Perimeter Medical Imaging AI, Inc.

Greetings. Welcome to the Perimeter Medical Imaging AI second quarter 2022 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 Mark Kaminosky, Investor Relations. Thank you. You may begin.

Good afternoon. Thank you for joining us on this call and webcast today to provide the second quarter 2022 update for Perimeter Medical Imaging AI or Perimeter. We will open the call with a business update from Jeremy Sabota, Perimeter's Chief Executive Officer, and then Chris Scott, Perimeter's Chief Financial Officer, will provide a financial summary. Following Chris' 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, commercial activities and timing, competitive conditions, research and development activities, projected costs and capital expenditures, research and clinical testing outcomes, the potential benefit of our products, including Perimeter S Series OCT, perimeter B series OCT, and perimeter image assist. The efficacy of our clinical trial designs, the timing and anticipated enrollment in our clinical trials, and the timing of potential publication or presentation of future clinical data. Forward-looking statements are subject to numerous risks and uncertainties, and many of which are beyond our control, including the risk 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 statements. For additional information about the risk and uncertainties facing our business, management encourages you to review the company's public filings and press releases, which are posted at CDAR at www.cdar.com. The press release summarizing this business update was released today, August 24, 2022, 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 Sabota.

Good afternoon, and thank you, everyone, for joining us today. I'll begin today's call by commenting on our commercialization progress and updating you on our outlook for the rest of the year, followed by an update on our Atlas AI project. Then I will cover general operation updates before turning the call over to Chris for a review of the second quarter financial results. On our previous calls, we have spoken about our commercial rollout strategy for our flagship S-series technology. Namely, we are focused on early adopters who can develop a broad-based expertise with the technology and form our long-term bench of reference sites, and we're seeing great progress in the execution of this strategy. From a macro perspective, the commercial team is seeing increased access to customers, which is critical as we educate this user community on our novel technology. However, our customers are continuing to react to uncertainties in their operations and supply chains around things like staffing shortages and other pressures that are challenging value analysis committees across the country, And this is impacting decisions from site of care for procedures to capital budgets and long-term procurement contracting decisions. That said, interest from our end-user surgeon community is strong and growing. Just a few weeks ago, we announced the first commercial placement of our Perimeter S-Series OCT system in the state of California at Pavilion Surgery Center, an affiliate of St. Joseph Hospital in Orange, California. The new medical imaging technology will be used under the direction of Michelle Carpenter, MD, a breast surgeon who performs breast conservation and other surgeries at Pavilion Surgery Center. This is a major milestone for Perimeter as not only are we thrilled to partner with such an esteemed physician as Dr. Carpenter, but also we are excited to have one of our early installations in the ambulatory setting, a site of care we believe will continue to form a greater proportion of procedures going forward and a shift that is only accelerating given the staffing challenges facing providers today. We now have systems placed at multiple sites and are actively working on growing this footprint. And it's worth noting that some of these institutions are some of the most advanced in medical care and want to stay on the forefront of medical technologies. Our pursuit of these types of institutions stems from our strategy to connect with leading healthcare institutions and to train and support innovative physicians who see the true benefits of using our technology in their surgical practices, And these leaders can then in turn train others as we look to expand our commercial footprint. Additionally, current proposals may start with a single system interest, but then have a rollout of multiple units. And while we are excited about the response of our customers wanting to make our technology the standard of care across our institution, it does introduce additional procurement steps for our customers and a higher level of volatility introduced by any one individual deal. With that, we have revised our full year outlook on commercial installations to increase the range to 10 to 20 units. We have assembled an experienced commercial team that is executing on our strategy and do foresee our rollout gaining momentum to close out the year and beyond. And I also do not want to overlook the performance of our early customers. Our sample size of procedures continues to grow across placements and evaluations over an increasing number of surgeon users. and we continue to see that results are outperforming our anti-expectations. Whether users are starting from national average type re-operation rates of 20% to 25% or as low as 10%, they are achieving early single-digit results utilizing our technology to minimize their margins intraoperatively, and this is the ultimate value creation for their practice. In terms of our Atlas AI project, which includes the clinical pivotal trial of the B series with ImageAssist AI, it is progressing with seven out of eight sites up and running. However, despite great engagement from our investigator partners, the staffing issues plaguing providers more generally are also impacting the enrollment rates within our study. That said, we are actively pursuing strategies to mitigate the risks imposed by shortages of staff, ranging from research support to pathology staff, but if the current environment persists, we do not see enrollment completing until early 2023. And just as a refresher, the goal of the study is assessing unaddressed positive margin rates of surgeries utilizing perimeters technology compared to the standard of care. We believe that this further enhancement of our technology using AI is going to empower surgeons with a supercharged toolset to improve healthcare outcomes. We couldn't be more pleased by the engagement of our physician investigators in this study and their feedback about what participation in it means for them. Finally, from an operational perspective, we previously announced the addition of Chris Scott to the team, and his appointment was a vital step to filling out the management team. Chris brings a wealth of experience directly relevant to Perimeter, and as in his previous role, he helped lead another medical device company through from IPO and scale-up to achieving revenue CAGR over 20%, five times headcount growth, and growing market capitalization from a pre-IPO value of approximately $10 million to a peak of over $600 million at the end of 2021. We're grateful to have Chris on our team and look forward to his contributions. The other addition we announced this last quarter, the appointment of Ananta Kanchola to our Board of Directors. from the nomination of social capital. We're thrilled to have Anantha on our board, and having someone with his AI expertise on our team really gives us an asset. Anantha is currently engineering director at Meta, where he is head of its AI platform. And additionally, he has a background of applying artificial intelligence and machine learning software solutions at companies such as Microsoft, Facebook, and Lyft, and will be invaluable as we advance our next-gen image assist AI technology. We are very excited about the product pipeline in this part of our business, and we look forward to his insight and his ability to leverage his AI experience and knowledge as we execute on our new product development strategy. With that, I'll turn the call over to Chris for a review of our Q2 financial results.

Thank you, Jeremy, and good afternoon, everyone. As Mark mentioned, we issued a press release summarizing our second quarter 2022 financial results earlier today. Unless otherwise noted, I will state financial figures in Canadian dollars. Operating expenses for the three months ended June 30, 2022 were $6.3 million compared to $3.1 million during the same period in 2021, primarily reflecting the increased activity in both the commercialization and clinical fronts. The net loss for the three months ended June 30, 2022 was $0.4 million compared to a net loss of $3.2 million for the three months ended June 30th, 2021. In addition to the higher expenses related to our commercialization and clinical efforts just mentioned, net loss was favorably impacted by higher finance income, primarily driven by the revaluation of the warrant liability, and higher net foreign exchange gains recognized during the quarter when compared to the prior year quarter. From a cash flow perspective, for the three months ended June 30th, 2022, cash used in operating activities was $6 million. The cash used during the quarter was mainly driven by expenditures supporting our growing commercial operations, research and development activities, and an increase in our secret receivable for project-related costs. Finally, as of June 30, 2022, our cash and cash equivalents totaled approximately $45 million. With our strong balance sheet, we are very confident that we will be able to fund the continued commercial rollout of our products Now I'll turn the call back to Jeremy for some final comments.

Thanks, Chris. Everyone at Perimeter is laser-focused and remains committed to transforming cancer surgery with advanced imaging, AI, and machine learning tools to improve patient outcomes and lower costs within the healthcare system. We believe we have the opportunity to provide something transformative. As our commercial rollout continues to gain traction and the Atlas AI project progresses, we continue to see steps towards the validation of what we are pursuing. If I step back and think back to the two largest areas of value creation for this organization today, we are exceeding progress on both of them. First, the clinical outcomes our physicians are achieving with the technology is exceeding expectation. This is a validating, leading indicator of our ability to become the standard of care. Secondly, the product development pipeline around what our artificial intelligence software can bring to really democratize this technology has accelerated over the last few months with the appointment of Ersan and Ananta, and I am very excited about what the future holds for that part of our business. And as always, I would like to thank our growing team of employees and stakeholders for everything they do. I'm truly excited for what we are building here, and I look forward to updating you on our progress on future calls. I'd now like to turn the call over to the operator and open the line for questions for either myself for Chris. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Frank Takanan with Lake Street Capital Markets. Please proceed with your question.

Great. Hey, thanks for taking my questions. I wanted to start on the commentary around the single system to multi-system order potential you were talking about, Jeremy. It sounds like that's a pretty exciting development. So maybe bring us just a little bit deeper into what exactly is happening with that specific or if there's multiple of those specific systems. single orders transitioning to multi-system orders and just how does this impact the procurement process around timing and is this a late time in this year that we see the placements occurring or is this maybe get pushed into the front half of 2023?

Certainly. Thanks, Frank. Yeah, I think, you know, despite the volatility it creates in our numbers, we're extremely excited about the response we're seeing from some of the larger named institutions. So again, maybe taking a step back a little bit and thinking about where our technology sits on really the two extreme ends of the scale, one being your smaller community hospitals, your standalone surgery centers, where they may not have the resources to manage this problem just because of funding and scale. So they might have a higher re-excision rate to begin with, so we can impact a higher re-excision rate across a lower number of patients in places like that versus the other end of the spectrum, the leading edge institutions, you know, the name brand hospitals that we would all know. They have a better re-excision rate, but they have more patients. And, you know, we're in institutions like that. They're in our pipeline. And what's happened is the response from, you know, the directors of the program and the evaluation has been extremely positive. They're seeing the kind of use cases that, you know, we expect they will see. And they don't want to have just a single institution or a single installation at the main campus. They want to see it expand to the satellite facilities as well. So fantastic reaction, which is really, really positive. Now you're Your comment on what it means from a procurement perspective definitely changes the authorization levels that have to take place. And there are more stakeholders to get involved through Valuable Analysis Committee or physicians at those satellite facilities. So things do become less predictable from a timeline perspective, but still feel really good about some of those falling as we get through the additional steps that we need to do some of those falling this year, and really it's made us more bullish about our long-term pipeline than we ever have been before.

Got it. That's really helpful. And then maybe just shifting over to the pavilion win a little bit, can you just talk about your expectations around what ASCs will – deployment of the S series? Do you think that ASCs are going to be the majority or is it an ASC hospital mix and how does that look as you deploy the technology?

Yeah, I think well, they will certainly ASCs will certainly become a big, big part of our business. There's no two ways about that. And I think the last 12 to 24 months has really only accelerated that trend. So I think probably in the near term, you You'll see more of the larger institutions, the more innovative, leading-edge kind of institutions be the larger percentage of the customer base. But even today, more and more we're hearing our surgeon partners say, I'm having a hard time getting OR time at the main hospital, so I'm moving more of my procedures to the ambulatory setting. You know, staffing challenges at the main OR are making it difficult to do as many procedures there, so I'm moving procedures to the ambulatory setting. And I think, you know, breast lumpectomies particularly are, you know, a fantastic candidate to move to that lower cost, you know, closer to the patient kind of site of care. So I really, you know, think over time it will become the lion's share of where our business happens for sure.

Okay, that's helpful. And then maybe just one more related to reimbursement. My understanding, there's some temporary reimbursement out there that you're having some success with. One, can you update around how the temporary code has been performing or if doctors have been receiving reimbursement of that temporary code? And then two, just kind of outline the reimbursement strategy we should be thinking about over the next couple of years.

Yeah, you are correct. You may have heard that at the ASPRS meeting. So I'd say if we think about the purpose or the true reason for having a temporary code out there, the primary reason is to track utility across the different payer environments. So that really is our number one objective as we get a broader base of users using it on more patients. the payers who see that code connected to those patients can track the overall cost per episode of care for those patients and track utility of what perimeter technology means. Now that said, there is real value into using the technology and both the physicians and the facilities can claim for reimbursement under that T-code and we are seeing some payments happening. I think it's definitely on a case-by-case basis today, but, you know, really supports the longer-term strategy. And as we continue to develop that real-world, you know, utility from the C-code being used over time, combine that with the clinical publications that are coming out and the data we anticipate having from the randomized control trial that's underway today, all forms, you know, really the evidence to support graduation to a more permanent code, as well as coverage and payment from the different payers, whether that's CMS or the commercial payers, for sure. And we'll continue to move down that path.

Perfect. That's really helpful. I'll stop there. Thanks for taking the questions. Thanks, Frank.

Our next question comes from the line of Raul Sargazer with Raymond James. Please proceed with your question.

You know, attracting such great talent.

So I just want to start with the interplay between placements at community hospitals versus larger teaching hospitals. And Jeremy, I believe in response to Frank's question, you said that most placements will likely be at the larger teaching hospitals. Could you maybe speak a little bit at a higher level in terms of the strategy of where you're looking to place these, you know, between the two types, as well as how you then plan to leverage that installed base of the current S-series towards the AI-enabled device, you know, as that further democratizes the tech.

Definitely. Thanks for the question, Rahul. You know, I've kind of described the commercialization phase we're in today as really the train the trainer phase is the way I like to describe it. And, you know, you could even, you know, some would even argue that we're pre early adopter at the moment where, you know, at the kind of ground zero customers from that perspective. And I think getting into the teaching hospitals is a, you know, tried and true path to really proliferating the technology across, you know, the future of, fellows and residents that are in those teaching hospitals today. So they tend to be the institutions that are willing to adopt these new emerging technologies. And the leaders of the departments are eager to be on the front end so that their students and fellows can learn on that new technology as they're learning and growing their practices. So definitely we'll have those kind of name-brand institutions squarely in our strategic efforts and active evaluations today. That said, everything I just described about what we're struggling with from staffing and our customer partners is necessitating being in some of those community hospitals today and really validating the model in those environments. So even physicians that are operating at those teaching institutions they may as well or may also have credentials at a surgery center and just prefer to do some of these lumpectomies there because they're less complicated and they can push through more volume. So, you know, it really is an important part of the commercial model and we really can add value in both ends of that spectrum and want to, you know, focus on both ends of those spectrums. And then, so as it relates to leveraging that user base, you're, you know, we're building the future KOLs prior to the enhancement with the artificial intelligence and focusing on the reference sites that, again, are putting a lot of residents and fellows through their program. They're the ones that are recognized as educators. They're the ones that people want to call to learn about this new technology, and they're the ones that have the podium presentations when we go to the industry conferences. As I mentioned in my prepared remarks, they're the future bench of our teachers, our KOLs down the road as we really look to expand the commercial footprint much more broadly.

Terrific. That's excellent color. Thanks, Jeremy. So my second question is a bit of a two-parter. Now, recognizing that you've adjusted your guidance of 10 to 20 units, And with the first placement in California, could you give us maybe a little bit more color in terms of confidence of reaching at least even the bottom end of that range? And then my second question is around the business model, given that this is sort of your first capital equipment sale, how should we be thinking about, again, the interplay and balance between capital equipment and potential recurring revenue as you continue to develop your business model?

Yeah, definitely. I think, you know, I'd say we expanded the range because of the, you know, the circumstances I described and that, you know, each individual deal is becoming a bigger proportion of the overall numbers. And it's really less of a, you know, I'd say it's more of a timing aspect from that perspective. So we're, you know, working on bigger deals that, you know, may or may not fall in the timing we expected. So that's really kind of the thought process behind the updated guidance, but we feel really good about where we're at from a pipeline perspective in hitting the low end of the revised guidance for sure. Now, we've got a number of deals in active evaluation today that gives us a lot of confidence and a greater number of deals in value analysis committees going through the process across you know, across the procurement cycle in the number of those kind of multi-unit type deals as well. So feeling really bullish, the sales team, you know, we're more confident than ever that they're out there doing the right things and, you know, they're feeling the confidence from the insurgents. And, you know, as I mentioned, like the actual, like if I combine the results from our early installations, the results from our evaluations, Like, the technology, physicians using our technology are seeing much better results than I would have expected or would have told you to anticipate 12 months ago. And that, at the end of the day, will, you know, will drive deals through the pipeline and will make things happen. So that's why we're so bullish about, you know, the next kind of four months and really the next and beyond from that perspective. So, sorry, the second part of your question?

the balance between the capital equipment sales versus potential recurring revenue sales.

Yeah, that's actually, we're seeing some interesting dynamics there. I think, you know, we still want the speedy path through the procurement cycle. We want to stay in the operating budget of our customers. So, you know, still running an offense of, you know, placement first and really they acquire the use of the capital equipment through the purchase of the consumables. Now that said, you know, just given unpredictability in the P&L of our customers, where there tend to actually, what we're feeling is a little bit looser capital budget, you know, there is a desire, an increasing desire of customers to have a capital purchase option. And that seems to be a growing trend as we're out there today. So, you know, I still think the lion's share, the vast, vast majority will be in the placement model. But, you know, we're not going to say no to, you know, an institution that absolutely needs to have a capital purchase option to get this technology to impact our patients' lives. So, you know, working through all of that.

Got it. And if you'll indulge just one more quick question. So, of course, the next generation AI devices is critical for the future of of the company. So could you perhaps talk about how these essentially the base of future KOLs and reference sites that you're establishing now and the strategy of how they are going to be leveraged for really that next phase and shortening that initial adoption cycle of the AI device and what sort of timeline we should be thinking about as the adoption ramp for that next generation?

Definitely. I think twofold from that perspective. One, we're out there with the S-Series today, and these users are learning the technology without any assistance from artificial intelligence. Now, they have our field-based clinical team, our administrative specialists out there doing a great job to help them learn and train and they're kind of learning on the job. So, you know, I think that, that set of, you know, future KOLs is really, you know, becoming image interpretation experts. They're, they're having to deal with things in the workflow that are a little more cumbersome without the support of, of the AI. So definitely, you know, want them to be excited and ready to, you know, have, you know, they can see, they know the AI under the hood, right, prior to the AI happening. But then the other end of that spectrum are the eight clinical sites that we have in the pivotal study. And, you know, they're the ones learning the technology with the AI. And I think, you know, you've probably heard me say several times at this point, we couldn't be more excited about the investigator partners that we have in the study and And those eight sites, you know, represent folks that are, you know, the respective chair of advisory committees in the American Society of Breast Surgeons. We have, you know, the nonprofit large 500-bed hospital investigators working on it. And then we have community-based hospitals that, you know, are in rural areas that are just excited to have technology like this. to help them, and they're going to be the ones that have the image assist experience and expertise as we look to democratize that. So you're exactly right. Both sides of the commercial KOLs that we're building, as well as the investigators that are going through the study, we expect them to be great partners as we look to really continue to build out our educational platform and continue to have educational events across the country. where their peers can learn about our technology specifically. And from a timeline perspective, I think we're constantly innovating from the AI perspective as we go as well. And Gen 2, as I kind of alluded to, I'm so excited about what's in the pipeline from a dev perspective on the AI side of that business. So Gen 2 is going to be even better than Gen 1. But I would expect the inflection point You know, considering when we'll be on the market and, you know, just the general procurement cycles that we're working through, I think you'll start to see that curve in the back half of next year bend up and really accelerate at an accelerating rate as we enter into 2024 and beyond.

Great. Thanks again, Jeremy. And thanks again for taking our question. We'll get back in the queue. Yep. Thanks, Raul.

Our next question comes from the line of Scott McAuley with Paradigm Capital. Please proceed with your question.

Hey, Jeremy and Chris. Thanks for taking the questions. I just wanted to dig a bit deeper into the utilization and re-excision rates that you're seeing with the current users. I don't know if you can share any details on how many cases that Dr. Tower and Dr. Carpenter or others have kind of performed on that commercial system and any estimates on the re-excision rates that you're seeing? I know you had highlighted in the spring that I think Dr. Tower had yet to have a re-excision at that point, so how that usage is evolving over time.

Yeah. Thanks for the question, Scott. The area that I mentioned in the prepared remarks, this is a leading indicator that, you know, the technology is working and it's working better than I think any of us would have expected. So, you know, if we do kind of consolidate, now these aren't clinical study numbers in the commercial setting, so, you know, we're tracking, we see when cases are done, you know, we know how many consumables are used and those kinds of things, but You know, we're up, you know, well over 100 procedures at this point and across, you know, users beyond just the two placements you mentioned, but also in the evaluation setting in some of those areas. And we're seeing early, you know, very low single-digit reoperation rates from those users. And that, to me, is just, you know, extremely exciting. I think it's a validation that We've got the right early users, so I think you probably heard me say in this early phase of revenue, it's less about how many installations we're making and more about the quality of the installations we're making, and we're seeing that quality play out. It's also a validation of the support we're getting those users out there with our educational platform that we're developing and the image training specialists that are out there in the field, shoulder to shoulder with those users. So couldn't be more thrilled to see the way the technology is impacting those practices. And it's only a matter of time until that word of mouth starts to get to their peers and we really begin to proliferate it further.

Yeah, no, that's very exciting stuff. On the installations and kind of the increase in size that you're seeing and interest in kind of the number of installations per site or per contract, I don't know if you can give any kind of indication of like is this going from an institution looking at just installing one site or one system to installing two or is this going from installing one system to installing five? you know, just as kind of a gross order of magnitude kind of increase that you're seeing in the interest kind of per site?

Yeah, I think it's, you know, it's all across that range depending on the kind of institution. So, you know, and some of those indications are pretty early, but, you know, I think you're exactly right. So there are some that are one to three, some that are one to five, and Others, you know, kind of one to eight type numbers as we think about, you know, engagement at the integrated delivery network level and some of those things. And, you know, we're super excited about that response. There's a lot to work through to make some of those bigger numbers happen and a lot more stakeholders, like I mentioned, to get involved. But, you know, couldn't be more thrilled. That's the, you know, and typically we're starting at the flagship campus too, right? So... That's a great position to be in for sure.

That's great for that additional detail. I don't know if you can comment on the demo activity, so in terms of either number or engagement of that early stage in the pipeline of placements or engagement on a demo level?

Yes. Yeah, well, we've got lots happening from a demo perspective. You know, really, I think if I were to kind of characterize it, it's across the country and across both of those kinds of customer profiles I described. So, you know, and the feedback from the end physician at all of those evaluations has been super positive, like the you know, that's the one thing that, you know, the surgeons are seeing the kind of results or are seeing better results than we all would expect, and that's what's driving the rest of the procurement cycle at those facilities. And, you know, as I mentioned earlier, you know, there's a lot of facilities out there in active evaluation, but, you know, kind of, you know, double or triple that in value analysis committees that are going through the process to try to get into So as we think about the health of the pipeline and from early to late stages of the pipeline, we're really excited about the rest of the year and into next year.

That's great. And one last one for me. I believe I read that seven of the eight sites for the trial are up and running and active. Do you have an estimate on standing up that last trial site? And obviously with some of the challenges with staff turnover and things like that, are you investigating expanding to adding additional sites to that eight? Or is it really about doubling down and improving the throughput on those existing sites?

so the status on the eighth site we're just waiting for the final IRB approval so you know that is we expect to be really any day now at this point and then on the second half of the question yeah I'd say we're we've encountered issues from staffing shortages that you know are really not exactly what you would read in the headlines from other med tech companies or other providers making their announcements. And I think the situation really delaying startup in some cases and enrollment in other cases was particularly acute in the research staff side of the equation supporting the study. So that's been You know, we've really been doing all we can to help the investigator partners keep that goal staffed and those staff that are trying to help them through recruitment or contracting or whatever that may be. And then, as I mentioned in the prepared remarks, all the other end of the spectrum, all the way to the pathology labs, you know, where the specimens can't be processed after the study because there's no staff at the pathology lab to process it. You know, interesting dynamics there, and, you know, I think we're doing both of the mitigation strategies that you mentioned. So, one, really partnering with the sites to increase the patient awareness through, you know, different kinds of campaigns, and that's really twofold. One, to try to increase the population of patients that are going to that particular site, but also to Once they're going through the screening and consenting process, making sure those patients are well-informed and excited about what this study can do for the future of breast cancer surgery, for sure, so that we get a higher hit rate on consents. And then the other end, evaluating whether or not it makes sense to add another site to try to increase the overall enrollment, the rate of overall enrollment across the different sites. working on both ends of those spectrums. And I think we'll see, you know, now that we're kind of exiting the summer vacation time and, you know, procedure volumes normalize a little bit for each individual investigator, I think we'll have a much better read on what the right mitigation strategies are going forward.

That's great. Totally appreciate that. Jeremy and Chris, thanks again for taking the questions and congrats on the core. Yep.

Thanks, Scott.

Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from the line of Brad Conacher with Richardson Wealth. Please proceed with your question.

Hi. Sorry, guys. You answered my question, Jeremy. Actually, the previous questioner asked what I was going to ask about the volumes, so I appreciate it.

Good luck. Thank you. Yep. Thanks, Brad.

Thank you. Our next question comes from the line of Hugh Cleland with Roadmap Capital. Please proceed with your question.

Hey, Jeremy. Hey, Chris. I've got two questions. One, I believe the top four cancer hospitals in North America are, I think, in order, MD Anderson, Memorial Sloan Kettering, Cleveland Clinic, and Mayo Clinic. Are you making any progress in engaging with any of those institutions in terms of commercial placements before the AI studies complete? I mean, are they willing to engage in discussions about commercial placements before the AI studies complete?

Yeah, definitely. And, you know, I think we talked a little bit about it in our strategy of teaching facilities. And, you know, you may recall that, you know, MD Anderson was part of our clinical development. They were in the data collection study for the AI, you know, development process prior to, you know, engaging into this pivotal study. And, you know, those are certainly the kinds of institutions that we are working with today. And they're the kinds of institutions that want to be on the front end of this, you know, kind of these technological advances, and we're really excited to have name brands like that thinking about enrolling or thinking about using the technology and evaluating the technology prior to the AI. You're exactly right.

Great.

So in my career of investing in these earlier stage companies and watching them grow, there's often uh some you know interesting anecdotes which give some insight into you know the value of the technology or what it's doing differently and maybe you have a couple you could share but one a question that occurred to me is right if you've got these cancer surgeons in demos or what have you where you know they're going from a re-excision rate historically of you know uh dr tower for example 20 25 percent down to zero i don't know if she's had any yet but How are the pathologists reacting when they see surgeons' re-excision rates plunge from the historical norms down to almost zero? Are pathologists kind of engaging and getting excited about what they're seeing, and how is that sort of flowing through into market development activities?

Yeah. Well, since day one, we've said pathology is effectively a secondary champion for us through the sales cycle. And I think there is a perception that we're trying to replace the gold standard pathology. That's not the case at all. And we want to partner with them and we want them to be excited about what this technology can do for the overall workflow. And we are seeing that. So I think it's less less of an observation from them about what the re-operation rates are like and more about precision of what our surgeons are able to accomplish. And, you know, I think there's a couple anecdotes of, you know, just the surprise or them kind of blindly knowing that something has changed because the shades that surgeons are taking are much more targeted. And on top of that, the shaves that were taken are much more precise. And, you know, that's, you know, part of, again, as we, you know, point to particularly community hospitals where they don't have pathology on site and, you know, they might have a pathologist that's driving 90 minutes to come deal with the procedures, you know, for them to be able to see the images coming out of the OR, know where they need to process the specimen to take their you know, blocks for evaluating margins and that kind of stuff is really, you know, a finer nuance to some of the softer value add that we have, but is really, you know, exciting to see that collaboration happen between the OR and the pathology lab and just the excitement across both of those champions.

Okay, thanks.

Thank you. Our next question comes from the line of private investor, Lawrence Baruch. Please proceed with your question.

Yes, Sherry, thank you for taking my question. Can you remind me of how long after all the patients are enrolled the database lock will occur and the results will be, at least the top-line results will be available?

Yeah, certainly. you know, we have a pretty kind of quick turnaround on observing kind of our patient state, given that, you know, if we do have a positive margin that requires a re-excision, that patient should be getting back as quickly as possible. So, you know, we would expect the database lock slash top-line results to be somewhere in the kind of two-month range after the patients are fully enrolled. We have You know, one secondary outcome that does require post-op follow-up to get specific patient reported outcomes as far as cosmesis and satisfaction from that perspective goes. But, you know, that being said, you know, we will know our primary endpoint of any unobserved or unaddressed positive margins in pretty short order following enrollment.

Thank you. And one more follow-up. Have you thought about partnering at all with groups that are developing AI-powered software platforms to do the pathological like companies like ProSha?

No, we haven't. I mean, other than just soft industry networking relationships, we haven't really had a need to partner with them. Obviously, the path workflow happening much later in the continuum of care than where we are And, you know, their imaging being stained and processed is a little bit different from us. But, you know, obviously we're active in like the AI in medical imaging community. So we, you know, we collaborate and trade ideas from that perspective, but nothing formal. Thank you very much. Yep. Thank you.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. This does conclude today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.