Ladies and gentlemen, greetings, and welcome to the Pulse Biosciences’ Fourth Quarter 2022 Earnings Conference Call. At this time all participants lines are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Trip Taylor, Investor Relations. Please go ahead.

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, March 30, 2023, 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 & 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.

Thank you, Trip. Good afternoon, everyone, and thank you all for joining us. On today’s call, I will discuss our nanosecond pulsed field ablation, nsPFA, development progress and our 2023 corporate objectives. I will then turn the call over to our Chief Technology Officer, Darrin Uecker, to provide a detailed overview of our core technology and product development initiatives. Then I will review our fourth quarter financial results before concluding and opening the call for a question-and-answer session. Pulse Biosciences is going where we believe no company has gone before, accomplishing beneficial first of its time effects that have yet to be achieved in the world of pulse field ablation. Our technology has consistently demonstrated a high degree of safety, efficacy and outcomes. In addition to the significant positive impact on patients, the knowledge gained during our previous FDA clearances has given us the present time confidence and vision to pursue the use of nsPFA on the human heart. Our FDA clearance in the treatment of over 6,000 patients with tissue-related positive results in skin proved the viability of our technology, paving the way for a differentiated cardiac applications. Our proprietary nsPFA technology has the potential to be disruptive in a unique, demonstratable and consistent manner. While it’s still early days and preclinical testing is ongoing, we are encouraged by our progress to date. 2022 was a pivotal year for Pulse Biosciences. We announced a strategic shift in reprioritizing our efforts to focus on the most compelling opportunities for the application of our proprietary Nano-Pulse Stimulation technology. Building upon our R&D work in cardiology that began several years ago, our top focus is now on developing multiple devices to deliver nanosecond pulse field ablation or nsPFA to cardiac tissue for the treatment of atrial fibrillation. We made this decision based…

Thank you, Kevin. I think it will be helpful today to reiterate the underlying capability of our technology to better understand why it has great potential to improve the present state of cardiac tissue ablation for the treatment of AF among other applications. At Pulse Biosciences, we have developed a novel and proprietary tissue treatment platform based on nsPFA where ultrafast electrical energy pulses at nanosecond pulse durations from billions up to millionth of a second are used to stimulate cellular effects that can lead to positive therapeutic outcomes. nsPFA is broadly considered a pulse field technology, but the use of nanosecond duration pulses leads to a highly differentiated cellular mechanism of action that can be applied to a number of important clinical applications with distinct and unique benefits to patients treating MDs and post-care trained staff. We have demonstrated that when these incredibly fast energy pulses are applied to cells, they penetrate the cell and disrupt the function of the internal organelles of the cell by creating small holes in the organelle membranes, known as poration. These organelles include the mitochondria, which is the cells power plant and the endoplasmic reticulum, which plays an important role in protein synthesis. When the function of these organelles is disrupted, the cell goes through a natural regulated cell death process. This ability to get inside the cell with nontoxic application of electrical energy, while preserving the integrity of the outer cell membrane to initiate regulated cell death is a cornerstone of our nsPFA technology. This regulated cell death process leads to a more natural healing response as the body’s immune system is accustomed to dealing with cell death through this natural and regulated mechanism as opposed to sudden necrotic cell death caused by other energy-based therapies, which can lead to a significant…

Thank you, Darrin. We did not recognize revenue in the fourth quarter of 2022. Moving down the income statement, I will focus my comments on non-GAAP results. I encourage you to review today’s earnings release for the detailed reconciliation of non-GAAP measures to the most comparable GAAP measures. In the fourth quarter 2022, we reduced non-GAAP total costs and expenses by $9.1 million to $7.7 million compared to $16.8 million in the third quarter of 2022 and by $4.7 million year-over-year compared to $12.3 million in the prior year period. The decrease in operating expenses were driven by the discontinuation of the commercial dermatology activity in the prior headcount reduction in restructuring. Non-GAAP net loss for the quarter ending December 31, 2022, was $8.1 million compared to $11.5 million for the quarter ending December 31, 2021. Cash, cash equivalents, and investments totaling $61.1 million as of December 31, 2022, compared to $28.6 million as of December 31, 2021, and $69.2 million as of September 30, 2022. Cash used in the fourth quarter of 2022 totaled $8 million and was reduced compared to both $13.4 million used in the same period in the prior year and $10.6 million used in the third quarter of 2022. As a result of tightening corporate strategic focus, in 2023, we expect quarterly cash burn to be approximately $8 million, consistent with the fourth quarter results. We have amended the terms of our loan agreement with Robert Duggan, extending the maturity date until September 30, 2024. We have the capital needed to finance our first-in-human clinical trials and remain confident we will achieve the optimal capital structure to advance our strategy and growth trajectories. Now, I will provide some closing remarks. The addressable market for AF intervention is multibillions of dollars and growing. With a management team that has deep experience and the strategy in place, execution is the present time focus. We understand that global regulatory approvals and evaluations are needed. Management is experienced in the field of robotics and energy ablation and maintain a proven track record of development, achieving regulatory approvals and launching disruptive new medical devices. Additionally, the financial leadership team has excellent depth of experience and is working diligently to optimize the company’s capital structure and fund our future. As an innovative bioelectric medicine company committed to health innovation and increasing quality life, we are confident we can have a meaningful impact on patients. Our recent accomplished milestones discussed today are propelling us towards development completion, clinical work and ultimately delivering patients in need the benefit of Pulse Biosciences nsPFA. We look forward to providing progress updates on the next call. Today, we would like to invite investor questions. And with that, operator, please open the call for questions.

Thank you. [Operator Instructions] Hey Kevin, who would be participating along with you in this session?

Yes. Thank you so much, operator. Joining me today is Executive Chairman of the Board, Robert Duggan; and Chief Technology Officer, Darrin Uecker, and I am Kevin Danahy, the President and CEO. So we did have a couple of questions that came in online. I’ll read off with this. The first question that came in was, why pivot to cardiac? So, I’ll jump in on this one, and then I’ll ask Darrin or Bob, if they would like to give a little bit more color. Our complete nsPFA impact understanding on how we compare to thermal destruction led us really to investigate cardiac ablation early on. Initially, we sponsored, like we said in the script today, university research, and then once we have the feasibility of the mechanism of action, and what it was proven on cardiac tissue and animals, we started our own R&D projects. After that, we took this information, and we started doing our own preclinical testing, which led to the development of the cardiac ablation clamp for cardiac surgery and cardiac ablation catheter for the use in electrophysiology. So this wasn’t really a pivot. It’s something that we’ve been working on for a long period of time. Darrin, do you have anything you would add to that?

No. I think that’s perfect. I mean I think it was really – we were led to these applications by physicians and really the outcomes that we saw in preclinical data.

Kevin. I’ll make a comment. Darrin and I go back over 20 years in robotics. And at the early moment, in the life of opportunity – evaluating opportunity for robotics in human health care, cardiac seemed to be the area of most opportunity. And then over time, proved to be incredibly difficult to pull that off. But we did learn quite a bit about heart and the importance of the heart. And essentially, the heart is energy-based. It’s critical and essential to the heart’s function. So with the nano-pulse field, we have an ability to use energy to complement the heart function or to correct misfunction in the heart. So it’s a one-off opportunity that we feel is outstanding in terms of size. It’s not been penetrated by anyone else at the field and the power of energy and the speed of that energy that we can bring to the table. So that’s why we’re in it. And I complement your comments and Darrin’s comments earlier here about the size of that market, the significance of it and the challenge to get it cleared and to prove it to be effective, which is what we’re going after in the next 12 months. And as you said earlier, we’ll keep our stakeholders apprised as to our progress in development. But I can assure you, we’re approaching this with a tremendous amount of confidence and excitement as potentially the outcomes will be – could be iconic and make – turn this into a very disruptive and powerful technology for all involved.

Awesome. Thank you, Bob. Another question that came in was just to ask how should we view success for Pulse Biosciences in 2023? And I think as we mentioned in the call today that we really have two main goals in 2023 to advance nsPFA in the treatment of AF. Number one, we intend to develop and advance our cardiac clamp through the appropriate FDA regulatory path. And number two, we hope to complete all the catheter product and regulatory milestones required to treat our early patients. So, I think that’s how we’re measuring ourselves, and how I would say that we should be measured. Anything Bob or Darrin to add to that? Okay. And then last question...

I’ll jump in. Yes. So basically, heart procedures come about in three ways open procedure, which can be incredibly invasive. I’ve had the honor of being present in up to 50 of those. And it’s – I would rather watch and be a part of it. But it is challenging, but it is also through precision approach and the use of the technology available, things such as a coronary artery bypass graft proved to be patent for almost 20 years. It’s an incredible procedure created by doctors at the Cleveland Clinic years ago. And Darrin and I happen to become very friendly with a number of them as they evaluate an opportunity for robotics there. So then you have less invasive surgery and then you have catheter-based. So the catheter base are you would recognize stents in the placement of stents early on as something that was effective, but very, very less challenging and dramatic to the patients. So really the business of repairing graphs and arteries with graphs came over on to the stent side. So we believe we’ve got the best of all worlds here. We can help in open procedures. Most of the open procedures that take place involve either the presence of or the risk of creating ablation and a fibrillation in the heart. So while the heart is open, you can apply a clamp to this and generate the ablation in areas that are needed and necessary with the clamp that we have under study. Some of the top doctors from robotics 20 years ago are now the top doctors in performing these procedures. So Kevin knows them. They know Kevin, they know myself, Darrin is very close with most of these teams. So it’s with great excitement that they’re welcoming us back into their…

Yes. Thank you, Bob. Last question that came in, and I’ll give this one over to Darrin, is what was the significance of the AF Symposium poster?

Yes. That’s a good question. So the AF Symposium is really one of the top meetings – scientific meetings in the treatment of AF that’s held annually. And I think typically, there are between 3,000 and maybe 5,000 attendees, which are the top electrophysiologists around the world and health care providers and people from industry. And the acceptance of our poster, I think, was a real validation of the technology and what the organizers of the meeting, believe is the potential of the technology. So, we were honored and very pleased to be a part of that important meeting. We had a lot of great conversation with a number of electrophysiologists who are excited to see it. We got to mention from the podium about the potential of nsPFA from one of the key physicians. So it was really a great meeting for us. It’s great to be able to demonstrate what we’ve been doing preclinically and to show that to the scientific community and to have it accepted by the scientific community as something that they want to hear about and get excited about going forward.

Thank you, Darrin. All right, operator, we can open up the questions.

Thank you. Our first question comes from the line of Robert Lovgren from Medical Hope Productions. Please go ahead.

Yes. I’m glad to hear the good result at the AF Symposium in Boston. And – well, first of all – the first thing I want to ask you is, are you securing your patents – your ownership of patents or regulation, some over to you. And I guess, in terms of other people who have gone on to Mayo Clinic and Washington University. Are you pretty secure in that and holding those patents? Is that an economic estimate business? You’re ahead in the business than the other people are because you already hold the patents.

Yes. Hey, Bob, it’s Darrin. Thanks for calling in and thanks for the question. Good to hear your voice. Yes. So as you know, I think this company was really founded about seven or eight years ago on a pretty broad and foundational IP portfolio related to nsPFA. And many of those patents came from two universities, Old Dominion University on the East Coast and the University of Southern California, here in California and then two small companies that were sort of loosely affiliated with those universities. So, we started with a pretty significant patent portfolio, and over the last many years, as a company, we’ve invested significantly in our patent portfolio. As we develop this platform, we’ve developed a lot of patents along the way. And some are obviously public and some are yet to come out. But we feel really good about, I think, where we are in terms of our patent portfolio, and what we’ve done to secure a pathway for ourselves in a lot of these different applications using this very unique technology. Bob and I, as he mentioned, lived through the early days of medical robotics and a lot of experience and knowledge was gained along that way as it relates to patents and the importance of patents in securing a path forward for these platform technologies. And we certainly have spent a lot of time and energy on that. So, I think we feel good in terms of where we’re at. Our works never done there, so we continue to expand that portfolio as we move along.

And Darrin, if I might add, and you correct me if I’m wrong here, I believe we have over 100 patents granted and then plus another 100 filed, and it’s a very dynamic phenomenon year-to-year, we’ll be growing patents all the way from here on out.

Yes. That’s right, Bob. Those numbers are accurate for sure.

And operator, next question?

Our next question comes from the line of James Hollingsworth, Private Investor. Please go ahead.

Yes. thank you very much. Bob, it’s good to hear your voice again, thank you for participating. I’m going to use an analogy about power tools. If you go to Home Depot, you can buy a set of power tools, and they all run on a battery. And I’m going to suggest that our nano-pulse technology is like the battery, and that battery plugs into a saw or a drill or some other type of device. And it seems to me that we – that our NPS and all these patents and our nano-pulse generator is like that battery. But what we’re dependent upon is the applicator, the apparatus that actually does the work on the patient. And I think that, that was the problem with our dermatology. I firmly believe in nano-pulse technology, but our applicator was faulty. And it seems to me that what we’re getting into now is that we must collaborate with the people that build the catheters and the other applicators. So are we going into the development of these applications, the devices that actually touch the patient. It seems to me that that’s where our problem lies and our opportunity lies is that we have the nano-pulse generator, but we don’t have the apparatus that that could treat the patient. So, are we going to collaborate with other companies that build these applicators? Or are we going to develop our own?

Kevin, I’ll take that. I’ve known Dr. Hollingsworth for quite a while. He’s an outstanding scientist and doctor in his own right and kind of grew up with us at Computer Motion. So he’s familiar with a lot of these things. But I would say we’re very much different than a battery. We are a tunable device that can scale, shift and adjust as needed and appropriate energy and place it in a very pinpointed area. It’d be like comparing a battery to a radio. It’s – there are some similarities, but it’s clearly not identical and the similarities are reasonably few. In terms of the application in dermatology, we had some spectacular results in dermatology. We had no adverse events, no reportable events to the FDA. Patients walked out of the facility with the potential to have a cleared lesion that went well beyond what normal treatments could provide to them. So you might say, well, it appeared to fail because you weren’t able to generate the revenues. What happened is over 6,000 patients were treated, treated well, treated effective. The device proved its workability. It’s still the only device of its kind of that nature in that business. It just was not viable in terms of – relative to the other procedures that were being performed is like you could come in with a slice in your arm and either they could put a band-aid on it or suture it, and the band-aid is so less expensive than the suture that they put the bandage on. We really got a lot of plot. It’s well deserved from patients and physicians and dermatologists alike from that field. So that product succeeded. Our business plan did not succeed. And we’ll take our own hit for that. We thought there would…

Thank you, Bob. Appreciate that.

Thanks Bob.

Operator, next question.

Our next question comes from the line of [indiscernible] Private Investor. Please go ahead.

Hey guys. Hi friends.

Hey, Andy. How are you doing?

I’m good. I really, I have two questions. One is there any possibility on the breakthrough you had on basal cell carcinoma. Can that be license also given to other entity to take it further or get pay back some money on it? No, we just…

Yes. I’ll jump in, and then if Darrin or Bob want to jump in. Right now, as we mentioned in our last call, we are exploring all opportunities with derm, as Bob just said very well that we were very proud of the results that that we got from our system. Right now, it’s just a matter of the commercialization architecture that we didn’t have in place to support that. Now the companies might have that, that we’re exploring, and we’re continuing to talk with. So we’re excited to continue to look at that.

That answers my question. Thank you. My second one is...

Did we lose them? Operator, I think we lost him.

Yes, that’s correct. The lines dropped. Okay. Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the conference over to Kevin Danahy, Chief Executive Officer, for closing comments.

Thank you very much, and thank you, Darrin and Bob for joining me today, and we’re excited about where we are today, and we like the format here where we have the opportunity to answer some of your questions. Hopefully, you felt like the conference call answered a lot of your questions. Just want to let everyone know that as we move forward, we’re going to be head down in our preclinical and product development throughout the closing quarters, and we will update everyone as our new data and the potential of nsPFA comes out, and the significant progress that we’re going to make, and we will continue to report quarterly and communicate updates in a timely and transparent manner that are materials to the business through public communication, calls and press releases. So with that, I would like to thank everyone, and we look forward to talking to you all soon.

Thank you. The conference of Pulse Biosciences has now concluded. Thank you for your participation. You may now disconnect your lines.