What happened
Castle Biosciences (CSTL 4.25%) stock was absolutely crushing it on Friday, with shares skyrocketing 54.4% as of 11:47 a.m. ET. The huge gain came after Novitas, a regional Medicare administrative contractor, said that it is withdrawing a draft policy that would not have covered Castle's DecisionDx cancer tests for squamous cell carcinoma (SCC) and melanoma.
In addition, Castle announced that it will present new data for its DecisionDx-SCC and DecisionDx-Melanoma tests this weekend. The company is scheduled for a podium presentation and a poster presentation at the American Head & Neck Society's (AHNS) 11th International Conference on Head and Neck Cancer in Montreal.
So what
Novitas' move is definitely the bigger catalyst for Castle. The genetic-testing stock plunged in June following the initial draft policy that would have denied coverage for DecisionDx-SCC. Today's gains recaptured much of that sell-off.
This reversal by the Medicare administrative contractor came as a complete shock. Novitas' original local coverage determination (LCD) was scheduled to go into effect on July 17, 2023.
Castle's presentations this weekend, on the other hand, probably won't have huge surprises. The study for which the company plans to present data for DecisionDx-SCC expands on a previously published study.
Now what
Novitas stated that it plans to create a new draft LCD for Castle's DecisionDx tests. This draft policy will be released for public comment at some point in the near future.
It remains uncertain whether Novitas will ultimately decide to fully cover DecisionDx-SCC and DecisionDx-Melanoma. However, Castle at least now has a temporary reprieve.
