Brian Dow - Senior Vice President and Chief Financial Officer Darrin Uecker - Chief Executive Officer, President & Director Robert Duggan - Chairman of the Board

Good afternoon, ladies and gentlemen, and welcome to the Pulse Biosciences Fourth Quarter Investor Update Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Brian Dow, Pulse Biosciences’ Senior Vice President and Chief Financial Officer. Please begin, sir.

Thank, you, and good afternoon and welcome to Pulse Biosciences quarterly investor update call. On the call with me today are Darrin Uecker, our President and Chief Executive Officer; and Bob Duggan, the recently appointed Chairman of our Board of Directors. Before we begin, I’d like to remind you that on today’s call, we will be making forward-looking statements. These include our plans and expectations relating to our operational, scientific, clinical and financial projections, products including the uses and applications of such products and other future events. You should not place undue reliance on such forward-looking statements, which are subject to a number of assumptions, risks and uncertainties, and may differ materially from actual results. These risks and uncertainties are more fully described in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K and our most recently filed Quarterly Report on Form 10-Q. Pulse Biosciences undertakes no obligation to update forward-looking statements as a result of new information or future events. In addition, please note that today’s call is being recorded and will be available for audio replay on the Investor section of our website at www.pulsebiosciences.com, shortly after the conclusion of this call. Investors electing to use the audio replay are cautioned that forward-looking statements made on today’s call may differ or change materially after the completion of the live call. I would now like to turn the call over to our President and Chief Executive Officer, Darrin Uecker.

Thanks. Brian. Good afternoon, everyone, and thank you for taking time to join us on today’s investor call. It’s an exciting time for Pulse Biosciences, as our ongoing progress and recent developments are bringing greater focus to our future prospects and direction. I will start today’s discussion with a review of a recent and very important milestone. During previous investor calls, we have made clear that we would begin fundraising activities towards the end of 2017. And just over a month ago, we closed an important financing, a $30 million private direct placement with Bob Duggan, who as many of you know, are aware was already a major shareholder prior to this financing. This is our second financing following our IPO, which was at $4 per share and our February financing at $6.10 per share. We completed this $30 million financing in September at a price of $15.2 per share. We’re pleased with the increase in value at which each of these financings was completed. This recent financing marks a significant 2017 milestone for Pulse Biosciences in our NPS technology. The proceeds will enable us to further accelerate our efforts to demonstrate the medicinal potential of our Nano-Pulse Stimulation technology, and to continue making meaningful progress towards our mission of improving the quality and extending the lives of patients through the use of NPS. Brian will provide additional details on the financing later on in this call. Following the financing and, as announced last week, our Board of Directors underwent a transition. We are most appreciative for the support of our early directors who were instrumental in guiding Pulse Biosciences through its early pre-IPO days, its initial public offering and into our first clinical trials using NPS. On behalf of Pulse Biosciences’ stakeholders, employees and shareholders, we extend our sincere gratitude to Bob Levande, Mitch Levinson Dr. Bob Greenberg, and Thierry Thaure, for all of their efforts, as well as the smooth transition to Pulse Biosciences new Directors. With that, we welcome the new Chairman, Bob Duggan, who is on the call with us today; Mr. Ken Clark, partner at the law firm of Wilson Sonsini Goodrich & Rosati; Dr. Tom Fogarty, of the Fogarty Institute for Innovation; and Manmeet Soni, Chief Financial Officer at Alnylam Pharmaceuticals; who have joined Maky Zanganeh and myself on the Board. As noted earlier, we are pleased to have Bob Duggan on this call. And on this topic, he would like to say a few words. Bob?

Yes. Thank you, Darrin, and good afternoon, everyone. This is a pivotal time for Pulse Biosciences. I’ve been a shareholder in Pulse Biosciences for over a year and with the knowledge gained during that time, I’ve grown increasingly optimistic about Nano-Pulse Stimulation technology, its potential and the ability of the Pulse Biosciences team to deliver on their mission of improving and extending the lives of patients with this proprietary technology. By recent investment and the subsequent transition of the Board of Directors come at a time when we believe Pulse Biosciences is set to transition from an early-stage development company to a company focused on the key application areas in which NPS can have a major impact. As was noted in the press release, announcing the Board transition on Friday November 3, the new Board members and current Board member of Maky Zanganeh and Darrin Uecker are very familiar with one another and have achieved notable success together and independently. Enthusiasm and confidence in Pulse Biosciences future is the common denominator bringing us together once again. I’m the Board look forward to working with the Pulse Biosciences team, as we strive to transform Nano-Pulse Stimulation technology from today is a good idea to tomorrow’s widely accepted reality. I’d now like to turn the call back over to Darrin.

Thanks, Bob. I will now continue with the updates for the third quarter ended September 30. As background for those of you new to Pulse Biosciences and as a reminder for those of you who’ve joined us on previous calls, Pulse Biosciences is developing a proprietary tissue treatment technology based on Nano-Pulse Stimulation, where ultra-fast electrical pulses with nanosecond pulse widths from billions to 10 millionth of a second are used to stimulate cellular effects that can lead to positive therapeutic outcomes. Nanosecond pulse is an incredibly short duration pulse. To give you a sense of the scale, a nanosecond is to a second, what a second is to 31.7 years. Our mission at Pulse Biosciences is to build a viable company that designs, produces and commercialize Nano-Pulse Stimulation technology to improve and extend the lives of patients. Our strategy to achieve this is to develop a therapeutic tissue treatment, NPS platform; demonstrate the unique medicinal benefits of the platform in a number of compelling treatment applications; and commercialize NPS systems to deliver the benefits of NPS to physicians and their patients. Within each application area or vertical market, we are working with key opinion leading physicians to develop and execute pilot studies to determine where this technology has the highest value to clinicians and patients from a patient outcome, market need and time to market perspective. We’ll then determine the optimal path to deliver those applications to the market. With that, as our foundation, I would now like to provide updates towards previously communicated milestones. First, as we discussed on previous calls, we submitted the company’s first 510(k) to FDA for the PulseTx System, our first NPS platform earlier this year seeking clearance for soft tissue ablation indication. In September, we voluntarily withdrew our application in response to FDA’s…

Thanks, Darrin. Our financial results for the quarter ended September 30, 2017 reflect the ongoing investment being made in our development and clinical programs, along with the requisite operations of a public company. Cash and investments as of the end of the third quarter totaled $42 million, compared to $15.4 million at the end of the second quarter and $16.4 million at the end of last year. The balance sheet at the end of September reflects the proceeds of the $30 million PIPE financing completed during the third quarter. This financing was structured as a direct private placement of 2 million unregistered shares to Bob Duggan, who was the sole investor in the round. The placement was priced at the closing price of the preceding trading session of $15.2 per share. No warrants were issued and no investment banking replacement fees were incurred in this transaction. The proceeds from this financing will be used to further advance Pulse Biosciences NPS technology and for general operating purposes. Cash used totaled $3.2 million for the third quarter and $9.2 million year-to-date. Cash used for both the quarter and full-year reflect operating losses incurred for the respective periods, excluding non-cash stock-based compensation, amortization and depreciation. Net loss for the quarter totaled $7.5 million, an increase of $1.3 million over the second quarter of 2017 net loss of $6.2 million and $4.7 million higher than the third quarter 2016 net loss of $2.8 million. On a quarter-over-quarter basis, net loss increased primarily due to $600,000 increase in non-cash stock-based compensation; increased compensation costs coming from growth in both G&A and R&D; and research and development expenses relating to our sponsored research arrangement with Old Dominion University, ongoing clinical trials and ongoing development of the PulseTx System. Given the IPO during mid-2016 and the result…

Thanks, Brian. 2017 continues to be a year of significant progress. We have secured the resources necessary to drive our technology and applications forward. We are nearing completion of our first clinical application study using NPS. We are successfully progressing in our translational veterinary medicine oncology study. And we continue to progress in our immunooncology research and study design. Over the course of the next few quarters and in collaboration with our Board of Directors, we will continue refining our corporate strategy and programs to provide greater resolution to the commercial opportunities for our technology and the most efficient and valuable ways we can bring this exciting technology to clinicians and patients. That concludes our prepared remarks. Operator, we would now like to open the call to questions.

Thank you. [Operator Instructions] Your first question comes from the line of [James Hollingsworth] [ph]. He is a private investor. Please go ahead. Your line is open.

Yes. Thanks very much. I’m Jim Hollingsworth. Good afternoon, Darrin and Bob. That was a good report. Could you be more specific on the 510(k) regarding what information did the FDA ask for? And do you have any idea how long it will take before you reapply?

Yes. Hi, Jim, this is Darrin. Yes, thank you for the question. I think, without going into all the details of the review process with FDA, FDA asked us for some additional information across a broader spectrum of settings with our system. And when that question came to us, we just simply did not have enough time in their review process timeline to respond adequately. As we said, we think it’s an appropriate question based on everything. And so our decision at that time was to withdraw that that 510(k) submission. We are now out gathering that data and expect to submit another 510(k) to FDA, as we said on the call, in the first quarter of 2018.

Okay, great. Thank you. [Operator Instructions] I see no further questions in the queue at this time. I turn the call back over to Mr. Darrin Uecker.

All right. Thank you, operator, and thank you, everybody, for joining us on this call. We look forward to sharing our continued progress on our call in the first quarter of 2018. Thank you very much.

Thank you. This concludes today’s conference call. Thank you for your participation, and have a wonderful day. You may all disconnect.