Pulse Biosciences, Inc

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.

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.

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.