Pulse Biosciences, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 28, 2024. Pulse Biosciences develops Nano-pulse Stimulation (NPS), also called nanosecond pulsed-field ablation (nsPFA), medical-device technology. The company has shifted its primary focus from dermatology to atrial fibrillation (AF) and remains development-stage with no significant recurring revenue.
Key financial results
| Metric (USD millions, except per-share data) | 2023 | 2022 |
|---|---|---|
| Revenue | $0.0 | $0.7 |
| Research and development | $27.8 | $20.8 |
| Sales and marketing | $0.0 | $12.0 |
| General and administrative | $15.8 | $14.0 |
| Operating loss | $(43.6) | $(58.1) |
| Net loss | $(42.2) | $(58.5) |
| Net loss per share, basic and diluted | $(0.88) | $(1.72) |
| Cash used in operating activities | $(33.0) | $(47.0) |
| Cash and cash equivalents at year-end | $44.4 | $61.1 |
Margins are not meaningful because the company reported no 2023 revenue. The lower net loss primarily reflects reduced commercial and dermatology-related costs and higher interest income; R&D spending increased. In 2022, cost of revenue included an $8.5 million inventory write-off.
At December 31, 2023, total assets were $59.2 million and total liabilities were $14.8 million. Stockholders’ equity was $44.4 million, versus a $2.2 million deficit a year earlier. The $65.0 million related-party loan from Executive Chairman Robert Duggan, plus accrued interest, was extinguished in May 2023 in exchange for 10.0 million common shares; no loan balance remained at year-end. Lease liabilities were $9.1 million, with $12.1 million of total undiscounted operating-lease payments remaining.
Financing activities provided $16.4 million in 2023, mainly from warrant exercises ($14.8 million) and stock-option exercises ($1.2 million). Cash declined by $16.8 million during the year. Common shares outstanding increased to 55.1 million from 37.2 million at year-end 2022.
Material changes and business developments
- The company discontinued dermatology sales and marketing after its 2022 strategic shift. Revenue fell to zero in 2023; the company says it continues to support remaining dermatology users and is open to a commercial partnership.
- R&D increased to $27.8 million as development activity expanded. The company initiated a clinical study of its CellFX nsPFA 360° cardiac catheter in Prague in December 2023; it described early acute and remapping data as promising. U.S. marketing would require the FDA’s PMA pathway, according to the filing.
- The company completed a preclinical GLP study for its cardiac clamp and filed a 510(k) submission in January 2024. It was also taking steps toward a clamp clinical study in the Netherlands and European CE marking.
- In a first-in-human thyroid-nodule study of the percutaneous electrode, the initial ten subjects reportedly tolerated treatment without reported serious side effects; 90-day imaging showed resorption of treated nodule portions. The study protocol was expanded to optimize treatment parameters.
- Subsequent event: In March 2024, the FDA cleared the CellFX nsPFA Percutaneous Electrode System for soft-tissue ablation in percutaneous and intraoperative surgical procedures. The company said it began a limited release to selected accounts. This clearance occurred after the fiscal year-end.
Outlook, risks and contingencies
- Management stated that existing cash was expected to fund projected operations for at least 12 months from the filing date. The company nevertheless expects to seek additional capital or collaborations; availability and terms are uncertain. A shortfall could force it to reduce or discontinue development, trials, or operations.
- Commercial success depends on clinical outcomes, regulatory clearances or approvals, physician adoption, reimbursement, manufacturing and supply, and the ability to build sales capabilities. The company has limited commercialization experience and faces larger competitors, including established AF-device companies developing pulsed-field ablation products.
- The company reported no significant recurring revenue and expects continued losses. Its business and potential products depend substantially on one platform technology, NPS, and it may never become profitable.
- Robert Duggan beneficially owned approximately 69% of the common stock as of March 20, 2024, giving him control over stockholder votes. His related-party financing and transactions, potential future share sales, and the stock’s historically low trading volume are notable governance and liquidity considerations.
- A former CFO’s arbitration claim seeks severance and other remedies. The company disputes the claims, could not estimate a range of possible loss, and concluded a liability was not probable at year-end.
- Management reported effective disclosure controls and internal control over financial reporting as of December 31, 2023. The auditor issued an unqualified opinion on the financial statements but was not engaged to audit internal control effectiveness.
Important facts for investors to verify
- Cash burn, the stated 12-month runway, and the amount and timing of any financing needed after the filing date.
- Clinical-study enrollment, final and longer-term safety and efficacy data for the cardiac catheter and clamp, and the regulatory pathway and timeline for each.
- Commercial uptake, revenue, pricing, reimbursement, and support costs following the percutaneous electrode’s March 2024 clearance and limited release.
- Potential dilution from future fundraising and equity awards; year-end shares outstanding were 55.1 million, and 9.5 million stock options were outstanding.
- Developments in the former CFO arbitration, lease commitments, and any future related-party financing or transactions involving Mr. Duggan.