Perimeter Medical Imaging AI, Inc.

Greetings. Welcome to the Perimeter Medical Q4 and full year 2021 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mark Kamenowski of Investor Relations. You may begin.

Good afternoon. Thank you for joining us on the call and webcast today to provide the fourth quarter and full year update for Perimeter Medical Imaging AI or Perimeter. On the call with me today is Jeremy Sabota, Perimeter's Chief Executive Officer, who will provide a financial summary and business update. Following Jeremy's prepared remarks, we will open up the call for your questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the future financial position, business strategy and strategic goals, competitive conditions, research and development activities, projected costs and capital expenditures, research and clinical testing outcomes, the potential benefit of our products, including the Perimeter S Series OCT, Perimeter B Series OCT, and Perimeter Image Assist. The efficacy of our clinical trials design, the timing and anticipated enrollment in our clinical trials, and the timing of potential publications or presentations of future clinical data. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our CDAR filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statement. For additional information about the risks facing our business, I encourage you to review our public filings and press releases, which are posted on CDAR at www.cdarsedar.com. Yesterday's press release summarizing the business update will be made available under the investor section of our website at www.perimetermed.com and filed with CDAR. Now I'd like to turn the call over to Jeremy. Jeremy.

Good afternoon and thank you everyone for joining us today. Yesterday we issued a press release containing our 2021 results delivering solid progress on a number of different initiatives across the organization. most notably on the commercialization efforts of our flagship perimeter S-series OCT and product development of our next-gen perimeter B-series OCT with ImageAssist AI. I will start today's call with a financial overview of both the fourth quarter and full year. After that, I'll move into a business overview and outlook for the coming year. And finally, I do look forward to taking your questions at the end of the call. Before I dive into the specifics, by way of background for those of you who are new to the Perimeter story, we are a commercial stage medical technology company driven to transform cancer surgery with ultra-high resolution and real-time advanced imaging tools addressing unmet needs. Currently, we're striving to address the key unmet need for intraoperative margin assessment by bringing ultra-high resolution imaging information right into the operating room. and putting it in the hands of surgeons to assist with their clinical decision-making with the hope of avoiding all of the costs and complications associated with repeat operations. With that, let me move into a financial overview, and unless otherwise noted, I'll state financial figures in Canadian dollars. Operating expenses for the three months ended December 31, 2021, were $5.5 million compared to $4.2 million during the same period in 2020. For the full year, operating expenses were $16.2 million in 2021 compared to $10.2 million in 2020, reflecting our expanded investment in both our commercialization and our product development initiative. The net loss for the three months ended December 31, 2021 was $5.5 million compared to the net loss of $2.3 million for the three months ended December 31, 2020. For the full year of 2021, our net loss was $16.7 million compared to $7.9 million in 2020 For the 12 months ended December 31, 2021, cash used in operating activities was $13.9 million. The cash used during the year was mainly driven by costs associated with expenditures, supporting our growing commercial operations, as well as research and development activities, including our clinical studies. After that use of cash, as of December 31, 2021, cash and cash equivalents were $4.7 million. However, subsequent to December 31, 2021, the company raised an additional capital through a private placement resulting in gross proceeds of approximately $48.7 million as announced on January 27, 2022. This private placement was led by a $43.4 million strategic investment from social capital and included insider participation from both the board and management. The significant interest from a major U.S. technology and healthcare investor, combined with the broad market support we received across the additional subscribers, is further validation of the company's technology and business at a time when we are embarking on transformational, commercial, and clinical initiatives for the organization. For me, having that strong balance sheet was essential for us during these early stages of commercialization as we remained agile in responding to the market's needs. However, beyond the strong balance sheet, we found a strategic partner at Social Capital that went well beyond my expectations. Not only have they provided us with the capital to move forward, but they also bring to us expertise and an ecosystem in artificial intelligence at a time when we are looking to build upon the strong foundation already developed with ImageAssist AI. Looking at the company from a macro perspective, our balance sheet is really part of the foundation from which we will build this business and support the commercial growth of our technologies. On our last call, I talked about the buildup of our commercial efforts, which will be one of our primary focus areas for the foreseeable future. Under the leadership of Steve Seppit, our Chief Commercial Officer, we are continuing to build out a highly skilled commercial team who have been actively executing on commercialization. However, like many parts of the economy and healthcare system, This team felt the headwinds of COVID during 2021. The impacts of procedure volumes, staffing shortages at our customers, restricted access to customer facilities were all felt across the team. None of these are conducive to launching a novel technology in any market, and particularly in healthcare. But I'm pleased with the way the team was able to persevere and continue to make progress while building brand equity during these difficult times. That said, the early part of 2022 has given us reason to believe that these effects are waning as infections in the U.S. decline and ICU capacity improves. Steve's team, which now includes eight market development managers and two area business directors covering regions across the U.S., and they continue to target surgeons who exemplify the early adopters of our imaging technologies. These are imaging-savvy surgeons who are excited to be in the early part of the adoption curve of this technology and who can become the thought leaders that help us execute on a train-the-trainer strategy as we continue to advance towards the implementation of the next-gen artificial intelligence-enabled technology that's currently in clinical development. These early users are seeing great results from the technology thus far, and we will look to continue to refine our new user onboarding experience to build on these early successes. Another major area of focus is to continue to support our multicenter randomized two-arm pivotal clinical trial on our FDA breakthrough designated device for our investigational perimeter B-series OCT combined with image assist artificial intelligence, what we are calling our Atlas AI project. As a note, this Atlas AI project is partially supported by an up to $7.4 million U.S. grant from the Cancer Prevention and Research Institute of Texas. and we continue to value the partnership and support from the entire CPIRT organization. The trial, when fully enrolled, will consist of over 300 patients undergoing breast conservation surgery across eight U.S. clinical sites with the aim of assessing unaddressed positive margin rates of surgeries utilizing perimeters technology compared to the standard of care. The principal investigator is Dr. Alistair Thompson, Professor and Section Chief of Breast Surgery from Baylor College of Medicine in Houston, Texas. And last November, Drs. Fine and Berry from the West Cancer Center, which is outside of Memphis, Tennessee, enrolled the first patients in the study. We have identified an exemplary list of remaining participating sites in the study, and we continue to work to onboard these surgeons and institutions with the expectation of having all sites active by mid-year. We believe that this further enhancement of our technology is going to empower surgeons with an incredible tool set to improve healthcare outcomes. and we look forward to updating you on progress of the study as it moves towards completion. With that, let's turn to our 2022 outlook. We are anticipating building on the strong momentum that we built up to close out 2021. As mentioned earlier, while some effects of the pandemic will linger, we see reasons to be optimistic that some of the aforementioned headwinds are slowing. Our outlook assumes that trend will continue, and our full-year estimate for new perimeter S-series OCT installations is 15 to 20 units. Similarly, on the clinical side, we assume continued progress towards normalcy in procedure volumes at our investigator sites, which should enable completion of patient enrollment by year-end. In closing, I'm extremely proud of what we accomplished in the past year. We've commercialized our technology, funded ourselves so that we can continue to roll it out and, as well, move our perimeter B-series OCT with image assist AI through its pivotal trial. While I'm extremely proud of the progress we made in 2021, there is still much work to be done, and the organization remains laser-focused on executing the commercial and clinical tasks at hand. The team here at Perimeter is committed to transforming cancer surgery with advanced imaging, artificial intelligence, and machine learning tools to improve patient outcomes and lower costs within the healthcare system. I want to close by thanking our employees and all of our stakeholders for their continued commitment and support. I'm excited for what we're building here, and I look forward to updating you on our progress on further calls. I'd now like to turn the call over to the operator and open the note for questions. Operator?