Perimeter Medical Imaging AI, Inc.

Greetings and welcome to Perimeter Medical's second quarter 2023 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. It is now my pleasure to introduce Jody Rakes. Thank you. You may begin.

Thank you. Good afternoon. Thank you for joining us on this call and webcast to provide the second quarter 2023 results for Perimeter Medical Imaging AI, or Perimeter. Joining me on today's call is Adrian Mendez, Perimeter's Chief Executive Officer, who will provide an overview of Perimeter's progress across the business, along with Andrew Berkley, Perimeter's co-founder, who will speak to product innovations underway to support Perimeter's future growth. We will then open the call up 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 cdarplus.ca. The news release summering this business update was released today and available under the investor section of our website at PerimeterMed.com and filed with CDAR. Now, I would like to turn the call over to Adrian.

Thanks, Jody. Good afternoon, everyone. I'm excited to host this first quarterly call since taking on the role of Perimeter CEO in early June. Today, I'll walk through an update on the immense amount of work that we have done within this initial 90-day period since our leadership transition where we're at with both our commercial and clinical development plans and an overview of our business strategy going forward and the key milestones ahead. I'll also ask Andrew to provide some detail around our next gen technology and product developments and highlight some key areas of product innovation at Perimeter. I'll then wrap up with some concluding remarks before we open the call for your questions. Before diving in, I think it's important to discuss what drew me to Perimeter and some of my initial observations. When I was approached with this leadership opportunity, I did my due diligence and was impressed by the sophisticated innovation work being done, of course, on the artificial intelligence front, but also across the board. As many of you know, I come from a tech background and can see the extremely compelling rationale for combining advanced AI with Perimeter's novel OCT medical imaging platform. The promise of next-gen AI was a key element that attracted me to Perimeter, but a big factor was also the fact that the team included globally recognized leaders on our board, such as Anantha Kancherla, who's the former head of AI platform at Meta. I was drawn to the opportunity to address the significant unmet need in cancer surgery and focus my efforts on improving the lives of patients by assisting surgeons with the introduction of new technologies while also reducing healthcare costs. It's important to note that AI is only one pillar of Perimeter's technology platform, and I believe there is strong product market fit for our commercially available S-series OCT, which has the potential to be game-changing technology for margin visualization. Cancer surgeons have long recognized the challenge of achieving negative margins while preserving healthy tissue during surgery. Traditional interoperative imaging modalities do not deliver the resolution to visualize microstopic features associated with cellular-level disease. And since it's several days or weeks before pathology reports on margin status are available, if they show positive margins, patients must typically return to the operating room for another procedure due to cancer left behind. One of the goals at Perimeter is to change the standard of care in breast-conserving surgery by delivering innovative technology solutions. What was exciting for me to learn about Perimeter is that today we offer the only intraoperative OCT imaging technology with the resolution to visualize tissue structures at the cellular level down to the critical 2-millimeter depth, and especially with 10x higher image resolution than x-ray and ultrasound and 100x greater image resolution than MRI. In addition, I believe the importance of our single-use consumable, a key element of our razor slash razor blade model, is often overlooked. The engineering of our proprietary tissue immobilizer solution creates distributed pressure without distortion of the margins, allowing surgeons to make informed decisions in their ORs while preserving the sample for pathology. And finally, the Atlas image library, which we use to train our AI models, It currently has over 2 million images and represents a broad-based tissue library for training and for reference. So based on all that, I saw and I continue to see the amazing growth potential for our platform and believe I can apply both my past experience scaling cutting-edge technology companies and my operational knowledge leading hardware, software, AI, product, and commercial teams to address this meaningful problem of ineffective margin assessment in the OR. Expanding the user base of our commercial stage revenue generating S-Series, it is foundational to our business strategy, and I'll also walk through some recent accomplishments on that front shortly. Okay, with that backdrop, let's dive into my observations and the team's accomplishments from the last 90 days. We've conducted a thorough review of the business and made some important decisions I'll run through today. These broadly group into three areas. First is our leadership group and employee base as a whole. Second is our clinical development work. And third is our go-to-market and commercial efforts. Beginning first with the leadership team itself, concurrent with my appointments, Dr. Josh Vose joined our board of directors and has provided invaluable insights into our clinical development program. In addition, I'm pleased to report that Sarah Bryan will become Perimeter's Chief Financial Officer, effective September 1st. We're grateful for Russ Wagner's service as our interim CFO, and he and Sarah will work together to ensure a smooth transition. I'm also pleased to confirm that we have named Andrew Berkley, one of Perimeter's co-founders, as Chief Innovation Officer. This new role reflects not only Andrew's valued contributions as a member of our senior executive team, but also his proven track record as a trailblazer that continues to develop game-changing technologies to ensure we have a robust product development pipeline for years to come. Today, I'll ask Andrew to speak to the promise of some of these earlier stage developments. We believe that these changes at the leadership level will help support our goals to improve morale, increase employee retention, and remove any silos preventing effective collaboration across the org as a whole. Across the business, we are striving to apply resources and refocus where needed and encourage a re-energized collaborative approach to our work. I'll speak about this in the context of both our clinical and commercial groups now. Okay, so turning now to our AI technology and the clinical development of perimeters B series OCT with image assist AI. I'm pleased to report that we have received approval from the FDA to introduce an enhanced AI algorithm into the ongoing clinical trial under the existing protocol. Importantly, all clinical trial sites Including the newest trial sites we've added last quarter, which are the Mayo Clinic and Baptist MD Anderson in Florida, are now cleared as of this month to begin using the updated AI. This version 2.0 of our AI takes advantage of a large amount of additional training data and big improvements to the model architecture. It demonstrates improved sensitivity, specificity, precision, and recall. And it's expected that this updated version of the AI will contribute to more accurate classifications, as well as, most importantly, fewer false positives and fewer false negatives. I'll ask Andrew to expand upon the significant benefits of the updated AI later in the call. We're currently engaged in ongoing discussions with the FDA to reach alignment on subject enrollment and secondary reporting. And this is expected over the next couple of weeks. Updated guidance on study completion will be provided following receipt of the FDA feedback. While this decision to introduce the improved AI will certainly extend the anticipated study completion date, we firmly believe that this is the right decision and the best course of action to ultimately deliver better technology to our surgeons and their patients. And most importantly, this approach ensures that we don't have to run a separate later trial to bring version 2.0 to the market. To date, with our breakthrough device designation, our regulatory interactions have been very productive, and we're confident we can reach alignment on key elements of the trial and drive the development of the B series forward in the clinic. Once we receive feedback from the FDA, we intend to update and refine our guidance in the next couple of weeks. We are committed to assigning resources as needed. while tapping into the expertise we have on our board from Dr. Vose to drive as quickly as possible towards a successful completion of the clinical trial in anticipation of a data package that will support the commercialization of our next Gen B series product in the future. Turning to the commercial organization, we are staying true to our strategy to identify high-profile reference sites and engage with key opinion leaders to help build a strong foundation for our initial early adopter customer base. We have a strong sales team with extensive medical device experience that's currently based in key regions in the US. We continue to receive positive feedback from existing customers about the service and support they did receive from the perimeter team. Of note, we also continue to generate new sales leads and demos and have successfully expanded into the states of Utah and Georgia just in the last quarter. The overall sample size of S-Series enabled procedures continues to grow. We're seeing positive results from this early adopter user base with a backdrop of a national average re-operation rate ranging anywhere from 15% to 25%. Initial anecdotal reports from our customers show single-digit results when using our technology to visualize their margins interoperatively. We continue to gather these data and consolidate some of these reports with the goal of publishing white papers and articles that provide further clinical evidence of the benefits of perimeter OCT. With these commercial strengths identified, we've also identified some gaps. We see the need to focus some amount of resources on helping with user workflow to help the experience in the OR. In addition, we continue to improve our customer selection criteria and as always, are working to recruit additional physicians at existing commercial sites as another way to grow our business through increased utilization of our devices. We must ensure our business is scalable, especially in the way we support our surgeons and the use of tech in their ORs. This is where I believe our ability to drive innovation and product development will support not just the clinical development team, but our commercial efforts as well. We will apply an agile approach to our commercial business, and we will continue to learn in the field with the goal of constantly iterating and improving upon the current state. With that, I'd like to now turn over to Andrew, who's going to discuss some of the innovations that can be applied in the near term and future developments that we can use to further broaden the market opportunity for Perimeter. Andrew?