Q1 2024 Pulse Biosciences Inc Earnings Call

Participants

Trip Taylor; IR; Pulse Biosciences Inc

Kevin Danahy; President, Chief Executive Officer; Pulse Biosciences Inc

Presentation

Operator

Thanks and welcome to the Pulse Biosciences First Quarter 2024 financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Trip Taylor. Please go ahead.

Trip Taylor

Thank you, operator. Before we begin, I'd like to inform you that comments and responses to your questions during today's call reflect management's views as of today, May seventh, 2024 only and will include forward-looking statements and opinions. Statements, including predictions, estimates, plans, expectations and other similar 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.
In our filings with the US 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 Pulse Biosciences.com in 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, Kevin Danahy.

Kevin Danahy

Thank you, Trip. And good afternoon, everyone, and thank you all for joining us. I'm excited to provide today's condensed update. As our last call was just over five weeks ago, Mike Koffler, Vice President of Finance will join me in the prepared remarks to review our first quarter 2024 financial results. Then Robert Duggan, Executive Chairman of the Board, Darren Nucor, Chief Technology Officer, and Director, and Mitch Levinson, Chief Strategy Officer, will join me for a question and answer session.
During today's call, we will give you an update about our proprietary designed and engineered cell FXNSPFA. energy delivery system, and three novel proprietary Endo factor devices. Q1 was a very active and productive quarter for Pulse Biosciences. As you know, we are making a material and significant commitment to the field of nanosecond pulsed field ablation, addressing soft tissue ablation for human beings need. Pulse Biosciences is pleased to bring into existence a novel electrophysiology and surgical treatment modality that focuses in the nanosecond up to billions of a second pulse duration range. This is up to two orders of magnitude faster than the millions of a second range currently deployed in the pulsed field ablation area.
This increase in Pulse speed in conjunction with the capacity to increase Pulse Amplitude is believed by us potentially bring out material improvements in safety and efficacy as well as overall significant improvements in treatment times and thus treatment outcomes. Additionally, NSPFA. is a very patient physician care provider friendly treatment option. Going forward, we are planning to do multiple clinical trials across different indications. It is important to note that inclusive of 6,000 Humann dermatological skin lesions treated, not a single serious adverse event has occurred. In March 2024, we received FDA five 10 K clearance for our non-cardiac cell XNSPF., a percutaneous system for soft tissue ablation indication. Soft tissue ablation is used by physicians in a wide range of procedures, including the thyroid, liver, breast and other areas of the body.
Currently, we have treated 30 patients in need of soft tissue ablation for thyroid disease. Dr. Stefanos Piazza, Chief of endocrine surgery division at Naples Hospital Demare in Naples, Italy, our key opinion leader in the field of fibroids in collaboration with Dr. Ralph Stefano medical director heading endocrine surgery, the Sarasota Memorial Health Care System, I've successfully performed soft tissue ablation procedures on 30 patients with the SLFXNSPF., a percutaneous system in Italy. The first patient was treated in April 2023, and the last patient in January 2020 for all procedures were thyroid for amended protocols at our request. We have observed patients as early as one week and up to this point as late as 180 days. Patient follow-ups are weekly for the first four weeks, 1030, 60, 90, 180 and 360 days time points following the procedure, no evidence of scarring or injury to the surrounding tissue has been observed and patients treated have been judged to be successful.
Moving on to the update of our cardiac indications, starting with our surgical plan. In the past few weeks, we have communicated with the FDA regarding our cell effects and SPFA. surgical clamps for cardiac procedures. The FDA has requested clinical data prior to rendering a final decision in pursuit of our request for FDA five 10 K clearance. As of today, only preclinical animal work has been performed. No patient has been treated as of yet without cell FXNSPFA. surgical claims in present time. However, we have submitted to the ethics committee in the Netherlands and applications to start first-in-human feasibility study with the cell FXNSPF., a surgical plan. We anticipate their response within the next several weeks. The study is designed to treat up to 30 patients in several centers in the Netherlands. This study would provide information on first in-human effectiveness and safety with our device.
Our second device for cardiac indication is iCell effects and SPFA. 360 degree cardiac catheter. We are pleased to announce that 24 of 30 patients have been successfully treated in Prague by Dr. Vivek Reddy, Director of cardiac arrhythmia services at Mount Sinai Hospital in New York and direct, Dr. Peter Newton, Chief of Cardiology at Hamaca local hospital products and his team and product, the remaining six patients are expected to be treated within the next 45 days. The primary endpoints for this study are acute effectiveness at the time of the procedure and add up to 30 days for safety. Discussions with the FDA are ongoing and present time, and we will provide updates in a timely manner. Pulse Biosciences will have a strong presence at the upcoming Heart Rhythm Society, HRS meeting May 16th to the 19th in Boston cross-sell effects. NSPFA. energy delivery system will be featured in a total of six poster presentation abstracts as well as a live case presentations.
Before turning the call over to Mike, I will now provide additional details on our efforts to strengthen our balance sheet through the rights offering. This offer serves as a stockholder friendly avenue for Pulse Biosciences to secure the necessary capital to advance our novel and factors fluids market entrants, while offering our existing stockholders a potential non-dilutive opportunity to continue to support the company's growth. The Board of Directors has approved a rights offering of up to $60 million worth of units that will be available to all holders of record of the company's common stock. As of the specified record date this week, the Company determined to initiate the rights offering in June or July, not met so that the early record date of May 16th will most likely be changed to a date in mid June. The date will be selected by our Board and announce once all the necessary filings have been completed. Subscriptions may begin immediately once the company commences the rights offering most likely in June. It is important to note that the subscription rights will expire and have no value if they are not exercised prior to the expiration date of the offering, which date will also be announced by the company once the necessary filings have been completed. Assuming that the rights offering is fully subscribed at the initial price, the Company will receive gross proceeds up to $60 million less expenses related to the rights offering and upon exercise of all the warrants, a potential to raise up to $126 million of fully subscribed rights. Our parent would fund the Company's growth plans into the first quarter of 2026. Please refer to our release on the rights offering for more information.
Now I will pass the call over to Mike Kofler for an update on our financial results.

Thank you, Kevin. Today, I will highlight our GAAP and non-GAAP financial results. I encourage you to review today's earnings release for a detailed reconciliation of non-GAAP measures to the most comparable GAAP measures in the first quarter of 2020. For total, GAAP costs and expenses increased by $1 million to $10.6 million compared to $9.6 million in the prior year period. The increase in GAAP costs and expenses was primarily driven by an increase in noncash stock-based compensation expense, which was $1.8 million in the first quarter of 2024 compared to $0.9 million in the prior year period. Total non-GAAP costs and expenses in the first quarter of 2024 increased by $0.3 million to $8.6 million compared to $8.3 million in the prior year period. The increase in total non-GAAP costs and expenses was primarily driven by an increase in research and development expenses to support the advancement of our cell effects and SPFA. devices.
Gaap net loss in the first quarter of 2024 was $10.1 million compared to $9.8 million in the prior year period. Non-gaap net loss in the first quarter of 2024 was $8.1 million compared to $8.6 million in the prior year period. Cash and cash equivalents totaled $34.9 million as of March 31st, 2024 compared to $44.4 million as of December 31st, 2023. Cash used in the first quarter of 2024 totaled $9.5 million compared to $7.2 million used in the same period in the prior year and $6.9 million used in the fourth quarter of 2023. The sequential quarterly increase was driven mainly by $2 million in 2023 annual cash bonus payouts.
I will now turn the call back over to Kevin?

Kevin Danahy

Thank you, Mike. It is an exciting year for Pulse Biosciences as we continued to advance our novel platform technology into the hands of more physicians for the benefit of more patients through their calls, we will provide real-time updates on events and interactions as they unfold.
Joining me for the question and answer session today are Executive Chairman of the Board. Robert Duggan, Chief Technology Officer and Director, Darren Nucor, and Chief Strategy Officer, Mitch Levinson.
Operator, please open the call for questions.

Question and Answer Session

Trip Taylor

Thank you, Kevin. Now we're going to address a few questions we've received over e-mail, then we'll open up the line for questions from the audience.
First one is how is the pilot launch going in the U.S. with the percutaneous electrode now that it's approved. What's the interest level? And when can we anticipate full commercial launch and Patriot business?

Kevin Danahy

Maybe I can take that one as has since our five 10 K clearance we got a few weeks ago, we've reached out to the KOLs that we were targeting for our pilot program and the interest has been just really high. We've got a lot of physicians at major institutions that want to evaluate our system for soft tissue ablation. As some of you may know, an institution or institutions like this in hospitals, there's an approval process usually takes several weeks, sometimes longer to approve bringing in new technologies.
We've got multiple KOLs currently working through that approval process, and we expect our PHIL effects. Percutaneous system is going to be used in a number of prominent hospitals and clinics by the end of this year. And right now, we are just really focused on building the appropriate training around the system, providing comp strong clinical support and just ensuring that we are doing everything we can to help our our physician customers get the best possible clinical outcomes that they can with our technology.

Trip Taylor

Operator, can you please open the line for questions now?

Operator

(Operator Instructions) Anthony Petrone with Maxim Group.

Thank you and congratulations on the progress here. You may be a little bit just on the FDA dialogue. It sounds like that's that's moving in the right direction. They've they've sort of given a little bit of guidance here, I think on just kind of the clinical pathway going forward. And so maybe anything you could add there on how broad-based a pivotal program could look like on how many sites, how many patients and I guess your early views on timing of when this could be launched and of one follow-up.

Kevin Danahy

Yes, Darren, you want to take that?

Yes, yes, sure. Thanks, Anthony. This is on the clamp, right. I apologize.Yes, that was downright on, no cardiac Clancy up.Yes. So I think as we discussed on our last call, we received an additional information letter from the FDA that led to a couple of meetings with FDA one that we had very recently and a very collaborative, great discussion with FDA as we're moving this forward.
As of today, as we mentioned, we remain in the five 10 K process and after receiving a letter that that goes on hold with regard to the review cycle, as you probably know, and you know, I think we had good dialogue with FDA about the need or request for human clinical data. And so we're really in the process of discussing that with FDA and coming to some agreement on what that clinical program would look like.
And likewise, the regulatory path going forward right now, we really don't have much to report on that in terms of timing and one of the things on the clinical side that and that we have discussed is a first in human feasibility study for a clamp which will happen in Europe in the Netherlands and that we've submitted to the ethics committee there. We expect to hear back from the ethics committee within the next several weeks and then commence that study on soon thereafter. And so we've got a lot going on on that side. Fda is aware of that study, and we'll just be working with FDA over the next period of time to finalize what's going to be required for the plant in the United States.

That's helpful. And then a follow-up would be just on HRS. Looking ahead here, you have a live case with Celebrex that is being presented posted presentations as well. The market here in the United States is now officially underway. We have pulse select and power poles out there.
So what are you expecting out of HRS? And I guess from the perspective of Pulse Biosciences. Are you surprised at the rate of adoption by the early PFA catheters? And maybe just the of the expectations on physician feedback for cell effects that are made in Europe thanks again and thereafter, Anthony?

Kevin Danahy

Yes, thanks, Kevin. Yes, I would I guess I would say, you know, we are really looking forward to HRS. We have six abstract presentations as you mentioned, and those are both actually on the catheter and our plan. And so that is something that is very encouraging to get both of our products into HRS. for this important meeting. And then as you mentioned, we have a live case in the PFA. Summit at the beginning of the meeting.
And as it relates to PFA in general, I think we are not surprised by the progress of PFA and the progress that we're seeing in the United States and by those other devices, I think you know, it seems the data is pretty clear that PFA offers some pretty significant advantages over current modalities. What we're all excited about and I'm looking forward to at HRS is talking about nanosecond PFA and our view that it's a sort of a next generation as it relates to PFA. and what the the differentiation is in terms of and the lesions that we create, the the integrity and durability of those lesions, the depth of those lesions, the speed with which EP.s are able to create those lesions.
So all those things we think are going to be really important to both physicians and patients, and we're looking forward to HRS to be able to talk about that and present our both both our preclinical and clinical data that supports those different benefits. So we think it is going to be a really exciting meeting for PSA in general. But and but also, of course, for nanosecond PFA and Pulse Biosciences.

That's very helpful. Thank you.

Operator

Robert McCarthy with [medical book production].

If this question is for Bob, a little preliminary. The ablation and catheters and so on. And so I'm real surgical on a coming of basically dual BOPs feel, though that you have all the patents and the have a head of all the other people, plus, of course, the machine itself are you said you are the tip of the spear well ahead of Bob, and the team would be somewhat similar, right but you really put your patent base together evaluated thoroughly, which we're constantly doing at this point where we're very pleased with what we have and what we are generating the acid test is when you bring it to market, it's not against a lot of developed anything you want even copy, you can alter that you can go denovo. But when you bring it to market. That's where the patents really swing. And so and we'll find out. But I am yes, I am Bob Duggan. I'm confident that we're in a good position there and I like the speed at which we continue to evolve our patent base. I hope that answers your question, but thank you.
Welcome.

Operator

I would like to turn the floor over to Kevin Danahy for closing remarks.

Kevin Danahy

Thank you, operator. In closing, I just want to thank you all for continuing to support and given us the confidence that we have in our company. We are dedicated to delivering value and growth with NSPFA., and we look forward to the opportunities that lie ahead. Thank you for joining us today.
And we remain committed to driving success for this company. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.