Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the Pulse Biosciences First Quarter 2023 Earnings Conference Call. At this time all participants lines are in a listen-only mode [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Trip Taylor, Investor Relations. Thank you. 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 11, 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'm excited to highlight a significant addition to our executive team, as well as discuss how the team plans to advance and achieve our corporate objectives. I will then turn the call over to our, Chief Technology Officer, Darrin Uecker, to share updates regarding our product development and regulatory initiatives. Mike Koffler, Vice President of Finance, will review our first quarter financial results, before I conclude and open the call for a question-and-answer session. I want to open this call by highlighting our leadership team. We are proud to have assembled a world-class team and organizational structure designed to accelerate and broaden the application of our innovative technology. Just this month, we announced the appointment of Dr. Gan Dunnington, as Chief Medical Officer focused on our cardiothoracic applications. Dr. Dunnington is a renowned cardiothoracic surgeon, specializing in complex minimally-invasive procedures. He is a leader in pioneering novel less-invasive technologies that improve the lives of patients with atrial fibrillation. Dr. Dunnington complements our leadership team at a critical point for our technology. We look forward to his guidance, as we advance the clinical and regulatory programs for our portfolio of cardiac devices. Dr. Dunnington will work closely alongside, Chief Technology Officer, Darrin Uecker and Chief Strategy Officer, Mitch Levinson. Mitch is a medical device industry veteran with a track record of successfully bringing new technologies and products to market across a variety of medical specialties. He is on the call and will participate in Q&A. Pulse Biosciences is on a path to deliver beneficial, first-in-kind therapeutic effects that have yet to be achieved within the current pulsed field ablation market. The platform nature of our technology enables multiple clinical possibilities. We continue to look, listen…

Thank you, Kevin. On our last call, we overviewed our current priorities to advance preclinical work with our nsPFA surgical clamp and catheter. As a reminder, both of these devices are intended to treat AF but with different approaches. The clamp will be used during open or minimally-invasive heart surgery by cardiac surgeons. The catheter will be navigated into the heart using standard minimally-invasive catheter techniques through large blood vessels by electrophysiologists in the EP lab. As a quick reminder, nanosecond pulsed field ablation or nsPFA is a novel platform technology that utilizes nanosecond duration electrical pulses of energy to ablate cells while sparing surrounding acellular tissue. The non-thermal mechanism of action of nsPFA can lead to beneficial differentiated outcomes in applications where ablation is performed today. We developed our proprietary CellFX System as a platform to deliver nsPFA across a number of applications including cardiac ablation. NsPFA differs from standard PFA and that the pulse durations for nsPFA are much shorter, typically 10 to 10,000 times shorter, which translates to appropriate energy exposure and an energy-efficient mechanism. In turn, less energy per nsPFA pulse, allows us to design larger footprint electrodes that can treat more tissue faster with substantially reduced risk of thermal damage that is of concern with standard PFA. Appropriate controlled energy and shorter duration pulses stimulate less muscle contraction and nerve stimulation during treatment and as such, reduce the need for stronger sedation and paralytics that are often used with standard PFA. Overall, we believe nsPFA will provide meaningful benefits in both efficacy and safety over standard PFA and thermal modalities. Turning first to our cardiac ablation clamp. We continue to believe nsPFA can offer a significantly faster, more precise, safer and easier way to perform a surgical ablation procedure for AF than current technologies. We…

Thank you, Darrin. Moving down the income statement, I'll focus my comments on our non-GAAP results. I encourage you to review today's earning release for a detailed reconciliation of non-GAAP measures to the most comparable GAAP measures. In the first quarter of 2023, we reduced non-GAAP total cost and expenses by $6.3 million to $8.3 million compared to $14.7 million in the prior year period. The decrease in operating expenses was driven by the virtual discontinuation of commercial dermatology activity and the prior headcount reduction and restructuring. Non-GAAP net loss for the quarter ended March 31, 2023 was $8.6 million compared to $14.2 million for the quarter ended March 31, 2022. Cash, cash equivalents and investments totaled $54.1 million as of March 31, 2023 compared to $61.1 million as of December 31, 2022. Cash used in the first quarter of 2023 totaled $7.2 million and was reduced compared to both $15.9 million used in the same period in the year -- in the prior year and $8 million used in the fourth quarter of 2022. Cash used in the first quarter excludes $200,000 of net proceeds from the exercise of warrants. As a result of the tightened corporate strategic focus, in 2023 we expect quarterly cash burn to average approximately $9 million. This month we entered into a stock purchase agreement with Robert Duggan, Pulse Biosciences' Executive Chairman for the purchase of approximately 10 million shares of the company's common stock at a price of $6.51 per share, a slight premium over the closing price of the previous business day. We successfully closed this private placement transaction earlier this week which resulted in the issuance of the shares and the cancelation of all indebtedness owed by the company to Mr. Duggan including the principal balance of $65 million and the accrued unpaid interest of approximately $0.25 million. This private placement transaction should provide us the runway capital we need to oversee our first-in-human clinical trials. As recently announced in other efforts to strengthen our balance sheet, we have decided to take the opportunity presented based on the strong share performance of late to redeem the outstanding warrants from the company's June 2022 Rights Offering which raised $15 million of capital. The redemption of warrants in 2023 represents an opportunity to raise up to an additional approximately $15 million. The company has chosen Friday, June 16 2023 as the final redemption date at which time any unexercised warrants will be redeemed by the company at a price of $0.01 per warrant. As a reminder, the warrants have a $2.05 per share exercise price. The exercise of all of the still outstanding warrants would meaningfully extend our cash runway. I will now turn the call back over to Kevin.

Thank you, Mike. Now I will provide some closing remarks. With a now even more accomplished veteran leadership team in place, a strengthened balance sheet and our preclinical and regulatory progress, we are confident we are on the right path forward. Our novel nsPFA technology differentiates us from others in the cardiac PFA space. We are excited to advance our clamp and catheter devices and it ultimately advance the treatment for AF patients. We look forward to providing progress updates on the next call. Joining me for the question-and-answer session today are Executive Chairman of the Board, Robert Duggan; Chief Technology Officer, Darrin Uecker; and Chief Strategy Officer, Mitch Levinson. Operator, please open the call for questions.

Thank you. [Operator Instructions] At this time, I will turn the call back to Kevin Danahy while we are polling for questions.

Thank you, operator. Conducting the question-and-answer session we had a few questions that came in via e-mail. The first question is directed towards Darrin. With regards to your cardiac clamp, is this the only device that you envision for the nsPFA in cardiac surgery?

Yes. Thanks, Kevin. So we believe there is a significant and growing opportunity for nsPFA in cardiac surgery for the treatment of AF. And it definitely does not end with a clamp device. We chose to introduce nsPFA into this area with a clamp because clamps are really -- one of the key tools they use today and we would expect that it would be more easily adopted into the procedure over current RF clamps. However, over the last many years the surgical treatment of AF has expanded significantly from open procedures to minimally-invasive or videoscopic procedures and to what is referred today as hybrid procedures which is a combination of a minimally invasive procedure from a cardiothoracic surgeon and a catheter procedure from an electrophysiologist. So we believe strongly that these hybrid procedures represent a significant growth opportunity and there are going to be opportunities for novel devices enabled by nsPFA and our CellFX platform to help expand that opportunity. And this is what also led us to work with Dr. Dunnington, and to bring him on as our CMO, he's been involved in over 1,000 hybrid procedures. So he has one of the biggest experiences in these types of hybrid procedures as a cardiothoracic surgeon, and has great insights into how these procedures can be evolved, with a unique technology like nsPFA. So, we think this evolution will take time, but we're excited about how nsPFA and our team can play a role in this opportunity.

Awesome. Thank you, Darrin. The next question that came in is directed to Mitch. What other areas can nsPFA have value? And are you looking into these opportunities? A - Mitchell E. Levinson Pulse Biosciences Inc. - Chief Strategy Officer & Director Yes. Thanks, Kevin. Well, as we've talked about over the years our nanosecond pulsing technology, it's a platform. And we will have utility across a large number of medical disciplines. Part of my role here as, our Chief Strategy Officer, is to field incoming interest about extra cardiac applications, outside the heart and also to analyze the potential for future opportunities. And as we've mentioned, we focused now virtually all of our resources on cardiac. When we have important intangible information about progress in other areas, we'll be sure to report that out.

Perfect. Thank you, Mitch. Operator, please open up to the next question.

[Operator Instructions] Our first question is from Robert Levande [ph], Private Investor.

Hi, guys. Kevin, can you give us an idea of the market potential, for the ablation clamps compared to catheter-based procedures.

Yes. Bob it's, Darrin. Great to hear your voice and thanks for the question. I'll just jump in and then Kevin, can come on top. So right now, the catheter ablation market is substantially larger than the clamp market, just in terms of the number of catheter procedures versus those procedures that are done surgically, for the treatment of AF. But again, that is a changing landscape. And I think, what probably isn't really clear is, how much of that is -- how many of those are done as hybrids, yet? So, I think what we're excited about like I just mentioned, actually in response to a question was that more and more cardiothoracic surgeons are teaming up with the electrophysiologists. And so, what would traditionally been thought of as maybe only a catheter-based procedure, is now turning into one step by the cardiothoracic surgeon, and then another step by the electrophysiologist. And so, we're probably one of the only companies or maybe the only company, that is using PFA on both sides of that. So, we think there's a really unique opportunity to work with both sets of physicians to help solve that problem. Kevin, I don't know if you want to.

Yes. Robert, thank you for the question. And I think the thing that's exciting for us right now, is we believe that we have a platform technology that can provide a programmatic solution to afib. And what I mean by that is we know in talking to Dr. Gan Dunnington, that there is a new wave of treatment that is saying that, if you're touching the heart for any reason, you should be exploring and treating for afib. And we don't think that market has been realized, yet. And what we believe with our technology, is that we will allow them to use nsPFA on the cardiothoracic side, but then work with the electrophysiologist team, to map it after the cardiac opportunity and then working in collaboration in a hybrid procedure as Darrin talked about. So, we're excited about that one opportunity and being the only company that we believe, that will be able to provide nsPFA in one platform.

Okay. Thanks a lot for the update.

Thanks a lot. Thank you.

Our next question is from Robert Lovgren with Medical Home Productions.

Thank you. I'm reminded that in this whole -- this discussion this morning or this afternoon of a meeting that I was attended in [indiscernible] living room. I don't know if Bob Duggan was there but he's the -- just -- it was a person there who had just started the -- just gone public with a laser company. And basically, the -- just the meeting was -- this laser was a very unusual platform or the procedure. And it was -- the guy said just the beginning. I'd like to have Bob Duggan, make a comment on that, if possible.

Yes. Hi, Bob well [indiscernible] is a mentor of mine and an unbelievable guy. I did not attend that meeting. What I can say is, the runway that we've been on with nsPFA tells me that there is a significant market out in front of it. We're using the core energy -- the essential core energy resident in every cell to determine its function. And we have an ability here to change polarity of the nucleus of the cell and thereby change function. Fortunately, and amazingly, it does it in a natural form consistent with the way the body operates. So, you wind up with something called, apoptosis cellular death, which is a natural cell death as opposed to poration [ph]. And there are a lot of good benefits to that. So, I'm of the mind that if [indiscernible] was here, he would say, listen, you're on to something, make the most of it. I do think this is -- we're early days in a very, very exciting business, but we're not early days in terms of does -- is this technology appropriate, or is it going to work? We're going to end our way through FDA clearances. These things will basically, mostly be open label, unlike in the drug business, where you don't know until they announced who's going to win the Academy Award. It's going to be very clear and plain, how well the technology is performing. And to validate that like Dr. Dunnington has come onboard, we have numerous cardiac and other outside of cardiac luminaries that are just at our side, really anxious and currently working with us to move this technology into a place where it can perform for them. So, yes, I would without a doubt or reservation say, that we're onto something and there's places that is just going to be exciting. So I hope that answers your question. I can't put a dollar on it that that would be inappropriate. But this is Fred Loop [ph] and Tobi Cosgo [ph] real mentors of the earlier on CABG procedure evolved the Cleveland Clinic back in the day, they always said you can do something for afib. That's where we're all headed. That's the home run. So, this is something for afib. So, yes, I'm excited. I appreciate you asking the question.

Thank you.

My pleasure.

Our next question is from Kurt Kruger, private investor.

Hi Bob, Kurt here. Can you hear me all right?

Yes.

We can hear you.

Good. Good. I -- very interesting in the way your company has pivoted now towards this very promising procedure indication. There are lots of reasons why afib has a huge potential, but it's never been fully realized and somewhat disappointing lots of reasons for that. It takes too much time. It's fussy. It doesn't work that well. Do you feel like your catheter, your technology addresses some of those impediments that the markets had?

Sure. This is Bob Duggan. 100% we're a bull's eye there because as a [indiscernible] talks about in the human life, the human cells, the chemistry and biology of the body, heat inside the body renders significant damage. So, it's really -- that's a sentence. But the word is the heat times, the volume of energy is where the damage occurs. So, we've -- as Darrin explained today at a rate of 10 to 1,000 times faster speeds, nanopulses if you ask me to count it, I'd be dead before I got there, it's 34 years to count to one billion. The lightning blistering speed at which we can deliver volumes of energy, not otherwise deliverable by other products puts us in a zone of incredible patient safety as we deal with the vital area of the human body. So it's not really that RF and Cryo doesn't work, it's the collateral damage that they do in order to work that places them -- places the patient at risk. We -- our collateral damage is if it's a handful of percentage points relative to what otherwise is available that's where we come out ahead. So that will be demonstrated as we get the first-in-human. It's been demonstrated preclinically. We're pretty pleased about it. But this is a substantive, meaningful difference that can be understood by those that apply it and then those that get a hold of the peer-reviewed journals. So this is -- that's the basis of our excitement here.

Okay.

I'll hope that communicates accurately. Good to hear your voice.

Yeah. Thank you, Bob. I know, I'm being somewhat of a straight man, because it may be obvious to you all but this could make a big difference which is exciting. And you may have said it and I may have missed it but, are you looking to do -- this is going to require a PMA or 510(k)? And then, when do you think you could see sales maybe like a year from now 1.5 years from now?

Yeah. Well, as we said, it will likely go down the PMA time track, but -- and we said it could take a couple of years. The truth is, we don't know. I would assume in this area the trials will enroll quickly, because we're safety first and efficacy is -- it may be slightly ahead of safety, but it may be a close second. Those two are our markers. I don't think it's going to be an untoward path. Our major challenge is to make sure we explain this accurately such that the FDA personnel are able to view a novel device without trepidation. And that's how we're going to go about it. It's not the first time in my life I've introduced something new. We did robotics of course. And then, we brought in patient-friendly oncology therapy which was if interesting an oxymoron and all those work. This should be easier quite by a long leap in either of those two. So we don't know. The good news is, as we do it the results will be available and market size will adjust accordingly. And I think people's appreciation of that we're going to get there will -- the reality of it will continue to favor the probability that we're really going to get there. So again, it's not like a drug where until they open that -- these drugs are double-blinded placebo-controlled they're double-blinded with a standard of care. And it's tough until you get line up with the trial and get it through the FDA, whether you want or not. This isn't going to be the case here. It's going to be very, very clear. And we have the clamp. So the clamp, I don't hesitate to say – well, let me be more cautious. How that gets through the FDA? The FDA will determine and we'll follow their advice. But I believe, it would be a lot less difficult than the circumferential catheter that we have in mind. So I hope again, that addresses, but we are going to be very active over the immediate quarter here and get to the human but first-in-human just as soon as possible. And then that will tell the story.

Yeah. Thank you very much. Nice to checking with you again, Bob.

Yeah. Yeah, you too as well.

Yeah.

Ladies and gentlemen, we have reached the end of the question-and-answer session and are out of time for today's call. Pulse Biosciences, thanks you for your participation. You may disconnect your lines at this time.