Pulse Biosciences, Inc.
Q3 2018 Earnings Call Transcript

Published: 31 Oct 2018

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the Pulse Biosciences Q3 2018 Earnings Conference Call. At this time, all participants are in a listen-only. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Brian Dow. You may begin your call.

[Brian Dow:]

Great. Thank you operator. Good afternoon, everyone. And welcome to Pulse Biosciences third quarter 2018 investor update call. In addition to today’s audio presentation, we will be webcasting our presentation during today’s call. For participants who would like to follow the presentation, you can find the link to today’s webcast on the investor relations section of our website at www.pulsebiosciences.com under News and Events tab and the Events Calendar. On the call with me today are Darrin Uecker, our President and Chief Executive Officer; Bob Duggan, the Chairman of our Board of Directors; and Ed Ebbers, our Vice President and General Manager of Dermatology. Before we begin, I would like to remind you that on today’s call, we will be making forward-looking statements. These include our plans, intentions and expectations relating to our operational, scientific, clinical and financial projections, financing plans, products including the uses and applications of such products and other future events. You should not place undue reliance on such forward-looking statements, which are subject to a number of assumptions, risks and uncertainties, and may differ materially from actual results. These results and uncertainties are more fully described in our Securities and Exchange Commission filings on Form 10-K and mostly recently filed quarterly report on Form 10-Q. Investors are encouraged to reference these risks and uncertainties and other disclosures in those reports. Pulse Biosciences undertakes no obligation to update forward-looking statements as a result of new information or future events. In addition, I remind you that today’s call is being recorded and the presentation and webcast will be available for replay on the Investors section of our website at www.pulsebiosciences.com, shortly after the conclusion of the live call. Investors electing to use the audio replay are cautioned that forward-looking statements made on today’s call may differ or change materially after the completion of the live call. I would now like to turn the call over to our President and Chief Executive Officer, Darrin Uecker.

[Darrin Uecker:]

Thanks, Brian. Good afternoon, everyone, and thank you for taking time to join us on today’s call. We continue to make great progress and our optimism builds as we work towards bringing to market our proprietary Nano-Pulse Stimulation platform. Nano-Pulse Stimulation is a highly differentiated and proprietary platform that uses ultrafast electrical energy pulses with pulse durations from billionth up to a millionth of a second. Our NPS energy pulses enter cells and disrupt the function of the internal cellular organelles, including mitochondria and endoplasmic reticulum, leading to cell dysfunction and death without disrupting the integrity of the outer cell membrane. This unique, nontoxic and non-thermal mechanism is a biophysical mechanism brought about by the speed and amplitude of our NPS pulses interacting with the physical structure of cells. While our NPS pulses directly affect the function of cells when delivered utilizing our treatment platform, they have no functional effect on acellular tissue such as collagen, a protein that supports the tissue structure and healing. In short, with our NPS, we can deliver a unique, internal cell-focused effect while preserving surrounding acellular tissue, a combination that we believe will lead the highly differentiated treatment applications. In previous calls, we have endeavored to deliver a consistent message regarding our strategy of bringing this proprietary Nano-Pulse Stimulation platform to the market. Superficially, we have communicated that we would first develop our NPS platform to take into the clinic, which we did with the PulseTx System, the first tunable NPS system used in human medicine. And I think it’s important to point out that at this point in time we are not aware of any other tunable NPS system with the capacities of our platform for therapeutic use in human medicine. Our comprehensive patent portfolio of over 80 worldwide patents is further evidence of our differentiation from other energy sources, and we strive to maintain a long-term proprietary position, based on these and future patents. We also stated that we would then demonstrate the unique and additional benefits of the NPS platform across a number of compelling treatment applications in pilot studies with the help of KOLs. And over the last two years, we have executed several clinical studies that have enabled us to demonstrate the safety, efficacy and unique mechanism of action of our NPS platform. And then, we would commercialize in markets as the opportunity and clinical evidence supported. Today, we are very pleased to announce that based on the compelling safety and efficacy data from our growing database of completed and ongoing clinical studies and a strong and expanding pipeline of indications, we have selected our first significant commercial market where we will launch our NPS platform. The aesthetic procedure market in dermatology. We have been working very closely with the group of the top dermatologic surgeons and skin cancer specialists in the United States over the last two and half years to guide our research of the unique and highly differentiated non-thermal mechanism of action of our NPS in the treatment of skin, and use those research results and our advisory board guidance to prioritize the highest value targets. Based on our excellent clinical data for the treatment for very common benign lesions, we are planning to launch in this dermatology specialty in the second half of 2019 or roughly 12 months from today, with a focus on cash paying aesthetic procedures. I will review the available clinical data in support of this planned commercial launch and the anticipated size of the future pipeline of new applications we are developing in support of this opportunity in a few moments. Before I do that, it’s important to point out that the clinical research that led to prioritizing this commercial opportunity, had the additional benefit of speeding up our developments in other applications for our NPS including immuno-oncology. Our extensive experience, which now includes over 1,000 NPS cycles in human skin has allowed us to establish the safety, the symmetry and mechanism of action in human patients. Our Basal Cell Carcinoma study, our first in human cancer is an example of how our progress in dermatology has allowed us to move into a human cancer more rapidly. We have also been clear that our mission at Pulse Biosciences is to be a viable company. Viability is paramount. And pursuing a significant market opportunity that we can access in the relative near term, while continuing to maintain an exciting pipeline of future opportunities is important progress towards that viability. Now, I’ll spend some time talking about the exciting market at aesthetic dermatology procedures. This is a fast and growing, large cash paying market. According to industry estimates in 2016, Americans spent approximately $22 billion on aesthetic procedures and removal of benign skin lesion with the growth rate of over 10%. In United States, this cash paying market is driven by a concentration of 3,000 to 4,000 skin specialists that are leading purchasers of energy-based devices for cash-paying procedures that improve the appearance of their patients. These procedures, including removal of benign lesions are typically not covered by insurance. In recognition of this growing market for cash-paying skin procedures, the American Society of Dermatologic Surgeons or ASDS conducted an annual survey of consumer interest in self-pay procedures. The most recent ASDS consumer research reported that 70% of patients are considering an aesthetic procedure, and that number has more than doubled over the last five years. The same consumer research confirmed that board certified dermatologists are the number one influencer of patient decisions, when it comes to these skin enhancing procedures. In short, this is an aesthetic procedure market where a large group of consumers are seeking appearance enhancing treatments that are paid out-of-pocket and are consulting those dermatologists for advice on which procedures to have done. As I mentioned previously, we have spent the last couple of years working with the top dermatologic surgeons and skin cancer specialists to build a clinical data set that has demonstrated our highly differentiated NPS mechanism of action, as well as the safety and efficacy in difficult-to-treat benign skin lesions that not only represent exciting opportunities to pave the way to multiple additional applications based on the results and these initial indications. The first step in this process was the safety and dose-ranging skin study that demonstrated the ability of our NPS to target cells while sparing acellular tissue, leading to good cosmetic outcome. If you are following along with the slide presentation where you are seeing a series of microscopic images of the skin. The image on the left is an image of healthy skin tissue prior to our NPS treatment. The top layer of skin is the epidermis, which you see here as dark purple epidermal cells. The middle images show skin 24-hourss after treatment with our NPS. Importantly, the epidermis and dermis below remain intact after treatment. However, the epidermal cells are no longer viable, as evidenced by their ghostlike appearance. This demonstrates a key feature of our NPS, which is that it affects cells without structurally breaking the cells or tissue apart and spares acellular tissue which in the case of skin is primarily the dermis underlying the epidermis. This ability to impact the cells of tissue while sparing acellular tissue is an important and we believe highly differentiated feature of NPS and makes it uniquely suited for cellular lesions, both in the epidermis and down in the dermis. The image on the far right of this slide shows the healing process where non-viable epidermis is lifting off and new epidermis is growing in below. One can imagine if a lesion was in the epidermis, it could be lifted off and replaced by new epidermis if treated with our NPS. Based on this early dose ranging data, we worked with our dermatology advisors and identified 15 skin conditions that would be good target for the mechanism of our NPS. These are shown in the prevalence chart on the left of the slide. We further prioritized these indications to identify those that we should study initially. At the top of the list were seborrheic keratosis and sebaceous hyperplasia. These were chosen because they represent benign lesions that are difficult to treat with term modalities, represent significant opportunities and as we showed success, would highlight the unique and valuable mechanism of our NPS as compared to alternative treatment modalities such as freezing, or burning. Our first indication study within seborrheic keratosis or SK, the most common benign skin lesion. Our research suggests that in the U.S. there are as many as 6 million patients being seen by aesthetic dermatologists and are interested in treatment. However, the also suggests that only about 35% of these patients receive treatment. We believe this is due to the poor cosmetic outcomes associated with current treatments, such as cryotherapy or electrodessication which can remove the SK but leave the skin looking worse than when the lesion was present. In our initial study, we showed an 82% efficacy rate of cleared or mostly cleared lesions after a single NPS treatment with very good patient tolerability and exceptional safety with no reported procedure or advice adverse events. This study included 58 patients with 3 treated SK lesions per patient. Our single treatment results from the study are superior with the efficacy of recently approved topical agent that showed a 61% efficacy rate, usually after multiple treatments. This SK data is important beyond and exciting commercial opportunity as it also paved the way for other lesions that present in the epidermis. Our next indication study was for a common facial skin condition called sebaceous hyperplasia or SH. This is a particularly difficult benign lesion to treat for current thermal energy modalities because its underlying cause is from a large sebaceous or oil gland that resides below the epidermis and in the deeper dermis. The treatment objective is to eliminate the enlarged sebaceous glands without damaging the surrounding dermis. In general, thermal technologies are unable to reach lesions or cellular structures deep in the dermis without significant collateral damage to the dermis due to their mechanism of spreading thermal destruction indiscriminately to the area. Damage to the dermis can be the scarring or other negative cosmetic outcomes that are worse than the original lesion. We believe that this risk of negative cosmetic outcome helps explain our market research that suggests only 21% of the approximately 3.6 million patients with SH being seen by dermatologists, receive any type of treatment. Our research has proven that NPS has a unique ability to penetrate into the dermis and target cellular lesions without damaging the surrounding dermis, making it a potentially unique and highly effective treatment modality for targeting SH lesion. Our SH study is ongoing. We stated previously that we expected to complete treatment in the third quarter with data being available by the end of 2018. We are pleased to report we completed enrollment and treatments of 72 patients in the third quarter as anticipated, follow-up is ongoing and we expect to report on the full data set by the end of the year. In addition, we took an interim look at the first 35% of the lesions that completed the 60-day follow-up period, and over 95% of those SH lesions have been reported as clear or mostly clear by investigators, a very promising efficacy result for such a difficult lesion to treat. We look forward to reporting on the full data set soon. However, based on the early results and the evidence that NPS is capable of eliminating sebaceous glands down in the dermis we are planning to study other conditions where sebaceous glands are at the center of the underlying issue, such as acne. Based on the results from the SK data and the continued data showing the ability of our NPS to treat lesions in the epidermis while sparing the dermis, we recently started a feasibility study in cutaneous warts. This study is currently being executed at the prestigious Scripps Health in San Diego with Dr. Vic Ross. Warts are consistently one of the top identified problems for patients seeking treatments from dermatologists. This feasibility study will enroll up to 20 patients. We expect to report out on this data in early Q2 2019 after completing enrollment in early Q1 2019. In anticipation of the positive results from the study, we’re designing a multi-center indication study to show safety and efficacy in cutaneous warts during the first half of next year. In addition, the exciting early results in the sebaceous hyperplasia study have garnered significant interest from our key opinion leaders around other conditions involving sebaceous glands, most notably the potential of NPS to treat acne. The sebaceous gland plays an integral role in acne. And our ability to treat the sebaceous gland as evidenced in our SH study gives us confidence to move forward into this sizable area of patient need and commercial opportunity. Our NPS has the potential property unique, drug-free therapy to these patients. We look forward to providing additional information as we advance this program into the clinic by the end of this year. In parallel with the clinical programs, we have been developing our next generation and first commercial NPS system platform called the CellFX System. If you’re viewing the slide presentation, you can see the image of the CellFX System, used with the system in a family of what we call single patient use tips. The system is designed for use in many treatment settings including a physician or clinic office and outpatient surgery center or a hospital. It’s a relatively small cart that can easily be wheeled from room to room and is set up in a matter of minutes. The treatment tips enable treatment of a variety of sizes and shapes of lesions and wirelessly connect to the CellFX System when they’re plugged into the hand piece. This enables automated treatment settings dependent on the treatment tip being utilized. The system was engineered to facilitate skilled manufacturing and leverage contract manufacturing partners to ensure our ability to meet anticipated demand while effectively managing underlying cost of goods. In addition, CellFX includes the functionality and capability to support a per click revenue model. The per click revenue model would be used to charge on a per lesion or a lesion treatment basis as opposed to a per treatment tip basis. This aligns the incentives of the patient, physician and Pulse Biosciences for these cash-paying procedures. This also allows us to use value-based pricing, adjusting price for the more difficult to treat lesions. This model has been successfully employed by others in the space, and Ed Ebbers, our Vice President and General Manager of our Dermatology business has been involved in successful implementations of such a revenue model in the past. The CellFX System has been successfully used clinically and we’re rolling it out into our clinical studies as we speak. I will now touch on the regulatory strategy for cosmetic dermatology. Based on our previous conversations with the FDA and knowledge gained from those interactions, we plan to pursue a 510(k) clearance for specific indications in aesthetic dermatology in quarter one 2019, based primarily on our SK and SH clinical data. We believe the 510(k) is the appropriate path for this indication, and look forward to the submission and to working with the FDA to ensure we provide all the required data. We have commenced preparations for filing with the agency. And the with planned early 2019 submission we look towards receiving a clearance in the Q3 2019 timeframe. Entering the aesthetic procedure market, there are four elements of our commercial strategy that will contribute to our success. Number one, our close collaboration with key opinion leaders in dermatology that has guided our mechanism of action studies and clinical study priorities will yield early acceptance of the CellFX System from the scientific podium and in peer-reviewed journals. Number two, our planned expansion of clinical study activity will include the top 40 key opinion leaders and aesthetic medicine will also increase the number of proven applications that are treatable with the CellFX System at launch. Number three, our early adopter strategy will drive both system sales and system utilization for the next wave of the doctors. This is a proven strategy for success in this market. And number four, we will organize our clinical marketing and sales infrastructure investment, around ever-increasing utilization for each installed system. Our per click business model provides a recurring revenue stream for each installed system, and each new clinical application proven in clinical trials will increase the usage per installed system. This is a business model that scales and that builds value. We are building out our sales, marketing and training team in anticipation for next year’s launch. Our research revealed a sizable addressable market for lesions that we are currently generating clinical data on and the future applications we anticipate will be well-suited for our CellFX NPS mechanism. For many of these lesions today, the available choices, mainly the use of extreme cold or extreme heat, leave the patient worse off than when they started. We believe that our CellFX NPS system will provide a significantly improved solution, removing the lesion with favorable healing and cosmetic outcome. These near-term clinical applications are just the beginning of our application pipeline that we have planned to increase our utilization rates. We will expand our applications over time so that utilization per installed system goes up with each new application we study. We will continue to address and study new lesion types that are not well treated with current modalities. Over time, this recurring revenue model evolves into a mutually beneficial relationship with the aesthetic dermatologist and Pulse Biosciences as we help create and promote new applications that allow an aesthetic practice to offer more solutions for the aesthetic patients that expect new technologies to be offered as soon as they’re available. We expect the initial system price point in the range of $50,000, which is at the low end of the price spectrum for aesthetic devices, and each new application can be powered out of the same base system. Our unique per click revenue sharing model allows us to sharing the benefits of our new applications research as we participate in a profit of every lesion treated. Over time, we can expand our patient treatment tip offerings and make technology advancement without modifying the original system. I would now like to turn to our efforts in immuno-oncology. As I mentioned at the start of the prepared remarks, our focus on aesthetic dermatology as our initial commercial market has now turned [ph] our efforts in other areas such as immuno-oncology that we had discussed previously. We still believe that our NPS has the potential to play a role in this exciting field and it can deliver a vaccine like effect in treating cancer, and we have a strong foundation of preclinical evidence in support of this. However, this is a longer term opportunity and we continue to invest in our preclinical research. Our current efforts are focused on dose optimization with an without adjuvant, and combinations that can enhance the systemic effects of NPS treatment. We believe this preclinical research is important to better understanding of our NPS and how maybe optimized for use in malignant cancer in human. As we mentioned on our Q2 call, we are also currently executing a study in Basal Cell Carcinoma or BCC, the most prevalent form of skin cancer. We believe BCC is an exciting therapeutic opportunity, and in some ways represents a bridge between our developments in dermatology and those in oncology. This is our first NPS human study in cancer and will allow us to look at both the ability of NPS to eliminate the BCC lesion and in immune response changes as a result of our NPS treatment. This is not a therapeutic endpoint study but it is an important first step that enables us to move quickly to demonstrate safety and our NPS effect in the skin cancer and sets us up for a follow-on study aimed at a therapeutic endpoint. Thanks to our oncology and dermatology advisors, we were able to move quickly into this study and we are already making plans for a follow-on study so that we can move quickly as the data comes in. This study builds on all the work Pulse Biosciences has done and continues to do in dermatology where we have demonstrated the unique cellular effect, excellent safety profile and high patient tolerability of our NPS in skin. Because these BCC patients are treated by dermatologists, it also allows us to continue to utilize the prestigious group of dermatology investigators we have been using in our other skin studies, taking the advantage of their experience with our NPS today. In addition, we are pleased to be working with Dr. Rob Pierce and the Fred Hutchinson Cancer Research Center in Seattle to analyze the tissue samples and assess the destruction of the BCC treated lesion and changes in the immune response. Dr. Pierce who is a board certified anatomic pathologist is an expert in evaluating immune cell changes in the tumor microenvironment and is an incredible resource to have working on this project. We expect to complete enrollment in this important study by the end of this year and have a complete dataset available in the first quarter of 2019. This data will likely to be through a follow-on study in BCC to demonstrate a therapeutic outcome and may also lead to treatments in another cancers that are more highly metastatic in nature. I’ll now turn the call over to Brian to discuss our recent filings regarding fundraising and to review our financials. I will then return to discuss upcoming milestones.

[Brian Dow:]

Thanks, Darrin. I’m going to start my remarks today by first discussing our financing plans as outlined in our recently filed registration statement and then proceed to provide commentary on the financial results for the third quarter. Last week, on October 25th, Pulse Biosciences filed a registration statement on Form S-3 with the intention of commencing a rights offering to raise gross proceeds of upto $45 million. My discussion and comments today do not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of any securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the security laws of any such jurisdiction. Any offer if at all will be made only by means of a prospectus forming part of the registration statement. Last week’s filing is the beginning of a process that is subject to amendment, and the registration statement being reviewed and declared effective by the Securities and Exchange Commission. All stockholders are encouraged to read the registration statement and any subsequent amendments as the offer documents will govern any offering conducted. Once effective, we may commence the rights offering pursuant to the registration statement. After the SEC completes its review and assuming it declares a registration statement effective and we proceed with the rights offering, we will set the record date, subscription price and offering expiration date. We cannot state when or whether that will happen as it is dependent on the extent of any SEC review, but we will publicly announce and file a final prospectus with this information once it is available. Next, as discussed in the registration statement, under the proposed rights offering, each stockholder of record will be issued a basic right entitling the holder to a non-transferable subscription right to purchase their proportionate number of shares in the rights offering. For example, a holder of 1% of our common stock on the record date would be issued a basic right to subscribe 1% of the offering. I would point out, as disclosed in the S-3 that Bob Duggan, our Chairman and largest shareholder has expressed his intention to fully exercise his basic right, which amounts to approximately $15.6 million but has not made a formal binding commitment in this regard. Stockholders have fully exercised their basic right and who wish to acquire additional shares will be afforded the opportunity to exercise an oversubscription right to acquire unsubscribed shares. This oversubscription right is subject to the availability and allocation of shares among stockholders that have exercise their oversubscription rights and other limitations as further described in the registration statement. To briefly recap, the registration statement has not been declared effective. Key dates, including the record date and the right expiration date have not been set, nor have we set pricing or the related subscription ratio for the rates we may grant. All stockholders are encouraged to carefully read all filed documents relative to the registration statement. Turning now to the operating results for the quarter ended September 30, 2018. During the third quarter of 2018, the ongoing development and progress made in our clinical programs, the development of the next generation NPS system and the continued growth of our business, drove our ongoing investments as cash used for the quarter totaled $6.5 million, resulting in cash and investments totaling $21 million at the end of the quarter. This reflects a 10% increase over the second quarter cash used of $5.9 million. The increase in cash used can be attributed to increased research and development cost due to the commencement and progress of our SH and BCC studies as well as preparations for the work study that commenced during early October, increased headcount to support the expanded clinical trial activities and ongoing development of the recently introduced CellFX NPS system. In addition to our cash and investments on hand, totaling $21 million at September 30, we also have received irrevocable commitment of financial support from our Chairman, Bob Duggan for up to $15 million effective to the earlier to occur of the completion of $15 million equity financing or November 15, 2019. Such continuing support may take the form of a purchase of equity, loans or advances to us. Our balance sheet remains free of debt, and our outstanding stock is comprised solely of shares of common stock. With our current cash and investments accompanied with Bob’s commitment, we have sufficient liquidity to fund operations for in excess over the next 12 months. Turning to operating results. Net loss for the third quarter of 2018 totaled $10.8 million, reflecting a $3.3 million, or approximately 44% increase compared to the net loss of $7.5 million for the third quarter of 2017. Net loss for the periods includes non-cash stock-based compensation charges of $3.1 million for both periods in 2018 and ‘17, respectively. Similarly, year-to-date net loss for the nine-month periods ended September 30, 2018 and 2017 reflects similar operational growth with net loss increasing to $28.6 million in 2018 from $16.9 million during 2017. Again, stock-based compensation charges reflect a significant component of the expenses incurred, contributing $10 million and $6.4 million to the results of 2018 and 2017, respectively. The year-over-year increase in net loss reflects the progress of building our Company over the intervening period. Headcount has increased to 48 at September 30, 2018 from 31 a year earlier. To put this in perspective, at December 2016, headcount totaled 13. Research and development expenses increased to $5 million for the third quarter of 2018, an increase of $2.1 million or 72% compared to $2.9 million reported for the third quarter of 2017. On a year-to-date basis, R&D expenses increased to $12.2 million from $6.8 million during the prior year, an increase of $5.4 million or 80%. A significant portion of the increase reflects the increase in R&D personnel. R&D headcount increased to 35 as of September 30, 2018 from 21 at September 30, 2017 and 9 at the end of 2016. Also, contributing to increased R&D expense are increases in clinical trial expenses, reflecting increased activity in patient counts in our completed and ongoing studies; protocol development for recently commenced and soon to be commence studies, in addition to engineering and prototyping expenses reflecting the design, development and prototyping of the CellFX system; and then, finally support expenses relating to the increase in breadth of R&D [ph] activities. R&D expenses will continue to increase going forward reflecting the anticipated increases in the number of patients enrolled in our ongoing and future clinical trials, ongoing and future preclinical research, furthering the evidential support for NPS and in preparation for future clinical studies, and ongoing development of enhancements to the CellFX system in preparation for commercial introduction during the second half of 2019. Turning to general and administrative expenses. G&A expenses increased to $5.7 million for the third quarter of 2018, an increase of $1.2 million or 28%, compared to $4.4 million for the third quarter of 2017. On a year-to-date basis, G&A expenses increased to $16.2 million from $9.7 million, an increase of $6.5 million or 67%. The quarter-over-quarter increase reflects increased compensation, reflecting the increase in G&A headcount to 13, as of September 30, 2018, up from 10 at year-over-year and 4 at the end of 2016. In addition, Q3 2018 included additional consulting fees related to strategic planning activities and legal expenses associated with preparing for the registration filing made last week and general corporate matters. On a year-over-year basis, the significant increase reflected in the comparisons between year-to-date 2018 and 2017 expenses can be attributed to a $2.2 million increase in stock-based compensation, increased compensation expenses reflecting growth in G&A operation, increased legal expenses reflecting our ongoing development of our intellectual property estate, reincorporation in Delaware, registration statements for passed and proposed financings, and SEC matters and corporate support. Consulting and outside services, predominantly reflecting resources, assisting in the intellectual property matters and strategic planning initiatives also contributed to the increase. Going forward, we anticipate measured growth in G&A, reflecting the operational support needs of the organization as the operational tempo of our clinical studies and system development initiatives increase. Consistent with our previous guidance, we expect cash used for 2018 to total approximately $24 million. Finally, before I conclude my remarks, in response to questions received from multiple investors regarding notices on certain brokerage sties that Pulse does not need all of the NASDAQ’s ongoing listing requirements, I wanted to briefly revisit a discussion from our previous call. During July 2018, the membership of our audit committee was reduced to two independent directors. This resulted in our non-compliance NASDAQ ongoing listing requirements. NASDAQ has provided us with a cure period until the earlier of our next Annual Meeting or July 27, 2019. Our Board of Directors is committed to remediating the sufficiency well in advance of that time. This concludes my prepared remarks. I will now turn the call back to Darrin.

[Darrin Uecker:]

Thanks, Brian. To end our prepared remarks, I would like to reiterate a couple of important points and reiterate our milestones. First, our mission is to become a viable company. And toward this end, we are pursuing commercialization in aesthetic dermatology, a significant commercial opportunity where we believe our NPS’s unique mechanism can deliver on unmet needs in a number of skin lesions with a relatively quick path to market. And second, our commercial focus in aesthetic dermatology is not slowing down our pursuit of immuno-oncology application. In fact, we believe it helps to accelerate those applications by establishing the safety and mechanism of action of our NPS in human clinical studies as is evidenced by our ability to enter into an initial BCC study which is well leveraged against our previous and current skin studies. Now, I would like to reiterate our milestones. Last quarter, we communicated that we would complete treatments in our SH study in the third quarter with data being reported by the end of 2018. We are pleased to report all treatments were completed in Q3 and follow-up is on track to allow us to report data by the end of the year. Again, we’re excited to complete follow-up and to share the final data set as the interim data looks very promising. We also talked about starting additional studies in the second half of this year, and we started the BCC study in July. The feasibility cutaneous warts study in October, and we plan to start an acne feasibility study before the end of the year. We expect to report out on our BCC study and our warts study in quarter one 2019. We’ve previously said we plan to submit a 510(k) to FDA for specific indication in dermatology in quarter one 2019, and we continue to be on track for that important milestone. In fact, we expect it to be in the early part of quarter one 2019. We have used our next generation CellFX system in the clinic, and it is on track for commercial launch in the second half of 2019, once we get through the FDA regulatory process. We are excited about our progress and our prospects at Pulse Biosciences and appreciate you taking the time to listen in on our investor update. That concludes our prepared remarks. Operator, we would now like to open the call to questions.

[Darrin Uecker:]

Thank you, operator, and thank you everyone for participating in this quarter’s call. I’d just like to leave you with the last slide, which is an overview slide and just reiterate that Pulse Biosciences is a company that is in a strong position with a proprietary platform. We have excellent clinical data in very difficult to treat aesthetic dermatology conditions. We have a near-term commercial opportunity in aesthetic dermatology. We have identified several future applications, which we are also very excited about in immuno-oncology, and we have got a very strong management and Board of Directors. So, with that I will leave you with today’s call and thank you very much for participating.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thank you your participation and have a wonderful day. You may now disconnect.