Perimeter Medical Imaging AI, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Perimeter Medical second quarter 2025 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press door zero for the operator. This call is being recorded on Tuesday, August 26, 2025. I would now like to turn the conference over to Stephen Kilmer, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone.

Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws. These may include 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, perimeter's ability to broaden its user base, and the expected approval of its proprietary AI, expectations regarding new products and the timing thereof, and expectations regarding opportunities for market expansion. 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 public filings and press releases, which are posted on CDERplus.ca. Our results may differ materially from those projected on today's call. No forward-looking statement can be guaranteed. Perimeter undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. For the benefit of those who are new to the Perimeter story, I would also like to take a moment to summarize our business. We are a medical technology company working to transform cancer surgery with ultra-high resolution real-time advanced imaging tools to address areas of high unmet medical need. We are currently commercializing our FDA-cleared perimeter S-series OCT system, which provides real-time cross-sectional visualization of excised tissues at the cellular level. Our breakthrough device-designated investigational perimeter B-series OCT system which combines our proprietary image assist artificial intelligence technology with wide-field optical coherence tomography, represents our next-generation device. As we will discuss in more detail today, B-series OCT with image assist AI 2.0 has recently been evaluated in a pivotal clinical trial in breast-conserving cancer surgeries, or BCS. And our pre-market approval application for the device is currently under review by the U.S. Food and Drug Administration. On the call representing the company are Adrian Mendez, Perimeter's Chief Executive Officer, Andrew Berkley, Perimeter's Chief Innovation Officer and Co-Founder, Paolo DiPasquale, our Vice President of Corporate Development, and Sarah Bryant, the company's Chief Financial Officer. With that said, I'll now turn the call over to Sarah.

Thanks, Steve. Good afternoon, everyone, and welcome to our second quarter 2025 conference call. On behalf of the management team and everyone at Perimeter, I would like to thank you for your ongoing interest in our company. For those of you who are our shareholders, we appreciate your continued interest and support. I'll turn the call over to Adrienne in a moment. However, before I do, I'd like to provide a brief update on our financial results. To streamline things, all the numbers we will refer to have been rounded, so they are approximate. As a reminder, we also report in U.S. dollars. For the three-month period ended June 30th, 2025, the company recorded revenue of $506,000, $100,000, which consisted of the sale of consumables and the sale of ESP warranty programs. This represents 105% increase over Q2 2024. Gross margin for the second quarter of 2025 was 70%, essentially unchanged from the same period in 2024. Operating expenses for the second quarter were $4.3 million, a 22% improvement from $5.5 million in the same period in 2024. Additional costs cash conservation efforts were implemented at the end of Q2 with the associated cost savings expected to be realized in Q3 and onwards. Second quarter 2025 net loss was $3.9 million compared to $3.2 million in the three months ended June 30, 2025. As of June 30, 2025, cash and cash equivalents were approximately $1.4 million. This amount does not include the 1.6 million gross proceeds from the second and final closing of the company's recent prospective offering, nor a Cancer Prevention and Research Institute of Texas grant receivable of $745,000, which is related to the reimbursement of the Pivotal Clinical Trial project cost. With that, I'll now turn over the call to Adrienne.

Thanks, Sarah, and thanks again, everyone, for your time and attention today. As you can see from what Sarah just reviewed, we had an exciting and productive second quarter. And while that progress continues on every front within the company, we're carefully managing our resources as we continue to commercialize our current S-series device and, at the same time, lay the groundwork for what we expect will be an aggressive and successful rollout of our next generation B-series device starting in the next few months pending FDA approval. The S-series OCT, which is our first FDA-cleared interoperative imaging technology, provides surgeons with image resolution capable of visualizing tissue structures at the cellular level down to the critical 2-millimeter depth while assessing margins real-time in the operating room. It is cleared under a general indication, which has not been evaluated by the FDA specifically for use in breast tissue, breast cancer, and other types of cancer margin evaluation and reducing re-excision rates. Our goal has been to seed the market with S-Series OCT in order to create a strong network of early adopters and technology champions in preparation for a potential FDA clearance of our B-Series OCT with ImageAssist AI 2.0. We've done better than that. In fact, while it may seem counterintuitive, adoption of the S-Series in terms of both new system placements and increased current device utilization has been accelerating while we wait for the requisite go ahead from the FDA to introduce the AI driven B series to the market. To put that into perspective, revenue in the first six months of 2025 alone was 25% higher than the total for all of 2024. And we're excited to see utilization rates increasing 93% year over year and 35% sequentially quarter over quarter. as this further validates the specific need for our margin assessment technology at the surgical level. In fact, we recently surpassed a significant case volume milestone with surgeons now having imaged over 3,000 patients in the operating room. With respect to our upcoming B-Series, as you know, we filed our pre-market approval application for the device with the FDA in mid-March. On the heels of that, in May, Dr. Alastair Thompson, the principal investigator for the pivotal trial of the Perimeter B series, which supported the FDA PMA application, presented previously embargoed detailed study results to an overly packed audience of researchers and clinicians at ASBRS, the world's premier breast cancer surgery conference. While I won't take time to go over the trial-specific findings here again, I would like to reiterate what Dr. Thompson said about the results. To quote, today, interoperative margin assessment remains one of the most pressing problems for both surgeons and their patients. The final results of this pivotal trial clearly demonstrate that the use of perimeter B series has the potential to change the current paradigm by empowering surgeons to identify regions of interest, enhance real-time interoperative decision-making, and reduce the incidence of re-excision due to unaddressed residual disease following lumpectomy. That statement from an important opinion leader clearly validates what we have said before. The ultimate product promise of perimeter B series is greater peace of mind, both for the breast cancer surgeon who, no matter how skilled, currently faces a nearly one in five re-operation rate due to positive margins, and for the breast cancer patient and family who under the current paradigm typically have to wait and worry for up to 10 days for their surgeon to receive a postoperative pathology report, which will determine whether they will have to go through the emotional and physical trauma of a second surgery due to cancer left behind. There is no question that the PMA submission for perimeter B series, which has FDA breakthrough device designation, was a major milestone achievement. Our first regulatory approval application for our AI enabled wide field OCD technology as well as for a specific indication label. But we're not sitting back to watch and wait. Instead, we are aggressively commercializing our current S-Series device, while at the same time, we continue to have good dialogue with the agency as it reviews the PMA application for our next generation B-Series. And to further position us for continued sales success and growth, we've added two key people with deep expertise to our leadership team. Abby Goodman has been appointed Vice President of Sales, and Paolo Di Pasquale, who's on this call, has joined us as our VP of Corporate Development. Abby brings over 20 years of medical device sales experience, most recently serving as Profound Medical's Global Chief Commercial Officer. Prior to joining Profound, she progressed through a variety of senior leadership sales roles within Hologic, Novodac Technologies, Govidian, and Dupuis MyTech. Paolo brings a unique perspective as someone who has over 17 years of experience in the US and Canadian capital markets across equity research, institutional equity, and investment banking at Canaccord, Genuity, and Stevens. And so to summarize, we are seeing continuing positive commercial traction with our current S-Series product as demonstrated by 105% revenue growth, record patient cases, and growing installed base in the second quarter. At the same time, we are carefully managing our resources as we grow. And as a result of our cost control efforts, we expect additional cost savings to result in an approximate 30% reduction in total operating costs starting in the current third quarter. In November 2024, we announced that the pivotal trial of our next generation AI-enabled perimeter B-Series system met its primary endpoint achieving a statistically significant reduction in patients with residual cancer during surgery. These results demonstrate super superiority of the B-series ability to aid surgeons in achieving clear surgical margins during surgery, potentially lowering the need for reoperations. Based upon the positive trial results, we filed the FDA PMA application for the B-series OCD with images as 2.0 in mid-March 2025, And we've been working closely with the agency since that time as it conducts a substantive review of the PMA application. While the timing is obviously outside of our control, right now we are hopeful that the FDA approval will come sometime in late Q4 2025 or Q1 2026. Finally, if and when FDA clearance for perimeter B series is obtained, it will allow for a full and aggressive commercial launch of our next generation device. representing a major step in validating our AI's application interoperative margin assessment. And companies specifically, our go-to-market strategy and opportunity has significantly broadened our OCT user base across the United States. As you can hopefully see from today's press release and calls, we are quickly and confidently approaching the first of what I expect to be many potential major value inflection points for Perimeter. This is an exciting time for us, and we look forward to keeping you updated on our progress. And with that, I will now open up the call for your questions.

Operator?

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure to lift the handset before pressing any keys.

The first question comes from the line of Scott Macaulay from Paradigm Capital. Please go ahead.

Afternoon, everyone. Thanks for taking the questions. I guess just an update on, I guess, the current total number of S-series placements that are out there and I saw in the press release and over the past few months, you know, there's been two new announcements of new systems. So, maybe, you know, kind of the total and then how many you've added in the past quarter or so.

Yeah, sure. Sarah, do you want to take that question?

Thanks, Scott. Yeah, we have 20 total and one new added in Q2.

That's great.

um and i guess both for those um uh systems as well as kind of the interest you're seeing in the pipeline in terms of capital placements versus paper use is there any kind of evolution of that is it relatively constant and yeah what what are people saying in terms of which model they prefer yeah it's a great question scott so as as you know over the past few months we've

actually sold capital to some of our customers, which is a change in the business model. I guess I'd say more of an evolution of the business model from the placements at no charge that we've historically had. Our philosophy, our approach really is to meet the customer where they're at. There are some that won't do placements at no charge. and they'll only do capital purchases. There are some where it's easier to get through the approval processes by doing a pay-as-you-go type of model. There's some hospitals that have foundations that are willing to put some money up for the machine itself, and we're open to all those possibilities. So I think what's happening generally, though, is as we're getting more and more usage out there, more surgeons have been on the device, sort of more, you know, the benefits of the product getting out into the marketplace, we're starting to see more interest and more willingness, you know, to have a capital purchase approach versus a pay-as-you-go. So from our standpoint, we look at every deal individually and we are, you know, we'll do what we need to do to get the customer on board and get that utilization up. But of course, we're looking to see what has the biggest impact for us from a financial perspective at the same time.

That's great. And I guess, is there any way you can kind of characterize the current pipeline for that series? And especially if that's accelerated post the American Society of Breast Surgeons conference and the presentation of the positive trial data?

Yeah, actually, it's been so that was that conference that was a few months ago, as mentioned, is where the results from a clinical trial was presented by Dr. Alistair Thompson. The quote I quoted was from him at that time. A lot of interest after that, you know, getting that data out into the open from the trial has been very well received. The pipeline continues to grow very, very strongly. And the nice thing about it is it's, you know, with the B series, the AI-enabled device coming onto market, hopefully end of this year, early next year, we're actually seeing demand for the current product right now, the S series. We've got customers, potential customers who are looking and saying, hey, look, I can see what has been able to be done with the product already, the S series. I understand that the B series has all kinds of additional benefits. but I really want to bring something into my hospital today to help my patients today, to help my practice today. So the acceleration of the pipeline, the build of the pipeline is, you know, I like it because it's not just futures where people are saying, okay, great, now I'll buy from you a year from now. It's actually customers who are expressing interest today and that we're able to engage with today. So I think that's, you know, that's strong, really strong for what we're talking about in terms of not only seeding the market, but also being aggressive, as aggressive as we can to bring customers and revenue on board immediately.

Makes sense. That's great to hear. Things are picking up. I guess just on the balance sheet quickly, good to hear that 30% operating cost reduction target. Just to clarify, is that quarter over quarter? So kind of Q3 expected versus Q2, or is that year over year and maybe a little bit about kind of how that's being achieved.

Yeah Sarah why don't you take that.

Yeah thanks Scott. I mean ideally quarter on quarter and you know some of it's going to be a timing related. So you know we're expecting at least a 30 percent reduction versus prior quarter. So over Q2 timing you know we'll see how that works out but that's the plan. And really, you know, what we're doing is we focus the cost reduction efforts on cash conservation to focus on the B-Series FDA submission activities and prelaunch activities. So really focusing the organization and the commercial team on those activities.

That's great.

And I guess lastly for me, I'll hop back in here, is the current cash runway, do you expect with the added cash from the financing and the grant reimbursement and the operating cost reductions to see you through to the FDA approval.

Sorry, I guess I'll take that one.

I mean, I think, you know, we're always going to be in a position where we need to be looking to strengthen the balance sheet, making best efforts to reduce spend and increase runway. So, you know, I think it's all about timing and being opportunistic at when we can execute on, you know, shoring up balance sheet while also managing milestones.

Makes sense. Thanks all for taking the questions and have a good afternoon.

Scott, I'll just add some context to that answer as well, which is that to your question about the pipeline on the heels of ASBRS, we're seeing very strong demand. And so the thing that's limiting us right now, quite frankly, is the size of our commercial team. So bringing cash onto the balance sheet to accelerate that is a high ROI activity, right? So, so then the balance that we have to make is between between a runway and being able to bring those customers on board more quickly. So these this is sort of like a management standpoint, this is what we're working through internally. Intern but the nice thing is we have the demand out there, we can take it down. And we're only limited by the size of, you know, our commercial team at this point.

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by the number one on your touchtone phone. If you are using a speakerphone, please make sure to lift your handset before pressing any case. Your next question is from the line of Doug Lowe from Lead Financial. Please go ahead.

Yeah, thanks, operator, and good afternoon all. Adrian, I have a different question that I'll jump in on in a second, but just in response to your commentary there about marketing infrastructure being limiting for S-series adoption. Do you think you could cost-effectively add to your team before B-series is approved? Fingers crossed, as you say, later this year, probably early in Q126. Or is augmenting sales and marketing expense something you might more prudently add to once B-series is approved and there's some awareness of its availability in the U.S. market?

I think it's so, first of all, hi, Doug. Nice to talk to you again. So there's two phases, right? One is adding players to the team, adding the folks to the organization. And then the second is when do the results of that appear in the finances and sales? These have a relatively long sales cycle, up to six months or so from the time you start to engage with customers until when it comes through. So this is the balancing act that we need to have, which is, the combination of when do we hire the sales people, and then when do they expect to deliver, and then how do we map this into both our cash, our resources that we have right now, and then the speed at which we'd accelerate all of that living in the ambiguity of when FDA approval will come in, which is likely to be end of this year, early next year. So this is kind of how we're looking through that. That's the lens we would look to that, right? So that's a high level overlay. And then to your specific question is, there will be some amounts of commercial that we hire before we get FDA approval, and there'll be some that we hire after. So it'll be a mix of both. And the balance between the two is dependent on sort of fun as we progress when we expect that FDA approval really to come in as we get closer to the date.

And I appreciate the color. It's a tough call as to when you add marketing infrastructure in comparison to the availability of product. So thanks for that. My question is going to be just wondering how your focus needs to be on USB series sales once the device becomes approved and available. which we all expect, but how should we be thinking about international market opportunities? Is Europe a market where radical or partial lumpectomies are routinely conducted to a pace that we see in North America, which makes B-series and S-series adoption relevant here? and other international markets. Does it make sense to pursue regulatory approval specifically in Western Europe but in other markets? Do you think you could cost-effectively exploit those markets with a marketing team that would be comparable to what you're putting in place here? I'll leave it there.

Thanks. Step one is we have to get through the FDA approval and then build out and start to get the traction in our own backyards. Margin assessment is a problem that affects everyone all over the world. It doesn't stop at the borders. Cancer, generally, the U.S. is about 15% of all the diagnosed cancer cases in the world. So there's a big market outside the U.S. and one that we can't have a blind eye to. So the full expectation would be to expand outside of the U.S. But having that FDA approval in hand makes it a lot easier to move to the next steps. So definitely part of the plan, but at the right time.

Yep, good answer. Thanks very much. That's it for me.

Thank you very much. There are no further questions at this time. I'd like to turn the call back to Adrian Mendez for closing comments. Sir, please go ahead.

Okay, great. Thank you. And thanks everyone again for joining us today. It's a really exciting time for the company. And so, as always, we appreciate your ongoing support.

uh and look forward to reporting continued progress as we commercialize our oct technology thank you ladies and gentlemen this concludes today's conference call thank you very much for your participation you may now disconnect