Pulse Biosciences, Inc. (PLSE) Earnings Call Transcript & Summary

Today, I'm here to introduce Pulse Biosciences. Please welcome to the stage, Paul LaViolette, Co-Chair and Chief Executive Officer.

Thank you. And thanks for joining me. I'm, as mentioned already, Paul LaViolette, I'm CEO of Pulse Biosciences. I've been in the medical device sector for 45 years. I've launched a lot of products, seen a lot of technologies, been involved in a lot of exciting new therapies. And I came to learn of Pulse Biosciences a few years ago. Of course, many of us have seen the impact of PFA pulse field ablation in med tech in the last several years. I personally found Pulse Biosciences irresistible. I joined the company in January as Chief Executive Officer, and I am thoroughly thrilled to be leading the charge of this technology platform into the marketplace. We will make forward-looking statements today, and let me just dive in. Our mission is to drive this technology into an extremely exciting platform. We believe, multiple viable businesses to be found to create here a thriving company. We've identified the first 3 markets that we'll penetrate, and we've got an opportunity today to share with you some of our thoughts on how we'll develop our way into each of those 3. If you think about our position, we are very strong overall. We have a cash position at the end of Q1 of $119 million. That provides us with runway through '25 and '26 to execute our business plan. And so we feel really quite fortunate to have a series of programs, capital to execute our strategy and a highly differentiated technology. The team is led by very experienced executives, and I won't go into backgrounds just based on time. But suffice it to say, we have veteran leadership across technical and commercial functions in the company. And our Board is led by legendary serial entrepreneur, Bob Duggan, who has numerous successes behind his name and is highly committed to the success of Pulse. If we think about nanosecond PFA, this is a highly differentiated energy delivery capability within a field of pulsed electric fields, pulse field ablation delivery that is really exploding today. It's manifest today, first and foremost, in the electrophysiology space, and we're going to see it deliver in multiple new categories. The key element of PFA is to deliver nonthermal ablation to treat parts of the body nonsurgically with energy that does not leave behind a trace of heat and therefore, the dangers of heat in and around a thermal ablation zone. This company has been developing its system for a decade, has invested $350 million to $400 million. There are over 1,000 publications either directly from the company or specifically on nanosecond pulsed energy. And that has led to the company's creation of over 180 issued patents with 100 additional pending. So it's a very strong scientific base and technology base to help lead this platform into the clinic. In the clinic, what we really will find is that nsPFA is all about ultra-short duration pulses of energy delivered at very high amplitudes, very high voltages, a level of magnitude different than what we currently see in technologies such as Farapulse, which are driving significant disruption into major markets. So most important in understanding what differentiates Pulse Biosciences from other companies is the duration of the pulse measured in the 1 billionth of a second duration. That's what defines nanosecond durations. And our ability to use exceptionally short pulse durations, along with high amplitude energy creates a very unique treatment in the body. We deliver low total energy, but introduce an entirely novel mechanism of action, all done nonthermally and all done with extremely rapid duration procedures and pulses. That leads us into the ability to work on multiple markets. And here, you see a lineup of the first 3 markets that we have identified. The first for which we will have commercial application is the benign thyroid nodule indication. This is the first of a series of soft tissue ablation markets that we will target. The second and third, both relate to atrial fibrillation, which is obviously an extremely well-characterized condition is the single most common cardiac arrhythmia. And if you think about the cardiac surgical ablation category, that's itself a $1.8 billion category growing dramatically based on underpenetration today. And of course, the EP indication for AFib, which itself is a very large market today, growing double digits, growing 20% actually organically. And based on low penetration and rapid expansion, we expect that market to grow to over $8 billion. So the markets that Pulse is targeting today over $6 billion, and we think that number will more than double in the 5-year horizon or so. Now because this is a platform technology and because we can go after multiple indications, we have to be prudent, if you will, about how many markets we'll approach and how we'll approach them, whether we approach them directly or through partnerships. So we have a hybrid business strategy. Our approach to markets is based on the ability to scale in those markets with capital efficiency the feasibility, frankly, of going directly against either large entrenched competitors or entering greenfield opportunities. So we will approach certain markets directly with our own commercial channel and thyroid would be a good example of that and other markets based on much greater scale, much higher capital requirements and much greater commercial risk such as electrophysiology, we will enter those markets through partnerships. And we are advancing our business development under both of those models as we currently speak. So let me then take our markets and approach them one by one. And I'll start with thyroid, which is the first use case in the soft tissue ablation indication. We have a soft tissue clearance that allows us to pursue multiple clinical indications. We've selected thyroid because of its clinical significance, the volume of procedures and the particular clinical benefits of Nanosecond PFA in that indication. Thyroid disease is exceptionally common. We'll talk about the numbers in a minute. This is a critical functioning gland in the body that produces hormones that control body temperature, heart rate and blood pressure. And so the desire to retain thyroid function is extremely high. But surprisingly, for a benign disease such as benign thyroid nodules, thyroidectomy is the most common solution. And that's precisely what we intend to change with the introduction of nanosecond pulse field ablation. So thinking a little bit more specifically about this market. This is a 250,000 annual diagnostic volume market, of which 2/3, 150,000 move on to thyroidectomy per year. It's our view that thyroidectomy should not be certainly first-line therapy for a benign disease. And in our modeling, we're expecting to convert up to 80% of those surgical removals of the gland into a thyroid-preserving scarless nonsurgical alternative. In addition to the 150,000 surgeries per year, 100,000 patients move off into a watchful waiting pool, of which over 2 million patients have accrued over time. So our belief that this market can be a $1 billion opportunity is predicated on the large conversion of current surgeries and the significant appeal of a less invasive alternative for that very large watchful waiting pool of patients. The procedure is an ultrasound-guided nonsurgical therapy that preserves thyroid function, reduces benign nodule gland size, eliminates symptoms and is exceptionally safe to perform in an area of the neck that is surrounded by sensitive structures, including the nerves that control the vocal cords, the carotid arteries and others. From a status perspective, we have performed roughly 100 cases in a clinical trial in the United States in a post-market setting. We've done that at about 8 to 10 centers in the United States. We're in the process in 2025 of converting those sites from clinical status to commercial status and we will begin the commencement of a true commercial business in the treatment of thyroids in the second half of 2025. So we're extremely excited about this clinical indication. This is a market that we can approach directly. There really is no specific device competition. The same surgeons that perform surgical removal of the gland would be trained on minimally invasive ultrasound-guided ablation with nsPFA. So we think it's a perfect setup for a direct market approach. The second market that we're addressing is the first of 2 for atrial fibrillation. In this case, it's preoperative Afib patients that have atrial fibrillation already and based on some comorbidity are planned to undergo some form of cardiac surgery. It could be for mitral valve repair or replacement, it could be for coronary artery bypass grafting. Of that population of open heart surgeries, 80,000 patients today enter that operating room with preoperative atrial fibrillation. But the use of ablation to treat their Afib is significantly underperformed, and that is because of technology limitations in current tools that are available using radio frequency ablation. So our purpose with nsPFA is to convert patients that are currently being treated with radio frequency over to pulse field ablation and based on improved efficacy to substantially increase the number of patients that can be treated. If you think about current treatment activity, only about 1/3 of patients who are on label, on guidelines for ablation are currently receiving it. So our goal with an improved PFA delivery system for treating patients with AFib is to introduce a therapy that can be performed in a 5-second ablation, ablate tissue fully transmurally and nonthermally and do so with such speed and efficiency that surgeons will swiftly adopt that technology despite the time criticality of having these patients on cardiopulmonary bypass. This program is entering an IDE in the middle of this year, and we're finishing in parallel feasibility studies in Europe that are producing very impressive data. So we're very pleased with this program. And then the last program overall is for EP ablation in the endocardial approach or the catheter-based approach. This is one of the largest markets in the medical technology field. It's been one of the most highly covered markets based on the speed with which PFA has penetrated. And we find this to be one of the most compelling opportunities for our company. There's an annual incidence of almost 2 million patients diagnosed with AFib and moving into the lab to have ablation. This is a category that is growing based on disease prevalence, based on increased rates of diagnosis and the ability for PFA to affect a faster, safer outcome. PFA is disruptive today, but we believe the novel elements of nsPFA of nanosecond PFA poises us to disrupt this market once again. And so we think it's an extremely ripe target for our technology. And again, we intend to enter this market through partnerships. If you look at what our technology does, it produces a continuous ring of ablation energy around the entirety the full circumference of the pulmonary vein. It does so in just a 5-second single ablation. We usually perform only 1 to 2 ablations per vein and only 10 to 12 ablations for the entire isolation for paroxysmal AF. This is a technology that would drop right into the workflow that is currently used with Farapulse and other technologies. It produces a clinical outcome with only about 10 minutes of total ablation time. And at the bottom of the slide, you see that we're currently mapping and rendering our system on both the Abbott and CAO J&J mapping systems. This is a technology that requires essentially no learning curve, produces pristine isolation. We've demonstrated already over 90% remapping efficacy in our feasibility study. And as with the clamp, we'll go into an IDE in the middle of this year. So in summary, this is an extremely novel technology. It produces a novel mechanism of action. It's surrounded by a significant IP moat. We're in multiple clinical trials generating additional data. We have multiple very significant markets to enter both through direct businesses and via partnerships. We're commencing commercialization in 2025, and we have cash to execute our plans. Thank you very much. And with that, I'm out of time. I'd be happy to answer any questions.