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Pulse Biosciences, Inc. (PLSE) Q2 2020 Earnings Call Transcript

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PLSE earnings call for the period ending June 30, 2020.

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Pulse Biosciences, Inc. (PLSE -1.87%)
Q2 2020 Earnings Call
Aug 10, 2020, 4:30 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Thank you for standing by. This is the conference operator. Welcome to the Pulse Biosciences Second Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Philip Taylor, Investor Relations. Please go ahead.

Philip Taylor -- Investor Relations

Thank you, operator. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, August 10, 2020, only and will include forward-looking statements and opinion statements. These include statements regarding our plans and expectations relating to regulatory clearance, including the process, time lines and expected outcomes; our commercial, operational, scientific, clinical and financial projection; products, including the uses benefits and applications of such products; our commercial and regulatory strategies; the impact of the COVID-19 pandemic 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-Q filed May 11, 2020 with the SEC. Our SEC filings can be found through our website or at the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. Please note that this conference call will be available for audio replay on our website at on the News & Events section of our Investor Relations page.

With that, I would now like to turn the call over to President and Chief Executive Officer, Darrin Uecker.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Good afternoon. Thank you everyone for joining us today. This afternoon, we look forward to providing you with an update on all the recent progress made by our team at Pulse Biosciences. But before we begin, it is important for me to recognize the ongoing impacts of the COVID-19 pandemic outside our business. First, I would like to thank all the frontline health-care workers for their continued bravery an unwavering commitment to patient care.

Our thoughts are with everyone who has been affected by this virus. It is clear at this point that the pandemic will persist in our communities for some time and we all must continue to be vigilant in our efforts to protect those around us. The health and safety of our employees remains our top priority and we are taking every precaution to ensure we create the safest workplace possible while observing all local and state health department regulations and guidelines.

With that, as so many of experience disruption in their day-to-day lives, the pandemic has had an impact on our business as well. However, we are fortunate that to date these issues have not been significant and we have maintained our full workforce as we work through these challenging times.

From the onset of these uncertain times, internally, we have relied on clear and concise communication of our objectives to maximize our productivity. The responsible attitude of our company, our single location and our current state of internal focus have been beneficial as we navigate the current landscape with the intention of bringing about improved conditions.

Amid these unique circumstances, we remain excited about the opportunity ahead and confident we can execute our growth strategy over our next phase of growth. We remain focused on achieving regulatory clearances and continued progress toward commercialization of our proprietary technology along with the introduction of the CellFX System first to the aesthetic dermatology market.

Now for anyone new to Pulse Biosciences, I would like to provide a quick background on our business. Our mission is to offer bioelectric medical solutions that make a meaningful difference for the betterment of patients and clinicians. We believe our device, the CellFX System will be capable of offering such benefits.

The CellFX System is a multi-application platform that harnesses our proprietary Nano-Pulse Stimulation technology. NPS technology delivers nanosecond pulses of electrical energy to non-thermally clear undesired cells while sparing adjacent and needed non-cellular tissue. In the area of Dermatology this highly differentiated cell specific mechanism of action provides the ability to address cellular lesions that were not well addressable previously and at the same time, prevent collateral damage to the surrounding healthy skin. This enables clinicians to generate patient and caregiver friendly improved outcomes as older modalities typically result in a skin appearance that could be worse than the original condition.

The CellFX System is a console based software-enabled device designed to accommodate the clinical workflow preferred by dermatologists. Based on our extensive industry experience and collaborative process with clinicians we design our CellFX System with an integrated cloud infrastructure we call CellFX Cloud Connect. It is the backbone of our innovative utilization-based business model that aligns the operational and financial interests of patients, practices and the company.

CellFX Cloud Connect makes possible the wireless connectivity between the customer CellFX System, our e-commerce customer portal, clinical practice management tools to track utilization data and other operational metrics that are tracked by our internal customer relationship management and enterprise resource planning software systems. The customer portal is where practices purchase and wirelessly download cycle units directly to CellFX System.

Cycle units on a per lesion basis, so the more lesion, the patient once cleared, the more cycle units consumed. This enables the physicians to have identifiable and controllable fixed costs per lesion and to charge the patient on a per lesion basis, which is aligned with the patient preference. Our model contrast with the currently employed disposable and single-use based medical device models, removing the friction for the physician that can occur in those models.

One last note about the CellFX Connect is that it facilitates direct connectivity for pulse to remotely perform software upgrades to the CellFX System as well as provide several service and maintenance functions in real time. Because of this stability to streamline, be responsive and prevent disruptions of the clinician workflow, CellFX Cloud Connect allows us to provide unprecedented support and clinical practice growth enablement for our future customers.

Turning now to our business objectives. On the call today, we are pleased to highlight our progress and developments in the three corporate priorities we laid out on our last call. First, on our regulatory clearance for our CellFX System, both in the US and in key territories outside the US, namely the European Union and Canada. And second, preparations for commercial launch of the CellFX System in these territories. And third, financing, with the closing of the rights offering in June.

I will start off by addressing the successful close of our recent financing. On June 16, 2020, we closed the rights offering, generating net proceeds of $29.5 million for the company, with the potential for additional gross proceeds of $4.5 million through the exercise of issued warrants. The capital resulting from this shareholder friendly transaction has significantly strengthened the balance sheet and will provide the runway necessary to progress our other two corporate priorities, regulatory clearances and commercial launch preparations. We are thankful for this strong display of support and confidence from stockholders. Sandy will provide additional details on this very successful financing later in the call.

Now to our second priority. On the regulatory front, our top objective is achieving 510(K) clearance for the CellFX system with an indication for use in general dermatology. As we mentioned previously, in May, we had a pre-submission or Q-Sub meeting with FDA in which we confirmed three imperative items regarding our subsequent work. The regulatory path for 510(K) general dermatologic indication for the CellFX System the adequacy of the selected credit [Phonetic] device and then our proposed preclinical studies performed under FDA's good laboratory practices would be sufficient for the indication and support of our 510(K) clearance. We receive solid confirmation of all of these items.

It is important to note that the confirmed preclinical studies used animal skin and that no further human studies would be required for this submission. With a study design locked in, we began working with the GLP animal facility on the protocol and pilot activities for the general dermatologic study. Because of COVID-19, these labs were not operating at full capacity in June and are still operating at a restricted capacity to an extent as we update you today. Due to this constrained capacity, we began our study several weeks after our initial plan and we currently expect to submit this 510(K) in the next 60 to 90 days.

On the positive side, we are pleased to report that we have now completed all the preclinical treatments required for the study. The next steps will include the pathology assessments of the skin treatment samples at the different follow up time points. Then with the data in hand, we will analyze, evaluate and prepare it for the 510(K) submission. We continue to be optimistic that the advantages of a general dermatology indication submission being more straightforward combined with the FDA's prior knowledge of our system and the data being provided could potentially result in a clearance somewhere between December year-end 2020 and Q1 2021.

Our stepwise regulatory approach will continue with the pursuit of specific indications following the CellFX Systems initial clearance. While the submissions will be sequential we are able to parallel path some of our work. The next indication we will pursue is sebaceous hyperplasia or SH. On our May investor update call, we reported that we would be requesting a formal pre-submission meeting with FDA to discuss the required SH study design.

Today, we are pleased to report that we requested the meeting in June and just last week had the meeting with the FDA. Leading up to the meeting, we received feedback from FDA on the draft study protocol, we provided meeting request. The meeting was very productive and we were able to agree with FDA on the basic design of the clinical study that would support a specific indication clearance for SH.

Based on this, our next step is to incorporate FDA feedback into our investigational device exemption or IDE submission and submit this to FDA for approval to move forward with execution of this study. We anticipate submitting the investigational device exemption in the next couple weeks and to begin enrollment, it is important comparative trial in the fourth quarter. Barring any delays due to COVID-19, we estimate enrollment will take approximately three months. We plan to follow a similar path to achieve indications for warts and seborrheic keratosis, and we'll report on our timelines for this on upcoming calls.

Onto our efforts to commercialize the CellFX System in the European Union by obtaining the CE Mark. As we discussed on our previous investor call, the delayed implementation of new regulations for medical devices in the EU due to the impact of COVID-19 has provided an opportunity to potentially receive a CE Mark for the CellFX System six months to nine months sooner than we otherwise would have been able to. And we are pleased to report that we continue to track according to this accelerated plan.

Over the last several months, we have worked closely with our EU notified body, the company authorized to assess our compliance with the European Medical Device Directives or MDD and authorized use for the CE Mark. And we recently achieved the important milestone of submitting all required documents in support of the application for the CellFX System CE Mark. The application is currently under review and based on our discussions, we continue to believe we will gain approval for the CE Mark in quarter one, 2021, leading the commercialization of the CellFX System in the EU.

We also continue to make progress on Canadian regulatory approval, another important territories. The Health Canada process leverages the work we are doing for the CE Mark and, therefore, we believe we will be in a position to submit an application for the CellFX System to Health Canada in Q4 of this year with the Canadian clearance in the first half of 2021.

Now I will turn the call over to Ed to provide more details on our continued engagement with the scientific dermatology community.

Ed Ebbers -- Executive Vice President and General Manager, Dermatology

Thanks, Darrin. I will begin by sharing new marketing research on the continued business recovery in aesthetic dermatology practices, our target customers as they resume there are elective procedures, while navigating COVID-19 patients and staff safety measures. Next, I will highlight recent additions to our effort, expanding foundation of clinical evidence presented and published regarding the successful use of NPS technology on various difficult to clear skin lesions and describe our continued engagement with the scientific community as this important research is being published in peer-to-peer settings.

Starting with our new marketing research regarding the continued recovery of the aesthetic procedure market, as patients continue to demand these services. Compared to the same marketing research fielded in May, our newest marketing research shows clear trends of both increases in current procedure volumes compared to last May and more bullish projections of a continued recovery over the next six months. Back in May, surveyed aesthetic procedure offices were operating at less than 50% of capacity, including almost complete elimination of elective aesthetic procedure due to COVID concerns and constraints.

In the most recent July survey, the majority of dermatologists reported that patients future volumes had been restored to 50% or more of normal levels and the majority of practices have now opened their office to elective procedures. Regarding expectations for the future of patient volumes, the majority of physicians continue to project will take about six more months to return to normal procedure volumes. Taken as a whole, this new marketing research represents encouraging signs that the aesthetic specialty physician is thoughtfully implementing prudent COVID safety guidelines and that patient confidence in those safety measures is being reflected with a growing backlog of future appointments for aesthetic procedures.

Again, these new marketing research findings all point through growing of optimism from aesthetic dermatology practices that they can keep their patients, their staff and themselves safe and invite patients back into their office for elective procedures. This optimism and trending to normal procedure levels is further supported by recent reports from our Scientific Advisory Board that their practices are continuing to experience high demand for scheduling aesthetic procedure appointments and have a backlog of several months of patient appointments. This is equally true intentions to continue and expand new clinical research projects for companies like Plus.

As we're ready for the launch of our CellFX System in aesthetic dermatology, we have remained actively engaged with our key opinion leaders and clinical investigators who are experiencing increased demands for NPS technology to be presented at virtual scientific meetings and published in various dermatology specialty journals. Thanks to these continuing successes.

There is a growing awareness and acceptance of NPS as an important new technology in as a research results and clinical findings continue to be presented at scientific meetings and published in the leading peer-reviewed journals like the American Society of Laser Medicine and Surgery Journal and the American Society of Dermatologic Surgery Journal as well. But we are pleased to see how innovative and effective the first dermatologists professional societies have been embracing and enhancing their virtual meetings to share their experiences with emerging technologies like NPS.

There are some silver lining benefits to these virtual events including physicians having on demand access to this recorded scientific content that's available beyond those scheduled conference dates and their ability to share access to associates and clinic staff. As we mentioned on the previous call, the American Society for Lasers and Surgery and Medicine or ASLMS posted their annual conference this past month as a virtual meeting. NPS technology research was featured as its own new category of energy device.

With the large selection of papers including updates on three of our recent clinical studies and e-posters on the two preclinical studies for a total of five abstracts presented at this important conference of energy device specialists. Our newest clinical results were presented by Dr. Victor Ross, Cast ASLMS President and Pulse Scientific Advisory Board member, who presented early data from our pivotal study in cutaneous non-genital warts. He reported a 79% complete clearance of warts including clearance in the warts that have failed to clear with previous treatment methods. These new data showing high rates of clearance in difficult to treat warts in a large clinical study represent a significant commercial opportunity for NPS in the future.

Another important commercial application for NPS on which new data was presented is Sebaceous Hyperplasia or SH, which is a very common but difficult to clear facial lesion. The large multicenter clinical study was presented by Dr. Gilly Munavalli, a post clinical investigator and a member of our Scientific Advisory Board. These new findings prove that our energy settings both maintained efficacy and reduced healing time after these difficult to treat lesions were cleared by NPS.

Another important presentation was given by the incoming, President of the ASLMS and also a member of our Scientific Advisory Board, Dr. Thomas Rohrer. He shared positive results in our first human feasibility study of NPS to clear biopsy confirm nodular Basal Cell Carcinoma or BCC. Dr. Rohrer discussed the successful elimination of BCC and the unique advantage of NPS to preserve the healthy non-cellular derma surrounding the malignant cells of BCC nests. This unique potential safety advantage for NPS was illustrated by independently rated clinical photographs and histological evidence of a normal epithermal recovery process and a low potential for scar formation compared to the current standard of care.

The very positive findings from this feasibility study of Basal Cell Carcinoma, which is the most frequently occuring form of skin cancer, will be the basis for designing future studies of BCC, that are just part of our long-term development plan for the NPS platform for multiple applications in dermatology. The bright future of NPS technology was further highlighted at the ASLMS virtual conference into e-poster presentations. One was by Dr Brian Berman, showing that NPS could be used in combination with our modifier drug to synergize marine melanoma tumor clearance. And the second poster presentation by Dr. Brian Zelickson that provided key insights and evidence on the NPS cellular mechanism of actions by using high resolution electron microscopy images and demonstrates how NPS energy induced changes in the intracellular organelles such as the mitochondria and other vital cellular organelles.

At the same meeting corresponding aspects for the SH warts, Basal Cell Carcinoma and acne studies were published in the print and online versions of the 2020 ASLMS abstracts publication, which is a special supplement of the official ASLMS Journal, lasers and surgery medicine. This is a publication that is frequently read and cited by physicians that specialize in the use of these energy-based devices. Two weeks ago, there was another virtual meeting of aesthetic specialist called The Symposium for Cosmetic Advances and Laser Education or SCALE. This symposia is considered one of the most premier multi-disciplinary meetings for cosmetic and medical dermatology.

The prestigious scale faculty members are considered among the peers as respected scientific opinion leaders, many of whom are also Pulse Biosciences Scientific Advisory Board members or clinical investigators. Over 350 physicians registered for this event and NPS technology was spotlighted on the opening day of this virtual conference. First Dr. George Hruza, the 2019 American Academy of Dermatology President and early Pulse Investigator included NPS technology in his all about technology plenary session. He explained the cell specific mechanism of NPS and it's high efficacy and clearing SK lesions with a low risk of scar.

Next Dr. Victor Ross delivered a 10-minute presentation dedicated to NPS Technology, where he highlighted, it's non-thermal cell specific mechanism of action benefits across several common dermatology applications, including sebaceous hyperplasia, seborrheic keratosis, cutaneous non-genital warts and basal cell carcinoma. These two recent virtual scientific meetings are a testament to the importance and impact of our continuing investment in clinical evidence and growth in scientific information validating the unique properties of NPS technology with the potential for a broad spectrum of clinical applications in dermatology.

As of July 15, 2020, our clinical database has expanded to over 630 clinical study in patients with NPS results from over 34,00 treated benign and non-benign lesion procedures in human skin. Our commitment to high-quality science generated in partnership with some of the most respected leaders in dermatology has resulted in important advances in clinical outcomes, and then device development optimization that brings us closer to commercial product and production. And a receptive market for NPS technology based on our growing scientific foundation of acceptance and advocacy among key opinion leaders. While COVID production -- precautions may have constrained live physician meetings are prominent virtual presence as a live and ongoing in the scientific community.

Now I'll turn the call over to Sandy for more on the financials.

Sandra A. Gardiner -- Executive Vice President and Chief Financial Officer

Thank you, Ed. For the second quarter of 2020 operating expenses were $11.4 million compared to $11.6 million for the prior year period. Decreases in research and development costs were partially offset by increases in general and administrative costs. Operating expenses for the three months ended June 30, 2020, included $2.4 million of non-cash stock-based compensation versus $2.7 million in the year ago period.

General and administrative expenses consist of salaries and related employee expenses for executives, sales and marketing, finance, legal, human resources, information technology and administrative personnel, as well as professional fees, patent fees and costs, insurance costs and other general corporate expenses. General and administrative expenses increased by approximately $200,000 to $5.3 million for the three-month period ended June 30, 2020 from $5.1 million during the same period in 2019, primarily related to increased personnel from a year ago, offset by a reduction in marketing related outside service costs.

Research and development expenses consist of salaries and related expenses for manufacturing, research and development personnel as well as clinical trials and consulting costs related to the design, development and enhancement of our potential future products. Research and development expenses decreased by $0.4 million to $5.9 million for the three-month period ended June 30, 2020 from $6.3 million during the same period in 2019, primarily due to reduced clinical trial expenses and development costs associated with the CellFX System.

Net loss for the second quarter ended June 30, 2020 was $11.3 million compared to $11.4 million for the second quarter ended June 30, 2019. Excluding the net proceeds of the rights offering received in the three months ended June 30. Cash used in the second quarter totaled $7.9 million. Cash, cash equivalents and investments totaled $37.8 million as of June 30, 2020 compared to $15.9 million as of March 31, 2020. The successful completion of the rights offering generated net proceeds of $29.5 million.

The basic subscription and oversubscription received totaled $56 million far exceeding the $30 million offering amount. The structure of this transaction served two important purposes. It maximize the net proceeds to the company by minimizing transaction costs compared to a traditional public offering of common stock and that afforded stockholders the right to participate maintaining their ownership position.

Our Board of Directors approved the subscription price per unit equal to the lessor $7.01 the closing price of our common stock on April 23, 2020 or the volume weighted average price of our common stock for the five trading day period through and including the subscription expiration date of June 8. Upon the expiration of the subscription period, the subscription price per unit was determined to be $7.01, approximately 642,000 warrant with a cash exercise price of $7.01 per warrant share were also issued in the rights offering. Additional gross proceeds of approximately $4.5 million may be received from the exercise of these warrants.

In addition to the strong display of import and confidence from our stockholders, this confidence was also reflected internally with insider participation totaling approximately $1.1 million. This excludes participation by Chairman, Robert Duggan. We are very pleased with the results from this offering and the strength of our balance sheet.

Now I will turn the call back to Darrin.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Thank you, Sandy. To conclude, amid the challenging circumstances created by COVID-19 we persisted and had a very productive quarter at Pulse Biosciences. We have adapted our operations, prioritize the safety of our employees while maintaining our driven and collaborative culture. We are progressing the CellFX System allowing multiple regulatory path for multiple indications with FDA, the CE Mark and Canadian approval.

To reiterate our upcoming milestones, we expect to submit our 510(K) for a general dermatologic indication within the next 60 days to 90 days. Starting our SH comparative study to support a specific indication in the US, which we expect to begin in early Q4. Working with our notified body toward completion of the review process for the CE Mark, which we expect to occur in quarter one 2021 and a Health Canada approval expected in the first half of 2021.

At the same time, engagement with the scientific community albeit through new mediums like digital platforms and virtual events remain high. Recent programs have featured many positive investigational studies regarding our Nano-Pulse Stimulation technology. Leading key opinion leaders in this space continue to support our technology and educate other dermatologists on its variety of benefits.

Again, I would like to thank our employees for their dedication and commitment to our progress over these trying past few months. All of your efforts are appreciated. Through a continued strong collaborative effort, we are confident we will be able to execute our strategy throughout the coming months and achieve approval for our CellFX System. We are excited about the potential benefits, NPS will provide to patients and clinicians across various unmet needs. We look forward to providing you updates in the future.

Before we move into Q&A, I would like to welcome Richard van den Broek to our Board of Directors. We are very excited about the experience and leadership he brings to the company. Joining me for Q&A is Ed Ebbers, Executive Vice President and General Manager, Dermatology; and Sandy Gardiner, Executive Vice President and Chief Financial Officer.

Operator, let's open the call for questions.

Questions and Answers:


Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today will come from Sean Kang with H.C. Wainwright. Please go ahead.

Sean Kang -- H.C. Wainwright -- Analyst

Hi, this is Sean Kang from H.C.W. First of all, congrats on your progress for this -- you made in the quarter.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Thanks, Sean.

Sean Kang -- H.C. Wainwright -- Analyst

So back to the -- hi, did you say you are expecting potential US regulatory approval in late '20 or early 1Q '21, is that correct?

Darrin R. Uecker -- Chief Executive Officer, President and Director

Yeah, that's correct. So yeah, for the general dermatologic indication, so we've made very good progress throughout the last quarter on our GLP study and as we mentioned, completing all treatments. We expect to submit the 510(K) in the next 60 to 90 days, if that point, it is on FDA's review cycle. And as I'm sure FDA operates on a, basically a 90-day review period and so we are optimistic that because FDA is very familiar with the CellFX System and very familiar with the GLP study based on our pre-submission or Q-Sub meeting that we had that the review will go very efficiently. So that will put us we think end of year December 2020 or just into the first quarter of 2021.

Sean Kang -- H.C. Wainwright -- Analyst

I see. Thank you. So I will -- follow the question regarding your commercialization plan. Since -- due to pandemic -- considering the pandemic in fact ongoing right now, could you give ratings for the additional indication to get approved, then you start commercializing your product or would you do the launch right away?

Darrin R. Uecker -- Chief Executive Officer, President and Director

Yeah. No, that's a good question, Sean. So I think we are very optimistic about being able to launch commercially as soon as we get an FDA clearance. And as you kind of heard ED speak about in his prepared comments, we're in very close contact with many of the KOLs in this aesthetic derm space. We've done a number of surveys of their practices to kind of understand where they're at today and where they think they're going to be at in the coming months, given COVID-19. So our current plan is to launch as soon as we are able, meaning as soon as we get a clearance from FDA.

Now that being said, things can certainly change in the environment, but I think our positions are optimistic that their practices are going to continue to go strong in the back half of the year and early into next year and we're going to be prepared to deliver the CellFX at that time.

Sean Kang -- H.C. Wainwright -- Analyst

I see. Thank you very much. That very helpful. Just last question, could you just provide general commentary on operating expenses for the second half and then maybe on the cash run rate?

Sandra A. Gardiner -- Executive Vice President and Chief Financial Officer

Sure. So our cash utilization for the quarter was just under $8 million -- $7.9 million. The expenses that you see for the -- both the three month ended and actually the first half of the year, we do expect to stay at that run rate for the balance of the year. There are some reductions that we were able to see in this specific quarter largely due to COVID-19. For instance travel related expenses were slightly down, but these weren't material type of expenses. So if we look forward in terms of the -- first of all, the first half year cash utilization was $17.4 million and just looking at the back half of the year, we expect it to be, as I said on the same run rate. So really, ending the year with total cash utilization in the $34 million to $35 million range.

Sean Kang -- H.C. Wainwright -- Analyst

Thank you very much. That's all I have for now. Thank you.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Thanks, Shawn.


[Operator Instructions] The next question will come from Mike Gravatt, [Phonetic] Private Investor. Please go ahead.

Mike Gravatt -- Private Investor -- Analyst

Hi, congrats. Looking to be a productive quarter during challenging time. First question, strategically is I think that you have pretty robust data on SK. So assuming you get the general 510(K) approval. What's the logic on -- during a comparative study on your most robust indication as opposed to something that has not been explored as much?

Darrin R. Uecker -- Chief Executive Officer, President and Director

Yeah. That's a good question, Mike. So I think we may be touched on this a little bit on our last call but the strategy is basically to first -- and this is something that we've been in close communication with FDA on. So it's, first to go after the general indication like you suggested, and then pursue specific indications. And so the reason to pursue specific indication in SH is, we think two things. One is very high clinical unmet need for SH in the market today.

And so, therefore, it's something that we are going to want to be able to market to directly and allow physicians to market to their patients. And so in order to do that, the best way to do that is to have a specific indication for it, which will do two things. One, it will enable us to generate additional very good data but also then provide that data and various marketing materials to physician so they can market directly to their patients. And so we feel that is, that will be an important contributor to us being able to expand the market in, something like SH.

And so our first step was really to talk to FDA about what that comparative trial would look like, based on feedback that we had gotten from them previously on doing a comparative trial. And so now we think based on the formal meeting, we had, we have really good guidance along those -- or along the lines of that study design that will lead to a specific indication. And we think that it is a framework for indications to follow. So as much as we are leading with SH, our plan is to go very quickly after a number -- another -- a number of other indications now that we sort of have a good, I think a good framework with FDA on how do you studies to be executed.

Mike Gravatt -- Private Investor -- Analyst

Okay. Thank you. And just to clarify are you upon the general approval you could be treating SK and SH or just be up to the doctors discretion with less clinical data?

Darrin R. Uecker -- Chief Executive Officer, President and Director

That's exactly right. So it will be a general dermatologic indication for which physicians have the ability to treat various things of their choosing. It doesn't give us the flexibility or ability to market directly to those indications. And so doing that additional clinical work and going through the FDA will give us that ability.

Mike Gravatt -- Private Investor -- Analyst

Thank you. My last question is on that... Got it.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Go ahead.

Mike Gravatt -- Private Investor -- Analyst

And on the IDE, is there any other regulatory requirements, that would be used besides being able to use the device in and of itself before an approval.

Darrin R. Uecker -- Chief Executive Officer, President and Director

I'm sorry, maybe I'm not sure I understood the question. The IDE is for the purposes of executing the SH study. And so once FDA gives us approval for that, that gives us the go-ahead to execute that study in the US.

Mike Gravatt -- Private Investor -- Analyst

Okay. So there is no other exemptions from regulatory requirement other than just allowing you to do the study essentially.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Yeah. That's correct.

Mike Gravatt -- Private Investor -- Analyst

Thank you very much.

Darrin R. Uecker -- Chief Executive Officer, President and Director

All right. Thank you.


At this time, there are no further questions in the queue, and this will conclude today's question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

Darrin R. Uecker -- Chief Executive Officer, President and Director

Thank you everybody for joining us on our second quarter 2020 call. We look forward to updating you in the future.


[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Philip Taylor -- Investor Relations

Darrin R. Uecker -- Chief Executive Officer, President and Director

Ed Ebbers -- Executive Vice President and General Manager, Dermatology

Sandra A. Gardiner -- Executive Vice President and Chief Financial Officer

Sean Kang -- H.C. Wainwright -- Analyst

Mike Gravatt -- Private Investor -- Analyst

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