Greetings, and welcome to the Pulse Biosciences Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Philip 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, November 13, 2023, only, and will include forward-looking statements and opinion 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. The risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the U.S. 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, in 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 be joined by Darrin Uecker, Chief Technology Officer and Director; Mitch Levinson, Chief Strategy Officer; and Mike Koffler, Vice President of Finance. Today, I will start by discussing our progress in advancing our top corporate priority. Then I will hand the call over to Darrin Uecker, to detail our cardiac device development achievements. Mitch Levinson will then describe our extra cardiac business development progress, and then Mike Koffler will review the third quarter financial results before I conclude and open the call for a question-and-answer session. It was a highly productive third quarter for Pulse Biosciences. In the lab, our CellFX nsPFA technology continues to demonstrate the potential to revolutionize the treatment of atrial fibrillation. In the clinic, CellFX nsPFA is demonstrating the ability to safely and effectively treat benign thyroid nodules. And at the podium, we are pleased to be seeing increased external validation of our technology and presentations from KOLs at various scientific meetings. On the business front, we are excited to have appointed renowned cardiac surgeon, Dr. Niv Ad, as our Chief Science Officer, Cardiac Surgery. Altogether, we've done the work in the lab and it has confirmed our value propositions for CellFX nsPFA. As we share these preclinical results awareness of the benefit of CellFX nsPFA is growing, and attracting industry leaders from across the globe who see the positive impact of their engagement and want to be involved with advancing the technology as quickly as possible, to deliver improved clinical outcomes to their patients as well as many others. Our primary focus is on developing a cardiac ablation catheter and a surgical ablation clamp, both utilizing CellFX nsPFA for the treatment of atrial fibrillation or AF. The…

Thank you, Kevin. We are making significant progress advancing our feasibility and preclinical studies for cardiac ablation clamp and catheter programs. Our progress is garnering the attention of KOLs who are actively reaching out to participate in our CellFX nsPFA studies. We are excited to leverage this shared interest to continue our momentum into the clinic and view this external interest as a testament to the immense potential of CellFX nsPFA and future cardiac ablation market adoption. As a reminder, our core technology, Nanosecond Pulsed Field Ablation, integrated into our CellFX platform, is fundamentally different from standard PFA. We believe CellFX nsPFA can deliver safer and more effective ablation of cardiac tissue. CellFX controls the delivery of nanosecond duration pulses of electrical energy, that's pulse durations under 1 millionth of a second, to nonthermally cause cells to go through a natural regulated cell death process. The CellFX nsPFA energy pulses are uniquely able to penetrate the cell membrane and alter the function of cell organals, leading to regulated cell death rather than immediately destroying cells, like other energy modalities, such as standard PFA, cryo, which uses extreme cold, or radio frequency ablation, which uses extreme heat. The penetration alters does not destroy internal cellular function while sparing noncellular tissue and leading to a more elegant, precise regulated cell death. This differs from current microsecond ablation technologies where physicians may use suboptimal parameters to protect surrounding cellular tissues, and as a result, sacrifice efficacy for safety. Our early data shows that the CellFX nsPFA nonthermal mechanism of action, as opposed to thermal, can lead to beneficial outcomes in the clinical setting where physicians do not need to trade safety for efficacy. An additional benefit of the CellFX nsPFA mechanism of action is that it requires significantly less energy per unit volume…

Thanks, Darrin. The Pulse team continues to explore and develop new clinical areas where our novel technology can have a large positive impact on human health. We continue to explore potential new opportunities while prioritizing cardiac ablation, and we're allocating a large majority of our resources to advancing the treatment of AF. As we reported in August, we started our clinical feasibility study for treating benign thyroid tumors or nodules in the second quarter of this year. This study represents the first time our CellFX nsPFA energy was used inside the human body. We intended to assess patient tolerance, safety and tissue response. In the fibroid study, benign tumors were treated with our novel CellFX nsPFA percutaneous electrode using ultrasound visualization. Patients were kept conscious under local anesthesia and with the intent to assess tissue response at 90-, 180- and 360-day increments following the procedure. The 90-day evaluation has now been completed, and we're pleased with the positive results. Ultrasound imaging at 90 days has shown complete resorption of the treated volumes with most of the volume reduction occurring by 30 days post treatment with no evidence of fibrosis or scarring, a very positive finding. One of the problems with thermal ablation modalities like RF or microwave, is that the treated volume shrinks down into a ball of fibrotic tissue that can persist for a very long time. This means that the tumor volume is not completely eliminated and the residual fibrotic ball can look like thyroid cancer under follow-on ultrasound imaging, complicating long-term care for the patient. Early results from our study were presented at the American Thyroid Association Annual Meeting in Washington, D.C., in late September. Our principal investigator, Dr. Stefan Spiezia, presented two posters alongside Dr. Ralph Tufano, to their colleagues about histological and ultrasound observations immediately…

Thank you, Mitch. Moving down the income statement, I'll focus my comments on our non-GAAP 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 third quarter of 2023, we reduced non-GAAP total cost and expenses by $7.6 million to $9.2 million, compared to $16.8 million in the prior year period. The decrease in total cost and expenses was driven by the prior headcount reduction and restructuring, and the $7.2 million inventory reserve related to the dermatology business in the third quarter of 2022, partially offset by an increase of $2.3 million in research and development expenses to support advancement of our CellFX nsPFA cardiology devices. Non-GAAP net loss for the quarter ended September 30, 2023, was $8.5 million compared to $16.8 million for the quarter ended September 30, 2022. Cash, cash equivalents and investments totaled $50.4 million as of September 30, 2023, compared to $58.7 million as of June 30, 2023. Cash used in the third quarter of 2023 totaled $8.7 million, and was reduced compared to $10.6 million used in the same period in the prior year and $10 million used in the second quarter of 2023. We expect cash usage of approximately $8 million in the fourth quarter of 2023. I will now turn the call back over to Kevin.

Thank you, Mike. Now I will provide some closing remarks. Pulse Biosciences is receiving significant support from highly-esteemed physicians in the field of cardiology, who have been impressed with our CellFX nsPFA preclinical study results. We are excited to further build out our medical network as we deliver our novel cardiac ablation devices to market. Two of the top cardiothoracic surgeons in the world, Dr. Niv Ad and Dr. Gan Dunnington, committed to joining our leadership team as the first-hand experience with our proprietary CellFX nsPFA technology. Their immediate commitment shows how our scientific and engineering expertise is indicative of a strong future market adoption of our technology. We look forward to providing additional updates on the next call. Joining me today for a question-and-answer session is our Executive Chairman of the Board, Robert Duggan; Chief Technology Officer and Director, Darrin Uecker; Chief Strategy Officer, Mitch Levinson; and Vice President of Finance, Mike Koffler. Operator, please open the call for questions.

Thank you. [Operator Instructions] I'd like to pass it to Philip Taylor for some pre-submitted questions first.

Thank you, operator. We're going to start by addressing a few questions we've received over e-mail. The first question is, in your press release, you noted the cardiac milestones between December and end of Q1, 2024. Previously, you stated in the first half of 2024, which I assume is Q1 or Q2. Does this imply that these developments have gone better than planned and are expected to happen soon?

Yes. Thanks, Trip. This is Darrin. I'll answer that question. So that's an excellent question. For both the cardiac clamp 510(k) and the first in-human feasibility study for the catheter, there are a number of tasks that have to be completed, including all the preclinical testing, device verification testing, and regulatory safety testing, just to name a few. And for the catheter, there's an extra step, which is a regulatory step to have the study approved. And all of these tasks carry some schedule risk associated with them. So, as we stated in the prepared remarks, we're encouraged by our progress, and while there are still a number of these items that, are outstanding and need to be finished prior to either of these milestones being completed, as of today, we believe they will occur sometime between the beginning of December and the end of Q1 2024. And I'd further add that, we have site approval, the clinical site is ready, and we have MD availability. So, we're very encouraged by all the progress, we're making and look forward to updating, as we complete these milestones.

All right. Thank you, Darrin. Here's the next one. I understand from your remarks why nsPFA is potentially superior to PFA. Are you aware of any other companies using nsPFA in cardiac ablation besides Pulse Biosciences? And if not, why do you think that is?

Yes. Thanks, Trip. I'll take that one again. This is Darrin. Thanks for the question. I'm not aware of any other companies utilizing nsPFA, or specifically pulse field with pulse durations of less than a microsecond, in cardiac ablation. Of course, there are several companies that are using pulses in the tens to hundreds of microseconds, as we've noted on previous calls. So there are two important things that I think one should consider when thinking about why we're not aware of other companies using nsPFA. So the first is, Pulse Biosciences was founded on a large intellectual property and patent portfolio that was acquired from universities that were at the forefront of research and development of nsPFA. These patents include core nanosecond pulse field technology, as well as the application of nsPFA into cardiac ablation. So, we believe strongly that this IP is very strong. It's likely something that one would consider if they were going to get into the use of nsPFA in cardiac surgery, or in any other field, and I think it's also fair to say that pulsing in the -- microsecond domain as other companies are doing, has been around for a very long time. And so, that technology is readily available, and it's likely that there's less concern about any competitive intellectual property for pulsing in that domain. Second, we also know, having developed this technology over many years, that it requires unique engineering capabilities with regard to the pulse technology endofunctor development, and I'm not aware of any other company that has developed these kinds of capabilities. So I think - those are just a couple of reasons, why we think it's likely that there are no other companies in cardiac that, are using nsPFA.

Yes. If you might, you could add to that, the very tightknit Pulse Bioscience team has roughly a decade of experience in CellFX controlled nanosecond pulsed field ablation. If you call it a juggernaut, that would be an appropriate description. On top of that, we have our intellectual property patent base and a very dynamic present time IP activities going pedal to the metal. So, we're pretty excited about the position we're in. We respect the time it's taken to arrive at this capacity and the opportunity now looks brighter than it ever has in the past.

Thank you both. Here's one for Kevin. Why is Pulse pursuing surgical cardiac ablation when the market is relatively small compared to catheter-based cardiac ablation?

Thanks, Trip. This is really a great question. We see this as a huge opportunity in cardiac surgical ablation. There are over 1 million open heart procedures done every year worldwide. And then NIH says it's up to 2 million. So it's probably somewhere between those two numbers. And what we see is our world-class physicians, Dr. Gan Dunnington, Dr. Niv Ad, they joined our team, because they recognize the quality of our lesions. And what we could create with our nsPFA energy in this game-changing applications in cardiac surgery. And they look at this as an opportunity to really impact that larger number. And that's a possibility for us in the future. And that's why we're so excited about it, and we believe that the CellFX nsPFA can accelerate surgeon adoption. And finally bridge that gap between safety and efficacy and reduce the OR time significantly. So we see great opportunity for us in the future in this space, and we think this market is ever evolving. Darrin?

Yes, I'll just add a little bit to that. Thanks, Kevin. So today, it's estimated, just to give you a couple more numbers, it's estimated that of the patients undergoing open-heart surgery globally on an annual basis, over 300,000 are potential candidates for surgical ablation. So that's a market opportunity of north of $1 billion. The interesting number is really that there's only about 20% of those patients are being treated for their AF today. So according to our Chief Medical Officer for Cardiac Surgery, Dr. Dunnington, this relatively low penetration rate has everything to do with the current technologies that, are being used. And as we've noted before, these are thermal modalities like radiofrequency ablation and cryoablation. These devices have been available for decades, but still have relatively low adoption and penetration. So clearly, there are challenges with their use. And it's Dr. Dunnington's belief and our belief that the speed, lesion quality and inherent safety of CellFX nsPFA-powered cardiac ablation devices, starting with our CellFX nsPFA cardiac clamp, that will enable a simpler, faster, safer and more efficacious procedure that has the potential to both expand adoption and increase procedure growth in this market. It's also true that the catheter market is substantially larger than the surgical market today. But we view this as a single very large opportunity for the treatment of AF where patients will be treated by the EPs, the cardiac surgeons or both. And as the technology and devices evolve, we think it will shift more and more to a hybrid approach which is why we're focused on providing our technology to CellFX nsPFA devices to both of these groups. And it's our belief that we'll be able to do this, and leverage not only leverage those channels, but look for opportunities, to create unique synergistic treatment opportunities.

All right. Thank you. The next question is pretty much the same as the previous question, but for the thyroid market. Mitch, do you want to take this one?

Yes. Sure, Trip. We've now treated 21 subjects with our benign thyroid nodules with our percutaneous electrode in the clinic, and the early results, they're just super encouraging. And like we said earlier, these clinical results, the safety, the prospect of clearing the entire module without leaving that fibrotic ball. All of that, in our opinion, makes our solution just - it's just a lot better than surgery, or any of the current ablation options. And the thyroid market itself, it's big. Peer-reviewed articles estimate about one in 1,000 people worldwide, that's millions of people each year, suffer from symptomatic thyroid nodules. And most of these go untreated. We welcome all of them to the world of patient and physician-friendly treatment, and that's what we're shooting for with CellFX nsPFA. About 800,000 thyroidectomies are done each year, that's where they're getting half, or their entire thyroid removed. But most of these patients choose to just live with their condition, instead of having surgery for some people, the cure might be worse than the disease. We think that not only are we going, to be able to address a lot of these thyroidectomy patients, but because of our better safety, the efficacy and the healing profile, we think we can reach a good number of those 8 million "watchful" waiting patients. And we also think our procedure is going to be just really teachable and reproducible. That's going to allow us to enter the market, and grow this new market quickly. And not only do we have, this large opportunity for thyroid nodules, but this is also going to open the opportunity, for a bunch of other applications, including treating other types of tumors.

All right. That's it for our submitted questions. Operator, we can open up the line.

Okay. Our first question comes from the line of Robert Lovgren with Medical Hope Productions. Please proceed with your question.

Yes. It's very interesting that you - all the stuff that talked about here. We got a couple of questions here. First of all, safer and faster. And I guess it's -- what I'm told is, easier to do basically for initial electro-physiologists to do it where they're just starting out. In addition, have you sort of thought about an Advisory Board, Scientific Advisory Board? And then this papers business is they're -- I wished you put those papers up on your website, so we can read some of those papers. And then what about the company that you're in business with they're developing, is that part of the process? I forgot the name of the company, but, hello?

Yes Bob, this is Darrin. I'll tackle some of these. There - looks I think you have kind of four questions here. So let me see if I can go in order. Yes, so the first one you mentioned is safety and speed. And so, I think this is a general capability of nsPFA, both on the catheter side and on the clamp side. And by safety, generally, what we mean by that is our system, or this technology is completely non-thermal. So a lot of the safety issues that you see in ablation, in cardiac ablation in particular, have to do with the fact that thermal modalities are used. And when you're using a thermal modality...

Irreversible and reversible, this is reversible. Nanopulse is the only one that's reversible?

Yes. So there is a reversible component to it, but the safety really has to do largely with the fact that we don't have any kind of thermal spread, that thermal spread is something that can - when you're doing cardiac ablations can reach the esophagus and nerves and other critical structures. And of course, we're non-thermal. So, we don't have that aspect. And on the speed side, speed has been demonstrated by us and others. It's a very fast technology in terms of the speed required to do the ablation, and substantially faster, many times faster than what you see with radiofrequency ablation, or cryosurgery. And really, speed isn't just a convenience. It's also a safety component. So, the faster that you can perform these procedures, the sooner the patient gets out of anesthesia and back on their feet. So, I think there's a safety component that has also has to do with the speed. You mentioned a question about would we have an Advisory Board, we're starting to build that team. So you've heard about Dr. Dunnington and Dr. Niv Ad, and some of the other EPs that we're doing work with. And so we'll certainly over time, build what we believe will be a top-notch Advisory Board, likely both on the catheter side and on the cardiac surgery side. And that will come in time as these things evolve. You asked about papers and getting the papers posted on our website, which we very often do sometimes, we have to make sure that whatever the society or scientific meeting that that publication exists in is, okay with us publishing it on our website. But when they are - and we try to make that happen every time, we certainly will do that. And lastly, I think you're referring to a partnership that we have ongoing with our catheter to deliver mapping and navigation technology. And we view mapping and navigation as kind of part of the overall system that, needs to be delivered into the EP, to do these ablations with catheters. And so, our first in-human activity, we will have a mapping and navigation partner along with us. We've integrated our technologies together, to provide a really physician-friendly and what ends up being a patient-friendly solution. So, I think I got through the four questions that you had, but if not, let me know.

Okay. Thank you.

Thanks Bob.

Our next question comes from the line of Jason Smith, a Private Investor. Please proceed with your question

Congratulations on making fantastic progress on bringing nsPFA to patients. It's just been awesome to watch the evolution of the progress taking place. My question is whether the patents that are originally held by FARAPULSE or other standard PFA patent holders, is broad enough to potentially cause patent infringements by Pulse Biosciences?

Yes. Thanks, Jason. I wouldn't want to comment at all on patents by any other patent holders specifically, we spend a lot of our time and energy, and we invest a lot in our patent portfolio. We invest a lot in our product design, and we invest a lot in doing everything, we can to ensure that any of these markets are open, to our products. And so, I think that's the best way for me to handle that.

Okay. This is fair enough.

Jason, this is Bob Duggan. Just the process of embedding a patent is inclusive of validation of its appropriateness. That doesn't mean after the fact one can't bring that into question. But it's no small task to get through the patent filter. So with 188, 148 in hand, 103 pending and a very rapid set of developments, developments that, are application specific to CellFX and the nanosecond pulse. We're in pretty good - we think we're in a pretty good position, time will tell, but we do not consider our business to have a significant or serious patent risk at all. We think we're very strong in that area.

Perfect. Well thanks for my mind the equilaterally shares?

Yes. I think the biggest factor is when you touch the patient, is it safe? Patients who are really reluctant to go from a current condition to a surgical procedure, if it's not say, then it comes, is it friendly. But if that - those two questions are answered positively for the patient that is equally important, if not more important, is it physician-friendly? That's why you see 8,000 procedures today done robotically when we used to celebrate back in the day when we started our company in [indiscernible]. We have one procedure done every other week, time has changed. But safety, friendliness to both -- friendliness is our true ally to the patient and to the physician and thereby, and therefore, it is scalable. So when you have else coming into the business as they are, the dozens that they are making [technical difficulty] of it not to be underestimated how positive that is. So in this case, we've treated over 7,000 lesion. Now, we're treating some very specific areas of the heart. And once that's done, you'll see acceleration of our activities, and we await those opportunities and the timing is coming close. I can say that to when that will happen.

Fantastic. Well keep of the good work you guys. Very much appreciated.

Thank you. Jason.

There are no other questions in the queue. I'd like to hand the call back to management for closing remarks.

Yes. Thank you. One of the things I just want to close is to say, the past quarter has been outstanding for us. And we've done the work in the lab. We've done the work in the clinic, and we've done the work on the engineering side, and we're extremely excited about where we're going with nsPFA, CellFX, and we're really excited to bring these results to you. So stay tuned, keep watching us. We are really passionate about what we're doing. We think we're highly differentiated. We have a robust IP portfolio strategy. It starts with our energy. It goes from the energy to the console, from the console to the endofunctors, from the end of endofunctors to the patient. And we think that we've done an amazing job there. So continued ask questions, stay engaged, and we will continue to communicate. And we thank you for - all of you for joining the call.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.