Pulse Biosciences, Inc

Greetings and welcome to Pulse Bioscience's third quarter 2020 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Philip Taylor, Investor Relations. Thank you. You may begin.

Thank you, operator. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, November 9th, 2020 only, and will include forward-looking statements and opinion statements. These include statements regarding our plans and expectations relating to regulatory clearance, including the process, timelines, and expected outcomes, our commercial, operational, scientific, clinical, and financial projections, products, including the uses, benefits, and application of such products, and our commercial and regulatory strategies, the impact of the COVID-19 pandemic, and other future events. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2020. Our SEC filings can be found on our website or on the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. Please note that this conference call will be available for audio replay on our website at PulseBiosciences.com on the News and Events section of our Investor Relations webpage. With that, I would now like to turn the call over to President and Chief Executive Officer Darren Uecker.

Thank you all for joining us this afternoon for our third quarter 2020 earnings conference call. Across the world and in our organization, we all continue to adjust to the challenges presented by COVID-19. That said, we have not adjusted the mission of Pulse Biosciences, which remains to offer bioelectric medical solutions that make meaningful differences for the betterment of patients and clinicians. Throughout these difficult times, our team has shown unwavering dedication in their efforts to bring our technology to the market. We are excited to announce the 510K application for the CellFX system has been submitted to the U.S. Food and Drug Administration. This accomplishment and additional developments have positioned Pulse Biosciences to potentially receive regulatory clearance for the CellFX system in three strategic geographies as early as the end of the first quarter of 2021. On the call today, I will discuss the substantial clinical and regulatory progress and provide details on our commercial preparations and strategies. Ed will detail the planned controlled launch and summarize recent engagements with the scientific community. Sandy will discuss the third quarter financial results. Then I will conclude, and we will open up the call for Q&A. There are two main business objectives we are focused on to position Pulse Biosciences for long-term success. The first is achieving regulatory clearance for our cell effects system in the U.S., the European Union, and Canada. The second is preparing for the commercial launch of the cell effects system. In recent months, progress towards these objectives has been significant. Before providing details on the recent progress, I will take a moment to explain what our technology does, its benefits, how it is administered to patients, and why the system we have designed is ideally suited for the dermatology markets. The CellFX system is a multi-application platform that harnesses our proprietary nanopulse stimulation, or NPS, technology. NPS technology delivers nanosecond pulses of electrical energy to non-thermally clear cells while sparing adjacent non-cellular tissue. In the area of dermatology, this cell-specific mechanism of action is highly differentiated because it provides the ability to address cellular lesions while preventing collateral damage to the surrounding healthy skins. thus enabling treatment of lesions that was not previously practical. This provides clinicians the ability to generate improved outcomes compared to older modalities where treated skin could appear worse than the original condition. The CellFX system is a tunable, software-enabled, console-based platform that powers a handheld treatment applicator. It is designed to accommodate the clinical workflow preferred by dermatologists. Based on our extensive industry experience and a collaborative process with clinicians, we designed an integrated cloud software infrastructure we call CellFX Cloud Connect. It is the backbone of our innovative utilization-based business model that aligns the interests of patients, practices, and the company. CellFX Cloud Connect makes possible the wireless connectivity between the customer's CellFX system, our e-commerce customer portal, practice management tools to track utilization data and other metrics, and our internal customer relationship management and enterprise resource planning software system. The CellFX Marketplace is a customer portal where medical practices purchase and wirelessly download cycle units directly to the CellFX system. Cycle units are purchased and then consumed on a per lesion basis. So the more lesions the patient wants cleared, the more cycle units are required. This enables a preferred economic model as physicians have fixed costs per lesion and can charge the patient on a per lesion basis, which is aligned with the patient's preference. Our model contrasts with the currently employed disposable and single-use-based medical device models, removing the friction for the physician that can occur in those models. One last note about CellFX Cloud Connect is that it facilitates direct connectivity for Pulse to remotely perform software upgrades to the CellFX system, as well as provide several service and maintenance functions in real time. Because of this ability to streamline, be responsive, and reduce disruption to the clinical workflow, CellFx Cloud Connect allows us to provide next-level support and enable practice growth for our future customers. To bring this innovative technology to market, we are initially pursuing regulatory clearances in three key geographies, the U.S., the European Union, and Canada. These markets represent our top commercial priorities. In the U.S., we are pursuing a stepwise regulatory strategy to achieve FDA clearance. This was determined to be the best fit for our technology following discussions with FDA. This approach entails an initial 510K application for a general dermatologic indication for the cell effect system, followed by subsequent applications for specific treatment indication. The application for the general dermatologic indication required preclinical data evaluating the treatment of animal skin at multiple follow-up time points. Results demonstrated strong performance in skin treatment and healing as we expected, giving us confidence in the quality of our 510K submissions. We believe the time we spent with FDA confirming the data required to support the general dermatologic indication will make FDA's review straightforward. A decision on potential clearance is on track for as early as the first quarter of 2021. Another benefit of this step-wise strategy is that it provides us the opportunity to conduct studies for cell effect system indication expansion in parallel. This summer, we completed an additional pre-submission meeting with FDA to agree on the requirements for a subsequent 510K submission for the treatment of patients with sebaceous hyperplasia, or SH. Following the guidance from this meeting, we submitted and received approval for an IDE, or Investigational Device Exemption, study, allowing us to commence a comparative pivotal study. In just over five weeks, we were able to fully enroll the study, treating 60 patients with facial SH lesions at five study sites. Cell effect system procedures and comparator group procedures will be evaluated at follow-up intervals out to 60 days post-final procedure. We were very encouraged by how quickly this study enrolled. It demonstrates the broader patient need and underlying market opportunity for SH and dermatologists' excitement about using our technology. Given where we are with the study timeline, it is likely we will accelerate the submission of this 510K for the treatment of SH to the first quarter of 2021. versus the second quarter of 2021, as we had previously communicated. Because of the versatile clinical utility of the CellFX system, to maximize its value, we will continue to seek additional indication expanding clearances with the FDA. Next in our pipeline is common non-genital wards. As we have discussed previously, findings from our previous investigational studies have shown great promise for our NPS technology's ability to clear wards. We are finalizing the IDE protocol for a comparative study to support an additional 510K application for this specific indication. Following IDE approval, we will start the study, which we anticipate will be similar in scope and duration to the SH study. To commercialize the self-effect system in the European Union, we are required to obtain CE mark approval. These efforts are focused on working with our EU notified body. As we mentioned on the last call, our notified body has accepted our technical file submission and all required supporting documents. In line with our prior expectations, we have progressed through the interactive review phase where we have actively responded to questions and requests. One important milestone in the technical file review process is the review and acceptance of the clinical evaluation report. The clinical evaluation report is a supporting document provided by Pulse in support of the CellFX system for the proposed indications for use and is reviewed by a physician subject matter expert. we are pleased to share that the clinical evaluation report for the CellFX system, which included CellFX clinical data for the treatment of sebaceous hyperplasia, debria keratosis, and warts, including our recent peer-reviewed publication, was recently accepted by the notified body. The acceptance of this report means the notified body agrees that the CellFX system is safe and performs as expected for these clinical indications for use, and we believe is a testament to the quality of the CellFX clinical data the high quality of the clinical investigators, and the peer-reviewed publication. This also means that when the CE mark is granted, we will be able to promote the use of the CellFX system for those clinical indications, sebaceous hyperplasia, seborrheic keratosis, and warts, as we commercialize in the European Union. Given the acceptance of the clinical evaluation report, we believe we are very close to having the technical file review finished and anticipate receiving the CE mark and initiating our controlled launch in the European Union as early as Q1 2021. Lastly, on the regulatory front, our Health Canada medical device license application for the CellFX system has been submitted. As we were able to submit this application ahead of our expectations, it is now possible we could also receive Health Canada approval as early as the first quarter of 2021. In order to complete this application, our design controls, manufacturing, and quality systems were required to be evaluated and certified by the Medical Device Single Audit Program, also known as MDSAP. This certification, along with the previously received ISO 1345 certification, represent our ongoing commitment to the highest level of quality assurance standards for the production of our system and components. Now I would like to transition and provide a high-level overview of our commercial launch strategies. The intended result of our regulatory submissions is clearance and approval to market the CellFX system to aesthetic dermatologists in the U.S., EU, and Canada. Following potential respective clearances, we are prepared to commence controlled CellFX launches in all territories. Our controlled launch strategy is intended to place systems in thought leading key opinion leaders' practices, first anticipating that they will highlight the treatment potential of NPS technology and the CellFX system to a broader group of peers. The controlled launch physicians and their practices have been carefully selected based on their reputations among their peers for clinical excellence, as well as their known influence on acceptance of new technologies. The first wave of early adopters will look to our controlled launch participants for guidance on their own cell effects purchase decisions and advice on integrating cell effects into a successful aesthetic dermatology practice. Notably, these controlled launch dermatologists will be strategically located across the territories in the most attractive aesthetic dermatology market. They have shown great excitement and commitment to becoming early adopters of the CellFX system. As success grows with the controlled launch group, we will then expand to target a larger number of dermatologists. Our team will be focused on providing the highest level of service to these accounts while implementing efficient work streams into existing practice workflows. To support this strategy, we have hired an experienced commercial team including sales, marketing, and customer service professionals. Now I will turn the call over to Ed to provide more details on this strategy and our continued engagement with the scientific community.