Pulse Biosciences, Inc

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, May 10, 2021 only, and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission. 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. We disclaim any obligation to update or revise these forward-looking statements. We will also discuss certain non-GAAP financial measures. Disclosures regarding these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our website at PulseBioscience.com on the News and Events section of our Investor Relations page. With that, I would now like to turn the call over to President and Chief Executive Officer Darren Uecker.

Thank you, everyone, for joining us this afternoon at this exciting juncture for Pulse Biosciences. On today's call, I'm pleased to discuss our recent accomplishments and business updates, including the commercial, regulatory, and clinical progress we have made so far in 2021. Ed will provide details from the field on our initial commercial experience with the CellFX system. Then Sandy will share the first quarter 2021 financial results. I will then conclude, and we will open up the call for a question and answer session. From the beginning, at Pulse Biosciences, our mission has been to offer bioelectric medical solutions that make meaningful differences for the betterment of patients and clinicians. This is now a reality. In February, we received FDA clearance to market our product, the CellFX system, with CloudConnect services for use in dermatology. Just 10 days prior, we had received CE Mark regulatory approval to market the system in Europe. These achievements have advanced the company into our next chapter of growth. In 2021, we have two priorities that inform our current corporate strategy. Our focus and the top priorities are executing a controlled launch program to drive adoption of CellFX system utilization among key opinion-leaking aesthetic dermatologists, to set the foundation for a full commercial launch in late 2021 into 2022, and expanding the CellFX system's commercial potential by continuing to develop new applications that address the needs of patients. We are confident that discipline, focus, and resource allocation to these objectives will maximize the value of the CellFX system in the market over the long term. Before diving into priorities specifically, I would like to describe and remind everyone about the uniqueness of our technology and its opportunity to address unmet needs of clinicians and patients alike. The CellFX system is a multi-application platform that administers our proprietary nanopulse stimulation, or NPS, technology with unique benefits desirable for use in dermatologic procedures. NPS is an entirely new energy modality that delivers nanosecond-pulsed non-thermal energy that affects only cellular structures, while leaving non-cellular collagen-rich skin tissue unharmed, which helps promote a better healing profile overall. The differentiated, self-focused mechanism of action of NPS has proven to be desirable in dermatology as it provides aesthetic skin specialists the ability to address common skin conditions that have generally been challenging to treat with current traditional methods. The CellFX system is a software-enabled, tunable, cloud-integrated console with highly customizable configurations of applicators and energy levels to enable a wide range of procedural settings to address multiple dermatologic conditions. Built into the CellFX system is our proprietary integrated cloud software infrastructure called CellFX Cloud Connect. It is the backbone of our innovative utilization-based business model. It aligns the interest of patients, practices, and the company, and is the first of its kind for energy-based medical devices. Physicians are able to perform procedures and charge on a per lesion basis without the constraints of physical disposable costs and inventory burden, as is the case with other medical device models. CellFX Cloud Connect provides a novel suite of services that integrates the customer, the system, our e-commerce customer portal and practice management tools to track utilization data and other metrics, while on the back end connecting to our internal customer relationship management system and enterprise resource planning system. It is through the CellFX Cloud Connect suite of services that we were able to provide Aesthetic Practices key insights into the productivity and profitability of their CellFX franchise. We are very excited about the initial feedback we were hearing from customers regarding the seamless integration of the CellFX system Cloud Connect services into their practice. We believe this advanced delivery model will not only drive utilization of cell effects procedures, but also will create a premier experience and growth potential for our valued physician customers and their patients. Turning to our main focus for the year, execution of a controlled launch program, I'd like to discuss the benefits and advantages of our strategy for rolling out our novel technology to aesthetic dermatologists. We are introducing the CellFX system to the U.S. and European markets through a deliberate and measured controlled launch program. Our team has developed and begun to execute a thoughtful and methodical commercial plan designed to ensure broad adoption and long-term success for the use of our CellFX system in aesthetic dermatology. The goal of the controlled launch program is rooted in a deep understanding of the aesthetic dermatology market and best practices for introducing a novel technology into this market. Our intention is to produce and document outstanding patient experiences by partnering with top KOLs and implementing CellFX system best practices in their franchises. These influential KOLs become trusted advocates of the CellFX system and NPS technology, promoting the adoption of a new procedure among their peers. These partnerships also generate critical feedback, which can then be leveraged across our training and guidelines for other customers. The controlled launch program represents mutual investment by Pulse Biosciences and each participating clinic. In exchange for qualitative data on all aspects of the first 40 patients they treat, clinics will earn incremental credits towards the cost of their cell effect system. These clinics have proven their commitment to starting cell effect system franchises by investing the time to complete multiple virtual and practical training programs. They have indicated excitement and a strong desire to educate and offer patients the benefits of NPS. As previously stated, we are planning to include 75 leading aesthetic clinics across the U.S. and the EU in this program. I'm very pleased to say that because of the experience and preparation by our team, we were able to begin onboarding the first clinics participating in the controlled launch program within weeks of CellFX marketing clearances in both the U.S. and EU. We ended quarter one with 15 of the controlled launch sites fully trained and beginning to treat patients. This is consistent with our plan to have the majority, approximately 45 to 55 clinics, onboarded by the end of quarter two with the remaining in quarter three. Ed will provide details on the early experience to date later in the call. To remind you, we are also planning to expand our control launch into Canada pending Health Canada approval for the CellFX system. We recently responded to what we believe is the final question from the Health Canada reviewer and expect the review to be completed in the second quarter. Now I will discuss our other top priority in 2021, to progress our cell effect system clinical application research and regulatory strategy. We believe that anapole stimulation technology delivered by the cell effect system can be highly effective across multiple aesthetic dermatology applications and has the potential to be effective in additional therapeutic areas as well. To fully realize and offer the full potential of the cell effect system to clinicians and patients, investigational and clinical work is a high priority at Pulse Biosciences. In the U.S., we will expand beyond the current general indication for the CellFX system with a stepwise regulatory strategy that includes pursuing specific indications for high-value applications. As we described previously, the first specific indication we are pursuing is for the treatment of sebaceous hyperplasia, a small, benign lesion that occurs primarily on the face and where clinicians lack a suitable treatment that provides durable lesion clearance with an acceptable cosmetic outcome for patients. We believe the CellFX system can offer such a treatment for sebaceous hyperplasia and have executed an FDA IDEA-approved comparative study using the CellFX system and comparing it to electrodesiccation. We completed all treatments and follow-up of patients in this study during the first quarter, and at this point, we are in the final stages of preparing a 510 case submission and expect the submission to go to FDA within the next several weeks. The second specific indication we are pursuing is in cutaneous non-genital warts. and we continue to enroll and treat patients in our FDA IDE-approved pivotal comparison study. We have treated 51 of 150 patients and expect to complete enrollment of the study as early as the end of the second quarter or early in the third quarter of 2021. Given this timeline, we remain on track to use the data in a 510 submission to the FDA as early as the fourth quarter of 2021. We plan to continue to expand applications and indications for specific benign lesions to drive utilization of the CellFX system in clinics. We will not pursue a specific indication for all applications, but we'll focus on those applications that can be benefited by a specific indication, which allows clinics to market directly for those indications to their patients. We believe we have good clinical data and a number of additional benign lesions, some in feasibility and others further along, including febrile keratosis, syringoma, nevi, and acne. It is our intention to maximize the value of the cell effect system for dermatologists by expanding its use among the most prevalent and compelling lesions to physicians and patients. Whether all of these potential applications will ultimately be launched commercially is dependent upon a number of factors that need further validation. But today, we believe these all represent compelling clinical applications that are worth the investment. We will plan to provide more detailed timelines for these applications as they get closer to clinical regulatory and commercial milestones. We're also pleased to report today an important development in our broader application expansion strategy to pursue non-benign lesions. About a week ago, we received FDA ID approval for a treat and resect basal cell carcinoma feasibility study. Basal cell carcinoma, or BCC, is the most common form of skin cancer and the most frequently occurring form of all cancers. In the U.S. alone, an estimated 3.6 million cases are diagnosed each year, according to the Skin Cancer Foundation. The current standard of care is wide margin surgical excision, which can result in noticeable scarring. We believe the CellFX system can provide a tissue-sparing and cosmetically beneficial treatment for smaller BCC lesions in cosmetically sensitive areas, such as the face, and our scientific advisors believe this represents a compelling application for a large number of their patients. The objective of this feasibility study is to demonstrate the CellFX system can be used to eliminate a BCC lesion and to get an initial assessment of the cosmetic outcome of the treatment. In this study, BCC lesions will be treated with a cell effect system. Approximately 60 days after treatment, the treatment area will be assessed for cosmetic outcome, and then the lesion will be excised using the standard of care wide margin excision. Post excision, the tissue will be reviewed by the study pathologist to determine if there are any remaining basal cells in the treatment area. We believe this study will provide sufficient evidence to support a follow-on pivotal study that may lead to a specific indication for the treatment of BCC. The feasibility study will begin enrollment this quarter, and we expect to be fully enrolled with 30 patients by the end of quarter three. If successful, a pivotal study would follow in the half of 2022. We believe that the inherent nature of NPS can provide benefits across different applications in healthcare. And as we noted in our Q4 call, we are constantly examining and expanding the therapeutic range of applications relevant to the CellFX system and CloudConnect platform. We continue to invest in the early development of application areas outside of dermatology, leveraging the knowledge and experience we have gained. We are planning to provide more detail on these application areas and our plans to pursue them in the second half of the year, potentially in an investor R&D day, so that we can provide sufficient detail on our growing pipeline of applications. As we have shown to this point, our development and clinical teams will remain committed discovering and unlocking the full potential of our powerful technology, and we will continue to support these expanded efforts with the required measured investments. For more on our activity and clinics right now, I will turn the call over to Ed Evers.

Thanks, Darren. First of all, I want to say it is just great for the growing commercial team of 15, nine in North America and six in Europe, to be in the field in the U.S. and Europe helping our first customers onboard the CellFX controlled launch experience. Our team is continuously gaining practical experience with both physicians and patients. The anticipated warm reception for our unique cell-specific technology among these KOLs has exceeded our expectations in the early going. As intended, our controlled launch participants are contributing to our knowledge base on uses for the CellFX system. Our scientific advisors have done a great job setting a high bar for the clinical profile for MPS technology, and our first controlled launch participants are thrilled to now have an advanced technology solution in hand that addresses unmet needs in aesthetic medicine, offering this unique non-thermal cell effects procedure to patients with lesions that are difficult to clear with older technologies that use heat or colds. While our planned controlled launch experience is still in its very early stages with an initial group of KOLs, we are pleased and excited to report on a controlled launch progress as well as our continued engagement with the scientific community with our clinical research projects in support of new applications for the CellFX platform. As we have noted, our experience and marketing research in the aesthetic procedure specialty market has shown that the acceptance and adoption of new energy modalities like the CellFX system is heavily impacted by the influence of key opinion leaders or KOLs in aesthetic medicine. For that reason, we designed a controlled launch program to partner with these clinics and ensure very early positive clinician and patient experiences as we optimize the commercial learning curve required for new CellFX system users. In the future, as we transition from a controlled launch to prospecting the next wave of commercial early adopters, we expect that the trusted advice and influence of these controlled launch KOLs and their best practices guidance will be instrumental in laying the clinical and commercial foundation for the adoption and commercial success needed to grow a CellFX franchise in these high-end aesthetic practices. Controlled launch success begins with disciplined physician selection. In the months preceding the controlled launch, we carefully selected and qualified likely candidates for the controlled launch participation based on established criteria, including past experience with new energy technologies that have made the jump from clinical trials to commercial use. Our goal was to narrow down our choices to 75 positions to roll out the cell effects system. Our final selection of the first wave of early controlled launch participants was completed soon after regulatory clearances. We continue to qualify and move new controlled launch participants into our pipeline of planned onboarding being implemented by our growing direct sales team. The actual onboarding process for each controlled launch center begins with a comprehensive overview of the CellFX procedure and NPS technology for the entire staff. This is a didactic session, which includes learning modules covering mechanism of action, clinical applications, patient expectation management, local anesthetic administration techniques, as well as operation of a CellFX system, with a special emphasis on our e-commerce customer portal, enabled by the CellFX Cloud Connect system that Darren spoke about. This onboarding process can take a full day for the physicians and their staff, which represents a significant investment for both Pulse and the practice to ensure that the user and patient experience is carefully managed. Since there are no comparable technologies to NPS or to our non-thermal mechanism of action, we strive to have our commercial team present for the initial patient procedures and be present for diligent patient follow-up that is conducted after each cell effects procedure so that the physician can directly observe skin tissue changes that are inherent to the lesion clearance process, including observing the time it takes for the lesions to clear and how the healing process progresses over time. This direct observation of the lesion clearance and healing process helps the physician and their staff better describe the sub-effects experienced to future patients so that clear expectations can be set. Since initiating our controlled launch in February, we have onboarded 15 clinics by the end of the first quarter. We continue to expect it will take clinics approximately three months to complete their initial 40-patient procedure commitment as established in the controlled launch protocol. Imperative to this planned controlled launch process is taking feedback from the early controlled launch sites and their patients and applying this experience to newly onboard controlled launch sites. Our Expectations EXCELS program provides formal patient and physician feedback data gathered during the controlled launch phase and uses that feedback to refine our educational content for future sessions with our controlled launch sites. The major benefit of introducing a new paradigm changing platform like Cellifex with this carefully controlled and managed process in this early stage is that the early feedback and fine tuning of the procedure experiences from these KOL experts greatly enhances our ability to deliver a consistent and predictable clinical and commercial outcome as we scale up our launch to the next wave of early adopters. Unlike the structure of a controlled clinical trial, A controlled commercial launch of new technology empowers expert physicians and their staff to optimize all aspects of managing the patient's experience. In parallel with our controlled launch, our impressive and growing collection of peer-reviewed publications and major meeting podium presentations will continue to be critical in garnering the attention and potential purchasing interest of the next wave of early adopters. Discussion of NPS technology delivered by the CellFX system continues to have significant presence at major meetings of aesthetic procedure specialists. This enforces the broad applicability of our cell-specific non-thermal energy modality. Notably, at the 2021 Annual Meeting of the American Society for Lasers in Medicine and Surgery, or ASLMS, Four different podium presentations on NPS will be delivered by these notable key opinion leaders. First, Dr. Bruce Katz of New York City will present interim results on a multi-center feasibility study for the treatment of moderate to severe back acne. Next, Dr. Joel Cohen of Denver, Colorado will discuss our feasibility study for common nevi, generally known as MALS. And Dr. Suzanne Kilmer of Sacramento will report on optimized energy settings in maintaining high efficacy and excellent skin recovery for sebaceous hyperplasia. And finally, Dr. Ted Lane of Austin, Texas, will present on the efficacy of clearing cutaneous non-genital warts with a single cell effects procedure. Most recently, at the 2021 virtual meeting of the American Academy of Dermatology, Dr. Tom Rohrer, the current president of the ASLMS, presented consumer research with positive implications for the cell effects procedure. The research highlighted that aesthetic dermatology patients are highly motivated to seek a better and more durable solution for clearing common skin lesions and would place a higher value overall on a new procedure to clear lesions over other mainstream aesthetic procedures such as Botox or dermal fillers. With our controlled launch being faithfully executed by our growing and highly trained aesthetic specialty sales team and our parallel pursuits of new clinical data and applications, we will deliver the promise of a Cell Effect system as a multiple application platform that will be embraced around the world as we continue to advance our commercial launch plans, as well as the new clinical applications that will feed our future commercial growth. Thank you now, and I will turn the call over to Sandy.