Pulse Biosciences, Inc Common Stock (PLSE -2.46%)
Q1 2019 Earnings Call
April 30, 2019 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to Pulse Biosciences first-quarter 2019 investor and analyst call. [Operator instructions] Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Brian Dow, Pulse Biosciences' senior vice president and chief financial officer.
You may begin.
Brian Dow -- Senior Vice President and Chief Financial Officer
Great. Thank you very much. Good afternoon, everyone, and welcome to Pulse Biosciences first-quarter 2019 investor and analyst update call. On the call with me today are Darrin Uecker, our president and chief executive officer; and Ed Ebbers, our vice president and general manager of dermatology.
Our comments and responses to your question during today's call reflect management's views as of today, April 30, 2019 only, and will include forward-looking statements. These include statements regarding our plans and expectations relating to our commercial, operational, scientific, clinical, and financial projections, regulatory matters, products, including the uses and applications of such products, and other future events. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our most recent Form 10-K filed on March 14, 2019.
Our SEC filings can be found through our website or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at bulsebiosciences.com on the News and Events section under our Investor Relations page. In addition, today's press release has been posted to our website.
Today's format will consist of providing you with highlights of our first quarter of 2019 as described in our press release announced earlier today, followed by a question-and-answer session. I would now like to turn the call over to our President and Chief Executive Officer Darrin Uecker.
Darrin Uecker -- President and Chief Executive Officer
Thanks, Brian. Good afternoon, everyone, and thank you for taking time to join us on today's call. Our driving focus at Pulse Biosciences is the commercialization of our proprietary cell effects system and aesthetic dermatology in pursuit of our mission to build a viable company that makes a meaningful difference for the betterment of patients and clinicians in the field of dermatology using our proprietary and patent-friendly -- patient friendly cell-pulsing technology. The decision to launch pending FDA clearance the CellFX system and aesthetic dermatology is based on a strong clinical data generated from a series of successful clinical studies in difficult-to-treat skin conditions and the exciting potential of the aesthetic dermatology market.
Our initial histologic skin studies demonstrated the safety and unique mechanism of our CellFX system to impact cellular structures while sparing surrounding non-cellular structures such as the skin's dermis. Based on the histological findings and in consultation with our key opinion leaders, we successfully executed studies that demonstrated outstanding safety and efficacy in our first two targeted commercial applications, sebaceous hyperplasia, or SH, a small raised lesion caused by overactive sebaceous glands typically on the face and seborrheic keratosis, or SK, a common benign pigmented lesion of the skin that resides in the epidermis. These represent difficult-to-treat benign skin lesions that largely go untreated due to the lack of acceptable treatment options for patients and highlight the unique capabilities of the CellFX system to target cellular lesions while sparing surrounding non-cellular structures. Our results in SH and SK provide empirical evidence that our tunable CellFX system is safe, and based on its unique mechanism, has the potential to treat a large number of high-value and difficult-to-treat skin conditions.
Over time, we will deliver a growing array of valuable applications that patients will desire and aesthetic dermatology clinics will be excited to provide. We have a growing pipeline of potential future applications including words acne and basal cell carcinoma all in early feasibility studies that we believe can take advantage of the mechanism of our CellFX system and build on the success of our early clinical results. I will be updating on these programs later on in this call. The aesthetic dermatology market is a fast-growing and large cash-paying market.
According to recent industry estimates, Americans spend approximately $22 billion annually on aesthetic procedures, including removal of benign skin lesions, in an annual growth rate of over 10%. In the United States, this market is driven by a concentration of 3,000 to 4,000 skin specialists physicians that are leading purchasers of energy-based devices to provide cash-paying procedures that improve the appearance of their patients. In recognition of this growing market for cash-paying skin procedures, the American Society of Dermatologic Surgeons conducts an annual survey of consumer interest in these procedures. The most recent ASDS consumer research reported that 70% of patients are considering anesthetic procedure and would be willing to pay out-of-pocket, up from only 30% five years ago.
The same consumer research confirmed that board-certified dermatologists are the No. 1 influencer of patient decisions when it comes to these skin-enhancing procedures. In short, the aesthetic procedure market is a large cash-paying market where consumers are seeking appearance-enhancing treatments and are consulting their dermatologist for advice on these procedures. Pulse Biosciences with its unique CellFX system is well-positioned to build a viable business in this market.
Our business model post-FDA clearance centers around partnering with clinics to build a franchise based on value delivered by the CellFX platform, providing the necessary training and tools to deliver safe and effective patient outcomes to fit in the existing clinic workflow. By leveraging advances in data digitization, the network capabilities designed into our prospective CellFX system enables our utilization-based business model and delivery of value-added services to our clinic partners. The utilization model we are employing with our CellFX system aligns the economic interests of patients, clinicians, and Pulse Biosciences. Ed we'll describe the unique benefits of this model in a few minutes.
We continue to expand our world-class team comprised of professionals with successful track records in the field of aesthetic dermatology and we recently announced the addition of Mitchell Levinson to the board of directors of Pulse Biosciences. Mr. Levinson Levinson is an experienced and successful entrepreneur, an executive with more than 25 years of experience bringing novel medical technologies to the market, including over a decade in the aesthetics procedure market. He's previously founded and served as CEO and CFO of Zeltiq Aesthetics, overseeing the development and facilitating early commercial launch of its flagship CoolSculpting procedure.
Zeltiq was one of the early companies that successfully built a utilization-based business model in the aesthetic procedure space. Mitchell's experience in product and business model development in aesthetic dermatology will be invaluable as we launch our CellFX system and build a business around it. A key milestone in commercializing our CellFX system is an FDA clearance. On previous investor calls, we reported that we'd be submitting a free market notification via 510-K to the U.S.
Food and Drug Administration for our CellFX system in quarter 1. And in a press release on February 28th, we announced the 510-K submission. FDA acknowledged the receipt of the submission on February 25th and on March 11th, it was accepted by FDA for substantive review. This afternoon, we received an additional information letter request from FDA.
And the FDA, among other things, is questioning the adequacy of the predicate device provided in the 510-K. Responding to this request will add time and require additional testing inclusive of clinical trials and collaboration with FDA. In consideration of the above, we are presently evaluating an alternative approach, the de novo process approach, which would also likely require additional time testing and clinical studies. At the end of the day, the de novo approach may be in the best interest of Pulse Biosciences.
We will update on this important matter no later than the upcoming annual shareholder meeting scheduled for May 16, 2019. To provide an update on our progress in bringing our CellFX system to the market, I will turn the call over to Ed.
Ed Ebbers -- Vice President and General Manager of Dermatology
Thanks, Darrin, and good afternoon, everyone. The planned commercial launch of our CellFX system into the rapidly growing aesthetic procedure market is an important and exciting milestone for Pulse Biosciences. This major commercial opportunity begins with our first two clinical applications and is expected to grow as we continue to demonstrate that the NPS, non-thermal cell-centric mechanism of action is a significant differentiator from all other energy-based devices. Our skin specialists have told us that this unique mechanism suggests utility for a broad spectrum of difficult-to-treat skin conditions, including skin applications for the large markets that we have already identified and studied in our clinical program.
As Darrin mentioned, we are progressing toward our aim of commercially introducing the CellFX system to the market based on impressive clinical data from our first two high-value clinical applications that we've already discussed, sebaceous hyperplasia and seborrheic keratosis. These two high-value markets are just the beginning of our expanding commercial value. Since the unique CellFX mechanism of action demonstrated in our clinical studies extends beyond these two initial applications, our plan is to continue expanding our commercial value of the CellFX system by investing in a growing pipeline of future skin applications for which we have already commenced feasibility studies and we'll expand this investment further based on our feasibility results. Our marketing research with commissions and patients has demonstrated that the sebaceous hyperplasia market represents a large cash-paying market with unsatisfactory current solutions.
This is because SH is a particularly difficult facial lesion to treat because the underlying cause is from enlarged sebaceous or oil glands that reside deep in the skin. Current modalities, which are primarily heat-based create significant collateral damage to surrounding tissues when attempting to reach these deep treatment targets in the skin. This results in poor patient outcomes from both the cosmetic and efficacy standpoint as a result of these poor patient outcomes, clinicians are often reluctant to treat SH with current modalities. We believe that these poor patient outcomes and resulting commission reluctance to use existing modalities explained why the positions indicate that only 21% of the approximately 3.6 million patients with SH being seen by our dermatologists receive treatment, leaving an estimated 2.8 million patients annually that forgo or not offer treatment.
In contrast, we have demonstrated that our CellFX mechanism of action has a unique ability to reach the deep cellular targets such as sebaceous glands, with outstanding patient outcomes and lack of collateral damage. Earlier this year, we announced our excellent results from our clinical study of sebaceous hyperplasia in which we treat 71 patients with a total of 222 essay treatments. After just a single treatment, 92% of the lesions were rated clear or mostly clear, and just 8% of the lesions received a second treatment. And when combined with the lesions treated just once, overall, 99.5% of the 222 treated lesions were rated as clear or mostly clear, with 90% of those lesions rated as completely clear and just 9.5% lesions rated mostly clear.
Only one of the treated lesions rated as partially clear and 0 lesions rated as not clear. Patients rated 78% of these clinical outcomes as satisfied or mostly satisfied, which is a very positive result for an initial study in such a difficult-to-treat lesion. Our impressive SH clinical data was presented during March by 2 equally impressive and well-known investigators that led the research study. Dr.
Gilly Munavalli presented data from the podium at the American Academy of Dermatology, and Dr. Suzanne Kilmer presented SH data from the podium at the American Society for Lasers and Medicine and Surgery. These 2 very prestigious meetings are very well attended by physicians that focus their practices on these cash-paying aesthetic procedure patients. Each of our 2 investigators presented their own clinical data along with the entire multicenter study data set.
The response from physicians to our clinical data at these meeting was very positive, which gives us continued confidence in the unmet need for a safe and effective treatment for SH lesions and the unique ability of the CellFX SH procedure to address that unmet need. Next, I will be talking about seborrheic keratosis, our second high-value application, which is also a known area of significant clinical need for our CellFX System. Our early market research suggested that there are as many as 6 million patients in the U.S. being seen by the skin specialists that are likely to purchase our device.
The same physician marketing research data also shows that only 35% of these SK patients, many of whom have multiple lesions, receive treatments. Again, we believe that this low treatment rate history is due to poor patient outcomes associated with current modalities. Older treatment methods using cryotherapy or electro desiccation aren't capable of destroying SK lesions using these extreme temperatures, but the collateral thermal damage to surrounding dermal tissue can lead to skin looking worse than when the lesion was present, which discourages treatment. In contrast, our 58-patient study of the CellFX procedure showed a single treatment efficacy rate on 164 treated lesions with 82% cleared or mostly cleared with very good patient tolerability and no reported procedure or device adverse events.
This compares to a recently approved topical agent that showed just a 61% efficacy rate even after multiple treatment sessions. A couple of quick points here. We are very pleased with these results to date. These single-treatment sessions compare very favorably against current treatment alternatives, and importantly, we are confident that we can significantly improve these results based on lessons learned and improvements already being reflected in our CellFX system.
Specifically, we have fine-tuned the treatment parameters and introduced new CellFX treatment tips to fit a range of lesion sizes. With SH, SK as well as for our future applications, we will drive to and expect continuous improvements to patient outcomes via refinements to our treatment parameters and lesion management strategies as we believe our tunable CellFX system is designed with room to optimize results and expand our growth potential in all aspects of our business. I would like to take a moment and reiterate a little bit of what Darrin touched on earlier. From the very beginning, we designed the CellFX system to support a utilization-based revenue model.
The utilization model we are employing with our CellFX system aligns with the overarching clinical premise of providing outstanding patient outcomes with the associated economic interest of patients, clinicians and Pulse Biosciences in mind. With our flexible utilization-based business model, our CellFX System provides realtime per lesion cost information to the physician, which allows clinicians to build cash-paying patients based on known per lesion cost that the system provides, which allows for informed pricing decisions and alignment with the operational aspects of physicians business with Pulse Biosciences participating in the economics of each treatment delivered. As we prove new applications for our CellFX system, our utilization rates are expected to increase. In this cash-paying market, patients typically seek to have one or more lesions treated and expect to pay a fee proportional to the number of lesions they have cleared.
And physicians will support this by charging on a per lesion basis. In order to align ourselves with the desire of the patient and the physician, we have designed the CellFX System so that the cost to a physician in using the CellFX System will be tabulated on a per lesion basis. For each lesion, we expect a delivery of NPS energy using a single-patient multiuse CellFX treatment chip. We call this event a cycle, and we will build the physician on a per cycle basis through the advanced purchase of cycle units, which is the electronic currency of the CellFX System.
For example, if a patient wants 5 SH lesions removed, the physician will deliver 5 cycles with the CellFX System, and the clinician's pool of prepurchased cycle units will be charged for these 5 cycles according to the type of CellFX treatment tip or tips being used. The physician will charge the patient according to their known cycle cost. We believe this CellFX utilization-based model eliminates any economic barriers to use the system as the physicians understand the cost and revenue structure on any lesion treated. And in aggregate, we believe our revenue and our gross margin will benefit.
The physicians' cost per cycle will depend on the treatment tip and the value of the lesion being treated, enabling value-added pricing as well. Specific pricing for cycles has not yet been finalized, but we expect it to be in the range of $40 to $70 per SK and SH applications with an expectation that most patients will opt to have several lesions treated. The CellFX System will initially be sold direct to the physician, and we expect pricing in the $45,000 to $50,000 range. We are making excellent progress toward our planned launch.
As I discussed on the previous call, the foundation of the commercialization strategy for our CellFX System in this growing market is composed of 3 major components: one, to build a world-class sales and marketing team; two, to create a first wave of key opinion leader acceptance and advocacy of our CellFX System; and finally, leverage the CellFX System into additional applications and build a portfolio of treatment for the CellFX in the clinic. Turning first to development of our world-class sales and marketing team. Earlier this year, we added our vice president of North American sales, Bob Tyson, who in turn has begun recruiting and hiring his regional sales directors in our initial target geographies. Further, we have bolstered our sales support infrastructure by adding to product management and establishing important sales operation functions.
We remain highly selective in the personnel we are adding to our sales and marketing functions, and we'll be highly selective of key physicians we are scheduled to fill soon. But we are on track, and I am thrilled with the quality of candidates we've been able to attract and the caliber of the team being assembled. Our early launch efforts are focused on achieving early clinical and commercial success with this influential core of KOLs, or key opinion leaders, located in major markets. As we demonstrate success in earning KOL acceptance and advocacy of our CellFX system and procedures, their influence on the next wave of adapters will be a powerful driver of our success.
Our commercial introduction of the CellFX System will initially focus on the domestic market, and our sales team is being built to scale over time to reach our target group of up to 4,000 skin specialty physicians in the United States. Among this target group of 4,000 physicians, there's a relatively small core of key opinion leaders that play a major role in the adoption of new technologies, and many of these KOLs have been clinical investigators and early advocates of our unique technology. Now to the third element of our strategy, driving the routine utilization of our CellFX System and the revenue that utilization generates through our ever-expanding portfolio of high-value applications. Again, reiterating this key and fundamental aspect of our business, the CellFX is a platform.
SH and SK are just the first in what will be an expanding portfolio of treatment applications. Our nonthermal mechanism of action that targets cellular lesions and structures without damaging the noncellular components of the skin affords the opportunity to treat a number of ongoing high-value target applications. SH and SK are just the beginning of our potential market opportunity. We are making progress on our next applications, and Dan will provide an update in a few moments on our ongoing feasibility studies in BCC, warts and our recently initiated acne feasibility studies.
I will now turn the call back to Darrin.
Darrin Uecker -- President and Chief Executive Officer
Thanks, Ed. I'd now like to provide an update on our clinical application pipeline, in particular our ongoing feasibility studies. As we have reported previously, we have ongoing feasibility studies in warts, acne and basal cell carcinoma. As one might expect, our early feasibility studies are intended to provide data and insights to guide follow-on studies and if appropriate, to drive multicenter studies that when successful, lead to commercial applications.
When we undertake feasibility studies, we set out to explore different treatment levels of our tunable CellFX System, treatment timing strategies and in some cases different forms of the lesions being treated. We expect to have several ongoing feasibility studies at any particular time to keep a robust pipeline of applications for our CellFX System in development. NPS is a very unique energy modality, and exploring its capabilities across a variety of applications will be an ongoing priority for Pulse Biosciences. First, I'd like to discuss our ongoing warts feasibility study.
Similar to SKs, warts reside largely in the epidermis, the outermost layer of the skin, and the current treatment modalities have limited efficacy. Warts are consistently one of the top identified problems for patients seeking treatment from dermatologists. Our feasibility study is being led by Dr. Vic Ross at the prestigious Scripps Clinic in San Diego, and we have currently enrolled 19 patients with 33 warts.
In late March, at the American Society for Laser Medicine and Surgery, Dr. Ross presented some of his early data from the podium in a talk titled High Amplitude, Nanosecond Electrical Pulsing for Warts. In his feasibility study, Dr. Ross and Dr.
Gilly Munavalli treated common warts on the feet, toes, fingers and hands. We are continuing to follow patients in this study and at this point are very pleased with what we have learned about how to best treat warts using our CellFX System. Of note, our CellFX System proved to be very safe in treating warts in all locations, building on the already strong safety data from our previous clinical studies. The treatments have been well tolerated by patients even in highly sensitive areas such as fingertips and toes, and healing post CellFX treatment has been very good.
We have seen an initial reduction of wart size in all warts treated at the 30-day follow-up, and over 50% of all warts had a greater than 50% reduction at the 30- and 60-day follow-up time points. Complete resolution of warts has been observed in warts in all locations, though not in all warts. In one wart out of the 33, we observed an early reduction in the size of the wart that later regrew to a larger size. We continue to follow patients to later time points in this study and expect the complete data set to be presented at a dermatologic conference in the coming quarters.
Importantly, this feasibility data is giving us confidence to move forward with a multicenter study incorporating learnings regarding treatment parameters and methodology. With these changes, we believe our CellFX warts procedure will be one that patients and physicians will choose as a recurrent method. We expect to begin enrollment in the follow-on study later in Q2. Another one of our exciting feasibility studies is our moderate to severe back acne study being performed by principal investigators, Dr.
Mark Nestor, Managing Partner of Skin and Cancer Associates; and Dr. Brian Berman, Professor Emeritus of Dermatology and Cutaneous Surgery at University of Miami Miller School of Medicine. The back acne feasibility study was initiated after our sebaceous hyperplasia study clearly demonstrated that our CellFX System has the unique ability to impact sebaceous glands in the dermis while sparing the dermis and potentially the epidermis. it is well known that if you could eliminate the sebaceous glands in an area prone to having acne lesions that it will reduce the number of acne lesions from occurring in the area, and this is the underlying mechanism with some currently available pharmaceutical treatments.
The CellFX system can have a meaningful benefit in treating acne as this is a focal treatment that impacts the sebaceous glands without systemic toxicity, which can also be an issue with some pharmaceutical approaches. We are enrolling patients in this early feasibility study and are pleased with what we have observed to date, though it is early. As we reported on our previous investor call, we don't expect to have adequate data to report on or to make decisions about follow-on studies until later this year. Turning now to our ongoing early feasibility study in basal cell carcinoma or BCC, the most prevalent form of skin cancer.
As we had discussed previously, we believe BCC is an exciting therapeutic opportunity. This is our first human study in skin cancer and is not a therapeutic endpoint study. It is a biomarker study, whose objective is to provide important safety data on BCC cell destruction and then look at immune cell changes in the area of the BCC after the application of NPS. The study is what we call an NPS intersect study, meaning that we apply NPS to a portion of the BCC lesion and then several weeks later, the BCC lesion is excised as it would following the normal standard of care.
The BCC tissue samples are then analyzed to see the effect of the application of NPS on the BCC lesion and any changes to the untreated portion of the lesion, including infiltration of immune cells. We have reviewed the first group of tissue samples in this study, over 25 at this point, and are pleased with what we have learned in these early results. First and foremost, we continue to observe that NPS and its application in skin using our CellFX system is a very safe and highly tolerable therapeutic energy modality. No procedure-related adverse events have been reported to date.
Our observations reflect good basal cell destruction in the treatment areas. Again, this study includes only treating a portion of the BCC in order to observe changes in the entry to the area, so we are not looking for complete BCC destruction. But in those areas where NPS was applied, we observed an absence of the BCC lesion, giving us confidence that NPS would have benefit purely as an energy modality for the destruction of the BCC lesion. Finally, positive immune cell changes have been identified in a subset of the treated BCC lesions.
Though we do not see a consistently strong immune response across all lesion types, what we do see gives us important data to move forward on. We are planning a follow-on feasibility study where we intend to include the use of an adjuvant in order to amplify the immune response effects of NPS in the BCC. We expect this to also be an NPS intersect study as it will provide important data for the design of the therapeutic endpoint study. We continue to be optimistic about BCC as an application for CellFX System that NPS may provide a unique advantage over other modalities in terms of BCC lesion elimination and cosmetic result.
We are continuing to explore new applications that are enabled the unique mechanism of action of CellFX System with high-value cellular targets in the epidermis, the mid- and deep dermis and expect to add feasibility studies to our ongoing pipeline of applications over the coming quarters. I would now like to turn the call over to Brian to discuss our financial results for the first quarter.
Brian Dow -- Senior Vice President and Chief Financial Officer
Great. Thanks, Darrin. Shortly before today's call, we announced our financial results for the first quarter ended March 31, 2019. Our financial results for the quarter reflect the progress achieved in our development and clinical programs, accompanied by the requisite support infrastructure of those endeavors and operating as a public company.
Cash and investments at the end of the first quarter totaled $52.8 million, compared to $59.6 million at the end of 2018, reflecting first-quarter cash use of $6.8 million, slightly above our fourth quarter of 2018 cash use of $6.4 million. Net loss for the quarter totaled $10.1 million, reflecting a $1.6 million or 16% increase, compared to a net loss of $8.7 million for the first quarter of 2018. Net loss for the quarters reported include charges for stock-based compensation totaling $2.4 million and $3.4 million for 2019 and '18, respectively. The theme underlying the increases in both cash use and net loss is the continued growth of our company, reflecting the progress toward the commercial introduction of our CellFX System planned for later this year and the associated growth in sales, marketing and manufacturing-related costs; expansion of our clinical study programs, reflecting the initiation and execution of several feasibility and pre-commercial clinical studies; and the growth and support of functions for those areas.
This is exemplified by the growth in our head count, which has increased to 70 at March 31, 2019 from 37 a year earlier. Head count currently stands at 77. Research and development expenses increased to $5.8 million for the first quarter of 2019, an increase of $2.7 million or 84%, compared to $3.2 million for the first quarter of 2018. As you can distill from my earlier comments, a significant portion of the increase reported reflects the increase in R&D personnel.
R&D head count increased to 50 as of March 31, 2019 from 26 at March 31, 2018. This increase reflects additional resources in clinical affairs, the group designing and conducting our clinical trials; regulatory and quality, those preparing and overseeing our regulatory filings and ensuring we meet requisite regulatory and quality standards for our products and procedures; and additional engineering resources focused on preparing the CellFX for commercial introduction. Also contributing to increased R&D expense are increases in engineering and prototype expenses, reflecting the design development and manufacture of CellFX Systems deployed to our clinical study sites; late-stage prototypes and acquisition of initial inventory components in preparation for commercial launch; ongoing clinical studies; and support expenses relating to the increase in breadth of R&D activities discussed today. We expect that R&D expenses will continue to increase going forward, reflecting ongoing engineering and development work focused on refinements to our CellFX System in preparation for a commercial introduction, our current and planned clinical studies and future preclinical research further expanding utility and value of our CellFX platform.
Turning now to the general and administrative expenses. G&A expenses decreased to $4.4 million for the first quarter of 2019, a decrease of $1 million or 18%, compared to the $5.4 million reported for the first quarter of last year. The decrease reported compared to the prior year is primarily attributable to a significant year-over-year decrease in noncash stock-based compensation, accompanied by reduced legal costs associated with prior-year corporate matters, including our reincorporation in Delaware. These decreases were partially offset by increases in personnel in sales and marketing and additional market research and consulting expenses.
As we continue to build out of our sales, marketing support operations on path to commercialization of our CellFX system and continue to maintain and expand the depth and breadth of our intellectual property estate, we expect general and administrative expenses to increase during 2019. That concludes my remarks. I would now like to turn the call back to Darrin for closing comments.
Darrin Uecker -- President and Chief Executive Officer
Thanks, Brian. We made great progress in Q1 toward our goal of commercializing our CellFX System in aesthetic dermatology. We filed a 510(k) with the FDA for use of the CellFX System in dermatology, and this afternoon, we received an additional information request letter from FDA. And based on our review before this call, we believe responding to this letter will add to our regulatory time line and may potentially change the regulatory process we take.
We will update on this important matter at the Annual Shareholder Meeting in May. We continue to build out our commercial team, adding to the sales, sales operations, customer service and marketing functions. We remain on track with building a world-class commercial team with deep experience in the aesthetic dermatology space and importantly, stronger relationships with KOLs in field. As mentioned, we also added to our board of directors, bringing on Mitch Levinson, a successful veteran in the aesthetic dermatology field.
The CellFX System is a platform, and we are committed to delivering a portfolio of valuable applications to our physician partners over time. We continue to make progress in developing our pipeline of applications, and we discussed our progress in warts, acne and BCC on this call. We anticipate moving our warts and BCC programs forward in Q2, with follow-on studies based on the learnings to date. In warts, we anticipate the follow-on study to generate sufficient data to drive a commercial application, which would likely be introduced in late 2019 or early 2020.
We'll provide further details as the follow-on study is initiated. BCC will likely have a longer time line given that it is skin cancer. As we reported previously, 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. We plan to announce new applications and studies in the coming quarters that continue to take advantage of the unique mechanism of the CellFX System in difficult-to-treat skin conditions. We believe CellFX System will offer unique treatment capabilities to our aesthetic dermatology partners, and through the delivery of needed and wanted applications that enable physicians to provide safe and effective treatments to patients, we believe we'll achieve our mission of building a viable company. With that, I'd now like to turn back to the operator for questions.
Questions and Answers:
Operator
[Operator instructions] And our first question comes from RK with H.C. Wainwright.
RK Ramakanth -- H.C. Wainwright -- Analyst
I just have a couple of quick questions. So regarding the additional information request coming from the FDA. So how -- I'm just trying to understand your decision-making process because it looks like these are if you continue with the current application or if you go using the de novo application, you still have to produce some clinical data. So I'm just trying to understand what sort of clinical data do you think you need to provide? And sort of -- what sort of studies do you need to do? And is this going to change the time line between now and commercialization? From the folks who are on the call, I understand you're working on all directions, but at the same time, I'm just trying to understand how much work needs to be done between here and the state of commercialization.
This is on the 510(k) front. And then on the CE front, I'd like to hear what has been the dialogue between you and the European authorities. Since at least -- since I've been on the call, I did not catch anything in terms of comments from you.
Darrin Uecker -- President and Chief Executive Officer
Yes. Thanks, RK. I appreciate the question and for joining the call. So yes, let me talk about the FDA first.
So we just received this additional information letter a couple of hours ago, so this is a very sort of typical step in the process where you submit your 510(k), it goes through the substantive review process, and then you receive a letter requesting additional information from FDA. And so from that perspective, this is just another step in the process. Now that being said, we got a letter. We have taken a quick look at it.
Our read on the letter from just a couple of hours that we've had to review is -- it's going to take us some time to respond to the number of questions that FDA has and to prepare any kind of data, whether it's bench testing, preclinical testing or clinical testing. And so we obviously don't have clear time lines around being able to do that as I sit here today. But I think that what I would say is in the 510(k) process, when you get an additional information request, you're allotted 180 calendar days to respond to that request. And to think my early read on the letter from FDA is that it's likely that it would take us a good amount of that time, if not that total time to put a response together.
And so if that's the case, I think that from a 510(k) process perspective, that would push us out till later this year. Earlier, we had suggested potentially a quarter three FDA clearance. I think that our time line now is pushed out based on again, our early read of this information and how long that is, it's difficult to handicap, but again, I would say that at least out toward the end of the year. Now the other comment that I made is that in the letter that we received from FDA, there were some questions about the adequacy of the predicate device.
That also is not uncommon for a letter like this, additional information letter. And so I think we will review based on those comments whether or not it makes sense to continue down the 510(k) path or we may decide to go, for example, down the de novo path, which doesn't require a predicate. The de novo path, we think, may have some potential benefit to Pulse Biosciences. And there are -- there is a history of aesthetic devices that have used the de novo process in the past, ZELTIQ being one of the more well-known companies that went through that path.
So there are advantages. We went down -- we decided to go down the 510(k) path. And based on what we're seeing from FDA, we may still continue down that path or we may decide in close collaboration with FDA, of course, to go down the de novo path. We still remain very confident in the CellFX System and our ability to get a regulatory clearance and how we bring this exciting technology to the aesthetic dermatology market and treat patients and really go after a number of really exciting applications.
So this letter in no way changes our confidence in getting there. It looks like it could extend the time line as I suggested, and we will review the letter in great detail. And as I said, we look forward to updating everybody at our Annual Shareholder Meeting on the May 16. So onto -- I think you asked a question also about a potential CE Mark.
We have not talked at all about the CE Mark process in our technology -- in the CellFX System and getting a CE Mark for the EU, and so we don't have a time line to talk about on that. That being said, I mean, certainly we believe that our technology is one that could be well utilized outside the U.S. and that the CE Mark is certainly a pathway for that. Our decision has been to enter the U.S.
market first followed by likely the EU through the CE Mark process.
RK Ramakanth -- H.C. Wainwright -- Analyst
So if you go the de novo route, so does that mean based on the letter that you brought today, it's pretty much the same process in the sense you still have to do those additional -- those preclinical, clinical studies So that you put a package together except that you don't have to deal with the question of the predicate? So is that the reason why you're saying even on the de novo process, you still have to do some clinical studies?
Darrin Uecker -- President and Chief Executive Officer
Yes. So I think that either process -- based on the letter, I think either process is going to require us to submit additional data to the FDA. And so I think it's just a matter of us going through and reviewing the letter in detail, having discussions with the FDA, collaborative discussions where we understand the trade-offs between the time lines and the data that we would need for each process. And then I think we'll make a decision based on all that information on what we think the best path is for Pulse Biosciences.
But I think in each case, we're going to have to provide additional data.
Operator
[Operator instructions] And our next question comes from Sony Kevin with Pulse Biosciences.
Unknown speaker
My concern is the FDA is [Inaudible]. In the meantime, we've increased our burn rate on a quarterly basis to a significant number. And these long delays are just going to increase the situation where we run out of cash. And if you have any other alternatives to get into the market faster, I'd advise it even if it's overseas.
The last thing we want is run out of money. That's the end of my question.
Darrin Uecker -- President and Chief Executive Officer
Yes. Thank you, Tony. I completely understand and appreciate the comment. We're very confident in our ability to get through this process.
All the work that we are doing today is to build the internal infrastructure such that we enter the aesthetic dermatology market. We'll continue with work as we think it's important to entering the market, and we continue to do the clinical work that's necessary to do that, so we're very comfortable with our plan, and we think we're on the right track with everything. So appreciate it.
Operator
And with that, this concludes our Q&A session for today. I'd like to turn the call back over to Darrin Uecker for closing remarks.
Darrin Uecker -- President and Chief Executive Officer
Thank you, operator. Thank you, everybody, for joining us on today's call. We look forward to our upcoming Annual Shareholder Meeting in May 16 at Pulse Biosciences headquarters. So thank you very much.
Have a great day.
Operator
[Operator signoff]
Duration: 48 minutes
Call Participants:
Brian Dow -- Senior Vice President and Chief Financial Officer
Darrin Uecker -- President and Chief Executive Officer
Ed Ebbers -- Vice President and General Manager of Dermatology
RK Ramakanth -- H.C. Wainwright -- Analyst
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