CASTLE BIOSCIENCES INC

We lease approximately 46,000 square feet of commercial real estate located in Phoenix, Arizona under two agreements with terms expiring in July 2033 and February 2034, respectively. Each contract provides two five-year renewal options, none of which have been exercised. Most of the square footage at these locations is dedicated laboratory space.

We lease approximately 45,000 square feet of commercial real estate located in Pittsburgh, Pennsylvania. This lease commenced in April 2023 under a term of 10.5 years, expiring in October 2033, and provides us with a single five-year renewal option which we have not used. A majority of the square footage in this facility is dedicated for laboratory use.

We lease approximately 55,000 square feet of office and laboratory space in Scottsdale, Arizona under a lease that we entered into in May 2025. The lease covers a term of 143 months that will expire in April 2037. We also have a right of refusal to lease any additional adjacent space that may become available. The lease grants us two optional five year term extensions and a one-time option early termination right at the end of the 96 month, subject to certain conditions and payment of an early termination fee.

We believe that our existing facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms.

• Billing for our products is complex and requires substantial time and resources to collect payment.
• We rely on third parties for sample collection, preparation and delivery. Any defects in sample collection or preparation by such third parties and any delays in delivery of such samples could cause errors in our test reports and affect our ability to deliver test reports in a timely manner or at all, which could significantly harm our business.
• We rely on our database of samples for some of the development and improvement of our products. Depletion or loss of our samples could significantly harm our business.
• If one or more of our primary clinical laboratory facilities become damaged or inoperable or we are required to vacate our existing facilities, our ability to conduct our laboratory analysis and pursue our R&D efforts may be jeopardized.
• Our current or future products may not achieve or maintain significant commercial market acceptance.
• New product development involves a lengthy and complex process, and we may be unable to develop and commercialize, or receive reimbursement for, on a timely basis, or at all, new products.
• We may experience limits on our revenue if we are unable to increase and support adoption of our products by physicians and other healthcare providers.
• We rely on limited or sole suppliers for some of the reagents, equipment, chips and other materials used by our products, and we may not be able to find replacements or transition to alternative suppliers.
• If our products do not meet the expectations of clinicians and patients, our operating results, reputation and business could suffer.
• If we are unable to compete successfully, our business will suffer and we may be unable to increase or sustain our revenue or achieve profitability.
• Impairment of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition.
• The sizes of the TAM for our current and future products have not been established with precision and may be smaller than we estimate.
• The diagnostic testing industry is subject to rapid change, which could make our current or future products obsolete.
• Our business operations may subject us to disputes, claims, government investigations and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations.
• Risks Related to Reimbursement and Government Regulation
• We generally have limited reimbursement coverage for our products, and if third-party payors, including government and commercial payors, do not provide sufficient coverage of, or adequate reimbursement for, our products, our commercial success, including revenue, will be negatively affected.
• Our products are currently marketed as LDTs, and any changes in regulations or the FDA’s enforcement discretion for LDTs, or violations of regulations by us, could adversely affect our business, prospects, results of operations or financial condition.
• We conduct business in a heavily regulated industry, and failure to comply with federal, state and foreign laboratory licensing requirements including those established by CMS and the applicable requirements of the FDA or any other regulatory authority, could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions.
• Doing business with the public sector, including the U.S. government, subjects us to risk of audits, investigations, sanctions and penalties.
• The FDA may modify its enforcement discretion policy with respect to LDTs in a risk-based manner, and we may become subject to extensive regulatory requirements and may be required to conduct additional clinical trials prior to continuing to sell our existing tests or launching any other tests we may develop, which may increase the cost of conducting, or otherwise harm, our business.
• Failure to timely obtain necessary marketing authorizations for our products that are intended for clinical or diagnostic uses may have a material adverse effect on our business, financial condition, results of operations, and prospects.
• New legislation or regulation in the U.S. may make it more difficult and costly for us to manufacture, market, or distribute our products, or to obtain marketing authorizations for any future products.
• Disruptions at the FDA and other government agencies caused by layoffs, funding shortages or global health concerns could negatively impact our business.
• We cannot predict the likelihood, nature or extent of government regulation or other measures that may arise from future legislation or administrative or executive action, either in the U.S. or abroad.
• Interim, topline and preliminary data from our clinical studies that we announce or publish from time to time may change as more data becomes available and are subject to audit and verification procedures that could result in material changes in the final data.
• Changes in healthcare policy could increase our costs, decrease our revenues and impact sales of and reimbursement for our products.
• We are subject to numerous federal and state healthcare statutes and regulations, and complying with laws pertaining to our business is an expensive and time-consuming process. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties and a material adverse effect to our business and operations.
• We are subject to certain U.S. anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations and may become subject to their similar foreign equivalents. We can face serious consequences for violations.
• Ethical, legal and social concerns related to the use of genetic information could reduce demand for our products.
• Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (“ESG”) matters, may expose us to reputational and other risks.
• Risks Related to Intellectual Property
• If we are unable to obtain and maintain sufficient intellectual property protection for our technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize diagnostic tests similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
• Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
• Our in-licensed intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.
• Issued patents covering our products and related technologies could be found invalid or unenforceable if challenged.
• Our commercial success depends significantly on our ability to operate without infringing upon the intellectual property rights of third parties.
• We depend on information technology systems that we license from third parties. Any failure of such systems or loss of licenses to the software that comprises an essential element of such systems could significantly harm our business.
• We rely on licenses from third parties, and if we lose these licenses or are not able to obtain licenses to third-party technology on reasonable grounds or at all, then we may not be able to continue to commercialize existing diagnostic tests, be subjected to future litigation and may not be able to commercialize new diagnostic tests in the future.
• We may not be able to protect our intellectual property rights throughout the world.
• If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business could be harmed.
• We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
• If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
• We may be subject to claims challenging the inventorship of our patents and other intellectual property.
• Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
• Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time.
• Risks Related to Employee Matters and Managing Growth and Other Risks Related to Our Business
• We are highly dependent on the services of our key personnel, including our President and Chief Executive Officer.
• Our employees, clinical investigators, consultants, speakers, vendors and any current or potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
• We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.
• We have engaged in, and may continue to engage in, strategic transactions, such as the acquisition of businesses, assets, products or technologies, which could be disruptive to our existing operations, divert the attention of our management team and adversely impact our liquidity, cash flows, financial condition and results of operations.
• Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income and taxes may be subject to limitations.
• Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.
• If our information technology systems, or those of third parties with whom we work, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
• Product or professional liability lawsuits against us could cause us to incur substantial liabilities and could limit our commercialization of our products.
• International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the U.S.
• Requirements associated with being a public company, including those related to our status as an accelerated filer and no longer qualifying as a smaller reporting company, have increased our costs and diverted significant company resources and management attention.
• If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
• Our business could be adversely impacted by inflation.
• Our business could be adversely affected by natural disasters, public health crises and other events beyond our control.
• Risks Related to Ownership of Our Common Stock
• The price of our common stock may be volatile or may decline regardless of our operating performance, and you may lose all or part of your investment.
• If there are substantial sales of shares of our common stock, the price of our common stock could decline.
• We have broad discretion in the use of working capital and may not use it effectively or in ways that increase our share price.
• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
• Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• We have and may continue to enter into related party transactions that create conflicts of interest, or the appearance of conflicts of interest, which may harm our business and cause our stock price to decline.
• We do not intend to pay dividends for the foreseeable future.
• The concentration of our stock ownership will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval.