What happened
Shares of Castle Biosciences (CSTL 0.57%) closed this week down 12.6% for the week, after being down as much as 18.3% for the week, according to data provided by S&P Global Market Intelligence. The healthcare company closed last week at $26 a share before falling to as low as $18.32 on Thursday. The stock fell after the company announced trial results for one of its diagnostic tests.
So what
Castle specializes in diagnostic tests to help guide physicians toward better patient care. It makes and markets tests to help determine treatment plans in dermatologic cancers, uveal melanoma, Barrett's esophagus, and mental health conditions.
On Wednesday, the company released a study regarding its IDgenetix test. The results showed that patients diagnosed with moderate to severe depression saw a 35% increase in medication response and a 64% increase in remission compared to patients whose medication was not guided by IDgenetix. The test was shared in a poster presentation at the American Psychiatric Association's annual meeting in San Francisco.
Now what
It's clear that investors and analysts were unimpressed by the test's results. The pharmacogenomic (PGx) test uses a 15-gene variant panel with drug-drug interaction data and lifestyle factors to provide medication recommendations for patients with mental health conditions, such as depression and anxiety. It may take more to move the needle for the stock, as the company has been consistently unprofitable.
Castle has been able to increase revenue, but not without adding growing losses. In the first quarter, it reported revenue of $42 million, up 57% year over year, led by a 73% increase in tests over the same period last year. However, the company lost $29.2 million, compared to a $24.6 million in the first quarter of 2022.
One bright spot is the growth in sales for its dermatologic tests, DecisionDx-Melanoma and DecisionDx-SCC combined, which saw sales rise almost 40% year over year and nearly 10% sequentially.
