Perimeter Medical Imaging AI, Inc.

Greetings and welcome to Perimeter Medical fourth quarter and year end 2022 conference call. 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 a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jody Rates. Thank you. You may begin.

Thank you. Good afternoon. Thank you for joining us on this call and webcast to provide the fourth quarter and year-end 2022 results for Perimeter Medical Imaging AI, or Perimeter. Joining me on today's call is Jeremy Sabota, Perimeter's Chief Executive Officer, who will provide an overview of Perimeter's progress, and we will then 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 timing of 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 statement. 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 news release summarizing this business update that was released today, April 11th, will be made available under the Investors section of our website at www.perimetermed.com and file the 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. As we touch on the highlights and milestones from 2022, I will provide comments on both the commercialization activities underway with our S-series flagship technology the clinical development of our next-gen investigational B-series technology augmented with artificial intelligence software, which is currently being evaluated in a clinical trial under our Atlas AI project. I'll then provide a brief overview of our year-end financial results before opening up the call for your questions. As a brief reminder of our go-to-market strategy on the commercial front, we are targeting early adopters of Perimeter's transformative technology. These surgeons are building the base of our future key opinion leaders, and our team is focused on training and supporting these industry leaders to become long-term reference sites when future iterations of our technology democratize it for more widespread adoption. As noted on our last call, the ramp-up and pace of installations for the majority of the year did not meet our expectations due to a variety of factors, But in the fourth quarter, we made considerable progress. Fourth quarter revenue was up over 70% compared to that of the third quarter, and we completed three commercial placements of our perimeter S-series OCT, which doubled the total installed base of that technology. Furthermore, we saw continued progress expanding within our existing customer base as two of our fourth quarter placements were at new sites within a large national healthcare system. We believe these follow-on placements provide further validation that different stakeholders within our customers, including other surgeons and those in administrative leadership, see the benefits of implementing Perimeter's technology in the operating room. We are further encouraged by the feedback from our existing evaluations and the building of momentum in our commercial pipeline. While I am pleased that we ended the year in a strong position with additional deals nearing completion, we do get questions about the headwinds still facing our sales team and the broader med tech industry. The labor market continues to be a key topic of discussion with both our customers and our clinical investigators. And as we've heard from some of those customers who have publicly reported their results, Q4 was another quarter of progress towards normalization, particularly in the nursing staff. However, research staff and other specialties continue to be a concern in our conversations, And although these 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 of building future reference sites and key opinion leaders with the flagship S-series OCT. Additionally, it is important to emphasize the positive results that continue to be experienced by these early customers. As the overall sample size of S-series-enabled procedures continues to grow, we know that the national average of re-operation rates is somewhere in the 20% to 25% range, and our customer users are reporting early single-digit results when utilizing our technology to visualize their margins intraoperatively. Turning to our Atlas AI project, the high level of engagement from our existing customers continues to reinforce the belief that the next-gen B-series OCT with image assist AI has the potential to be a transformative technology that could democratize a new standard of care, which would easily be adopted at a mass market scale. As a reminder, the aim of the study is to assess unaddressed positive margin rates of surgeries utilizing perimeters technology compared to those of the standard of care. Our goal is to gather data from approximately 330 patients and complete the study by the end of 2023. We believe that this further enhancement of using artificial intelligence alongside our OCT imaging technology is going to empower surgeons with a tool set to improve healthcare outcomes. During 2022, we activated the initial eight planned sites in the pivotal trial of the Investigational B Series with AI, And during the fourth quarter, we received FDA approval to expand the number of institutions involved in our trial. And we continue to engage in dialogue with the FDA to ensure we get the best version of our breakthrough designated device to market. We expect to announce additional sites in the near term, along with a more broad trial update as well. And further, just as we have seen with our S-series customer base, the existing investigators in the trial are highly engaged and have provided positive feedback that suggests our B-Series OCT with ImageAssist AI has the potential to be a transformative technology. In terms of future growth initiatives for Perimeter, we had opportunities to present at a number of leading industry conferences and scientific symposiums, including research recently presented at the annual meeting of the College of American Pathologists 2022, that validates the potential use of our Perimeter S-series OCT to intraoperatively image specimens across a variety of tissue types with a process that does not interfere with surgical procedures or final topology. And lastly, Perimeter had a strong presence at the International Conference on Surgical Cancer Care hosted by the Society of Surgical Oncology, or SSO, in March. It was an absolute pleasure to engage with so many physicians across different surgical oncology specialties. And with the number of users growing across both our commercial and clinical initiatives, it was great to see the level of physician-to-physician discussions, sharing excitement about the technology, as well as implementation best practices. This included our spotlight session presented by Drs. Sean Deep-Tongue from Memorial Care Cancer Institute in Orange, California, and Nina Tamariza from MD Anderson Cancer Center in Houston, Texas. I will now turn my attention to a brief financial overview of the year. And as Jody mentioned, we issued a press release summarizing our 2022 financial results earlier today. Before diving in, please note that during the year, the company changed its presentation currency from Canadian dollars to United States dollars. The change in presentation currency was made to improve investors' abilities to compare the company's financial results with other publicly traded businesses in the industry. In making the change to a US dollar presentation currency, the company followed the guidance in IAS 21 and has applied the change retrospectively to all prior periods as if the new presentation currency had always been the company's presentation currency. Operating expenses for the year ended December 31st, 2022, approximately $16.6 million compared to $12.9 million for the previous year. For the year ended December 31st, 2022, the net loss was approximately $9.9 million compared to $13.3 million in the prior year. And from a cash flow perspective, for the year ended December 31st, 2022, cash used in operating activities was approximately $11.9 million. As of December 31st, 2022, cash and cash equivalents were $28.4 million, and with our strong cash position and prudent fiscal management, we are confident that we will be able to support our clinical development activities and fund the continued commercial rollout of our products. Before concluding the call, I would also like to reiterate our January 17th 2023 announcement of Suzanne Foster, president of Beckman Coulter Life Sciences, in her newly appointed role as board chair. Suzanne has a long-standing relationship with Perimeter as a director, and I look forward to continuing to work with her in this new capacity as we strive to transform cancer surgery. With this appointment, following the mid-year edition of globally recognized artificial intelligence expert, Anantha Kancherla from META, We continue to strengthen the talent and strategic leadership of Perimeter. Across the Perimeter team of employees, I'm proud of our unwavering commitment to improving patient outcomes and lowering healthcare costs through our innovative medical imaging and AI platforms, as we firmly believe in the opportunity to deliver a transformative technology. I would like to extend my gratitude to each and every one of our team members, and look forward to providing progress updates on future calls. I'll now turn the call over to the operator to open the line for questions.