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spk02: Greetings, and welcome to Pulse Bioscience's second quarter 2021 earnings conference call. At this time, all participants are in 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 cell phone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Philip Taylor of Investor Relations.
spk06: 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, August 9, 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 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 pulsebiosciences.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.
spk03: Hello, and thank you all for joining us this afternoon. On today's call, I will share with you our key accomplishments and business updates from the second quarter that have positioned us for success as we begin the second half of the year. Ed will then provide details from the field on the status of our controlled commercial launch. Sandy will share our detailed financial results, and then I will conclude and open up the call for a question and answer session. Our goal at Pulse Biosciences has always been to offer bioelectric medical solutions that deliver clinically differentiated outcomes for unmet needs of patients and clinicians. As of the first quarter of 2021, the commercial launch of the CellFX system is underway, and we are in the process of implementing our technology and select leading aesthetic dermatology clinics. We continue to build on the positive momentum from previous quarters and are excited by the progress of our interactive and collaborative controlled launch program with clinicians. We ended the second quarter with 49 clinics participating in the controlled launch, following onboarding 34 new clinics across the US, Europe, and Canada during the quarter. We are on track to complete onboarding for the program in the third quarter, and at this point, we believe up to 80 participating clinics will enable us to achieve our controlled launch program objectives. Clinics are actively treating patients, and the transition of clinics from controlled launch commercial use by opting to acquire the CellFX system after completing the controlled launch program has recently begun. Another highlight in the quarter was the receipt of Health Canada approval for the CellFX system. We are very pleased that we now have received approval in the three key geographies we targeted for initial commercialization. Our team was prepared to expand the controlled launch into this geography quickly, and we now have our first Canadian controlled launch participant performing CellFX procedures. To remind you, on our first quarter earnings call, we laid out two priorities for the year. These include execution of the controlled launch program for the CellFX system with the goal of driving adoption among key opinion leaders, or KOLs, within aesthetic dermatology. Our second corporate objective for 2021 is to continue to expand the CellFX system's applications in the U.S. to take full advantage of the diverse benefits of nanopole stimulation technologies. We continue to make progress on both the clinical and regulatory fronts, and I am confident in our team's ability to deliver on this objective over time. Before we dive deeper into these objectives, I would like to take the opportunity to inform and remind our listeners today about our technology's novel and proprietary capabilities and what differentiates our CellFX system over what is currently available for clinics and their patients. The CellFX system is a multi-application platform which delivers our proprietary nanopulse emulation, or NPS, technology. NPS is a nanosecond pulsed, non-thermal, energy-based modality that directly affects cellular structures, sparing the non-cellular, collagen-rich dermis of the skin. When compared to other thermal modalities currently on the market, we believe our cell-focused NPS technology provides improved lesion clearance with beneficial aesthetic outcomes. The CellFX system is a software-enabled, cloud-integrated, tunable console that powers a handheld treatment applicator. With highly customizable configurations of treatment applicators and NPS energy settings, physicians are able to treat a wide range of dermatologic conditions in accordance with the needs and wants of their patients, with procedure session times as quick as 15 minutes to fit into the clinic workflow. Integrated into the CellFX system is our proprietary cloud-connected software that links the system to our cloud-based internal resources. We have named this cloud-enabled infrastructure CellFX Cloud Connect. This development is the backbone of our innovative utilization-based business model, aligning our interests with those of our physician customers and their patients. CellFX Cloud Connect offers clinics an array of services that integrates the CellFX system, our e-commerce customer portal, and practice management tools to track utilization data and other metrics. Having the software connected to our internal customer relationship management system and enterprise resource planning system provides us and the clinics with crucial insights into the productivity and profitability of the CellFX system. Circling back to our top priority for the year, the CellFX controlled launch program. The controlled launch was initiated in the US and in Europe during the first quarter of 2021 following FDA clearance and the receipt of a CE mark. The methodical and calculated introduction of our system to the market, paired with the feedback we will receive from clinicians, will shape the long-term success and broad adoption of the CellFX system, not only for our currently approved applications, but also for those currently being developed. Our experienced team has a thorough understanding of the aesthetic dermatology market, and we incorporated our shared knowledge into best practices for introduction of our CellFX system into the market. The goal of the controlled launch program is to provide patients with exceptional experiences, tracking their progress from the initial procedure to resolution of the treated lesion and a positive cosmetic outcome in order to fine-tune our onboarding and treatment process. As planned, we are partnering with top aesthetic dermatology KOLs throughout the controlled launch and are collecting their critical feedback on the integration of the CellFX system and CellFX Cloud Connect into their practices and the experiences of their patients. Following the completion of the controlled launch, we anticipate these KOLs will become trusted advocates of the CellFX system and CellFX Cloud Connect infrastructure, promoting the adoption of our technology among their peers. Participating clinics in the controlled launch program were carefully selected. and our partnership represent mutual investments from them and Pulse Biosciences. In exchange for data gathered throughout the controlled launch program, clinics will earn incremental credits towards the cost of the CellFX system shipped to them for use in the program. The time invested by these clinics on numerous virtual and practical training sessions indicates their level of commitment to becoming CellFX system franchises and introducing the benefits of NPS to patients. On our first quarter call, we had outlined that our original estimate was that it would take clinics on average approximately three months to complete the control launch commitment. We are finding that our initial control launch clinics are taking a batched approach, treating an initial cohort of patients and then evaluating the healing process, followed by a second group of patients and so on. With each group of patients, physicians are applying their experience in patient and lesion selection and building confidence, helping to refine a clear set of best practices for the introduction of this novel energy modality. As a result, our initial clinics are taking approximately five months to complete the controlled launch process. That said, we are seeing that clinics coming into the program more recently are benefiting from the learnings and experience of the early clinics, and so we expect these clinics will complete the program closer to the original three-month estimate. We continue to be on track for the majority of clinics to complete the program by the end of 2021 and to begin our initial commercial sales in the fourth quarter. Overall, the feedback we have received with the controlled launch program has been positive. We are receiving consistent feedback that our training program is among the best that clinics have experienced for a new technology introduction, and the physician and patient experience continues to improve as we work through our clinic partners. I will let Ed provide a more detailed update on the mechanics of the launch in a few moments. I will now turn to our other priority for the year, the advancement of specific applications for a cell effect system on the research and regulatory fronts. Currently, our system is approved for general dermatologic procedures in the United States. As we have stated previously, we have implemented a stepwise regulatory strategy in the U.S. under which we are pursuing specific indications for high-value applications. First specific indication is for the treatment of sebaceous hyperplasia, a small benign lesion that develops primarily on the face and currently lacks acceptable treatment options with desirable aesthetic outcomes. During the first quarter, we concluded follow-up of 60 patients in an FDA IDE-approved comparative study comparing the use of the cell effect system against electrodessication to treat sebaceous hyperplasia and began the data analysis process. While we plan to file the 510K by this time, we are still completing the necessary steps to do so. For this IDE-approved study, FDA requested a number of safety and efficacy endpoints. including a blinded independent review by three dermatologists using photographic images of the treated lesions. The process of developing this blinded photographic review can only occur after all the patient follow-up is completed and its subsequent analysis continues. We anticipate having the analysis completed this quarter and expect to pursue a 510K submission at that time. The second specific indication we are targeting is for cutaneous non-genital warts. We have enrolled 127 of 150 patients and expect to complete enrollment in our FDA ID approved pivotal comparison study this quarter. We continue to plan for a 510 case submission for this indication as early as the end of 2021 or possibly early 2022, depending on follow-up timelines. Feedback from clinicians on work procedures using the CellFX system has been extremely positive. We continue to believe this is an exciting application. We will continue to pursue additional benign lesions to grow the CellFX Systems application portfolio. We will focus our efforts on applications that can be achieved through single specific indications, which provides clinics greater flexibility to market such applications to their patients. We have early data sets for a number of additional benign lesions, including syringoma, nevi, or common moles, and acne. As our treatment portfolio expands, we are targeting the most prevalent and compelling lesions in order to realize the true potential of the CellFX platform and maximize the value of NPS technology. Though there are clinical and regulatory works to be done before we are able to commercially launch these applications, we believe it is beneficial to our patients to invest our resources towards these applications. We look forward to providing more detailed timelines for these benign lesions as we approach clinical, regulatory, and commercial milestones. Outside of our benign lesion pipeline, we are also happy to update that we have enrolled 18 of 30 patients in our FDA IDE approved treat and resect basal cell carcinoma feasibility study, keeping us on track for enrollment to be completed by the end of the third quarter. Basal cell carcinoma, or BCC, is the most frequently occurring form of cancer in the U.S., with an estimated 3.6 million diagnosed cases every year, according to the Skin Cancer Foundation. Current treatment of BCC is wide-margin surgical excision, which often results in undesirable scarring. We believe that NPS technology in the CellFX system can be used to treat smaller BCC lesions with improved outcomes in cosmetically sensitive areas, such as on the face. We believe that this new application would be beneficial to a large number of patients, and we look forward to addressing their unmet needs that the current standard of care is unable to meet. The goal of the feasibility study is to demonstrate that the cell effect system can safely be used to eliminate BCC lesions with a potentially superior cosmetic outcome when compared to wide margin excision. During the study, BCC lesions will be treated with cell effect system and approximately 60 days following the treatment, treatment area will be examined for the cosmetic outcome. The lesion will then be excised using the current standard of care wide margin excision procedure and analyzed by the study pathologist to determine whether there are any remaining basal cells present in the treatment area. We believe that the study will yield the required evidence to support a follow-on pivotal study in the first half of 2022 that could then lead to a specific indication for the treatment of BCC using the CellFX system. We have demonstrated that MPS technology can be used across a wide range of applications. We believe that we have still only unlocked a portion of its true potential. We will always look to advance new therapies and applications for the CellFX system to bring to patients. We are continually investing in the early development application areas in and outside of dermatology. As we learn from our patients and clinicians, we will use their feedback to support and inform our strategy. Our development and clinical teams remain steadfast in their commitment to bringing our technology to patients, and we will support them in all aspects of their endeavors through necessary investments. I'm excited to give more details on these novel application areas throughout the remainder of the year, potentially at an investor R&D day, which will have more robust information on our ever-expanding application pipeline. For more detail on the current rollout and initial learnings of the Controlled Launch Program, I will now turn the call over to Ed Evers.
spk04: Thank you, Darren. I am very pleased to report we are making great progress with the Controlled Launch Program, and I'm excited to share the details with you today. Following initial use of the Celltex system, over 1,000 procedures have been completed at over 49 participating clinics across three geographies globally. Key opinion leaders, or KOLs, continue to add to our body of knowledge about the capabilities of our unique cell-specific NPS technology for a wide variety of common lesions. The scientific groundwork laid by the investigators who spearheaded the clinical research studies with the Celltex systems did a tremendous job providing clear evidence that has been published in peer-reviewed medical journals that support the unique safety and efficacy profile of MPS in clearing difficult-to-treat lesions in a controlled clinical study setting. Our global controlled launch program is achieving our intended goals by providing real-world validation of clinical and commercial best practices, as well as the value of the cell effect system that they will share with the next wave of likely early adopters. Our controlled launch experience with these leading aesthetic dermatology clinics around the world is setting the stage for transitioning to a broader commercial introduction of the CellFX system to early adopters of energy-based technologies. In the second quarter, we expanded the controlled launch initiative to selected Canadian key opinion leaders soon after receiving our medical device license for the CellFX system from Health Canada. Like our U.S. and European controlled launches, our first KOLs in Canada were poised to lead the way in their respective market and provide their peers the benefit of their early clinical and commercial experience, working closely with our direct distribution sales team in Canada. You may recall that the primary objective of our controlled launch is to ensure early positive patient and physician experiences and to establish clinical and commercial best practices for each region as we prepare to scale up the commercial implementation of CellFX to the first wave of early adopters in each global region. Our commercial team's experience and extensive primary marketing research has shown that in the aesthetic procedure specialty market, the acceptance and adoption of a new energy modality like the CellFX system is dramatically accelerated by the trusted influence of key opinion leaders in the respective geographies. Positive KOL experiences build a foundation for the next phase of our commercial rollout when we transition from a controlled launch to prospecting the next wave of commercial early adopters. At this next phase, we expect that the trusted advice and influence of controlled launch participant KOLs and their best practices guidance established in this controlled launch program will solidify the clinical and commercial foundation for the adoption and the subsequent commercial success needed to grow CellFX franchises in these high-end aesthetic practices. The mutual investment of time and resources is representative of a partnership and commitment to offering patients a unique procedure that addresses common skin conditions that are not well addressed by older technology modalities. From a tactical perspective, our early experience in onboarding leading dermatologists has offered a wealth of knowledge that has accelerated our refinement of commercial processes internally and that accommodate the needs of clinics as we scale up our commercial launch team. Onboarding a new physician customer typically includes the entire staff at a clinic and includes a detailed overview of the cell effects procedure and NPS technology, followed by didactic sessions and learning modules on the mechanism of action, as well as the operation of the system and CellFX Cloud Connect software. Just as importantly, our team is able to share the key learnings of respected dermatologists and encourage direct peer-to-peer communications. As you might imagine, these peer-to-peer communications are powerful accelerants for the viral adoption of a paradigm-changing technology like the CellFX system. Our experience with the early controlled launch sites is that our selected KOLs gradually ramp up their first quarter patients and directly observe lesion clearance and skin healing. Our clinical and commercial team closely collaborates with our controlled launch sites to accelerate the mutual learning curve and shares that experience with their peers and colleagues to refine and optimize both clinical and commercial best practices as we prepare to scale up for broader commercial usage. This evolution of a learning curve for newly implemented sites has allowed us to ramp up the learning curve with more recently onboarded controlled launch sites as we optimize our training curriculum. Controlled launch participants who were onboarded more recently are progressing through their initial patients more quickly. We see this acceleration as a clear indication of the value of our controlled launch program that greatly enhances the success of a broader scale-up of our commercial activity. Looking to the future, as we complete onboarding of the remaining controlled launch participants, there will be an organic progression into a broader commercial launch on track for the fourth quarter involving selling our technology to early adopters that we have identified, as well as fielding inbound interest that our KOLs will generate through their peer networks. This gradual transition to a broader launch will leverage the experience of controlled launch participants which will be bolstered by their willingness to share their experience with peers. In parallel with our controlled launch, we continue to build on our scientific foundation at major meetings of key opinion leaders in dermatology and aesthetic medicine. As you know, our engagement in the scientific community has always been a priority for Pulse Biosciences, and we are especially excited that our controlled launch participants will have live in-person venues to discuss their recent experiences together. Our first is next week, a meeting called SCALE, which stands for the Symposium for Cosmetic and Laser Education. And several of our Control Launch participants are among the faculty of this meeting. This SCALE meeting is co-directed by Dr. Michael Gold, who will be covering the differentiated benefits of NPS technology from the podium, and by Dr. Brian Beissman, both of whom are participants in our controlled launch program. Dr. Beisman is the lead investigator of our syringoma clinical study feasibility study and will be presenting clinical data results of that feasibility study in October at the annual meeting of the American Society for Dermatologic Surgery, or ASDS. Dr. Beisman's live podium presentation of the syringoma study results will appear in the best of cosmetic oral abstracts session at the asds at the same scale meeting we're also looking forward to our sponsored session in which dr vic ross of scripps clinic in san diego and dr joel cohen of about skin dermatology in denver colorado will be taking attendees on a deep dive of the importance of cell specificity and what makes nps technology non-thermal, to further drive home how the uniqueness of our technology can change the way aesthetic physicians address benign lesions. Just a few days prior to the SCALE meeting, Dr. Thomas Rohrer of Skin Care Physicians of Boston, Massachusetts, and past president of the American Society for Lasers and Medicine and Surgery, will be on the virtual podium discussing NPS technology at the Controversies and Conversations in Laser and Cosmetic Surgery which is an advanced annual symposium. In the area of published clinical research, we are pleased to share that clinical results of NPS technology in the treatment of non-genital cutaneous warts was published in the May issue of Lasers in Surgery and Medicine, which is the peer-reviewed journal of the American Society for Lasers in Medicine and Surgery. This clinical publication of our pivotal multicenter warts study reports the high efficacy of NPS to clear common non-genital warts by 60 days, with the majority of warts clearing with one and sometimes two procedures. Almost half of the warts treated in the study were recalcitrant, meaning that they had been treated in the past with other traditional methods and had failed these prior modalities. In the 120-day observation period of our study, none of the cleared warts had recurred, which is a big advantage for the CellFX procedure. In summary, our progress with the Controlled Launch Program combined with our focus on continuing to build on the clinical data on the use of the CellFX system to expand applications positions us well to offer a leading solution for unmet needs of patients and dermatologists worldwide and propel our future growth. I will now turn the call over to Sandy. Thank you.
spk01: Thank you, Ed. For the second quarter of 2021, operating expenses were $14.8 million compared to $11.4 million for the prior year period, an approximate $3.5 million increase year over year. Operating expenses for the three months ended June 30, 2021 and June 30, 2020 included $2.4 million of non-cash stock-based compensation. The year-over-year increase in operating expenses was primarily driven by the expansion of commercial and operational infrastructure, including increased headcount to support commercialization activities. As I move into the discussion of our operating expenses, I'll focus my comments on our adjusted or non-GAAP results to provide insights into the underlying trends in our business. Please refer to today's press release for a detailed reconciliation of non-GAAP measures with the most comparable GAAP measures. Research and development expenses consist of salaries and related expenses for manufacturing, research and development personnel, as well as clinical trials and consulting costs related to the design, development, and enhancement of our potential future products. Non-GAAP research and development expenses increased by approximately $1.5 million to $6.4 million for the three-month period ended June 30, 2021, from $4.9 million during the same period in 2020 primarily due to increases in personnel, facility-related costs, and consulting and outside services in support of our FDA submissions and new application development. We expect the incrementally elevated research and development expenses compared to the prior year period to remain at approximately these levels for the remainder of the year as we continue to invest in cell effect system application expansion initiatives. Sales and marketing expenses consist of salaries and related expenses for commercial personnel, including marketing and commercial operations, as well as professional fees, trade shows, sponsorships, and other promotional activities. Prior to receiving FDA clearance, CE-MARC, and Health Canada approval for the Cell Effect System, sales and marketing expenses were included in general and administrative operating expenses. Non-GAAP sales and marketing expenses increased by approximately $1.4 million to $2.6 million for the three-month period end of June 30, 2021, from $1.2 million during the same period in 2020, primarily related to increased personnel, consulting, and outside services to support commercialization activities not conducted in 2020. Sales and marketing expenses for the three-month period ended June 30, 2021, also included approximately $400,000 in non-cash expenses related to the controlled launch of the Cellifex system. We expect sales and marketing expenses will continue to incrementally increase throughout the year as we invest in activities to support broad commercial operations including the controlled launch of the CellFX system. General and administrative expenses consist of salaries and related employee expenses for executives, finance, legal, human resources, information technology, and administrative personnel, as well as professional fees, patent fees and costs, insurance costs, and other general corporate expenses. Non-GAAP general administrative expenses increased by approximately $500,000 to $3 million for the three-month period ended June 30, 2021 from $2.5 million during the same period in 2020, primarily related to increases in personnel, facility-related costs, and directors' and officers' insurance. Non-GAAP net loss for the second quarter of 2021 was $12.6 million compared to a net loss of $8.6 million for the second quarter ended June 30, 2020. Cash, cash equivalents, and investments totaled $47.4 million as of June 30, 2021 compared to $59.9 million as of March 31, 2021. Cash used in the second quarter of 2021 with $15 million excluding net proceeds received under the at the market or ATM equity offering program. Cash used in the second quarter of 2021 included the payment of $2.5 million to our chairman Robert Duggan in accordance with the terms of the May 2020 letter agreement whereby Mr. Duggan provided indemnity coverage on substantially the same terms as our prior year directors and officers liability insurance program. On June 30, 2021, we also strengthened our balance sheet through a $50 million common stock private placement with Mr. Duggan. The private placement included the extinguishment of the principal balance and accrued an unpaid interest of the March 2021 term loan as well as the investment of $8.4 million of new capital. The $8.4 million of new capital was received in July and therefore is not reflected in our cash balance of $47.4 million as of June 30th, 2021, but instead is recorded as a related party receivable at the end of the period. We will continue to use our best discretion in authorizing distribution of shares under the ATM program. During the three-month period ended June 30, 2021, we issued and sold 130,748 shares of common stock under the ATM. During the six-month period ended June 30, 2021, We issued and sold a total of 288,490 shares of common stock under the ATM. The shares were sold at a weighted average price of $27.73 per share for aggregate net proceeds of approximately $7.8 million after deducting sales commissions and offering costs. Cash usage will continue to increase incrementally as we invest in activities to support broad commercial operations, including building a commercial team in Europe, increasing inventory levels, and conducting additional studies to support indication expansion with the FDA. Inventories were $2.7 million at June 30, 2021. We remain focused on our controlled launch strategy and its implementation through calculated investments to drive long-term adoption and growth. As such, incremental revenue generating systems will come online throughout the back half of the year as systems transition to commercial use following completion of controlled launch program commitments. Reflective of this cadence, revenue in 2021 will be weighted to the fourth quarter as we anticipate initial commercial utilization as well as system sales to the first wave of early adopters. Now I'll turn the call back to Darren.
spk03: Thank you, Sandy. This is an exciting time for Pulse Biosciences as we are entering the third quarter of our controlled launch program. As part of the program, our participating clinicians are learning more about our technology every day, and we are actively supporting them in any way we can. The initial feedback that we've received from our KOLs so far into the rollout has been incredibly positive, and we are looking forward to hearing additional success stories in the coming months. We have begun the commercial transition of select sites, marking an immense milestone for Pulse Biosciences on our journey to recording our first revenues and broader commercialization in the fourth quarter. The positive clinical data that continues to come in reinforces our commitment to developing new applications for the CellFX system for the benefit of our patients. We are capitalizing on the strong momentum that we have gained within the last few quarters, and we are well on our way to establishing widespread adoption and utilization of the CellFX system and NPS technology and towards our mission of building a viable company. Joining me now for Q&A are Ed Ebers, Executive Vice President and General Manager, Dermatology, and Sandy Gardner, Executive Vice President and Chief Financial Officer. Operator, please open the call for questions.
spk02: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate that your line is in the question queue. You may remove your question from the queue by pressing star 2. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Chris Cooley with Stevens. Please proceed.
spk05: Good afternoon, and thank you for taking the questions, and congratulations on the continued progress there with the CellFX system. Thank you. Just two for me here at the outset. I appreciate the additional color you provided about the ramp-up of your kol sites and that's leading to the five months versus the initial three months conversion time i'm curious though if you could maybe go a little bit deeper there in terms of the types of lesions where they're initially utilizing the system if there's any variability there in terms of just the initial usage the wait time when we think about indications for use and then Maybe that could then help us kind of better understand how these additional protocols and learnings would apply to this second wave of adopters. And then as just a quick follow-on, if I may, for Sandy, I'm not sure if you're willing to do this at this juncture, but any additional color that you could provide in terms of the expectations for the EU commercial team build-out, either in terms of the scope of that, but also the related costs and just kind of the timing on that build out would be greatly appreciated. Thank you.
spk03: Thanks, Chris. Those are great questions. So let me jump in with number one, and this is Darren. I'll start off and then I'll probably hand it over to Ed to add some additional color. And so your question is on sort of the ramp up and what we've seen in the controlled launch in terms of lesions being treated. and how we think that's going to carry forward. So, yeah, I think the control launch has gone very much as we anticipated in terms of clinics experiencing this technology for the very first time in a commercial setting. And so, as you know, we have quite a bit of clinical data. We have peer-reviewed publications in the treatment of sebaceous hyperplasia. in seborrheic keratosis, and as we discussed on the call today, also cutaneous non-genital wards. And so as controlled launch sites, you know, started up, the initial sites, those were really the lesions that, you know, that they predominantly were looking to treat. So largely treating lesions that, you know, that we have clinical data that's published on, And that, you know, lends itself well to the mechanism of action of our NPS technology and the cell effect system. And so, from a lesion perspective, those are the things that they initially focused on. From a timing perspective, I think you can probably imagine that these early clinics brought patients in, began to treat these lesions. and then followed those patients both for lesion clearance, but ultimately the healing of those treatments and how they resolved over time. And I think the thing we've observed is that these initial sites really were thoughtful and methodical in terms of how they batched and treated those patients and treated a first group of patients followed those patients over maybe 30 to 45 days, and then treated a next set of patients. And so that whole process, you know, kind of led to the initial clinics sort of taking around this maybe five-month period of time to get through the controlled launch program as we sort of set it up. And as I mentioned in the prepared remarks, you know, we now expect that that, and we're seeing it today, that timeline is accelerating. And so it's sort of this transition from clinical use into first kind of commercial use and then the early adopters. In the first commercial use, those clinics really want to see and observe these patients very carefully as they're sort of the first ones out of the gate with the technology. And so that's what we're seeing. And I think you know, we appreciate our clinics and their desire to take that kind of an approach, and we're working very closely with them, you know, on a day-to-day basis. And again, you know, we've steadily seen, as we brought on more clinics, and again, we brought on, you know, 34 clinics in the second quarter, those clinics are certainly moving more rapidly based on, you know, all of the learnings that we've had along the way. So, I think that's sort of what we're seeing. We think it will continue. We think the lesions that I talked about in terms of where we have our clinical data is where we'll continue to see good utilization. That being said, on pretty much a weekly basis, physicians that are using the technology are bringing up new applications that they would be very excited about and want us to partner with and generate clinical data on. There's a lot of activity in terms of new applications and where physicians would like to see us go in terms of the technology. Let me just ask Ed if there's anything you'd like to add on top of that. Ed, I think you might be on mute.
spk04: Yeah, from the very beginning, we recognize that our mechanism of action to target cells would lead to these initial applications, but also would cause physicians to leap to other types of lesions that have the same kind of architecture. That is, they're composed of cells that sit on top of the dermis. So as soon as they develop confidence with our initial lesions, they quickly went to other difficult to address lesions and are seeing the same type of mechanism of action benefits with these other kinds of lesions that we saw with the top three that we've done our studies. So we expect more of that in the future, again, as we anticipated with our mechanism of action-based messaging.
spk03: And then, Chris, the second question, I think I'll hand that one over to Sandy in terms of the European build-out.
spk01: Hi, Chris. During the course of the six months that we've gone so far this year, we've largely built out the European team. We have approximately seven individuals in Europe across the commercial organization. That includes the leaders as well as the clinical application specialists, the ones that would be driving utilization. And this is across the major geographies that we're looking at, so Germany, France, Spain, et cetera. So for the rest of the year, we may add a couple more, but I would say that with the seven folks that we have, at least for completion of this year and looking to turn from control launch to commercial launch, we're largely set. So I don't see a major expansion there because we have fulfilled many of those positions in the first half of this year.
spk05: Thank you for that, Cara. I misunderstood. I thought you were implying that you were accelerating there in your comments. My mistake. Congrats on the great quarter.
spk03: Thanks a lot, Chris. Appreciate it.
spk02: Our next question is from Anthony Vendetti with Maxim Group. Please proceed.
spk09: Thanks. I was wondering if we can give us an update on the FDA ID approval for the feasibility study for BCC. I know maybe I missed this in the beginning, but you were going to enroll 30 patients. And is that still on schedule? And are you expecting completion of that by the end of 3Q?
spk03: Yeah, hey, Anthony. Yeah, thanks. Good question. Yep, we are on track in that BCC study, as I mentioned. In the prepared remarks, we have now enrolled 18 patients out of the total 30, and we are on track to enroll those up to 30 patients by the end of the third quarter here.
spk09: Okay, and then the pivotal study here, is to follow and is that still scheduled for first half 22 and any more details on what that pivotal study may look like?
spk03: Yeah. Well, we don't have any more detail right now. I think, you know, our current plan is to first, you know, complete this feasibility study, which as I mentioned is 30 patients. The patients get an initial treatment Then there's an excision approximately 60 days later, and then that tissue is analyzed by the study pathologist. So, you know, we will complete enrollment in the third quarter. You can imagine then, you know, add 60 days until that excision is done, and then there'll be some time to analyze that tissue. And so our estimate is still, I think... that in the first half of 2022, we hope to start, you know, a pivotal trial in BCC. Now, that being said, you know, there's a lot between here and there in terms of completing the feasibility study and, you know, also collaborating with FDA, which we will certainly do as it'll be an additional ID approved study. So there's still work to be done with FDA. We have not talked about any of the parameters of a pivotal trial at this particular point, but we're really excited about this particular application and the quick start that we have here in the feasibility study. There's a lot of interest with all of our physicians that we're working with on this, including all the controlled launch sites are really kind of excited to see how that application progresses through the regulatory and clinical process. So it still looks like the first half of 2022, but a lot of work to be done between now and then.
spk09: Good. Now, that's a great update. And obviously, that's a large market, as well as some of the ones that you said you're still, you know, growing a pipeline for, including acne and and overactive, you know, benign growths caused by overactive sweat glands. So I was just wondering, are those still very much in the early stage of sort of mapping out your strategy there, or is there any other detail you can give on some of those other markets?
spk03: Yeah, that's all. Yeah, great question. So yeah, I would say those are early in the process. As you know, we've done some early feasibility work in some of those things that you've mentioned, and we're really sort of mapping our strategy and beginning to talk to FDA about some of these additional applications and indications. And I think what we're trying to do is as we have regulatory and clinical milestones upcoming around those or having, for example, an ID approved, then we can begin to share more detail on exactly what those studies look like, how long we think they'll progress, and then what potentially comes after them like we've done with BCC. But we certainly have a number of other things in the pipeline, and we really do look forward to sharing some of the milestones that will be coming with those in the not-too-distant future.
spk09: Okay, great. And then I guess just lastly, it seems like everything's on track with the 75 KOLs. I know by the end of the year or before the end of the year, expect to generate revenues. Is there any more detail on the timing? And in terms of the feedback that you're getting from the KOLs, are there any tweaks that you're already making either to the protocol or or the device in any way or anticipating to make, or is it too early and you're going to wait for the feedback from all 75?
spk03: Yeah, so, Anthony, let me comment first just on the kind of feedback we're getting and any tweaks we're making. So I would generally say, you know, the feedback we're getting is great. I would say also we're learning stuff, you know, every day and every week and every month that we're in this controlled launch program. And those learnings are certainly leading to us tweaking, you know, various things we're doing that includes, you know, training. It includes, you know, conversations with physicians around patient selection and lesion selection. You know, as you can probably imagine, You know, we're in over 50 clinics at this particular time and, you know, we work with some really talented physicians and, you know, they have new ideas and new thoughts about technique and different things that they would like to try and should try based on the mechanism of action of our system. So I think that this control launch program is all about that. It's all about learning and tweaking. As far as the system goes, I would say largely no. We haven't made any substantive changes to the system. The system's been functioning really well. All the systems in the field have operated really well, no issues with anything as far as we're concerned. We have lots of ideas about how to improve things all the time, but I think as far as that goes, the control launch has been going very well and And we're taking all the feedback we get and putting it into new training programs and education programs and other things. So with regard to revenue, I'll let Sandy jump in.
spk01: Hey, Anthony. So in the prepared March, you heard Darren say that we're starting now to see the transition from the controlled launch clinic participants into commercial clinics. So we'll start to see some of the utilization revenue from that in the third quarter. But in terms of commercial revenue, that would actually be heavily weighted towards the fourth quarter. We're still on track to begin the full commercial launch in the fourth quarter of this year.
spk08: Okay, great. That's great. That's a lot of good color. Thanks. I'll jump back in the queue. Thanks, Anthony.
spk02: Our next question is from Sean Lee with HC Wainwright. Please proceed.
spk07: Good afternoon, guys, and thanks for taking my questions. Congratulations on a great quarter. I'm just maybe a little bit more on the upcoming 510K applications for SH and Word. So I was wondering, with the data analysis expected to finalize this quarter and next quarter, would you be releasing some of those data ahead of your submissions?
spk03: ahead of the submissions? Most likely not. I mean, I think a lot of the data rollout follows the cadence of some of the meetings, some of the big meetings in this area. But I think as it relates to clinical data that's going to go into a submission to FDA, it's typical to get that to FDA and get that through the process before going out publicly with it.
spk07: I see. My second question is on the educational side of things, because it sounds like just building out the KOL support and building out the educational side is very important for the broader commercialization of the device. I was wondering, what's the longer-term plan of that? Is it just going to be KOL symposiums and talks at the key meetings, or is there a larger plan on how to reach the smaller clinics especially?
spk03: Yeah, so excellent question and I'll, let me just comment quickly and then I'll hand it over to Ed. So, you know, I think just one comment I'll make is we will always, as a company, be highly focused on physician and patient education and training. So it's our firm belief that, you know, a technology Like this, which is a new technology into a market, the key to success in the field and adoption, high rates of adoption, is all to do with education and training. So we will have an organization that will be highly focused on that. We pride ourselves on our team being very well trained and educators themselves in terms of the technology and what they can do in the field. with the clinicians and their entire staff at these clinics. So I think we never see a scenario where we go away from doing that. It's obviously heavily weighted now in a controlled launch program. And also this program is really all about helping us to create those best practices around how we do training and education in the field going forward. So Ed, any additional comments there?
spk04: Just that we've had our first evidence of controlled launch sites submitting abstracts based on the controlled launch experience at meetings coming up later in this quarter. So that's certainly what we had hoped for as part of this controlled launch is to see increased trafficking in new data from something other than our controlled clinical trials, which is really a good sign with the new energy-based technology. The other observation is that physicians are really used to the world of Zoom calls. So the opportunity for us to connect physicians in the controlled launch both with each other as well as with prospective purchasers to convey their experiences is something that we plan on in the third and fourth quarter. So this cross-fertilization that's the whole point of the controlled launch is very much an ongoing growth stage of the company and something that our sales team is very used to catalyzing with the controlled launch sites and the respective positions that tend to follow them. So I expect to see more of that in the coming quarters.
spk07: Thanks for the additional call. That was helpful. That's all I have.
spk03: All right.
spk07: Thanks a lot, Sean.
spk02: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Darren Uecker for closing remarks.
spk03: Thanks, operator, and thank you, everybody, for joining our call. We very much appreciate the support always and the great questions, and we look forward to our upcoming calls.
spk02: This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation, and have a great
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