Pulse Biosciences Inc (PLSE) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Pulse Biosciences Investor Update Conference Call. (Operator Instructions)

As a reminder, this conference call is being recorded.

I will now turn the call over to Brian Dow, Pulse Biosciences Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, and good afternoon, everyone. Welcome to Pulse Biosciences fourth quarter 2018 investor and analyst update call.

On the call with me today are Darrin Uecker, our President and Chief Executive Officer; and Ed Ebbers, our Executive 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 statements regarding our plans, intentions and expectations relating to our commercial, 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, as they are subject to a number of assumptions, risks and uncertainties and may differ materially from actual results. These risks and uncertainties are more fully described in our Securities and Exchange Commission filings, including our annual report on Form 10-K and most recently filed quarterly report on Form 10-Q. Investors are encouraged to reference these risks, 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, today's call is being recorded and will be available for audio 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.

Thanks, Brian. Good afternoon, everyone, and thank you for taking time to join us on today's call. 2018 was a very productive and important year in our mission to become a viable company at Pulse Biosciences.

Before reviewing our progress in 2018 and how this is driving our milestones in 2019, the most important thing we want our shareholders and partners to understand today is that we have a clear vision for the commercialization of CellFX System in aesthetic dermatology in 2019, and we believe this provides us a clear path to viability.

Our mission -- our vision for our CellFX System in aesthetic dermatology is clear. Our CellFX System is a platform, and we will deliver a growing array of valuable applications through the CellFX platform that patients will desire and aesthetic dermatology clinics will be excited to deliver for their patients.

Our initial commercial applications will be in seborrheic keratosis, a common raised benign pigmented lesion on the skin, and sebaceous hyperplasia, a small raised lesion caused by overactive sebaceous glands, typically on the face. These are both significant opportunities and where we have generated compelling clinical data. We have a growing pipeline of potential future applications, including warts, acne and basal cell carcinoma that take advantage of the mechanism of our NPS technology, built on a success of the early clinical result and are in different stages of clinical development.

We believe the unique mechanism of our CellFX System provides the potential for many high-value applications in this field, and we will continue to develop applications at a rapid pace through our clinical development programs.

We are building a world-class team of experienced executives with successful track records in the field of aesthetic dermatology, who understand the business and have close relationships with the key opinion leaders in the field. We will partner with clinics to build a franchise around the CellFX platform, providing the necessary training and tools to deliver safe and effective application outcomes that fit in the clinic workflow.

We will leverage the growing digitization of healthcare by networking our CellFX Systems, enabling a utilization-based business model and value-added services through the network to our clinic partners.

The utilization-based business model aligns the incentives of the patient, the clinic and Pulse Biosciences and will be enabled by the connectivity of our CellFX System.

We will also continue to strengthen our competitive barriers around our CellFX System. The applications it delivers and the services we provide through the continued development of our intellectual property portfolio, which now stands at 89 issued patents worldwide and 81 pending.

We have a number of patents and patents pending directly related to skin treatments and the use of NPS, and we continue to file new patent applications to further solidify our position in this field.

Finally, though our clear focus for 2019 is commercialize in aesthetic dermatology and drive towards viability, and the majority of our communication to shareholders will center around this focus, we remain steadfast in our belief that our NPS technology and our CellFX System has the potential to have broad applicability across many disciplines in medicine.

Our proprietary CellFX System is a highly differentiated and proprietary platform that uses ultrafast electrical energy pulses with pulse durations from billions up to 1 millionth of a second. This unique nontoxic and nonthermal mechanism is a biophysical mechanism brought about by the speed and amplitude of these energy pulses, interacting with the internal structure of cells.

And we will continue to explore how this unique mechanism can be applied to large unmet needs in medicine.

With that as a backdrop, I will now cover some of the more recent clinical progress in more detail before handing the call over to Ed to discuss our commercialization strategy in aesthetic dermatology.

We started 2018 with the release of our first clinical data in a dermatologic indication. The treatment of 58 patients with seborrheic keratosis, or SKs, showing an 82% efficacy rate with a single treatment. This exciting dataset not only identified an initial commercial application but validated a key mechanism of NPS, the ability to eliminate cellular lesions in the epidermis of the skin while sparing acellular structures, specifically the dermis.

Based on the positive SK data in our early histology stage on the use of our technology in different skin regions such as on the face, we identified another important capability of our NPS technology. And that is the ability to target cellular structures in the deeper dermis while leaving the dermis unaffected.

With this understanding, our key opinion leaders immediately recommended a number of applications that they believed would be enabled by this capability and that are difficult to treat with conventional thermal modalities because of the damage those modalities do to the dermis. The initial application, which represent a clear and significant unmet patient need and would validate this capability with the targeting of sebaceous glands for the treatment of sebaceous hyperplasia, or SH.

SH lesions are yellowish small papules, typically on the face and ranging from 2 to 4 millimeters in diameter and are 1 to 2 millimeters below the epidermis.

The treatment objective for sebaceous hyperplasia is to reduce or eliminate the large sebaceous gland without damaging the surrounding dermis.

We started our SH study with the goal of treating 60 patients in late June of 2018. By early September, we had treated 71 patients with a total of 222 SH lesions, with the increase in enrollment being due to strong physician and patient interest. We recently reported, and included in today's press release, our top line results for this study.

In this study, investigators evaluated SH lesion clearance at the final follow up as either, mostly clear, partially clear or not clear, as a standard measurement tool for these types of lesions and consistent with what we use for the SK study.

The results for lesion clearance, the primary SK endpoints were extremely positive. 90% of the 222 treated lesions were rated as completely clear and 9.5% of lesions were rated mostly clear with only 1 lesion rated as partially clear and 0 lesions rated as not clear.

Also of note, 92% of the lesions were rated clear or mostly clear after a single treatment, with the remaining 8% being treated the second time and again, all but 1 lesion was rated clear or mostly clear following that second treatment.

These efficacy results exceeded the investigator's expectations. We also reported on patient satisfaction, where 78% of lesion outcomes were rated as satisfied or mostly satisfied by the patients, a very positive result for an initial study in a difficult-to-treat lesion but also leaving an opportunity for improvement given the 100% efficacy rate.

Based on our learnings from this study, we are confident we understand how to raise the patient satisfaction into the high 90s range and believe it will be at these levels in the commercial setting. We believe this SH application data provides the required clinical efficacy and safety data to pursue a specific FDA indication.

The SH dataset will be presented by Dr. Gilly Munavalli at the upcoming Annual Meeting of the American Academy of Dermatology on March 1 through the 5 in Washington, D.C. and by Dr. Suzanne Kilmer at the upcoming Annual Meeting of the American Society of Lasers in Medicine and Surgery on March 27 through the 31 in Denver, Colorado. We look forward to the SH dataset being presented from the podium at these prestigious meetings.

The results of the SH study not only gave us confidence in the SH application as a clear commercial application for our CellFX System, but also opens new application doors, based on its clear demonstration of being able to treat cellular structures in the deeper dermis. In fact, based on these results, our KOL suggested we immediately begin a feasibility study in moderate to severe back acne on the knowledge that the sebaceous glands play an important role in acne. In late 2018, we began working towards the feasibility study and today, we announced the first patient treatment in our back acne feasibility study.

The study will treat up to 20 patients with the objective of demonstrating that our CellFX procedure can target the sebaceous glands across a large area on a back acne patient and reduce the number of new acne eruptions when compared to untreated skin.

The first step will -- this first step will provide important insights into the potential benefits of our CellFX System in treating this condition, and we look forward to communicating our results as they are available.

Dr. Mark Nestor, Managing Partner of Skin and Cancer Associates and Dr. Brian Berman, Professor Emeritus of Dermatology and Cutaneous Surgery at the University of Miami Miller School of Medicine are the principal investigators on this study.

In Q3 of 2018, we treated our first patient in our feasibility study in warts. Similar to SKs, warts reside largely in the epidermis and the current treatment modalities have limited efficacy.

Warts are consistently one of the top identified problems for patients seeking treatment from dermatologists. This feasibility study will enroll up to 20 patients and is being led by Dr. Vic Ross at the prestigious Scripps Clinic in San Diego. As we noted in the Q3 investor call and reaffirm here, we expect to report out this data in early Q2, 2019 after completing enrollment this quarter.

The objective of the feasibility study is to identify which types of warts are best treated by our CellFX System. In anticipation of the positive results from this study, we are preparing for a multicenter indication study that we are planning to begin late in quarter 2 of 2019.

During 2018, we also initiated and are currently executing a treat and resect study in basal cell carcinoma, or BCC, the most prevalent form of skin cancer. We believe BCC is an exciting therapeutic opportunity and represents a bridge between our developments in dermatology and those in oncology. This is our first NPS human study in skin cancer and will allow us to look at both the ability of NPS to eliminate the BCC lesion and immune response changes as result of the NPS treatment.

This is not a therapeutic endpoint study, but is an important first step that enables us to move quickly to demonstrate safety and NPS effect in a 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 rapidly into the study, and we are already making plans for a follow-on study so that we can move quickly as the data comes in. We expect to have initial data within this quarter and look forward to reporting on it.

An important milestone for commercialization will be an FDA regulatory clearance for use of our CellFX System in 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, including our SK and SH data. We previously communicated the submission would occur during this quarter, quarter 1, 2019, and we are on track for this to take place.

We believe the 510(k) process is the appropriate path to this indication and look forward to the submission and to working with FDA to ensure we provide all the required data. Based on our plans for submission and 510(k) time lines, we are planning for a clearance in the third quarter of 2019.

We believe that 2018 will prove to be a seminal year establishing the CellFX System as a unique treatment energy modality with a wide variety of potential clinical applications. And 2019 will be the year we launch this exciting technology commercially into aesthetic dermatology.

With that, I would like to turn the call over to Ed to discuss the steps we are taking to prepare for commercial launch in this exciting market.

Thank you, Darrin. I am very pleased to report on our progress in planning a world-class launch for our CellFX System in this aesthetic procedures market. This large and growing market is composed of a concentrated group of dermatologists, plastic surgeons and other skin care specialists with a known history of purchasing and using energy-based devices to perform various procedures on the skin for both aesthetic and clinical application.

The economic trends and demographics of an aging population and the associated conditions of aging skin, provides significant opportunity for launching a new technology in this category.

The foundation of the commercialization strategy for our CellFX System to this growing market is composed of 3 major components: First, build a sales and marketing team with a proven track record in launching devices and increasing device utilization over time in true collaboration with the key opinion leader speciality positions that have a history of successful clinical and commercial excellence in adopting new technologies in this aesthetic procedure market; second, create a first wave of key opinion leader acceptance and advocacy of our CellFX System that validates high patient extraction and proven commercial success. This successful CellFX adoption of the first wave of key opinion leaders, or KOLs, leads to a rapid uptick for the next wave of early adopters with a highly efficient sales and marketing investment; third, continue generating high-quality scientific evidence that proves the superior profile for both current and anticipated future clinical applications that increase the utilization revenue that Pulse earns with every use of its device.

First, let's discuss building a world-class sales and marketing team. We recently announced hiring of Robert Tyson as Vice President of North American sales. Bob is one of the most experienced and successful sales executives in this market. He has an established track record of delivering results by building and managing high-performing sales teams for category leaders like ZELTIQ, Ulthera, Miramar Labs and Thermage. These technologies are all examples of the successful utilization-based business models that closely resemble our commercial model for our CellFX System. And we'll build our team around this proven model.

For the introduction of our CellFX platform, which is initially focused on the domestic market, our sales team is being built to scale over time to reach a target group of about 4,000 specialty physicians in United States.

Among this target group of 4,000 physicians, there is a relatively small core of key opinion leaders. Our early launch efforts are focused on achieving early clinical and commercial success with this influential core of KOLs located in major markets.

When we are successful in earning KOL acceptance and advocacy of CellFX System and procedures, their influence on the next wave of early adaptors is a powerful predictor of success.

This core of KOL support, along with our continued outstanding clinical data, will lead to podium presentations at major meetings, media exposure in major markets and results in a stream of publications of our outstanding scientific evidence for our clinical applications.

Our success with the small group of KOL physicians, along with continued favorable clinical data published on new applications, sets the stage for the first wave of early adopters that we accept -- we expect to purchase our CellFX platform in the future.

In our next quarterly call, we will discuss the specific initiatives designed to gain the trust and advocacy of this influential group of respected key opinion leaders.

This leads to the final element of our commercial launch foundation, the continued generation of high-quality scientific evidence that support both current and future applications.

This drives the routine utilization of our device and the revenue that this generates. Our first 2 targets: seborrheic keratosis, SKs, and sebaceous hyperplasia, SH, are both examples of high-value, difficult-to-treat skin conditions for which our initial study show outstanding efficacy and visible proof of a nonthermal mechanism of actions that targets cellular lesions or structures without damaging the noncellular dermis.

Our early market research with our target physicians has shown that patients with these 2 common lesions are already being seen by our target physicians over 300 times per month. So there is a ready pool of patients available for our CellFX procedure. This is just the beginning of our potential market opportunity. Based on our success in clearing these first 2 common examples of visible skin lesions and relying on the advice of our scientific advisory board, we are aggressively pursuing evidence of efficacy and utility in treating other skin lesions and conditions that have similar attributes for which our cell-specific mechanism of action has likely effect.

We have already discussed warts, acne and basal cell carcinoma. Our application development pipeline continues to reveal promising targets that will add to the utilization potential of our future growing installed base.

To summarize, as we grow the sales team and continue to build on our successful relationships with KOLs, we will drive the acceptance of our CellFX System and its growing portfolio of applications to the large potential installed base of our targeted specialty physicians. And our ever-increasing utilization-based business model will drive value for our installed base of physicians and offer a unique technology to skin problems of patients that they see every day.

I look forward to reporting on our commercial plans and progress in the quarters to come as we continue on our ambitious launch effort for the CellFX technology and to reach our goal of changing the way that skin specialists treat benign and nonbenign legions and help patients improve the quality of their skin.

That concludes my remarks on the commercial launch plans for our CellFX System. I'm turning the call over to Brian to discuss Pulse financial highlights.

Great. Thanks, Ed. Shortly before today's call, we announced our financial results for the fourth quarter and year ended December 31, 2018.

Our financial results for the quarter and the full year reflect the progress achieved in our development and clinical programs, accompanied by the requisite support infrastructure of those endeavors and operations of a public company. Cash and investments at December 31, 2018, totaled $59.6 million compared to $21 million at the end of the third quarter and $38.1 million at the end of 2017.

The 2018 year-end balance reflects the proceeds from our recently completed rights offering. During December, we successfully completed a $45 million financing in which we received $44.8 million from the sale of 3.6 million shares of common stock at a price per share of approximately $12.57. We pursued a rights offering as a mechanism for this capital raise as it provided an efficient stockholder-friendly path to fund the company.

Through this offering all stockholders were afforded the right to participate and it avoided a number of the customary transaction expense of a traditional financing. The success of this financing affords the resources necessary to accelerate our progress towards commercialization and enhancing the utility and value of our CellFX System.

During the fourth quarter of 2018, our ongoing development activities, advancement of our clinical studies, the introduction of the CellFX Systems into those clinical studies and the continued growth of our business drove our fourth quarter cash use of $6.4 million, bringing the total cash used for the year to $23.5 million, slightly below our previous guidance of $24 million for the year.

Turning now to operating results for the fourth quarter and for the year ended 2018. Net loss for the fourth quarter of 2018 totaled $9 million, reflecting a $300,000 or 3% increase compared to the net loss of $8.7 million for the fourth quarter of 2017.

Net loss for the periods include noncash stock-based compensation charges totaling $2.4 million and $4.5 million for 2018 and 2017, respectively.

Year-to-date net loss for the 12-month period ended December 2018 totaled $37.5 million, reflecting an $11.9 million or 47% increase compared to the net loss of $25.6 million during the year ended 2017.

Stock-based compensation charges reflect a significant component of the expense incurred in both periods, contributing $12.3 million and $10.9 million to the results for 2018 and 2017, respectively.

The year-over-year increase in net loss reflects the progress of expanding our CellFX development and clinical programs and building our company over intervening period. Headcount has increased to 54 at December 31, 2018, from 33 a year earlier and currently stands at 62.

To put this in perspective, at December 2016, headcount totaled 13. Research & Development expenses increased to $5.1 million for the fourth quarter of 2018, an increase of $2.2 million or 77% compared to $2.9 million for the fourth quarter of 2017.

On a year-to-date basis, R&D expense increased to $17.3 million from $9.6 million during the prior year, an increase of $7.6 million or 79%.

A significant portion of the increase reflects the increase in R&D personnel. R&D headcount increased to 41 as of December 31, 2018, up from 24 at December 31, 2017, and 9 at the beginning of 2017.

Also contributing to increased R&D expenses are: increases in clinical trial expenses, reflecting increased activities surrounding our completed and ongoing studies, specifically our SK and SH studies for which data has been announced and our warts and BCC feasibility studies that remain underway; protocol development for recently commenced and soon-to-commence studies, including the acne feasibility study announced earlier today; engineering and prototyping expenses reflecting the design, development and manufacturing and deployment of CellFX Systems to our clinical study sites; and support expenses relating to the increase in breadth of R&D activities.

R&D expenses will continue to increase going forward, reflecting: ongoing engineering and development work, focused on refinements to our CellFX System and preparation for commercial introduction later this year; our ongoing and planned clinical studies; and future preclinical research further expanding the utility and value of our NPS platform.

Turning now to general and administrative expenses. G&A expense decreased to $3.8 million for the fourth quarter of 2018, a decrease of $2 million or 34% compared to the $5.8 million reported for the fourth quarter of 2017.

On a year-to-date basis, G&A expense increased to $20 million from $15.5 million in the prior year, an increase of $4.5 million or 29%.

The quarter-over-quarter decrease is primarily attributable to a significant decrease in noncash stock-based compensation.

On a year-over-year basis, the increase noted can be attributed to: increased expenses in compensation, professional services and consulting; increased compensation expense reflects increased headcount as G&A has increased to 13; increased legal expenses, reflecting the ongoing development of our intellectual property estate our reincorporation in Delaware earlier this year; registration statements for past financings; SEC matters; and ongoing public company support.

Consulting and outside services predominantly increased, reflecting resources contributing to ongoing development of our intellectual property estate and strategic planning initiatives.

As we build out our sales and marketing and manufacturing operations on the path to commercialization of our CellFX System, continue to maintain and expand the depth and breadth of our IP estate and implement the requisite support infrastructure, we expect G&A expenses to increase during 2019.

That concludes my prepared remarks, so I will now turn the call back to Darrin.

Thanks, Brian. In 2018, we made significant progress in demonstrating that our proprietary NPS technology can produce compelling clinical data in difficult-to-treat skin applications, in particular, in SK and SH lesions. And we are more confident than ever that there are many applications that will be well served by our CellFX System. In fact, there are several that we discussed on this call and are currently under development.

In 2019, our focus is on bringing our CellFX System to the aesthetic dermatology market. As I mentioned in the opening remarks, our vision for our CellFX System in aesthetic dermatology is clear. Our CellFX System is a platform, and we will deliver a growing array of valuable applications or apps that patients will desire and aesthetic dermatology clinics will be excited to deliver for their patients.

We will develop a network of our CellFX Systems that will allow us to provide best-in-class training and service to our customers.

In 2019, we'll be focused on the successful commercial launch of our CellFX System and to laying a foundation for future growth of the business. An important milestone will be an FDA regulatory clearance. And as I mentioned previously, we expect to submit a 510(k) with FDA this quarter and based on review timing, we are targeting a Q3 clearance.

Once we receive regulatory clearance, we will proceed with our launch through key KOLs as described by Ed on this call. We plan to announce when the 510(k) is submitted and we will provide updates as appropriate.

We will also continue our developments of applications in 2019. We anticipate our wart study and BCC study data to be available by the end of Q1, and we anticipate moving those programs forward in Q2.

In warts, we are planning a follow-on study that will generate sufficient data to drive a commercial application, which, if successful, would likely be introduced in late 2019 or early 2020. We will provide further detail as the follow-on study is initiated.

BCC will likely have a longer time, given it is a skin cancer. We will provide additional details on the schedule for this application as we get through this first important study.

We expect the back acne feasibility study to take into Q3 before we will have sufficient data. Again, as the data is available, we will communicate plans for future studies.

In addition to these, we expect to initiate studies in new applications, either as feasibility studies or indication studies that leverage the mechanism of action and unique capabilities of the CellFX System. As we have done in the past, we expect to communicate details of these studies as we begin treating patients.

To wrap up our prepared remarks, I would simply say, we are very excited as a company to be driving towards commercialization in such an exciting market in 2019.

As we move through 2019 and approach our commercial launch, we will provide additional details on launch plans and metrics for our commercial business. In short, we are in the apps business and apps will drive utilization, which will be good for patients, physicians, clinics and the viability of Pulse Biosciences.

That concludes our prepared remarks. Operator, we would now like to open the call to questions.

(Operator Instructions) And our first question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.

The hyperplasia data certainly looks impressive. My question here is what are the physicians offering at this point to these set of patients? And what competition does CellFX System face when it enters the market with these physicians who are offering -- what are they offering to the hyperplasia patients?

Yes, this is Ed Ebbers answering your question. The sebaceous hyperplasia market currently has no reasonable choices for physicians to employ to patients who have these problems. By and large, the available tools cause more damage than the original problems, so patients are displeased with any potential cosmetic outcomes. So by and large, the physicians avoid the treatment of sebaceous hyperplasia. This is because most technologies are thermal and the thermal technologies have to reach deep sebaceous glands in order to achieve an effect. And because they are thermal, they cause damage on the way down. Because of our unique ability to affect the cells of the sebaceous gland, we're able to safely reduce these glands without damaging the surrounding dermis. So this ability to target the gland without causing collateral damage provides a unique efficacy, but also unique cosmetic outcomes once the lesions have been removed. To our knowledge, there are no other available technologies studying sebaceous hyperplasia at this time. And to our knowledge, we have a unique effect that no one's been able to duplicate with other forms of energy technology or pharmaceutical intervention.

Regarding back acne, could you help us understand the dynamics of that market? And how big of a market back acne is as such?

RK, this is Darrin. Yes, I think what we would say right now is kind of what we said in the prepared remarks, which is the acne was something that was very strongly recommended by our key opinion leaders, our scientific advisory board, as something that we should go after based on the results that they saw from our SH study. And again, the link there is the sebaceous gland. What I would say right now is that this back acne study is a feasibility study. We triggered our first patient today. So the effect that have and where that opportunity may guide us, I think we'll reserve for future discussion as that data starts to come in. I think if you talk to dermatologists, they obviously -- acne is a big problem and where we fit in and in that problem, I think, will be born out from the data and our early feasibility data, perhaps.

So I think until we get a little further down the road, we wouldn't talk too much about the specific opportunity. It's more that based on our observations of treating the sebaceous hyperplasia, we feel like this is something that we can definitely have an impact on.

(Operator Instructions) And our next question comes from the line of [Dick Jant] with Pulse Biosciences.

I would like to talk about CellFX, a little bit about your research into cancer. Specifically, you're dog liver treatment that was announced couple of years ago, but we haven't heard anything about it since. And I would like to know what the progress has been on the treatment of dog liver, the canine program?

Thanks a lot for listening in, Dick, and thank you for the question. So in 2018, we started a veterinary medicine study, it wasn't in the liver cancer, it was actually in Stage I, II canine oral melanoma. So this is a study that we started in, I believe, in the second half of the year. So we entered into that study to continue to explore the use of NPS in our technology in an oral lesion and to continue to build data on the safety profile of our technology in the treatment of that oral lesion. At the time that we started -- or announced that we were going to be in that study, we communicated our intent was to start the study and that we would provide additional data as sufficient data became available.

This study is ongoing. It's currently enrolling. I would say, it's enrolling a bit slower than we had anticipated. But that being said, we expect to report on that data when we have sufficient data to report any definitive result. So at this time, we're not reporting on that. I expect we will be able to report more definitive data in the upcoming calls, perhaps in the Q1 call.

Okay. Well, in your recent option program, you were to sell half of the company to existing shareholders, as I understand it, for $45 million. And effectively, that told us that the whole company was worth $90 million. And what I'd like to know is do you have any kind of internal information concerning the future of treatment of internal cancers that would make the value of the company more than that $90 million. And if...

Okay, Dick, this is Brian, I'm going to jump in here for just a second. It wasn't 50% of the company. We sold 3.6 million shares, out of what at the time was roughly 17 million shares. So you're really looking more in the 15% to 20% value of the company. And when we're looking -- now, we're looking at 20 million shares outstanding. And with the current market conditions, we're looking at a market capitalization or in the neighborhood of $300 million. So I'm not sure where the 50% and $90 million numbers are coming from. So that's...

All right. But when the -- selling stock for -- my problem is that I wonder if the value of the company is -- was increased by that $45 million because of...

Operator, maybe we should prompt to see if there are any other questions.

(Operator Instructions) And we have our next question from the line of Andrew [Savis,] a private investor.

I have a question on future revenue. As I see it, and correct me if I'm wrong or just hopefully I'm right, there should be 3 to 4 different ways to receive revenue once you're commercially approved and your sales team starts going, causing sales and expanding. One would be the sale or the lease of the CellFX System. Two would be per application, am I correct. so far? Then three would be continuous supplies. And service. Will that -- all those 4 items be your source of income? Am I right or wrong on that stuff?

Andy, it's Brian, thanks for your question. The revenue streams are going to be predominately from 2 main sources. First, it's going to be from the initial placement of the CellFX Systems. So in Ed's remarks he discussed the target clinicians that will be going -- will be pursuing and placing systems with. Subsequent to that and more importantly to that will be the procedure revenue. We designed the system, and we're implementing a business plan that is oriented toward aligning Pulse Biosciences with the interest of the clinics so that for each use of the system, we're generating revenue off of those systems. Thereby, every -- when we make investments into these additional applications, the utility of the system is increased and the number of procedures that the system can be used for increase. So it's a per-click revenue model.

Okay. Now when you do a procedure, do you need to replace a -- I'm basing this on intuitive surgery model, they either sell or lease their machines and they get a -- they make a lot of money from replacing whatever they need for the application. Supplies and also service. Do you need to replace anything or add on to anything in that CellFX System that would generate revenue? Or it's just per application?

Great. Thank you for giving us the chance to clarify along those lines. First, on the initial placements, just for clarity, we would be actually selling the systems at this time. We're going to be -- it will be a purchase from the clinicians on the upfront side. Now on the back end, yes, there are consumables that will be used in the process, but we are actually using a different model wherein it is a -- the CellFX System will be networked. And from that, the clinician will download treatment cycles or cycle units to the system and utilize those cycle units in treating patients. And it is those cycle units that will be the source of revenue for Pulse Biosciences, it will not be purely the consumable -- in selling the consumable.

No, that's smart. I like that very much. The other thing, do you also -- will you have a service contract with the -- where you can actually make money on the machine if necessary?

There are opportunities for that. At this point, the key attributes that really are going to be the value drivers are going to be in the procedure revenues that will be driven by the system placements.

Okay. Do you have any idea what these systems will be selling for? Any range or you haven't decided yet?

Well, we have previously announced that we're expecting to place these systems in the neighborhood of $45,000 to $50,000 in the initial launch.

And approximately how much per procedure? Or is that each procedure is different in cost?

We'll be in a position where we'll be giving additional transparency and resolution to what we'll be doing on the commercialization standpoint from a pricing and revenue standpoint as we get closer to the introduction into the commercial markets.

Okay. Then I have one more personal question. I have a friend who has a few clinics, he is a plastic surgeon. How -- who should I put him in touch with and when you're ready to launch?

Okay.

This is Ed. Please feel free to drop me an e-mail with his name and contact information. I will make sure he's on the contact list once we proceed in our commercial launch mode. Thank you.

Yes. He's in Manhattan and I'll -- he just wanted me to find out approximate timing. I told him, probably, maybe, my guess was late summer. But that's my guess. Okay.

Ladies and gentlemen, this concludes today's Q&A session. I would now like to turn the call back over to Darrin Uecker for any closing remarks.

Thank you, operator. Thank you for joining us on today's call, everyone. It's an exciting time for Pulse Biosciences as we drive to the commercial introduction of our CellFX System. We look forward to sharing our progress with you on our next call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone, have a wonderful day.