Perimeter Medical Imaging AI, Inc.

Greetings, and welcome to the Perimeter Medical third 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jody Rates with Investor Relations. Please begin.

Good afternoon. Good afternoon. Thank you for joining us on this call and webcast today to provide the third quarter 2022 update for Perimeter Medical Imaging AI. 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's prepared remarks, we will open 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 benefits 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 time for potential publication or presentation 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 statements. For additional information about the risks and uncertainties facing our business, management encourages you to review the company's public filings and press releases, which are posted on CDAR at www.cdar.com. The press release summarizing this business update was released today, November 15, 2022, and will be made available under the Investors section of our website at www.perimetermed.com and file with CDAR. Now, I would like to turn the call over to Perimeter's CEO, Jeremy Sabota.

Thank you, Jody. Good afternoon, and thank you, everyone, for joining us today. I'm proud of the progress we made over the third quarter despite continued headwinds impacting both our customers and our clinical partners' operations. I will begin today's call by commenting on both our commercialization activities as well as the clinical development of our next-gen technology currently being evaluated in a clinical trial under our Atlas AI project. I will then turn the call over to Chris for a review of the third quarter financial results. On the commercial front, we made another large step forward in the execution of our go-to-market strategy with our flagship S-series OCT technology. We remain focused on closing the subset of the market who can be strategic early adopters able to develop expertise with the technology without the assistance of AI, and to form our long-term base of reference sites as future iterations of the technology democratize it for more mass market utility. Our pursuit of these types of users 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. These leaders will become our bellwether sites to help shape and support more broad-based adoption of the technology supported by ImageAssist AI. Although the pace of installations is not what we expected, we are confident in our rollout, made good progress in the quarter, and have continued to build strong momentum in our commercial pipeline. As noted during our last call, in Q3, we successfully completed the first commercial placement in the state of California at Pavilion Surgery Center, an affiliate of St. Joseph Hospital in Orange, California. We believe this segment of the market to be of strategic importance to our commercial plans. This installation was also important as it's in the ambulatory setting, a site of care we believe could continue to form a greater proportion of procedures going forward. Then, more recently, we announced the commercial placement of our Perimeter S-Series OCT system at a hospital that is part of one of the largest healthcare networks in North Texas, and is particularly significant for us because it's part of a large national healthcare system across the U.S. Also mentioned in our Q2 call, while many of our current proposals may start with interest from a single user and a single system, we know there is potential for a rollout of multiple units and reaching new champions of our technology. This morning's announcement demonstrated that is the case here with our second installation within this customer network. We believe our technology provides a solution which resonates across many different stakeholders and healthcare providers, including administration leadership within integrated delivery networks like these, and we look forward to expanding on these relationships and placing additional units with those customers. While deals like this often take a bit longer to close, as it does introduce additional procurement steps for our customers, the potential upside in the mid to longer term with increased ability to expand our customer base is significant. Looking at the commercial macro environment, I should note that our sales team continues to work in a challenging environment. We, like many others in the healthcare sector, are feeling the effects of staffing shortages occurring in hospitals across the country. This is broad across our medtech industry, and we are seeing and hearing from healthcare providers, therapeutic companies, and medical device and technology companies who are all struggling with the resulting surgery cancellation and procedure backlog. This is impacting decisions from site of care for procedures to capital budgets and long-term procurement contracting. And in light of these continued issues facing healthcare providers, which are in turn introducing additional elements of volatility in our sales cycle, we have elected to withdraw our installation guidance of 10 to 20 units in the calendar year. However, we are encouraged by the growing number of facilities requesting evaluations and the building momentum in our commercial pipeline. We now have active or pending in-service evaluations at more than 10 sites across the country. We share this leading indicator with you today to give you this one-time insight into the health of our pipeline as we make this transition. And going forward, we will continue to provide updates on our commercialization progress, and we'll comment on our placement outlook once sales cycle return to a more normalized rate. And while staffing and other macro pressures persist for our customers, We believe the caliber of users and institutions adopting the technology are incredibly strong indicators of the validity of our stated early commercialization strategy that is building future reference sites and key opinion leaders with our flagship S-series OCT. I also do not want to overlook the performance our early customers are experiencing. Our sample size of procedures continues to grow across placements and evaluations over an increasing number of surgeon users. and we continue to see results that outperform our 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 re-operation rates utilizing our technology to visualize their margins interoperatively. Next, turning to our Atlas AI project, which includes the clinical pivotal trial of the B series with ImageAssist AI, we have activated the initial eight planned clinical trial sites. And further, we have received FDA approval to expand the number of institutions involved in our trial to support the goal of accelerating patient enrollment. In parallel to our request to the FDA for expansion sites, we have been executing diligence on potential expansion sites and believe we have qualified options available to us that we can quickly work to get enrolled. While the staffing shortage headwinds I've already described have had an impact on clinical trials across our industry as well. I'm pleased to report that we are executing on our site expansion plans and other mitigation strategies to increase patient enrollment. Further, we believe the high level of engagement from our existing investigators and the significant interest we have received for expansion sites reflect the belief within our end-user community that our B-series OCT with ImageAssist AI has the potential to be transformative technology. As a reminder, the aim of the study is to assess unaddressed positive margin rates of surgeries utilizing perimeters technology compared to the standard of care. Our goal is to gather data from approximately 330 patients and complete that patient enrollment in the first half of 2023. We believe that this further enhancement of using AI along with our OCT imaging technology is going to empower surgeons with a tool set to improve healthcare outcomes. Lastly, in terms of future growth initiatives for Perimeter and to give a glimpse into future indications, we were pleased to announce the two poster presentations at the annual meeting of the College of American Pathologists 2022, which took place from October 8th to 11th in New Orleans, Louisiana. The research presented validates the potential use of Perimeter's S-series OCT to intraoperatively image specimens across a variety of tissue types, such as breast, thyroid, kidney, liver, lung, colon, heart, pancreas, spleen, and adrenal glands. This research helps to demonstrate that perimeter S-series has the potential to be used in a variety of additional settings and to also bridge the gap between surgeons' need for immediate real-time info in the operating room with images that correlate to histological results with a process that does not interfere with surgical procedures or final pathology. And with that, I would like to turn the call over to Chris Scott to give a financial overview. Chris?