Perimeter Medical Imaging AI, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Perimeter Medical Q3 2023 conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, Please press star zero for the operator. This call is being recorded on Tuesday, November 14th, 2023. I would now like to turn the conference over to Jody Ray. Please go ahead.

Thank you. Good afternoon. Thank you for joining us on this call and webcast to provide the third quarter 2023 results for Perimeter Medical Imaging AI. Joining me on today's call is Adrienne Mendez, Perimeter's Chief Executive Officer, who will provide an overview of Perimeter's progress across the business, along with Sarah Bryan, Chief Financial Officer, and Andrew Berkley, Perimeter's Chief Innovation Officer, who are available to answer questions when we open up the call for Q&A after our prepared remarks. 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 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 CDARplus.ca. The news release summarizing this quarterly update is available under the investor section of our website at PerimeterMed.com and filed with CDARplus. Now, I would like to turn the call over to Adrian.

Thank you, Jodi. Good afternoon, thanks everyone for joining our call. Today I will walk you through some of the highlights from the quarter and zero in on advancements made within both the clinical development and commercial sides of our business. Before getting into these detailed updates, I wanted to provide some high level observations on progress made across the business. Since joining the company this past summer, we have made some key changes at the leadership level, which are all driven by our goals to improve team morale increase employee retention, and remove any silos preventing effective collaboration across the organization as a whole, all with the intent of greatly increasing our pace of execution. During our last quarter, we welcomed Sarah Bryan as our CFO and Andrew Berkley, one of Perimeter's co-founders, to his new role as Chief Innovation Officer. Today, I would like to extend a warm welcome to Adam Hodges, who joined Perimeter's senior leadership team as our Vice President of Sales and Marketing in early September. Adam's extensive med tech background represents a great fit for us with this focus on advancing category first novel technologies that challenge the clinical standard of care and add value to the healthcare system. In fact, I believe he has already made a positive impact both in his department and across the company. And we expect that our sales and marketing team will continue to benefit from his leadership as we expand the number of surgeon champions and geographic regions adopting our commercially available S-series imaging platform, and ultimately the adoption of our next-gen AI-enabled B-series technology when it reaches a commercial rollout stage. We have been very deliberate in how we've approached these org changes as we are hyper aware of the importance of not just attracting, but also retaining top talent. I'm proud of the team we have in place, and as we grow, I believe we are creating a strong culture that will enable us to achieve our ambitious business goals. Let's dig in now on the clinical development side of the business and the progress made across our next-gen AI development and the ongoing pivotal trial. This quarter, we've reported the outcomes of our positive interactions with the FDA that resulted in us reaching alignment on key elements of our clinical trial, which is evaluating Perimeter's B-series device when used during breast-conserving surgeries, otherwise known as lumpectomies. The B-series device combines Perimeter's innovative OCT platform with our ImageAssist AI technology, which will further accelerate customer adoption of perimeter solution. This quarter marked an important milestone in our clinical development program. First, we received regulatory approval to implement our substantially enhanced AI algorithm in the ongoing pivotal clinical trial under the existing study protocol. As a result, all clinical trial sites are now using the updated AI as patients continue to enroll in the ongoing study. Andrew spoke on our last call about some of the anticipated significant benefits of the new enhanced AI, which takes advantage of additional training data and Perimeter's latest AI advancements that demonstrate improved sensitivity, specificity, precision, and recall. It is expected that this updated version of ImageSyph AI will contribute to more accurate classification, as well as fewer false positives and false negatives. Second, we now have a planned interim analysis in the trial. which will provide us with an early readout of results based on the use of the newest algorithm. If key endpoints are met at the time of the interim analysis, we may opt to conclude the trial and begin preparing regulatory submissions supporting market clearance. Alternatively, the interim analysis could support continuing the trial to build a stronger submission package for additional subjects. Ultimately, our goal is to expedite the development of our next-gen AI technology and deliver it to our surging customers to improve clinical and economic outcomes in breast surgical oncology. Third, we are permitted to enroll additional subjects, up to 531, and have received clearance to increase the number of trial sites with the goal of further supporting and expediting patient enrollment. I'm pleased to report that we recently added a clinical trial site at the University of Washington Fred Hutch Cancer Center, located in Seattle, as a quick follow-on to the recent site initiations at Baptist MD Anderson and Mayo Clinic in Jacksonville, Florida. Importantly, patient involvement is tracking well and slightly better than modeled, and we continue to guide that we expect an interim analysis in the second quarter of 2024. If we determine that more data is needed, anticipate sub-study completion by the end of 2024. We continue to hear from KOLs that the potential of combining AI with ultra-high resolution interoperative imaging has the potential to become a new standard of care during breast conservation surgery. Our clinical development team is extremely driven to conduct a well-run study that provides us with important data, allowing us to chart a clear path forward to our next-gen technology. We look forward to keeping you updated on our progress. Turning now to our 510 cleared perimeter S-series technology. Briefly, For those newer to the perimeter story, this is our flagship interoperative OCT imaging technology, which provides surgeons with resolutions capable of visualizing tissue structures at the cellular level down to the critical two millimeter depth with 10x higher image resolution than x-ray and ultrasound and 100x greater image resolution than MRI. Cancer surgeons have long recognized the challenge of achieving clean margins while preserving healthy tissue during surgery. 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. We conducted a thorough review of the business when I came on board at CEO, and I firmly believe that there continues to be a compelling product market fit for Primrose commercially available S-series OCT. Our focus today is to build a network of early adopters capable and driven to use our groundbreaking technology. While this does begin to establish an early-stage revenue pipeline, perhaps more importantly, it allows us to have a clear channel to customers to gather product feedback. We are applying an agile approach to our commercial business to learn the field with the goal of constantly iterating and improving upon the current state. These same early champions and reference sites will take on an even more important role when we launch our next-gen AI-enabled tech. to reach our goal of significantly broadening our user base in the US. Our team continues to make good progress reaching these targeted customers. We have a clear game plan to further expand our install base by connecting with high potential surgeons, leveraging existing institutional relationships within healthcare networks, and identifying the optimal geographic locations. In particular, those which offer the lowest barriers and costs providing image training supports. A few additional comments on our most common pricing model. Healthcare facilities typically receive a free placement of the perimeter S-series device and then pay per procedure with the purchase of our proprietary specimen immobilizer consumables, which we sometimes refer to as the razor blade model. Importantly, assuming we establish clinical validation regulatory approval for AI technology, the console can be easily updated with the new AI feature. Looking ahead, we believe we can leverage this combination of imaging and AI across multiple indications as we grow our business. Our go-to-market strategy is further supported by a strong IP position. We hold six issue patents and a proprietary image database of over 2 million images related to breast cancer alone. We also recognize that there are further opportunities outside of breast cancer. Looking ahead, we continue to identify viable growth opportunities through the expansion of indications and tissue types, as well as exploring new points in the cancer surgery workflow, for example, using perimeter technology to assist the pathologist as well as the surgeon. I also wanted to highlight that Perimeter is shortlisted in a grant funding process sponsored by the Advanced Research Projects Agency for Health, otherwise known as ARPA-H, under its Precision Surgical Interventions, or PSI, programs. We attended a Proposers Day in early September and subsequently submitted an abstract, which has been selected to advance to the next stage of the grant funding process. We remain on track to submit a full proposal by the deadline this Thursday. Clearly, we are excited to participate in this important Biden Cancer Moonshot Initiative and thrilled that the Federal Advanced Research Project Agency for Health has selected Dallas as one of the two regional hubs in its $2.5 billion health innovation network. In addition to being a potential source of non-diluted funding for the company, the goals of the PSI program align precisely with the mission of Perimeter and further validate the significant healthcare problem that our team is committed to solving, ensuring that no patient needs to return for repeat surgery due to cancer left behind. Okay, turning briefly to our financial position, as of September 30th, 2023, cash and cash equivalents were approximately 18.1 million U.S. dollars. For more details, please refer to the quarterly report and press release filed today. With this strong cash position, our prudent fiscal management, and additional CPRIG grant money still available to us, we're confident we will be able to support our planned clinical development activities and fund the continued commercial rollout of our product. In summary, on behalf of the whole Perimeter team, we are very excited about the future ahead. We believe no other technology comes close to what we have and Perimeter's technology is perfectly positioned to address a widely accepted $750 million problem in breast oncology in the U.S. alone and many multiples of that across other indications and other geographies, not to mention the significant emotional challenges with today's standard of care. We continue to add and redeploy resources to support the key areas of our business and we remain focused on our goals that include expanding our base of key opinion leaders who will champion the use of Perimeter S-Series, supporting ongoing enrollment in our pivotal trial using the improved AI algorithm, exploring additional tissue indications and other workflow expansion opportunities, and continuing to grow a high-performance team that is driven to transform cancer surgery. And with that, I will now open up the call for questions. Operator?

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you wish to ask a question, please press star, fold by one. If you'd like to withdraw your question, press star, fold by two. And if you're using a handset, please lift the keys before asking any questions. Your first question comes from Raul Segurser from Raven James. Please go ahead.

uh good evening adrian thanks so much uh for taking our questions and i apologize for a little bit of the background noise um and i also apologize that i got dumped off the call for a little bit when you were talking about um the uh the the ai trial and potentially be able to accelerate uh the 510k application so it would be great to hear a little bit more about you know what you're seeing in terms of timeline uh numbers of patients any additional parameters and or thresholds that we should be looking for as we try to get more resolution on that? Sure.

Yeah, thanks for the question, Rahul. So we are... So right now we've got... So if we run the trial all the way to the end, we should be complete in the fourth quarter of 2024. As mentioned, we have the opportunity to have an interim analysis. And that... You know, at the current rates we're at right now, projections will be in Q2. Right now, as of the end of November, sorry, end of October, we're tracking a little bit ahead of our projections, maybe about 15% ahead in our patient enrollment rates. So we're actually quite confident we're going to be able to hit those deadlines. We brought on, as mentioned, maybe you didn't hear it in the call when you were kicked off, but we brought on Mayo Clinic. and MD Anderson in Florida, as well as the University of Washington earlier this quarter. So that'll really pick up the rate of enrollments. So we're feeling pretty comfortable right now that we'll be able to hit the dates that we described.

Great. Thank you very much for that. And so in terms of that interim analysis, can you give a sense of sort of the number in the data set and any thresholds that we should be looking for in order to, you know, de-risk the likelihood of an improvement?

Yes, so the primary outcome that would allow us to have that successful interim analysis would be for us to have what they call conversions, so six conversions out of the 186 enrollments that we would have at that point in time. So basically, you know, six patients that if it were not for the use of OCT in their procedure would have had to come back for a second surgery because the margins would not be where they need to be. But for having used OCT, the surgeon found the, you know, the inadequate margins and was able to correct that within the first surgery. So that's really the target that we're looking for at the interim analysis point. Unfortunately, we're blinded to the data right now, so it's hard for us to, in fact, we just don't really know how we're progressing against that. However, when we look at anecdotal information from our commercial side of the house, which doesn't, of course, use the AI-enabled product, but does use OCT in all the sites we have out there, We're seeing very, very good outcomes there from those surgeons. So we've got a high degree of confidence we'll be able to hit this trial, hopefully by the time we get to interim analysis, but certainly by the time we run the entire trial.

Great, thank you. And then just one last question then. Driving FDA clearance is one thing, and then having strong enough data to change hearts and minds of doctors is another. And so while you've expressed confidence in being able to engender an FDA clearance, how do you see that data playing in terms of as a marketing tool to be able to drive adoption? And that'll be for me. Thanks.

Yeah. So I think that's where the decision of whether we actually do, even if we achieve that outcome at the early analysis point, whether we choose to continue to run the trial to the end just to gather more data. So that would be one aspect of that. The other side of it in terms of the marketing side, even beyond the AI piece, is really the outcomes we're seeing from the S series in the commercial world right now, which as I said, you know, anecdotally is very positive. And there's data that we're looking to pull together to be able to publish, you know, over the coming few months.

Great. Thanks so much for taking our questions. Wishing you the best of luck. I'll get back to you. Thanks, Rahul.

Ladies and gentlemen, if you wish to ask a question, please press star, followed by one. Okay, there are no further questions at this time. I'll turn it back to Jody for closing remarks.

Thanks, Colin. Thanks, everyone, for joining us today. This concludes our Q3 call. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.