Houston Cancer Diagnostics Firm Castle Biosciences Raises $11.8M

Xconomy Texas — 

Castle Biosciences, a maker of biomarker-based tests for rare cancers, said Wednesday it has raised $11.8 million in a Series E investment round.

The money will largely be used to expand the clinical availability of its gene expression profile test for patients with cutaneous melanoma. The tests were first made available last year. Castle, which is based in the Houston suburb of Friendswood, TX, is also gearing up for the launch of its biomarker assay for patients with esophageal cancer in early September.

“This revolutionizes the identification of patients, leading to better treatment,” says Derek Maetzold, Castle’s founder and CEO.

That remains to be proven. The tests for skin melanoma and esophageal cancer join Castle’s diagnostic assay for eye cancer, which was released in 2010,under the DecisionDX umbrella of assays. The company last year began working to develop a diagnostic test for rectal cancer, which could be available by the end of 2015, Maetzold says.

Enabling healthcare providers to develop a more personalized treatment plan for patients with rare cancers is at the heart of Castle’s innovations, Maetzold says. Current diagnostic methods apply a one-size-fits-all approach that can result in unnecessary chemotherapy or fail to fully diagnose the progression of the disease.

For example, Castle Biosciences says its melanoma test can detect high-risk patients who are currently diagnosed as lower risk. “The best tools today miss two out of three people who are at risk,” Maetzold says.

For patients with esophageal cancer, standard treatment involves chemotherapy and surgery. But for up to a third of them, that therapy has no effect. “When you look at tissues after the surgery and chemo, they looked like they never even received treatment of chemotherapy,” Maetzold says.

The Series E investment round makes a total of $19 million raised by Castle. Investors included HealthQuest Capital and previous firms such as Mountain Group Capital and Affiliates and Longfellow Venture Partners. Garheng Kong, managing director at HealthQuest, is joining Castle’s board of directors.

Castle does not sell the assays as kits to healthcare providers. Instead, physicians send tissue samples to Castle’s lab in Phoenix where the assays are used to evaluate the samples. Because of this, the assays are considered to be lab-developed tests and are regulated under the Clinical Laboratory Improvement Act, not the FDA.

But FDA officials recently released draft guidance to Congress to bring the supervision of such tests to the agency. Such a change wouldn’t happen for several years, Maetzold says, but he supports it.

“It’s something we’re aware of, and we’re planning for it,” he says.