Perimeter Medical Imaging AI Inc

XTSX:PINK

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Perimeter Medical Q1 2024 Conference Call. [Operator Instructions] This call is being recorded on Tuesday, May 14, 2024. I would now like to turn the conference over to Sara Brien, Chief Financial Officer. Please go ahead.

[Sara Brien, executive]

Good afternoon. Thank you for joining us on this call and webcast to provide the first quarter 2024 results for Perimeter Medical Imaging AI or Perimeter. Joining me on today's call is Adrian Mendes, Perimeter's Chief Executive Officer, who will provide an overview of Perimeter's progress against the business, and Andrew Berkeley, Perimeter's Chief Innovation Officer, who is 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 S-Series OCT, Perimeter B-Series OCT, and Perimeter ImgAssist, the expected benefits of Perimeter's updated version of its ImgAssist AI, 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 SEDAR 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 sedarplus.ca. The news release summarizing this quarterly update will be made available under the Investors section of our website at perimetermed.com and filed with SEDAR.

Now I'd like to turn the call over to Adrian.

[Adrian Mendes, executive]

Thanks, Sara. Good afternoon, everyone. On behalf of the management team and everyone at Perimeter, I would like to thank you for your interest in our company. And for those of you who are shareholders, we appreciate your support. I'm particularly excited today because we're starting to see tangible results from the changes we've made over the past 12 months, and I look forward to sharing some of them with you today.

Since joining the Perimeter leadership team, we have implemented a strategy to greatly increase our pace of execution across all aspects of the business. And although it's been less than a couple of months since we reported our year-end '23 results, we have made significant advancements within our clinical development, commercial and new product innovation teams. Today, I will provide an update on our progress in these key areas. One key area of focus is our ongoing pivotal trial, led by principal investigator, Dr. Alastair Thompson at Baylor College of Medicine, Perimeter is conducting a multicenter, randomized 2-arm clinical trial to measure the effectiveness of the Perimeter B-Series OCT with our proprietary ImgAssist AI, in reducing the number of unaddressed positive margins in breast lumpectomy procedures when used in addition to standard intraoperative margin assessment.

Shortly after I joined the company, Perimeter reached alignment with the FDA on key elements of the ongoing clinical trial, including clearance to introduce an enhanced AI algorithm, the option to introduce interim analysis within the study protocol, and permission to enroll additional subjects in order to attain statistically significant findings based on the use of the new AI algorithm. Subsequently, the new algorithm was introduced into the study, which introduces -- which includes our latest AI advancements that have demonstrated improved sensitivity, specificity, precision and recall. We believe that this updated version of ImgAssist AI will contribute to more accurate classifications as well as fewer false positives and negatives. Further, all sites have been activated, which has contributed to accelerate enrollments in the study.

Our goal to reach sufficient enrollment by the second quarter of this year in order to make a go, no-go decision around conducting interim analysis in the study. I'm very pleased to report that we are enrolling patients at a much higher rate than models. And as such, we've opted to forgo the interim analysis, pending regulatory approval and focus our efforts on expediting full enrollment of the study now anticipated in early Q4. This decision allows us to build upon the enrollment momentum, maintain the study blind and gather as much data as possible based on the use of the improved algorithm. Further, we don't need to split the attention of the clinical team, but rather can drive forward to enroll all patients by early Q4 in order to generate top line results. We have a high degree of confidence that this pathway not only allows for the strongest data package for regulatory submissions to support potential commercial approval, but is also the most capital and resource-efficient option.

Having already received FDA breakthrough device designation for our B-Series system, the readout from this pivotal trial will be a significant catalyst for Perimeter. If positive, these data will support a full commercial launch of our AI-enabled OCT technology, representing the next major step in our go-to-market strategy and an opportunity to significantly broaden our user base across the U.S.

Turning now to the commercial side of the business and our goal to seed the market with S-Series OCT in order to create a network of early adopters prior to B-Series approval. To set the stage, the S-Series OCT system represents our flagship intraoperative imaging technology, which provides surgeons with image resolutions capable of visualizing tissue structures at a cellular level down to the critical 2-millimeter depth when assessing margins real time in the operating room. We continue to implement key process improvements and make important investments in our sales organization. In particular, we identified that we needed to augment our clinical education and image training team and redeploy resources to help eliminate bottlenecks in our sales cycle. This work is starting to pay off.

In fact, since the beginning of this year, we've successfully closed 3 new placements of our S-Series OCT, including 2 new hospitals in North Texas, which are part of a leading national healthcare network, this is a current repeat customer and a third, which is the first placement in a brand-new healthcare network. This expansion is exciting for us because it shows that surge in word of mouth is starting to spread through the broader community, which is key to our scaling goals. The pace of new placements far exceeds that of last year and is reflecting the growing recognition of the need for much better solutions to address the large number of reoperations after breast-conserving surgeries.

As a reminder, this past quarter, researchers at the University of Texas MD Anderson Cancer Center published a study that demonstrated high reoperation rates after breast-conserving surgery persists and are correlated with elevated risks and adverse outcomes for patients, concluding that more attention and continuing efforts should be made to reduce operation rates. I encourage you to read this research. It outlines the real problem that the entire Perimeter team is striving to address and clearly highlights the clinical value proposition of our technology, which we can deliver to our customers.

I had the privilege of leading a number of surgeons while attending the annual meeting of the American Society of Breast Surgeons, or ASBrS, this year and saw firsthand the keen interest to use the technology that help them identify cancer margins real time in the OR. While at our booth, I saw current customers interacting with new surgeons with the search as new to S-Series OCT and was fulfilling to see the aha moments about how our technology can solve this real unmet need. We will continue to work on shortening the sales cycle for those placements and be sure to capitalize on the increasing number of [ word-of-mouth ] recommendations from surgeons to their colleagues both within their broader health network, as well as beyond and into new networks and geographies. These recommendations from early expert adopters to their peers provide additional validation and support our aim to make Perimeter's technology part of the standard of care in cancer surgery.

Finally, we have put additional focus on gathering customer's feedback in order to apply an agile approach to improving not just our current product offering, but the other products and technologies within our development pipeline. On that note, while our near-term focus is on the S-Series and B-Series, we have a robust product pipeline supported by our engineering team and dedicated AI experts who are always looking at ways to improve our product offering across both healthcare workflows and across various indications.

Look, in particular at our AI work, in addition to the many improvements to the algorithm itself, Perimeter has amassed a very large proprietary image library, not just in breast cancer, but across other tissue types. With this data set, we can train models in a way that will be very difficult for other companies to replicate. This is the world that I come from and was one of the key things that made me so excited about joining Perimeter. We have world-class leadership on our board and strong relationships with expert surgeons who are helping us train the AI. We have identified many ways that AI can improve our business offering. While the obvious advantage is using AI for image recognition or what we call ImgAssist. For the surgeon, we're also looking at ways to speed up image capture, improve the clarity of images and other improvements up and down our technology stack.

I believe that Perimeter's AI leadership represents a key value driver as we build a product pipeline that aims to improve surgical outcomes and also broaden our addressable market through a variety of tissue types. Under Andrew's leadership, we've been taking a very disciplined approach to our product development road maps, and we will continue to leverage our extensive AI and med tech expertise to find ways to deploy AI models through our tech stack to improve the customer experience in many different ways. We will be sharing some of these advances with you as they roll out over the course of this year.

I'd like to now turn the call over to Sara, who will summarize our financial position before opening up the call for your questions. Sara?

[Sara Brien, executive]

Thanks, Adrian. Turning closely to our financial position. As of March 31, 2024, cash and cash equivalents were approximately USD 10.6 million. All of our current clinical and product development plans remain on track and within our current financial modeling. For more details, I encourage you to refer to the quarterly report and the press release filed today.

Thanks again for your time and attention today. Everyone at Perimeter is committed to making a real difference in the lives of patients by creating and commercializing innovative intraoperative imaging technologies with the aim of helping ensure that no patient has to go through the emotional and physical trauma of the second surgery due to cancer left behind. We look forward to keeping you updated on our progress throughout 2024 and are excited about the important milestones that lie ahead.

With that, I will now open up the call for your questions. Operator?

[Operator]

[Operator Instructions] There are no questions at this time. I will now hand the conference over to Sara for closing remarks.

[Sara Brien, executive]

Thank you, everyone, for joining today. We look forward to keeping you up to date on milestones on our next earnings call. Thank you.

[Operator]

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