Castle Biosciences partners with SciBase to develop atopic dermatitis test

FRIENDSWOOD, Texas - Castle Biosciences, Inc. (NASDAQ:CSTL), a diagnostic company with a robust gross profit margin of 82% and strong balance sheet showing more cash than debt, has entered into a collaboration and license agreement with SciBase Holding AB to develop a diagnostic test that predicts flares in patients with atopic dermatitis, according to a press release statement issued Monday. According to InvestingPro data, the company maintains excellent financial health with a current ratio of 9.37.

The collaboration will utilize SciBase’s Electrical Impedance Spectroscopy technology, which includes both desktop and point-of-care instruments. The companies aim to create a test that can predict flares before symptoms appear, allowing patients to initiate rescue treatment plans earlier. Castle Biosciences, currently valued at $541 million, has demonstrated strong revenue growth of 38% in the last twelve months.

"The intent of this initial development program is to identify a test that can pre-symptomatically predict flares and, thus, enable patients to initiate rescue treatment plans to minimize or altogether avoid a flare," said Derek Maetzold, chief executive officer of Castle Biosciences.

Under the agreement, the companies will jointly explore and develop clinical indications for dermatologic diseases. SciBase’s initial territory includes the EU, Switzerland, United Arab Emirates, Japan and South Korea, while Castle’s territory covers North America.

The financial terms include SciBase receiving a single-digit royalty percentage on Castle’s gross margin, a low double-digit percentage mark-up on product sales to Castle, and a $5 million milestone payment when Castle’s annual sales reach $50 million.

While development costs will be shared, SciBase will defer its clinical development costs for the initial indication, with reimbursement coming from future royalty and milestone payments.

According to the companies, there could be up to 24 million patients with atopic dermatitis in the United States, with the majority experiencing flares despite maintenance treatment.

Castle Biosciences currently offers tests for skin cancers, Barrett’s esophagus and uveal melanoma, while SciBase specializes in early detection and prevention in dermatology. While analysts anticipate a sales decline in the current year, InvestingPro analysis reveals 10+ additional key insights about Castle Biosciences’ financial outlook. Discover comprehensive analysis and Fair Value estimates in the Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Castle Biosciences reported a 21% year-over-year revenue increase for the first quarter of 2025, driven by a 17% growth in test volumes and achieving 81% adjusted gross margins. The company has adjusted its product offerings by discontinuing the IDgenetix test due to reimbursement issues and acquiring Previse, a firm specializing in gastrointestinal diagnostics, to strengthen its TissueCypher platform. This acquisition aims to enhance Castle’s offerings in esophageal cancer care, with the TissueCypher test showing a 117% volume increase year-over-year in the first quarter. Despite these positive developments, Scotiabank has revised its price target for Castle Biosciences to $40, maintaining a Sector Outperform rating, while BTIG has adjusted its target to $32, keeping a Buy rating.

Castle Biosciences also confirmed the efficacy of its DecisionDx-UM test for uveal melanoma through new validation data, supporting its use as a standard of care in ocular oncology. Additionally, the company is preparing to introduce a therapy guidance test for atopic dermatitis by the end of 2025. KeyBanc Capital Markets reiterated an Overweight rating with a $36 price target, citing the company’s strong first-quarter performance and strategic moves to optimize its test portfolio and salesforce. The company remains focused on expanding its dermatology and gastrointestinal salesforces to drive growth in specialized diagnostic tests.

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