Pulse Biosciences, Inc

Greetings and welcome to Pulse Bioscience's first quarter 2022 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 telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Philip Taylor, Investor Relations. Thank you, sir. 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, May 11th, 2022 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 PulseBiosciences.com on the News and Events section on 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. On today's call, I will discuss our first quarter and recent business progress, including our commercial priorities and updates on our clinical and regulatory initiatives. We will then be joined by Chief Commercial Officer Kevin Danahy, who will outline recent commercial activity. Then Sandy will detail the financial results before I conclude and open the call for Q&A. Recently, we pivoted our commercial focus towards driving utilization of the CELFx system to ensure comprehensive integration within dermatology clinics. We made changes to the commercial team, including new leadership and implemented organizational changes to better position the company to execute on this new term focus. At the same time, we executed operating expense reduction initiatives reflective of our new focus and to reduce cash usage. In total, we reduced our headcount by approximately 20% and reduced overall operating expenses by approximately 20% from the first quarter 2022 run rate. Our priorities in 2022 are straightforward. Drive meaningful cell effect system utilization and expand the system's indications for use in dermatology. Last year, we initiated a controlled launch program with 70 dermatology clinics that agreed to share data and observations about patients and their own experiences with treatments. In exchange for this valuable data, they earn credits towards the purchase of their system. As we shared on our last call, at the end of the first quarter, 39 clinics have converted to commercial use and 20 remain in the program after 11 clinics have opted out. With the controlled launch conversions to date and the three clinics that have purchased a CellFX system outside of the controlled launch program, we ended Q1 with 42 commercial CellFX clinics. These commercial clinics performed a total of 700 patient sessions during the quarter. A number of important learnings have come out of the controlled launch program in terms of patient and lesion selection, treatment protocols, and an understanding of the task of integrating the cell effect system into the clinic workflow across the continuum of clinic types, from cosmetically focused to medically focused. Perhaps most importantly, the controlled launch has confirmed our belief that patients are motivated to have their benign lesions cleared, and that these patients are already visiting dermatology clinics on a daily basis, either seeking to receive treatment for these lesions or for other reasons, but are excited to learn about the potential benefits of the CellFX treatments. Though we view these learnings as positive indicators for the potential of the CellFX business for both clinics and Pulse Biosciences, we have also learned that the integration of the CellFX procedure into the busy dermatology clinic workflow requires a much higher touch model to generate the system utilization we expect. And while we generated increasing average commercial clinic utilization throughout Q1, as shown in the graph included in today's press release, NR10Q, we are not satisfied with the rate that the utilization increased or the inconsistent trajectory. And this has led to our change in commercial leadership and strategy. It is now our priority to address this and to drive more consistent and accelerating commercial utilization of cell effect systems. We are doing this by initially partnering with nine of our commercial clinics across the US, EU, and Canada to collaborate on developing commercial best practices that will demonstrate the clinical and economic value of a cell effect system completely integrated in a dermatology practice. During the month of April, Kevin and his team visited many of our commercial clinics to discuss this program, selected the nine participants, and are launching the program at the clinics throughout the month of May. In Q1, these nine clinics averaged 14 commercial sessions per month. Our goal for the program is to get them to 40 sessions per month on a consistent basis. We expect once this initial group of clinics has achieved this level of utilization, we will have a blueprint for the necessary training, education, and marketing required, and we'll be in a position to scale and apply this blueprint to clinics going forward. Coming up, Kevin will discuss our framework for this program and what this means tactically. Until we develop these commercial best practices and achieve our utilization goals, we will reduce the emphasis on cell effect system capital sales into new clinics. We will continue to develop and build our capital sales pipeline and believe that as we reach our utilization goals, we will be well positioned to focus on capital sales. Now on to our clinical and regulatory pipeline. Our stepwise regulatory approach with the FDA to expand the cell effect system's indications for use with specific lesions will provide the ability for us to assist clinics with marketing and promoting the cell effects for treatment of any cleared specific lesions, in addition to our current capability to do so for general benign lesions. The treatment of sebaceous hyperplasia is approved under our CE mark and Health Canada approval. We are currently seeking to achieve FDA clearance for this specific lesion. Following the submission of the 510 to the FDA in the fourth quarter, we received an additional information request letter, also known as an AI letter, from the FDA. In the AI letter, the FDA stated it did not believe the company had provided sufficient clinical evidence at this time to support the expanded indication for use and that the company had not met the primary endpoints of the SH IDE study. Recently, we had our initial meeting with FDA to clarify issues raised in the AI letter. Shortly following the meeting and at FDA's request, we provided additional analysis of our SH comparative clinical data. A follow-on discussion is being scheduled with the FDA to review the additional data sets. We expect to continue our collaboration with FDA during this 510K review process and to formally respond to the AI letter. Again, I would like to remind you that this current 510K submission is meant to add a specific indication for spacious hyperplasia to our current general indication and has no impact on the existing 510K clearance for the cell effect system. In the third quarter, 2021, we completed enrollment of our 150-patient FDA IDE-approved pivotal comparison study for the clearance of non-genital warts. This data will support the second specific indication we are planning to submit. We are currently finalizing the 510 submission and remain on track to file during the second quarter. Regarding our basal cell carcinoma or BCC feasibility study, we have completed follow-up and analysis of the data. We are pleased with the results we achieved and are excited to take the next steps to advance the regulatory process with FDA. This will include a meeting with FDA to discuss potential pivotal study for a specific indication to treat BCC lesions with the CellFX system. We expect to have this meeting by the end of the third quarter. We are also looking forward to presenting this data at an upcoming scientific meeting. Expanding the CellFX system's application portfolio where it makes the most sense for dermatologists is the priority of our development programs. Before handing it over to Kevin, I want to highlight our extensive engagement with the scientific community. Investigators generating clinical evidence and promoting the latest discoveries with MPS technology is a crucial component of physician adoption. I had the privilege of attending the recent annual meeting of the American Society for Laser Medicine and Surgery And in happy to report, the cell effect system was well represented in the scientific program with an oral presentation and poster. In the oral presentation, Dr. Suzanne Kilmer discussed long-term NPS data on the clearance of sebaceous hyperplasia, showing high levels of lesions maintained or improved clearance and good cosmesis 12 months after treatment. Another poster presentation by Dr. Mary Elgash demonstrated the first case of HPV-related dermatosis on the lips. completely cleared by NPS. Both presentations drew strong engagement with clinicians who were eager to learn about the cell effect system and NPS technology. This week at the annual Symposium for Cosmetic Advances and Laser Education, Dr. George Ferruzza, past president of the American Academy of Dermatology, will present an overview of NPS technology on the main stage. And in June, we are excited to have strong scientific and commercial presence at the World Congress of the International Master Course on Aging Science, also known as MCAS, which will take place in Paris. Now, I will turn the call over to Kevin.