Good afternoon, ladies and gentlemen, and welcome to the Pulse Biosciences' Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Speaker Brian Dow, Pulse Biosciences Senior Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you very much, operator. Good afternoon, everyone, and welcome to Pulse Biosciences' Quarterly Investor and Analyst Update Call. On the call with me today are Darrin Uecker, our President and Chief Executive Officer; and Ed Ebbers, our Executive Vice President and General Manager of Dermatology. Our comments and responses to your questions during today’s call reflect management’s views as of today, August 8, 2019 only, and will include forward-looking statements. These include statements regarding our plans and expectations relating to regulatory clearance, including the process and expected outcomes; our commercial, operational, scientific, clinical and financial projections; products, including the uses and applications of such products; and other future events. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Form 10-Q filed earlier today. Our SEC filings can be found through our website or at the SEC’s website. Investors are cautioned not to place undue reliance on forward-looking statements. 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. In addition, today’s press release has been posted and is available on our website. Today’s format will consist of providing you with highlights of our second quarter of 2019, as described in our press release announced earlier today, followed by a question-and-answer session. With that, 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 call. Our driving focus at Pulse Biosciences is the near-term commercialization of our proprietary CellFX System in aesthetic dermatology in pursuit of our mission to build a viable company that makes a meaningful difference for the betterment of patients and clinicians. Today, I’ll start with some important recent updates, including an update on our regulatory process, before turning the call over to Ed to update on our preparations for commercialization of the CellFX System once we receive an FDA clearance. I will then provide additional updates on our clinical programs, and then Brian will provide a financial update. Necessary to our commercializing the CellFX System in the United States is obtaining clearance from the U.S. Food and Drug Administration. As we communicated previously during February of this year, we submitted a premarket notification 510(k) to the U.S. FDA for our CellFX System. On April 30, just prior to our Q1 investor call, we received an additional information, or AI letter, from FDA. This is a typical part of the 510(k) process in which FDA identifies specific questions and clarifications required by the company in order to proceed with the review process, and it allows the company 180 calendar days to submit responses. Importantly, after a thorough review of the AI letter and discussions with FDA, we are confident the 510(k) regulatory path is the appropriate path for the CellFX System. We remain in the standard 510(k) review process, and we are making good progress in preparing our response to the AI letter and route to a 510(k) clearance. We have been communicating with FDA on an almost weekly basis over the last couple months as we work through each question and requested clarification in…

Thanks, Darrin, and good afternoon, everyone. It is an exciting time here at Pulse Biosciences, and I’m excited to share our preparations for introducing the CellFX System to the aesthetic dermatology market. In just a few short years, we have successfully transformed the science of our patented NPS technology into the commercial CellFX System that we are targeting to launch into the large and growing aesthetic procedure market. Once we’ve received the FDA clearance, we will commence the commercial introduction of our CellFX System into the cash-paying aesthetic procedure market. According to recent industry estimates, Americans spend approximately $22 billion annually on aesthetic procedures, including the removal of the common lesions that we’ve studied. Furthermore, this market has an estimated annual growth rate exceeding 10%. Here in the United States, this market is driven by a 3,000 to 4,000 skin specialty physician number that has a history of utilizing energy-based devices to offer cash-paying procedures to improve the appearance of their patients. In recognition of this growing market for cash-paying procedures, the American Society of Dermatologic Surgeons conducts and annual survey of consumer interest in aesthetic procedures. The 2018 ASDS consumer research concluded that 70% of patients are currently considering an aesthetic procedure and would be willing to pay out of pocket for this procedure. This is up 30% from just five years ago. The same ASDS research confirmed that board certified dermatologists continue to be the number one influencer of patient decisions when it comes to these skin-enhancing procedures. This is precisely why we are focusing our initial commercial efforts for the CellFX Systems on this group of influential clinicians. For our planned commercial launch of the CellFX System in the United States, we are focused on this 3,000 to 4,000 group of aesthetic dermatologists that consistently adopt new…

Thanks, Ed. I will now provide an update on our growing clinical application pipeline. First, I would like to discuss our ongoing warts program. As we reported in a Q1 investor update call, we are pleased with the results of our warts feasibility study. A partial set of the data was presented earlier this year at the ASLMS meeting, and Dr. Gilly Munavalli is presenting updated data at the Controversies and Conversations Meeting tomorrow in San Francisco. Based on the learnings from this feasibility study, we are pleased to report that we have initiated a multicenter wart study and have begun treating patients. This study is intended to include up to 60 patients at six centers across the U.S. To date, we have treated seven patients and expect to complete enrollment in the fourth quarter and complete patient follow up in quarter 1 of 2020. Warts represent a very difficult lesion for dermatologists to treat, and we are optimistic about the commercial opportunity for CellFX System in treating the many patients physician see with warts. We believe this data will be the basis for a next commercial application. We also recently started a new study investigating the treatment of macular SK lesions. As Ed mentioned in his remarks, the macular or flat SK lesion represents a very difficult-to-treat subset of SK lesions that we think our CellFX System may be particularly well suited for and we are optimistic about the commercial opportunity, given the lack of acceptable treatments available. We plan to treat up to 50 patients at several centers to generate data in support of the treatment of these specific lesions and expect to complete enrollment in the fourth quarter and follow up in early quarter 1 2020. As we’ve discussed previously, we plan to have ongoing feasibility studies…

Thanks, Darrin. Shortly before today’s call, we announced our financial results for the second quarter ended June 30, 2019. Our financial results for the quarter reflect the progress achieved in our development and clinical programs, accompanied by the requisite support infrastructure for those endeavors. Cash and investments at the end of the second quarter totaled $42.6 million compared to $52.8 million at the end of the first quarter, reflecting second quarter cash use of $10.2 million, which is approximately 50% higher than our first quarter cash use of $6.8 million. Although a portion of this increase is due to increased activity in our clinical studies, technology development and general growth of our business, during the second quarter we also incurred $2 million of cash use relating to the annual renewal of our corporate insurance policies for the 2019/2020 policy year. The expenses associated with the renewed policies will be recognized over the next several quarters. Excluding the timing associated with our insurance renewals, cash use increased approximately 20% quarter over quarter. Net loss for the quarter totaled $11.4 million, reflecting a $2.2 million or 24% increase compared to the net loss of $9.2 million for the second quarter of 2018. Net losses for the quarter included charges for non-cash stock-based compensation totaling $2.7 million and $3.2 million for the second quarters of 2019 and 2018, respectively. The increase in net loss represents continued growth of our company and the progress towards the commercial introduction of our CellFX System planned for later this year. This includes the cost associated with growth in our sales, marketing and manufacturing operations, accompanied by the continued expansion of our clinical study programs, including early work leading to the commencement of our warts pivotal study announced today. This is exemplified by the growth in our headcount,…

Thanks, Brian. We made great progress in Q2 towards our goal of commercializing our CellFX System in aesthetic dermatology. We’ve had very productive and collaborative conversations with the FDA as we work through the questions and clarification in the AI letter. We are confident the 510(k) path is the appropriate path. We believe we are close to being able to provide our responses to the AI letter and expect to do that by the end of Q3. And finally, we look forward to working with FDA to obtain an FDA clearance for the CellFX System in quarter four. In Q2, we continued to build out our commercial team in preparation for our controlled launch post-FDA clearance. We added experienced and successful regional sales directors, as well as clinical application specialists that will be responsible for implementing and driving a utilization-based business model enabled by our networked, tunable and multi-application CellFX System. We continue to make progress in developing our pipeline of applications. We’ve initiated our warts multicenter pivotal study and a multicenter study in macular SKs, and look forward to completing enrollment for both studies in the fourth quarter and follow up in Q1 2020. We believe our CellFX System will offer unique treatment capabilities to our aesthetic dermatology partners through the delivery of needed and wanted applications that enable physicians to provide safe and effective treatments to patients. In doing this, we believe we will achieve our mission of building a viable company. That concludes our prepared remarks. We would now like to open the call for questions.

[Operator Instructions] Your first question comes from the line of Swayampakula Ramakanth of H.C. Wainwright.

Thank you, Darrin and team for the exhaustive comments on how the company is progressing. Regarding the submission of response in Q3 and expectation for a Q4 approval, just trying to understand what’s the – is there a normal, quote-unquote normal time that FDA takes to make a decision based on such a submission of a response? And also, how confident are you that by – even if you submit by the end of Q3, you could get a decision by end of Q4.

Yes. Hi, RK. Thanks for dialing in and thanks for the question. Yes, there is a – I would say there’s a normal process to the 510(k) as opposed to kind of a normal time. The process is such that once you get the AI letter, the company, as I mentioned on the prepared remarks, the company has 180 days to respond to that letter. And so what we’ve been doing over the last couple months is we’ve been engaged with FDA, and essentially working serially through the questions that they asked on the AI letter. It’s not really possible to do it in parallel with the reviewer. It ends up for the most part being kind of a serial process. So for example, there are a set of questions, or maybe a set of questions about the technology or about some of the bench testing. So we would address those questions with FDA, potentially get on a conference call with FDA, and once we’re comfortable that our responses will address their questions, then we would move on to next questions. And so over the last couple months, we’ve been working our way through all the questions that are in that letter. We think we’re very close to, as I mentioned, to being at the end of that, and then we’ll be able to kind of formally send in the responses to all those questions. So we expect that to happen as I said by the end of quarter three, and we’ll work closely with FDA to make that happen. Once we do that, then FDA is back on their review clock. FDA strives – their goal is to get through the review from beginning to end within 90 days. And right now they’ve used approximately 65 days of their review time. And then once they send the AI letter, they basically put the review on hold until we do the full response or the formal response. So they still have roughly 30 days. They can always go over 90 days. But their objective will be to try to review our responses to the letter within that period of time. Typically that’s what’s called interactive review, so there’ll be a lot of email back and forth with the agency as you try to work through any lingering questions. So, I think that is the typical process. I think that’s what gives us comfort that we should expect something in the fourth quarter, assuming that we can get everything to FDA at the end of the third quarter.

Okay. Thank you. And then regarding follow-on indications, I know you spoke a little bit about warts and your expectation regarding the data. I’m not sure you spoke about acne, and if you did, I apologize. But I’m just trying to understand what’s the situation with acne.

Yes. So with acne, we just mentioned that we’ve expanded the investigators and we did that to increase enrollment. And our objective is to enroll up to 10 patients and follow those patients by the end of the year. So we’re currently ongoing with the acne feasibility. We will – we’ll look to get data out potentially in an upcoming conference, an upcoming derm conference. But right now, we’re enrolling patients and we’ll continue to do that over the next several months and follow those patients out to the end of the year. And then I think at that time, we’ll be in a good position to describe or to communicate more fully what our next steps are in terms of the acne application.

And then the last question from me is let’s say we get approval in Q4. So in terms of getting ready to launch the product, how immediate would it be for you to roll out CellFX devices from your facility?

Yes. So we’re preparing for that now in terms of having systems ready in inventory and being ready to roll out to our customers. When that happens, when and if that happens, I think we’ll be prepared to talk about timing for that controlled launch. We expect it to be very quick post an FDA clearance because we’re in full preparation for that. What can happen at the end of an FDA clearance is FDA can make certain requests about labeling and other things, which once you get the clearance, you have some work to do before you can actually commercially distribute product based on those requirements. But it’s – that’s typically on the order of weeks to a month as opposed to anything longer than that. So, we are preparing ourselves for that eventuality, and shortly after a clearance, we’ll be ready to go.

Okay. Thank you. Thanks for taking all my questions.

Yes. Thanks, RK. Appreciate it very much.

I’m showing no further questions at this time. I would now like to turn the conference back to Darrin.

All right. Thank you, operator. Thank you, everybody, for joining our Q2 conference call. We very much appreciate everybody dialing in and listening and if you’re on your computer for connecting and listening. We’re very excited about all the progress we’re making, and we look forward to the third quarter conference call and updating you again and providing updates as they happen and we release them. Thank you very much. Have a great day.

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