US-based diagnostics firm Castle Biosciences has closed the acquisition of Cernostics, a company focused on spatial biology and AI-powered image analysis of tissue biopsies.

Under the terms of acquisition agreement, Cernostics has become a wholly owned subsidiary of Castle Biosciences.

Castle has paid the initial cash consideration of around $30m to Cernostics security holders, upon closing.

The company is expected to make additional payments of $50m in cash and common stock, subject to achieving certain milestones based on 2022 performance.

Castle Biosciences president and chief executive officer Derek Maetzold said: “We are excited to continue the evolution of the Castle story with the closing of the Cernostics acquisition and our entry into the gastrointestinal space through the TissueCypher platform.

“The TissueCypher Barrett’s Esophagus Assay is designed to help predict the likelihood of BE’s progression to the more serious HGD or highly aggressive esophageal adenocarcinoma (EAC).

“We believe we have a unique opportunity to help physicians and patients make more informed disease management decisions based on deep interrogation of the biology of an individual patient’s esophageal biopsy.”

Cernostics is engaged in providing TissueCypher family of laboratory tests.

The TissueCypher platform leverages an approach that consolidates important elements of AI to deliver the spatialomics revolution to clinicians.

Its TissueCypher Barrett’s Esophagus Assay is considered the first to predict future of high-grade dysplasia (HGD) and oesophageal cancer in Barrett’s oesophagus (BE) patients.

The assay is indicated for patients with endoscopic biopsy confirmed BE, graded non-dysplastic, indefinite for dysplasia or low-grade dysplasia.

It has been validated in multiple, independent studies of BE progressor patients.

Castle Biosciences is a diagnostics company that provides personalised, and clinically actionable information to clinicians and patients for improve health outcomes.

The company leverages advanced technologies for its portfolio of diagnostic tests, in the areas of skin cancers, uveal melanoma and Barrett’s oesophagus.