Pulse Biosciences(PLSE) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Q1 2025 financials show no revenue, a $16.8 million net loss, and $119.3 million cash, boosted by financing activities Condensed Consolidated Balance Sheets As of March 31, 2025, total assets slightly increased to $133.4 million, liabilities decreased to $14.9 million, and stockholders' equity rose to $118.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $119,279 | $118,038 | | Total current assets | $120,909 | $119,449 | | Total assets | $133,383 | $132,460 | | Liabilities & Equity | | | | Total current liabilities | $7,760 | $10,055 | | Total liabilities | $14,931 | $17,598 | | Total stockholders' equity | $118,452 | $114,862 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 saw no revenue, with net loss widening to $16.8 million from $10.1 million due to increased operating expenses, notably R&D and G&A Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $0 | $0 | | Research and development | $10,313 | $6,741 | | General and administrative | $7,731 | $3,874 | | Loss from operations | $(18,044) | $(10,615) | | Net loss | $(16,795) | $(10,137) | | Net loss per share | $(0.25) | $(0.18) | Condensed Consolidated Statements of Cash Flows Q1 2025 operating cash use was $13.5 million, offset by $14.8 million from financing, primarily warrant exercises, leading to a $1.2 million cash increase and $119.3 million ending balance Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,521) | $(9,780) | | Net cash used in investing activities | $(45) | $(5) | | Net cash provided by financing activities | $14,807 | $305 | | Net increase (decrease) in cash | $1,241 | $(9,480) | Notes to Condensed Consolidated Financial Statements Notes detail the company's NPS technology focus, complex stock-based compensation valuation, the $60 million 2024 Rights Offering, and confirm single-segment operations - The company's primary focus is on using its nsPFA energy and CellFX platform for treating atrial fibrillation (AF) and for surgical soft tissue ablation[23] - In Q1 2025, the company issued stock options with both market-based (market capitalization targets) and performance-based (revenue and margin metrics) vesting conditions, valued using a Monte Carlo simulation model[33] - The 2024 Rights Offering raised gross proceeds of $60 million. The company's majority stockholder and Co-Chairman, Robert W. Duggan, purchased approximately 88% of the units offered[54][86] Stock-Based Compensation Expense (in thousands) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Research and development | $2,762 | $949 | | General and administrative | $2,919 | $810 | | Total | $5,681 | $1,759 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses nsPFA technology, FDA clearance, and clinical progress, highlighting increased operating expenses and net loss, while confirming sufficient cash for 12 months but anticipating future financing Overview The company focuses on NPS/nsPFA technology for AF and soft tissue ablation, with FDA 510(k) clearance and Breakthrough Device Designation, expecting pivotal cardiac clinical trials in mid-2025 - Received FDA 510(k) clearance in March 2024 for the nsPFA Percutaneous Electrode System for soft tissue ablation[95] - The company plans to pursue a PMA application for its cardiac clamp to treat AF and expects to begin a pivotal clinical trial in mid-2025[101] - Received Breakthrough Device Designation from the FDA in July 2024 for its nsPFA Cardiac Surgery System for the treatment of AF[102] - Following promising data from an initial clinical study, the company expects to commence a U.S. IDE pivotal clinical study of its 360° Cardiac Catheter in mid-2025[106] Results of Operations Q1 2025 saw no revenue, with R&D expenses up $3.6 million to $10.3 million and G&A up $3.9 million to $7.7 million, widening net loss to $16.8 million Comparison of Operations (in thousands) | Item | Q1 2025 | Q1 2024 | $ Change | | :--- | :--- | :--- | :--- | | Total revenues | $0 | $0 | $0 | | Research and development | $10,313 | $6,741 | $3,572 | | General and administrative | $7,731 | $3,874 | $3,857 | | Net loss | $(16,795) | $(10,137) | $(6,658) | - The increase in R&D expenses was primarily due to rises of $1.8 million in stock-based compensation and $0.9 million in compensation and other employee-related expenses[119] - The increase in G&A expenses was primarily due to rises of $2.1 million in stock-based compensation and $1.5 million in compensation and other employee-related expenses[120] Liquidity and Capital Resources As of March 31, 2025, cash was $119.3 million, with $13.5 million used in operations and $14.8 million provided by financing, deemed sufficient for 12 months, but future capital raises are planned - The company had cash and cash equivalents of $119.3 million as of March 31, 2025, and believes this is sufficient to fund operations for at least the next twelve months[124] - In Q1 2025, financing activities provided $14.8 million, mainly from $14.1 million in proceeds from the exercise of warrants[130] - Cumulatively, as of March 31, 2025, the company has received a total of $63.5 million in gross proceeds from exercises of the 2024 Rights Offering Warrants[123] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk from year-end 2024; primary exposure is interest rate fluctuations, with no financial instruments used for trading - There have been no material changes in market risk. The primary exposure is from fluctuations in interest rates[140] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[141] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[142] PART II. OTHER INFORMATION Legal Proceedings The company is not a party to any legal proceedings expected to materially adversely affect its financial condition or results of operations - The company is not presently a party to any legal proceedings expected to have a material adverse effect on its results or financial condition[145] Risk Factors This section details substantial investment risks, including financial position, capital needs, high development and commercialization risks for its single NPS technology, IP, cybersecurity, and significant ownership concentration Risks Related to Financial Position and Need for Additional Capital As a development-stage company with no significant revenue and a history of losses, the company requires additional capital; failure to secure funding could force program delays or elimination - The company has incurred significant operating losses each year since inception and expects to continue incurring losses for the next several years[156][157] - The company will need to raise additional capital to execute its business plan, and if unable to do so, may need to scale back operations[160][162] Risks Related to Development and Commercialization Success depends on its single NPS technology, facing high clinical development risks, intense competition, limited sales experience, and uncertainty in obtaining adequate third-party reimbursement - The company's revenues and future profitability are entirely dependent upon the CellFX System and the NPS platform technology[168] - The company faces intense competition from well-established manufacturers like Abbott, Boston Scientific, and Medtronic, which have significantly greater resources[176] - Commercial viability may be impacted if products fail to obtain an adequate level of reimbursement from Medicare and other third-party payers[197] Risks Related to Intellectual Property, Cybersecurity, and Data Privacy Competitive position relies on protecting NPS technology patents, facing risks of challenges and infringement, alongside cybersecurity threats and data breaches - The company's ability to compete depends on the proprietary nature of its technologies, and it may be unable to adequately protect its intellectual property rights[226] - The company is exposed to risks from cybersecurity and data privacy threats, which could lead to regulatory investigations, litigation, and disruptions to business operations[235] Risks Related to Corporate Governance and Owning Our Common Stock Significant stockholder risk stems from Co-Chairman Robert W. Duggan's 72% ownership, controlling corporate actions, classifying the company as 'controlled,' and contributing to high stock price volatility - Co-Chairman Robert W. Duggan beneficially owns approximately 72% of the company's common stock, giving him control over corporate actions requiring stockholder approval[278] - The company is considered a "controlled company" under Nasdaq rules, which may exempt it from certain corporate governance requirements[280] - The market price of the company's common stock has been and is expected to continue to be highly volatile[273] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the three-month period ended March 31, 2025 - During the three-month period ended March 31, 2025, the company completed no unregistered sale of its securities[304] Default Upon Senior Securities The company reports no defaults upon senior securities - None[305] Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[306] Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - During Q1 2025, none of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement"[307] Exhibits This section lists Form 10-Q exhibits, including CEO/CFO certifications and Inline XBRL financial data files - The report includes required CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL data files[308]