect for diversity

• Equitable policies, processes and practices

All of our employees have a responsibility to treat others with dignity and respect at all times.

All employees are expected to exhibit conduct that promotes inclusion and belonging in the workplace, at work functions on or off the work site, and at all other company-sponsored events.

Our DEI strategy and programs hinge upon three core pillars:

Recruiting a diverse workforce

Building a culture of inclusion

Promoting transparency

To ensure we are cultivating an authentic company culture, we will take the following actions:

• Conduct annual diversity awareness/unconscious bias training

• Monitor diversity data, including compensation data

• Offer mentorship programs or networking groups

• Support employee resource groups

As of December 31, 2022, our employees were 65.7% female and 34.3% male.

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Females represented 35.5% of employees in executive positions.

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.

Affirmative Action

Our DEI practices reaffirm our belief in and commitment to equal employment opportunity (“EEO”) for all employees and applicants in all aspects of employment.

We have developed and maintained a written Affirmative Action Program (“AAP”).

Our President and Chief Executive Officer supports the AAP and urges each employee to commit to carrying out the intent of the AAP and this statement.

We maintain an audit and reporting system to determine overall compliance with its EEO mandates.

The EEO Administrator oversees the AAP development, modification, implementation, effectiveness and reporting requirements, and conducts management updates.

We will strive to ensure all aspects of employment, including recruitment, selection, job assignment, training, compensation, benefits, discipline, promotion, transfer, layoff and termination processes remain free of illegal or unethical discrimination based upon race, color, religion, sex (including pregnancy, sexual orientation, gender identity or transgender status), age, national origin, genetic information, marital status, political affiliation, disability, status as a parent, protected veteran status, or a person’s relationship or association with a protected veteran.

Regular review helps ensure compliance with this policy.

Employee Engagement

We value the unique perspective our employees bring to the organization and encourage open channels of communication.

In June 2022, we conducted our second annual employee engagement survey to understand what was working well at Castle and what opportunities we had for improvement.

We received feedback from over 89% of our employees and achieved an engagement score of 81%, meaning that 81% of our employees are engaged or enthusiastically engaged in the culture at Castle.

Our engagement score was considerably higher than the healthcare benchmark average of 53% for other healthcare companies who conducted the same employee engagement survey in 2022.

Compensation, Benefits and Professional Development

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• an annual bonus opportunity;

• equity compensation, including stock options and/or restricted stock units and an employee stock purchase plan;

• equity compensation, including stock options and/or restricted stock units (“RSUs”) and an employee stock purchase plan;

• medical, dental and vision plans;

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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