Greetings, and welcome to the Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Philip Taylor of Investor Relations. 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, August 12, 2024 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. These 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 and Events section on our Investor Relations page. With that, I would now like to turn the call over to President and Chief Executive Officer, Burke T. Barrett.

Good afternoon, everyone, and thank you all for joining us. I'm glad to be on my first Pulse Biosciences earnings call since being appointed President and CEO of Pulse in May of this year. Today, I'll provide updates on our continued business progress and then Michael Koffler, Vice President of Finance will review certain second quarter 2024 financial results, then Bob Duggan, Co-Chair of the Board; Darrin Uecker, Chief Technology Officer and Director; and Kevin Danahy, our Chief Commercial Officer, will join me for a question-and-answer session. To begin, I want to briefly describe why I joined Pulse. I've been in the medical device space for more than 35 years, with the majority of that time spent pioneering medical devices and focusing my last 20 years on cardiology devices. I believe Pulse's pulse field ablation approach called nano-PFA has the potential to be more transformative than any other innovation I've worked on throughout my career. When you consider all the currently available treatments that use heat, cold, radiation and other approaches to kill undesirable cells in the body and the fact that nano-PFA has the potential to compete with and perhaps even someday supplant many of these currently available treatments that translates to Pulse having the opportunity to significantly improve many patients' lives. This is possible because nano-PFA has the potential to kill cells in a better way than heat, cold, radiation and even currently available micro PSA. It's the core of what Pulse does and as we will describe in a moment, it is showing great promise in the three product lines currently being studied clinically. Beyond these three current products or product lines, I believe that nano-PFA energy has the potential to advance the standard-of-care for the treatment of multiple other disease states and disorders across the human…

Thank you, Bert. Today, I will highlight our key financial metrics focusing on our cash position and details on our costs and expenses for the second quarter. Cash and cash equivalents totaled $26.2 million as of June 30, 2024 compared to $58.7 million as of June 30, 2023. Note the cash balance as of June 30, 2024 does not include the $60 million in gross proceeds received from the rights offering that closed in July of 2024. On a pro-forma basis, including the cash received from the rights offering, we begin the third quarter with approximately $86 million. Cash used in the second quarter of 2024 totaled $8.7 million, compared to $10 million used in the same period in the prior year and $9.5 million used in the first quarter of 2024. In the second quarter of 2024, total GAAP costs and expenses increased by $1.5 million to $11.7 million compared to $10.2 million in the prior year period. The increase in GAAP costs and expenses was primarily driven by an increase in non-cash stock-based compensation expense, which was $2.1 million in the second quarter of 2024, compared to $1.1 million in the prior year period. To remind everyone, non-GAAP costs and expenses exclude stock-based compensation, depreciation and amortization. Total non-GAAP costs and expenses in the second quarter of 2024 increased by $0.6 million to $9.4 million compared to $8.8 million in the prior year period. The increase in non-GAAP costs and expenses was primarily driven by an increase in headcount to support the advancement of our nano-PFA technology. I will now turn the call back over to Burke.

Thank you, Mike. We believe the future of nano-PFA Energy should be invested in through rigorous clinical and regulatory pathways that ultimately can unlock the full value of the devices we develop as we move product-by-product from clinical studies ultimately into commercialization. Joining us now for the question and answer session today are Bob Duggan, Co-Chairman of the Board Darren Uecker, CTO and Director; and Kevin Danahy, CCO. Operator, please open the call for questions.

[Operator Instructions] Our first question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.

Congratulations on the progress in the second quarter here to the team. Maybe first to start with on the cardiac surgical claims side of the equation. The company went through the TAP program initially and you've received breakthrough designation. You have a couple of cases that are done here already. So maybe, one, just on the case side of the equation, two of the benefits on the clamp side using CellFX as a backdrop or speed of the surgery, but also nerve sparing. Just wondering, if you can go over some of the feedback from these initial cases. How fast was the surgery done? How safe was it? What was the side effect profile, if any, of these patients? And then secondly, commencing the trial in 2025, it's a 510(k) clearance. Maybe just a little bit as we look ahead to what is going to be needed to secure 510(k), what will the next phases of this study look like? And then I'll have a follow-up.

It's Burke. Based on the extensive preclinical data, there are many advantages of nano-PFA in cardiac surgical ablation compared to the standard-of-care today which is RF. One of them you mentioned is speed, but others are the ability to make consistent transmural or full thickness through the thickness of the heart lesions, because of the way the energy is transferred and the form factor of the clamp, the use of it in the surgeon's hands is very similar to what they're familiar with from an RF point of view. So the energy itself is non-thermal and as you said it's expected to be not nerve sparing or safe with collateral tissue. Not going to comment on a lot of the specific details of the two procedures, because two is a small number and we're just starting. But the device performed as expected, it performed well, the procedures were very efficient and certainly the clinicians involved in the procedure were excited by the performance of the device. When it comes to the regulatory pathway for approval in the U.S., while the company did initially submit and had discussions with the FDA on a 510(k) submission for cardiac surgery, we made the decision to pursue a specific indication not just for cardiac surgery, but for the treatment of atrial fibrillation. And that is the primary reason why we will be discussing with FDA shortly a pivotal clinical study design for this kind of device. The pathway to market for a specific indication of treatment of AF is a so called PMA pathway. Again, both of those pathways would require some sort of pivotal clinical study, which we'll conduct. But the actual application that will go into the FDA after the study is complete will not be a 510(k) it will be a PMA. We believe, there are significant benefits once we have a successful pivotal clinical study and a PMA approval to be able to sell and market and importantly train specifically as a treatment for atrial fibrillation. What should happen when we have that approval and we have the specific indication, we should see quicker adoption in the marketplace because we can sell market and train specifically for the use of the device in the treatment of atrial fibrillation.

That's helpful as a backdrop. Maybe on the soft tissue ablation front, the percutaneous electrode system, announcing pivotal trial is expected in 2025, but you're targeting benign thyroid nodules. Maybe just a little bit about that market opportunity and why the decision on that specific initiative soft tissue ablation with the percutaneous electrode decision to go more narrow in terms of that indication again specific to benign thyroid nodules?

The company went through a process over the last three years of very thoughtfully and carefully analyzing the possible indications, applications, markets, if you will to deliver nano-PFA, which included not only market size, but the relative clinical performance of the current standard-of-care devices, ease of utilization of nano-PFA and so on. And the benign thyroid nodule opportunity is within the soft tissue ablation opportunity, became one of the very exciting markets. There is a significant number of people that have benign thyroid nodules. It's estimated to be as many as 1.3 million people worldwide. And the two main options to treat these benign thyroids, which are, they become large and so there's a cosmesis effect. Obviously, you can see them, but also as they grow they put pressure on the surrounding structures and nerves and they become painful. And the two main options are to have a surgical resection, which not only leaves a scar, but may leave the patient needing to have lifetime hormone replacement therapy or to do nothing. Those are the two primary approaches. We believe that providing a tool that can shrink benign thyroid nodules without the risk of thermal spread to the surrounding structures like various cranial nerves, the trachea, the vocal cords and other things that are in proximity to the thyroid represents a great opportunity for nano-PFA.

And last one for me, I'll hop back in, is just, when you think about 2025 here now and the capitalization efforts, you have the 510(k) for benign for PTN, we can call it. And then you have, obviously, surgical ablation on the clamp side and also pursuing catheter ablation, specifically nano-PFA 360 catheter ablation. So it's three studies being pursued concurrently in 2025. Maybe just an update on looking at the pro-forma cash balance, assuming $60 million in proceeds from the rights offering, how well capitalized the company is to handle the three concurrent studies?

You're welcome. Historically, in recent quarters the average cash burn has been about $9 million per quarter. Obviously, cash burn will go up as we enter the active phases of these three different studies. We haven't provided information yet about the anticipated cash burn in the future because much of the spend will depend on the actual study design, the number of sites, the number of patients and the timing of the start of the study, but we do anticipate that the burn will go up. We have said that, we believe that the cash on hand today will take us into 2026. And that's without any exercise of the warrants from the rights offering.

Thank you. And it looks like there are no further questions at this time. I would like to turn the floor back over to Burke Barrett for closing remarks.

I want to thank the Pulse team for a fantastic quarter. I want to thank you all for calling in and listening to the update and we look forward to providing more updates and talking to you all again next quarter. Thank you.

This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.