Earnings Call: Q2 2021

Aug 9, 2021

Quarterly report

Good afternoon, and welcome to Castle Biosciences' second quarter 2021 conference call. As a reminder, today's call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question and answer session. I would like to turn the call over to Camilla Zuccaro, Executive Director, Investor Relations and Corporate Communications. Please go ahead. Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences' second quarter 2021 financial results conference call. Joining me today is Castle's Founder, President, and Chief Executive Officer, Derek Maetzold, and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, August 9th, 2021. Therefore, if you are listening to the replay or reading the transcript of this call, any time-sensitive information may no longer be accurate. A recording of today's call will be available on the investor relations page of the company's website for approximately three weeks. Before we begin, I would like to remind you that some of the information discussed today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company, including expectations and assumptions related to the impact of the COVID-19 pandemic, and are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties, and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021, and in the company's other documents and reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change. In addition, some of the information discussed today includes financial metrics such as adjusted revenue and adjusted gross margin, which are non-GAAP financial measures. We believe these metrics provide useful supplemental information in assessing our revenue and cash flow performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the investor relations page of the company's website. I will now turn the call over to Derek. Thank you, Camilla, good afternoon, everyone. Thank you for joining us today for Castle's second quarter 2021 earnings call. This afternoon, I will discuss highlights from the quarter and recent progress against our growth initiatives. Frank will then provide additional detail on our financial results and performance. I'd like to start today's call by thanking the Castle team. On the sales side, we were able to conduct sales training updates in person in the first quarter, and we entered the second quarter fully engaged as our clinician customers continued to open up their practices. It is our team's hard work that contributed to an exceptional quarter, and by exceptional, I mean that we had record test report volume in a single quarter for each of our proprietary gene expression profile tests. To say it differently, we continue to execute on our long-term growth initiatives, furthering our position as a leader in dermatologic diagnostics. In the second quarter of 2021, we delivered total revenue of $22.8 million, a 79% increase over the second quarter of 2020. Additionally, our adjusted revenue, excluding the effects of revenue adjustments related to tests delivered in prior periods, was $22.9 million. It was 120% increase over the second quarter of 2020. As you may recall, we provided revenue guidance in May for the full year 2021. Due to our strong performance and expected continued momentum, we are raising our 2021 revenue guidance for the full year to $80 million-$93 million, compared to our previously provided guidance of $80 million-$83 million. We delivered 7,007 total gene expression profile reports in the second quarter of 2021, compared to 3,314 in the same period of 2020. This includes 5,128 DecisionDx-Melanoma test reports delivered, despite cutaneous melanoma diagnoses remaining below historical 2019 levels by approximately 12%, based upon our analysis of third-party data. The year-over-year growth in DecisionDx-Melanoma test reports of 70% reflects gains in both diagnoses compared to 2020, as well as significant gains in market penetration. We understand that comparing test report growth to 2020 may be less informative given that we believe the pandemic impacted us the hardest during the second quarter of last year. To provide a different perspective, our second quarter 2021 test report volume for DecisionDx-Melanoma is a 39% increase over the second quarter of 2019, and this is in the face of the decreased cutaneous melanoma diagnoses I just mentioned. Although we cannot be certain of any potential future impacts of COVID-19, including the emergence and spread of variants, we believe the positive momentum we have seen will continue. The expansion of our sales team is complete. Beginning on July 1, our dermatology clinician-focused outside sales force approximately doubled in size to the mid-60s, and each of our sales representatives is selling all three of our skin cancer diagnostic product lines. Utilizing our existing sales channels and calling on dermatologists as their primary call point, followed by Mohs surgeons who work in skin cancer, including surgical oncologists and head and neck surgeons, and dermatopathologists. We have seen that our market is promotionally responsive, and we believe that our continued increase in market penetration is being positively impacted by three promotional variables. Number one, nearly 90% of our calls in the second quarter were in person, up from just over 75% in the first quarter of 2021. Number two, the number of average calls per day per sales reps continues to improve, and specifically more than doubled in the second quarter of 2021 compared to the second quarter of 2020. Although it is still below the pre-COVID first quarter levels of 2020 by approximately 20%. Number three, we are seeing a continued return to in-person peer-to-peer programs to the extent that for the first half of 2021, we've already exceeded our totals for all of 2020. Thus, we believe that we are well positioned for continued growth for the remainder of 2021 due to these three variables, combined with a doubling of our dermatology-focused sales team. Turning to our DecisionDx-SCC test for patients diagnosed with high-risk cutaneous squamous cell carcinoma and one or more risk factors. We delivered 784 test reports in the second quarter of 2021. We remain extremely pleased with the rate of adoption for this test. We believe one clear differentiator for Castle is our position as a leader in dermatologic GEP tests. We have seen and expect to continue to see value to leveraging our established dermatologic commercial channels for SCC, as well as for our comprehensive diagnostic test offering. Third-party data shows that over 90% of dermatologists and Mohs surgeons diagnose both melanoma and SCC, providing us with leverage that we are seeing in the field. More specifically, for the first six months ended June 30, 2021, approximately 70% of clinicians who order DecisionDx-SCC also ordered DecisionDx-Melanoma. We are a data-driven, evidence-based company, and we invest heavily in evidence development. At this year's American Head and Neck Society 10th International Conference on Head and Neck Cancer, we presented new data demonstrating that DecisionDx-SCC complements current risk assessment methods in patients with cutaneous squamous cell carcinoma of the head and neck. Archival primary tumor specimens and associated data from a cohort of 278 patients from 33 different clinical sites were included in the study. The patients had high-risk SCC located on the head or neck, and 54 patients or 19% overall, developed regional and/or distant metastasis. Patients received either a Castle Class 1 low-risk biological test result, a Class 2 moderate biological risk test result, or a Class 2B high biological risk test result, had significantly different three-year metastatic-free survival rates of 92.1%, 76.1%, or 44.4% respectively, with a P value of less than 0.001. Furthermore, as expected, using multivariate Cox regression analysis, the DecisionDx-SCC test was found to be an independent predictor of metastasis when compared to AJCC staging. Additionally, and I would say more importantly, DecisionDx-SCC had a substantially higher hazard ratio, 9.07 compared to 2.51 with AJCC staging, demonstrating the increase in risk stratification compared to AJCC staging alone. We plan to continue investing in evidence development for all of our gene expression profile tests, as it remains a key component of our growth strategy, supporting both adoption of our test by clinicians and reimbursement by commercial payers. As we previously discussed, the technical assessment dossier for our DecisionDx-SCC test was submitted to Palmetto and Noridian in the 2Q of 2020. We received confirmation of acceptance of the submission as being complete in the 3Q of 2020. Although there can be no assurances, we continue to plan for a draft Local Coverage Determination or LCD to be posted in 2021. I remind you that there is no specific timeframe under which Palmetto and Noridian must operate. Let's discuss our comprehensive diagnostic test offering for difficult-to-diagnose melanocytic lesions, also called unequivocal, uncertain, or suspicious. As you may recall, in April, we announced our plans to acquire myPath Melanoma, and the deal closed in late May. myPath Melanoma and DecisionDx, DiffDx-Melanoma are gene expression profile tests designed to provide an objective and comprehensive diagnostic test offering to aid dermatopathologists and dermatologists in characterizing these difficult-to-diagnose melanocytic lesions as likely to be benign, malignant, or in rare cases, intermediate risk for malignancy. Let me remind you, it is estimated there are over 2 million biopsies of suspected melanoma annually in the U.S. Thankfully, approximately 85% of these biopsies receive a definitive diagnosis of either benign or malignant, as determined by a dermatopathologist using traditional microscopic analyses. Up to 300 lesions, or 15%, are not confidently diagnosed with traditional histopathology. These difficult-to-diagnose melanocytic lesions do require additional or ancillary testing before a definitive diagnosis can be reached. It is important to reduce this diagnostic uncertainty so the patient's treatment plan can be determined and implemented. In the case of a benign lesion, the treatment plan is generally do nothing on that lesion. In the case of a malignant lesion, the clinician would, at a minimum, perform a wide local excision, and depending on the depth and other characteristics, pursue a sentinel node biopsy procedure as well. Let's talk about our acquisition of the Myriad myPath laboratory and the Myriad myPath Melanoma test. As you may recall, a few years ago, we began development on our own DiffDx-Melanoma test to address this unmet medical need to provide improved clarity around difficult-to-diagnose lesions. In addition to developing a test with high sensitivity and specificity, our target product profile included the criteria of having both a low technical failure rate, that is, being able to report a test result out on more than 95% of orders, as well as a small intermediate test result. Our assessment of the published literature and market research was that while clinicians and dermatopathologists valued the myPath Melanoma test, they perceived the technical failure rate and intermediate rate of the test as being high. As you know, we succeeded in achieving our target product profile. However, we also knew that we would be investing additional performance studies, including additional work in pediatrics, to serve our customers and build market share and penetration while competing with Myriad for the same patient population. Not to mention that we'd also have an estimated 18-to-24-month wait for Medicare coverage. Myriad announced its intention to divest myPath Melanoma in the fourth quarter of 2020, just as we were making our DiffDx-Melanoma test available for clinical use. We determined that housing both gene expression profile tests for use in difficult-to-diagnose lesions and providing structure to ordering could enable us to serve more patients more quickly, significantly advance the combined evidence development, and move forward reimbursement in a significant manner. I am pleased to announce that even though we only had one full month of offering the combined diagnostic test offering, that is June, we were able to deliver 627 test reports for myPath Melanoma and DiffDx-Melanoma combined for the second quarter, a record number of test reports delivered for our suspicious pigment lesion offering for a quarterly period. Furthermore, we were also successful meeting our objective of upgrading the myPath Melanoma test ability to provide clinically actionable results. From less than 80% when offered as a standalone test to more than 95% when offered in combination with DiffDx-Melanoma. This is a fantastic achievement and results in more patients getting an actionable test result more of the time. In addition to this performance, it's worth pointing out that the National Comprehensive Cancer Network, or NCCN Guidelines, support the use of ancillary testing, including gene expression profile tests for indeterminate melanocytic neoplasms following histopathology, meaning both tests are supported by the NCCN Guidelines. As you should expect, our reimbursement team is already focusing on driving appropriate payment from commercial payers through the use of both a more extensive base of evidence and NCCN Guidelines support. In summary, we delivered an excellent quarter of financial performance with a strong execution on our growth initiatives, delivering on our commitment to our stakeholders and continuing to create value for patients and stockholders. I will now turn the call over to Frank, who will provide additional detail relating to our financial results. Thank you, Derek, and good afternoon, everyone. We are pleased that the investments we have made in our growth initiatives, along with solid execution from the Castle team, enabled us to deliver a strong quarter. We reported revenue of $22.8 million in the second quarter of 2021, compared to $12.7 million in the second quarter of 2020, a 79% increase. Overall, the increased revenues reflect higher report volumes for both DecisionDx-Melanoma and DecisionDx-UM and higher per-unit rates, partially offset by lower positive revenue adjustments related to tests delivered in prior periods. Our gross margin during the second quarter was 83%, essentially flat to the second quarter of 2020. Our adjusted gross margin, excluding the effects of intangible asset amortization and revenue associated with test reports delivered in prior periods, was 84%, compared to 79% for the second quarter of 2020. Going forward, we expect amortization of the acquired intangible asset to be approximately $700,000 per quarter. Our total operating expenses, including cost of sales for the quarter ended June 30, 2021, were $31.6 million, compared to $13.4 million for the same period last year. The largest driver of the increase was higher SG&A, which increased by $10.4 million for the three months ended June 30, 2021, compared to the same period in 2020, attributable in large part to higher personnel costs associated with our increase, which includes salaries, bonuses, benefits, and stock-based compensation. These higher personnel costs were primarily attributable to the expansion of our sales and marketing teams, as well as administrative support functions. The remainder of the increase in SG&A was primarily associated with conferences and training events, as well as higher travel costs as our commercial team returns to in-person events, as Derek mentioned. R&D expense increased by $4.1 million in the second quarter of 2021 compared to 2020, and was primarily associated with costs incurred in our clinical studies and associated increases in personnel costs attributable to additional headcount to manage and run these studies. As we have discussed, the investments we are making in our R&D activities are a key part of our growth initiatives. We expect our R&D expense to increase further as we continue to support our commercial products and pipeline initiatives, which we believe position us well for near and long-term growth. Total non-cash stock-based compensation expense, which is allocated among cost of sales, R&D, and SG&A, totaled $4.8 million for the quarter ended June 30, 2021, compared to $1.6 million for the quarter ended June 30, 2020. We expect further increases in stock-based compensation expense in future periods, reflecting both higher post-IPO stock option valuations as well as additional awards outstanding due to growth in our headcount. Our net loss for the second quarter of 2021 was $8.8 million, compared to a net loss of $1.4 million for the second quarter of 2020. Diluted loss per share attributable to common stockholders for the second quarter of 2021 was $0.35 a share, compared to diluted loss per share attributable to common stockholders of $0.08 a share for the second quarter of 2020. Operating cash flow for the six months ended June 30, 2021 was negative $10.1 million, compared to positive $13.3 million for the same period in 2020, and was primarily attributable to the net loss, increases in working capital requirements, and recoupment of a portion of the Medicare advanced payment, partially offset by non-cash charges. You'll recall that the prior year operating cash flow benefited from the receipt of $8.3 million associated with the Medicare advanced payment. This year, beginning in April, recoupment of the advanced payment began. As of June 30, 2021, $2.2 million has been applied to the balance in recoupment. Investing cash flows during the six months ended June 30, 2021 were primarily associated with a $33 million payment for the acquisition of myPath Melanoma. We had cash and cash equivalents at June 30, 2021 of $368 million and no debt. We look to the rest of the year, we have raised our annual revenue guidance to $89 million-$90 million to reflect the performance of the company over the first half of the year and the belief that the current recovery trends should continue for the remainder of the year. We continue to invest aggressively in our growth plans, which revolve around our commercial team expansion, evidence development, and progression of our pipeline tests, all in order to continue to create value for clinicians, patients, and stockholders. I'll now turn the call back to Derek. Thank you, Frank. In summary, we are extremely pleased with our second quarter performance across the entire company. On commercial execution, coupled with continued evidence development, enabled us to drive record test report volume for each of our proprietary gene expression profile tests, and this translated into our second highest GAAP revenue and record adjusted revenue in one single quarter. I'd like to emphasize that our strong second quarter results and continuing momentum can be attributed to our purpose-driven Castle team. Their dedication and commitment have taken us to the next level in our business and continue to make an impact on the lives of patients with skin cancer and other dermatologic diseases with high unmet clinical needs. This concludes our remarks. Thank you for your continued interest in Castle. Operator, we are now ready for Q&A. The first question is from Catherine Schulte with R.W. Baird. Please proceed. Hey, guys. Congrats on the quarter, and thanks for the questions. May I ask first, can we just get your thoughts on the Delta variant impact on melanoma diagnoses and rep access? Just what kind of trends did you see in July, and what are your assumptions embedded in your guidance for the balance of the year? We didn't poll July since this closed last week. Our qualitative feedback is that across the country, we aren't seeing anything necessarily in terms of rep access, although there's noise in corners as you would expect to see. It's way too early to look at third-party diagnosis, at least the data we purchase in terms of predicting July. At this point in time, we're assuming that there could be a modest impact. We're not assuming anything like it goes back to second quarter, third quarter last year. We're assuming that between the improvement that we saw in 2Q21 over 1Q21 in terms of access and calls per day, as well as even though diagnoses are down still about 12% compared to '19, we can't see how we're going to see a shutdown in medical commerce, I guess that would significantly alter our guidance right now. That being said, we could be surprised here in a few months in terms of the severity of a reaction. As of right now, we aren't hearing about that, but it's still early, Catherine Schulte. Okay, great. For the Reopen DecisionDx-Melanoma LCD, how did those open meetings go? Are you confident that MolDX has the data that they need to reaffirm your existing coverage criteria? Maybe last question first. I think the position that was put into the draft LCDs and are posted sort of wraps up, I presume, where Medicare and Palmetto and Noridian, WPSG, et cetera themselves, which is that you have a couple of critical articles here, but we don't see anything that should result in a change in coverage. We don't have any other intelligence that would say otherwise at this point in time. I think in terms of the actual meetings that we attended, participated in, there was no negative discussions or questions or presentations. I think we had an opportunity to get across quite succinctly, by using a number of existing customers as well as ourselves to reinforce the strong wealth of data of what 31, 32 publications out there that support the coverage decisions that they made a year, 1.5 years ago now. I think the meetings went well. No indication of anything different than I guess I would say from our perspective. Frank, you want to add any comments? I agree. Maybe last one from me. Your 10-Q noted that you recently started 2 additional disease studies for pipeline tests for new indications. Any color you can share on what those new indications are? Not yet, Catherine. We'll look at the right time when we think it's appropriate to talk a little bit more detail about that. For now, we're not disclosing the indications just for some competitive reasons. All right, great. Thank you. Thank you, Ms. Schulte. The next question is from Thomas Flaten with Lake Street Capital Markets. Please proceed. Hey, guys. Thanks for taking the questions and congrats on the quarter as well. I was wondering if you guys could give us a quick progress report on the AD psoriasis project that you have ongoing in terms of bringing new sites in, et cetera. Yeah. Me? Sure. Qualitative only, not quantitative here. We completed input from not only our steering committee, but a number of other thoughtful clinical scientists, dermatologists back in the first half of the year. The protocol was completed, locked up through our central IRB. We are in the process of recruiting sites and opening up centers under contracts and IRB approval. I would say that maybe on a qualitative basis, we've been in skin cancer diagnostics, I guess, though we were quite small in 2010, 2011, maybe it doesn't count. I would say that our clinical research operations team has never seen the kind of interest and veracity of people raising their hand up saying, "Can I be involved?" with any of our programs so far. I think we've done some exciting things, not only with cutaneous melanoma, but also the high-risk squamous cell test. That tells me that we were correct in our assessment and the input that we were getting from some of our KOL advisors that there is such a huge unmet need here. If you could solve this, it's going to be a fantastic gain in patient care, which should be for ours. I would say, perhaps next time we go and chat, we'll provide some numbers in terms of progression, in terms of centers and sites and patients enrolled. So far it's early, and we're seeing nothing but things that are actually exceeding our internal targets in terms of recruitment. Great. Just one more for me. Given everything that's going on, I know you've only had the new field team out there for 5, 6 weeks or so, do you have any thoughts on when we might expect to see that new expanded field team at kind of a run rate performance or production, given that there's a lot of new folks out there? 12, 18 months? Yeah. Historically in non-COVID times, I would say we would sort of expect to have people 100% effective or fully effective, probably what, Frank? 5, 6 months in post hire. These individuals largely came on board, I think, in kind of the April, May-ish period. Completed sort of their phase II training just before the 4th of July. We had a national meeting here in July to kind of regroup the entire field force together and march out hard beginning August 1st. I think while I would say we should be able to move that up, I don't have any data for that. I would still think that our sort of revised guidance includes the positive impact of that group, which we probably see more so in the fourth quarter than the third quarter, just based on assumptions of timing. The flip side of that, to go back to Catherine's question, would be, are we going to advise that there's kind of a retrenchment on rep access or patient visits by doctors that we don't account for? So I would assume we're going to see continued progression in 3Q compared to second quarter and 4Q compared to the third quarter. The question would be, how hard do we hit 2022 running? Are we going to see continued impacts on promotional access or not? So far we aren't seeing that, as I commented earlier, but I think that's the plus and minus there. Probably 4, 5, 6 months out is when you should start seeing a real drilling, right, Frank? I agree. All right. Thanks, guys. Congrats on the quarter. Thanks, Thomas. Thank you, Mr. Flaten. The next question is from Sung Ji Nam with BTIG. Please proceed. Hi, thanks for taking the questions, and congrats on the quarter. For myPath Melanoma, the DiffDx platform, obviously very impressive volume there already with just 1 month contribution from myPath Melanoma. Was there a backlog heading into that post-acquisition, or is this how we could model in terms of the volume cadence for the rest of the year? If you could talk about that. Also, if you might be able to talk about the split between myPath and DiffDx. If not, then we'd love to hear if it's playing out as you guys are expecting in terms of how you're positioning the different tests available. Yeah. I don't have the split in front of me here, and that probably, going forward, will be less relevant. I don't think there was a backlog of tests. Now that being said, our field forces did not mention the impending acquisition. I don't think Myriad's forces did either. I don't know if that meant people were kind of at all. I don't have any kind of sense on that, Sung Ji, so maybe there was some pent-up demand there, but I'm not sure if that's the case. Going forward are how we position these tests. Our perspective was to focus on the core of what's best for the patient first. I think that what does that mean for us now that we kind of have both of these assets and can do something better than we could before just doing it alone? I think that there is clearly more evidence that was developed by Myriad over the years. They had statistics overall on accuracy that I don't think was much better than or different from, in fact, I would argue ours could be slightly better, but they had more data and more of it published. We launched our DiffDx-Melanoma test back in November. We were uncomfortable with the level of pediatric data that we had in our validation set, so we chose not to even test the pediatric population till we developed additional data. I think overall, how we present this to our customers, which are both dermatopathologists and beginning this month, also dermatologists, is to say, "Hey, if you have an uncertain diagnosis or you're scratching your head because it's difficult to diagnose and you don't want to call it benign in case you're wrong, but it's also a big leap to call it malignant melanoma, our test is an option for you." What we'd like to do, unless you object to us, is to go ahead and run the myPath Melanoma test first. Why is that? Just based on amount of data, no other reason. If the myPath Melanoma test fails to report a test result, which is around, I think, what, 11%, 12% of the time in published literature, we can go ahead and offer you to run our DiffDx-Melanoma test as a backup to that. If we get an indeterminate score or an intermediate result out of the myPath Melanoma test, we can also run our DiffDx-Melanoma test. Rather than having us give you an actionable report result, which we would think would be benign or malignant 75%, 80% of the time, we're able to go ahead and show even just in the month of June, we were able to take that and make it above 95%. That's a pretty good upgrade to the ability to have clarity around uncertain diagnoses. Wouldn't you agree, doctor? That's the discussion that we're having with physicians. I think it's the right call to make because it does the best for patient care, and as long as we're aligned, that's good for us. On the back end of that, the myPath Melanoma test already has an existing LCD, as you know. It already is established as an ADLT test as well. That does pull through reimbursement for us, at least on the Medicare side, quite substantially. All around, it's a good outcome for patient care if we organize test ordering across, as I just told you. At the end of the day, I would expect the bulk of the differential test orders to probably be the myPath Melanoma test for the time being, a minority being DiffDx. It would be those really that are non-reportable because of test failure, or they have an intermediate myPath result. As we develop additional evidence, we may find out that maybe there are populations where our DiffDx-Melanoma test outperforms the myPath test, in which case, we'll make adjustments in a very transparent fashion to customers. Does that answer the questions? I think so. Yeah. Oh, I know. Yeah. Super helpful. So modeling-wise- Sorry. Yes. Modeling-wise, of course, you would say, of course, you would say this, Derek Maetzold, but I guess I would not go ahead and jump from first quarter to second quarter. I would probably let us get third quarter numbers out, and that probably becomes more tangible going forward. Gotcha. That's super helpful. I just have one more follow-up. Just thought, we'd love to hear the progress you're making with the commercial payers, especially, you mentioned the NCCN Guidelines inclusion for the DiffDx and myPath Melanoma. You received recent- For the SCC, DecisionDx-SCC getting the KOL, the expert panel recommendation for that test as well, just kind of would love to hear how those conversations are progressing with the private payers. First of all, on the differential side of the business, our comprehensive diagnostic offering, which includes both myPath and our DiffDx-Melanoma test. We only began those interactions, I guess, call it late June, probably July, when kind of things got moved over well, we could run the test and we're reporting it out well to customers. I think it's too early to see how we impact that now, my sense is that since the myPath Melanoma test had been offered up for strategic divestment since last fall, is that there wasn't much attention paid by the Myriad managed care folks on moving that test forward because of lead time. At least that's our belief. I think we're kind of starting from a ground zero to something interesting. I think as we move through the third and fourth quarter, my hope would be that pointing to not only Medicare coverage, a substantial database, but also NCCN guideline inclusion should accelerate against kind of a fairly low base. I think it's too early to comment on success or failure on that one, Sung Ji, except that certainly is a heavy focus of our team. That only started here late June, early July. In terms of squamous cell carcinoma, we are moving forward on that effort as well. Our sort of internal models was that we would be successful in appealing and getting paid on a one-off basis by a claim-by-claim basis in 2021, and that's part of the reason why we aren't accruing revenue. Our historical perspective would be the sort of significant commercial players are likely to want to hold back until they see something from Medicare. That could be a draft LCD, for example, being posted. I think there's an opportunity in 2022 to have us see progress, but I would say that still is early, and I would agree with you, that was a very nice article in terms of really looking at sort of some influential KOLs and high volume physicians, to be frank, coming together and recognizing that we need something better and this looks to be like a better solution. Great. Thank you so much. Thank you, Ms. Nam. There are no additional questions waiting at this time. I will now pass it back to Derek for closing remarks. This concludes our second quarter 2021 earnings call. Thank you again for joining us today and for your continued interest in Castle Biosciences. That concludes the Castle Biosciences second quarter 2021 conference call. Enjoy the rest of your day.