Q3 2024 Perimeter Medical Imaging AI Inc Earnings Call
Speaker Change: Good afternoon ladies and gentlemen and welcome to the Perimeter Medical Q3 2024 conference call. At this time all lines are in listen-only mode.
Speaker Change: If at any time during this call you require immediate assistance, please press star zero for an operator. This call is being recorded on Thursday, November 14, 2024, and I would now like to turn the conference over to Stephen Kilmer, Investor Relations. Please go ahead.
Stephen Kilmer: 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,
Stephen Kilmer: 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.
Stephen Kilmer: Poor 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 Cedar Plus.
Stephen Kilmer: Our results may differ materially from those projected on today's call. No forliquid statement can be guaranteed. Perimeter undertakes no obligation to publicly update or revise any forliquid statement, whether as a result of new information, future events, or otherwise, other than as required by law.
Stephen Kilmer: For the benefit of those who are new to the Perimeter story, I would also like to take a moment to summarize our business.
Stephen Kilmer: We are a medical technology company working to transform cancer surgery with ultra-high-resolution, real-time, advanced imaging tools.
Stephen Kilmer: to address areas of high unmet medical need. Our FDA-cleared perimeter S-series OTC system provides real-time cross-sectional visualization of excised tissues at the cellular level.
Stephen Kilmer: Our breakthrough device-activated investigational perimeter B-series OCT with ImageAssist represents our next-generation artificial intelligence technology.
Stephen Kilmer: As we will discuss in more detail today, B-series OCT with dementia cyst is currently being evaluated in a pivotal clinical trial in breast conserving cancer surgeries.
Speaker Change: On the call representing the company are Adrian Mendes, Perimeter's Chief Executive Officer, Sara Brien, the company's Chief Financial Officer, and Dr. Sarah Butler, our Vice President of Clinical and Medical Affairs. With that said, I'll now turn the call over to Sara Brien.
Sara Brien: Thanks Steve. Good afternoon everyone and welcome to our third quarter 2024 conference call. On behalf of the management team and everyone at Perimeter, I'd like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support.
Sara Brien: I will turn the call over to Adrienne in a moment. However, before I do, I'd like to provide a brief update on our Q3 2024 financial results.
Sara Brien: To streamline things, all the numbers we will refer to have been rounded, so they are approximate.
Sara Brien: Also, unless specified otherwise, all the amounts are expressed in U.S. dollars.
The End.
[inaudible]
Speaker Change: For the three-month period ending September 30, 2024, the company recorded revenue of $208,000, which consisted of the sale of consumables, system leases, as well as from the sale of ESP warranty programs.
Speaker Change: The increase in net loss is primarily the result of a change in two non-cash expenses. Net finance expense resulting from the revaluation of the warrant liability and net foreign exchange loss.
Speaker Change: Cash used in operating activities in the nine months ending September 30, 2024, was approximately $11.6 million, compared to approximately $10.6 million in Q3 2023.
Speaker Change: As of September 30, 2024, cash and cash equivalents were approximately $9.5 million.
Speaker Change: This amount does not include any of the approximately 1.5 million or 2 million Canadian in gross proceeds from the second and final closing of the recent non-brokered private placement, nor a Cancer Prevention and Research Institute of Texas grant receivable approximately 1.9 million, which is related to the reimbursement of pivotal clinical trial project costs as of the end of the third quarter of 2024.
With that, I'll now turn over the call to Adrian.
Adrian Mendes: Thanks, Sara. And thanks again, everyone, for your time and attention today. As Steve mentioned at the start of the call, we are committed to making a real difference in the lives of patients by creating and commercializing innovative interoperative imaging technology.
Adrian Mendes: In fact, not just technology, but solutions to address long-standing, unmet needs in cancer care.
Adrian Mendes: Surgeons have worked for years to innovate every step in the diagnosis and treatment plan for their cancer patients with the ultimate goal of improving survivability and quality of life. Yet, interoperative margin assessment remains one of their most pressing problems. We are working hard to change that.
Adrian Mendes: As many of you know, we are currently commercializing our first FDA-cleared, interoperative imaging technology, the S-Series OCT, which provides surgeons with image resolutions capable of visualizing tissue structures at the federal level, down to the critical 2mm depth when assessing margins real-time in the OR.
Adrian Mendes: It is cleared under a general indication and has not been evaluated by the FDA specifically for use in breast tissue, breast cancer, other types of cancers, margin evaluation, nor reducing re-excision rates.
Adrian Mendes: 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 authorization of our next generation system, the B-Series OCT with ImageAssist AI.
Adrian Mendes: On October 1st, we announced the completion of patient enrollment in a pivotal study evaluating the use of the B-Series system in breast conserving surgeries.
Adrian Mendes: This prospective, multi-center, randomized, double-arm clinical trial enrolled approximately 530 women.
aged 18 years and older.
Adrian Mendes: undergoing breath-conserving surgeries for the treatment of stage 0 to 3 invasive ductal carcinoma and or ductal carcinoma in situ. Participants were recruited from 10 clinical sites across the United States and randomized in a two-to-one ratio to the device and control arms.
Speaker Change: Moving forward from here, since we have already received FDA breakthrough device designation for our B-series, we anticipate the readout from this study will be a significant catalyst for our business.
Speaker Change: To help facilitate that we've asked Scott Mcauley and.
Speaker Change: And equity research analyst, who covers permanent for paradigm capital to lead a special Q&A session now with Dr. Butler and after that I'll come back with some closing remarks operator. Please open up Scott's line now for the B series pivotal trial Q&A.
Speaker Change: Yeah.
Speaker Change: Hey, Adrian Sarah and the team thanks for taking the questions and great to see another quarter in the book.
Speaker Change: Maybe just to start off on some of the news from.
Speaker Change: I'm, just an hour or so ago.
Speaker Change: I think he highlighted that I think there are eight new placements for the F series year to date, certainly exciting and accelerating that pace I guess could you just confirm how many F series are kind of out there in commercial use in the U S. A today.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah, we're up to 15.
Speaker Change: Rice is out there in commercial use now.
Speaker Change: That's great.
Speaker Change: And as if there's others fifteens sites out there right now.
Speaker Change: It's out there it's being used in commercial procedures today.
Speaker Change: So you kind of touched on it in the prepared remarks, but at a high level. This P series product. This trial why is it important to patients to surgeons and to perimeter itself.
Speaker Change: Okay. Yeah, Great question. So what this trial will do is it is the first step in allowing us to get our AI into into the marketplace.
Speaker Change: What AI brings to the device that we don't have available with the F series today is at a call. It a KOL pilots for the surgeons, which makes it easier to identify suspicious areas when looking at the images that are device captures.
Speaker Change: And then from a business day, but what that allows us to grow the customer base.
Speaker Change: Much beyond where we are right now.
Speaker Change: And so there is about 8000 surgeons breast surgeons.
Speaker Change: Surgeons that do breast surgery in the U S right now.
Speaker Change: And so our goal of course is to be able to get our device into as many of those hands as possible.
Speaker Change: Having AI and market allows us to reduce the learning curve and makes it much more approachable for many many of those surgeons.
Speaker Change: To get them it use it for their patients.
Speaker Change: Yeah, No that's that's great maybe.
Speaker Change: Maybe what kind of dig into a little bit into the trial itself. So.
Could you go through the workflow the trial I know theres, some kind of special within subject analysis, that's pretty unique and interesting.
Speaker Change: So maybe could you dive into some of that.
Speaker Change: Yeah, I'll hand, it over to Sarah to go into that.
Sarah Butler: Happy to.
Sarah Butler: With the trial. The trial was was split into two parts. So the one I kind of want to focus on at the moment is what we did in the second part which is really the addition of images. Just 2.0. This is also what we will be using for the effectiveness of the trough.
While.
Sarah Butler: So for that.
Sarah Butler: When patients come in they do their standard of care treatments for all arms of the trial in the device arm. These individuals' then we're able to have the OCG technology used as well. So these patients are able to be their own control.
Sarah Butler: This is very unique ability. It also helps to cut down on a lot of that variability you see between patients.
Sarah Butler: We employed this for the trial and our effectiveness well, we'll be looking at those patients that were in the device arm, having both standard of care and the OCD technology.
Speaker Change: Yeah, I guess, maybe a bit about the image assist two point or kind of what the what that change was and kind of why you thought it was worth doing.
Mid study.
So we started the trial with images just 1.0 that was a good augur rhythm.
Speaker Change: As you know with AI things turn very very quickly. So by the time you get something out here you need to iterate on it already.
Speaker Change: And so we started with the one point, we got about not quite halfway.
Speaker Change: And then reached out and engage the FDA to discuss adding in this enhanced augur of them, which is the image is just to point out.
Speaker Change: It's much better and something that we thought would be better for patients, but also to be out on market. So we negotiated with the FDA on the next steps and we restarted the trial then using in there just to point out. So there you will see a little bit of difference in those numbers all of the patients that.
Speaker Change: Were enrolled throughout the trial will be included in the safety analysis that only the ones in images just to point out which would be somewhere around 206 and the July farm.
Speaker Change: We will be used for the effectiveness or analysis.
Speaker Change: Yeah.
If it makes sense and maybe kind of put a little bit of a sharper point on it in terms of the the primary outcome.
Speaker Change: The readout.
Speaker Change: What is.
Speaker Change: The primary end point.
Speaker Change: And when you're releasing it do you have an idea of kind of what that's going to look like in terms of presenting that to the market.
Speaker Change: Okay.
Speaker Change: Yeah, So the primary end points.
Speaker Change: Really is looking at the occurrence of unaddressed margin. So what does that mean so the primary end point you can summarize it by looking at the proportion of subjects with at least one unaddressed positive margin. After the treatment. So still has cancer. After standard of care has completed and.
What we're looking for then is after standard of care is complete then you would randomized.
Speaker Change: To that device and then youre looking at detecting any additional margins for that patient. So was there any cancer mist, which could then potentially lead to a reacceleration.
Speaker Change: And in that then we're able to then calculate what that effectiveness is how many patients then were we able to detect in.
Speaker Change: With the surgeon actually looking at this and using the <unk> technology.
Speaker Change: So that within subject will be very important because like I mentioned it helps to control some of that I assist and that variability between patients where these can be measured exactly the same way. It's the same patient.
Speaker Change: Yes no.
Speaker Change: Super interesting.
Speaker Change: I guess any.
Speaker Change: That's clear on the primary endpoint any.
Secondary endpoints that.
Speaker Change: Our interesting or you think.
Speaker Change: Surgeons and patients will be particularly focused on down the road once those are released.
Speaker Change: All of it absolutely yes, we've got a primary endpoint that is critical to the study into the patients, but theres a lot of information and the secondary endpoints, which we're looking at margin levels as well.
Speaker Change: And additional outcomes. So there's a lot of information a wealth of information that will be getting from this.
We're really excited to get through all of the information.
As you know, there's like a 100 data points per patient. So there's a lot of info that will take some time to get through them, but we're very excited to at least get through and get the primary endpoints analyzed them and get that out to the public as well.
Speaker Change: Yeah, that's great and then I guess.
Speaker Change: Talking to surgeons, either the early adopters of the F series or people, who are interested in the B series.
Speaker Change: As well as administrators in.
Speaker Change: Hospitals are surgical centers.
Speaker Change: Is there something in particular that they're looking for statistical.
Speaker Change: Significant result is great.
Speaker Change: That's the FDA, what theyre looking at four.
Speaker Change: The bar for approval.
Speaker Change: Is there a particular level or a readout that would get them really excited or is it anything that's going to impact.
Speaker Change: Positive margins in <unk> like that alone is a baseline gets I'm interested what feedback youre getting from from them.
Speaker Change: Yeah, it's interesting right, so FDA really looks for statistically significant.
Speaker Change: And in our case with a within subject, we're really looking at a one sided T test stripe. So youre looking for a P value of less than 0.0 to five because we're looking for a decrease in the number of patients right. So youre, having patients from standard of care <unk> is looking to decrease that number.
Speaker Change: Get through with cancer. So it's a one sided test.
So that's what we will be looking for in when we released the primary endpoint Thats, what youll see as a proportion and then you'll see a P value and once we get the results that should be less than zero to five.
Speaker Change: Why this is important I think from a broader perspective, the fda's kind of looking at very specific on statistics and then we're looking more across the board.
Speaker Change: The technology that you can use in breast conserving surgery, you know 20% of patients that go through this are coming back for weeks.
Speaker Change: Really high.
Speaker Change: So I think anything that we can use to be able to help to start reduce this number and help to address these patients I think that's really invaluable both from a patient perspective, but also from the surgeons, so really aid them in detecting breast cancer before they release from surgery catch it during surgery before it gets passed and then patients have to come.
Speaker Change: But nobody wants to make that phone call.
Speaker Change: I think this is a really great tool and were really excited to get the results.
Speaker Change: Yeah and Scott.
Speaker Change: But if I can follow up on that a little bit.
Speaker Change: On the commercial side of the house, when we're out talking to potential.
Speaker Change: Future customers.
Speaker Change: We are already hearing from their peers the effectiveness of our F series, which uses.
Speaker Change: Very similar OCC imaging technology, but without AI and they are there.
We're seeing the effect of that alright, so what they're looking at and we've got to speak about what Theyre looking at from this trial isn't so much the effects NIM.
Speaker Change: Effectiveness of the imaging technology, but the ability to use the AI.
Speaker Change: So really whats key for them is when can you guys get the AI on the market.
And so really what they're looking for is really the same as what the FDA is looking for is this going to show that the physical significance to allow the FDI to give you.
Speaker Change: Authorization.
Speaker Change: And so that's what we're going to be working through.
Speaker Change:
Speaker Change: As the state of starts getting released in over the next year.
Speaker Change: Yeah.
Speaker Change: And the AI again.
Speaker Change: How about it before but the benefit of the AI being.
Speaker Change: Fast potentially faster turnaround because youre getting this.
Speaker Change: Co pilot view of not having to review all of the images you can just focus surgeons can just focus on images of potential interest and they can decide whether or not.
Speaker Change: Its potential cancer or not.
Speaker Change: As well as time and then just ease of use is what they're they're focused on.
Speaker Change: Correct Yep.
Speaker Change: Okay, that's great.
Speaker Change: And then I guess on the the other potential effect is on the label.
You highlighted before that the current F series label is tissue agnostic, which.
Which is great, but then to say it doesn't have the breast cancer in margin.
Speaker Change: A reduction.
Speaker Change: Specific claims on that label. So is there a label that you're kind of particularly targeting that you'd be.
Speaker Change: At about and then what would that enable you to do from a sales and marketing perspective, or other kind of business development perspectives that you can't necessarily do with the current.
Speaker Change: Tissue agnostic label.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Go ahead Sir.
Sure so.
Speaker Change: With the information that will be we'll be getting image assist is a utility tool that really increases that efficiency and really helps to aid the surgeon during during surgery. So the technology is great it's able to really visualize.
Speaker Change: The tissue and to help patient care and I think with the image assist you'll also see that added benefit of reducing time and really getting the benefits to the surgeon.
Speaker Change: I think that gives you a lot larger than the market as well to be able to to show those effects.
Yes, So you can specifically go out and market around.
Its use in breast cancer.
Speaker Change: Which from a sales perspective, which maybe you can't necessarily jump up and down.
Speaker Change: From a market sales and marketing perspective around specifically around breast cancer with the current label.
Yes. This is really nice because it is in breast cancer and breast cancer patients right in the workflow of breast cancer and how surgeons are treating these patients.
Speaker Change: It's a little different with the image is just in the V series compared to the F series.
Speaker Change: It's giving and showing really that technology and how it works and then how well the images just age that physician to be able to determine you know make those determinations and surgery again huge impacts for the patients level, but it's also going to be a big improvement for the surgeons as well not just technology.
Speaker Change: The AI that helps detect it.
Speaker Change: Yes definitely.
And I guess on timing.
Speaker Change: Adrian I think you'd mentioned that looking to put the results out soon.
Speaker Change: So I don't know if you can put a finer point on that or not.
Speaker Change: And then in terms of looking forward for a potential submission to the FDA and approval.
Speaker Change: Kind of what are you putting out there in terms of those potential timings.
Yes.
Speaker Change: Yes, so I think we're going to be able to talk about.
Speaker Change: At least the primary endpoint very shortly here.
Speaker Change: So we're just with the trials that obviously are patients rolling we're close out the sites.
Speaker Change: So so very very soon.
Speaker Change: And then in terms of being able to submit to the FDA that'll be early next year.
Speaker Change: It's one we will be able to get that application in flight.
That's great.
Speaker Change:
Speaker Change: And then I guess on the on the commercial side a little bit.
Speaker Change: Again, great to have those 15.
Speaker Change: F series users.
Speaker Change: What are you hearing from people in terms of anyone kind of waiting in the wings.
Speaker Change: For the B series approval before jumping in.
Speaker Change: And then people who currently have the F series and looking to upgrade or convert to the B series once that's approved.
Yeah. Good question. So just just to correct. The record it's actually 14, I misspoke when I said 15 earlier, so <unk> devices out there.
Speaker Change: We do have yes, we do have customers that are waiting.
Speaker Change: For the AI like I was saying before getting that onto the market really reduces the barrier to adoption.
Speaker Change: So as our sales teams out there talking to potential customers for the F series.
Speaker Change: The ones that are interested in what we have right now with the imaging DLC imaging, but without AI, we're able to bring them onboard.
Which is what we do.
Speaker Change: And then that's sort of laying the groundwork seeding the market for eventually where we'll get to the B series, but theres a lot of interest for this product out there we.
Speaker Change: <unk> got a very deep pipeline.
Speaker Change: As time gets closer it will.
Speaker Change: No there is excitement within the community.
To be able to get their hands on it so I'm really I mean, we're all here really really looking forward to being able to bring that out to the customers into the patients.
So it'll be it's going to be exciting year next year really exciting as we get this thing pushed through the approval process.
Speaker Change: Definitely.
Speaker Change: From.
Speaker Change: As sales and marketing infrastructure perspective, and making those preparations so that once you do get the approval you can hit the ground running.
Speaker Change: Kind of what are you doing.
Speaker Change: Internally or from the operation side to get ready so that you can.
Make those sales and convert that interest into installations.
Speaker Change: Yeah. So there's a lot of planning that's going on right now internally in terms of.
Speaker Change: Our entire go to market plan or the business model the marketing strategies over the next 12 months.
The resourcing strategies.
Eric: Eric We've got from a from a really from a business standpoint.
Speaker Change: Well the variable that we have to work with is when do we actually get that authorization from the FDA right now.
Speaker Change: The error bars around the expected timeline right along right six months plus or minus a year from now six months plus or minus so it's Rick we have for managing the business is to make sure. We're not investing too far ahead of the curve, but making sure.
So to speak the day, we get authorization, we're ready to hit the ground running and so that's our that's our management challenge at this point, making sure we're growing our commercial.
Speaker Change: Focus and Resourcing at the right pace. So we're building that interest in the market to allow us to sort of unleash as soon as we got authorization, but doing it too far in advance in a cash and efficient way.
Speaker Change: Definitely and then you kind of referred to it a little bit there.
Speaker Change: And that last answer but in terms of the economic or business model for the B series versus the F series.
Speaker Change: Are there any kind of differences obviously, there is the software which has added value versus just the hardware and consumables. So any kind of early thoughts on how youre thinking of positioning the b series versus they are serious.
Speaker Change: Yes.
Speaker Change: From a business model okay.
Speaker Change: The mental standpoint, the F series will continue to exist.
Because we do and can and do use it for other tissue types. Besides breast.
Speaker Change: So the F series will be kind of debt.
Speaker Change: <unk> used for non breast.
Speaker Change: Procedures.
Speaker Change: For breath that will all move over to the V series, we will have the AI on top of it we will be introducing new business models are more subscription based versus consumable based.
Speaker Change: And so those are the those are the types of malls that were looking to rollout as we bring these theories that onto market.
Speaker Change: Definitely.
Speaker Change: And I guess on.
Speaker Change: Kind of a higher level I think there's been a fair amount of innovation in the breast cancer space across imaging diagnostics.
Speaker Change: And a number of different areas and we have seen some.
Speaker Change: Kind of strategic acquisitions.
Speaker Change: Even just in the past six months.
In the breast cancer space so.
Speaker Change: How do you see.
Speaker Change: The P series this tumor margin assessment kind of fitting in with the whole innovation, that's happening across the breast cancer care pathway.
Speaker Change: And your potential interest down the road from some of the bigger strategic players who are in the space.
Speaker Change: Okay.
Speaker Change: Yeah. Okay. So this margin assessments challenge with breast cancer really all cancers.
Speaker Change: Very big unsolved problem.
Speaker Change: And it's one that hits patients directly and it also hits the economics of health care directly. So it is off great interest.
Speaker Change: To some of the potential strategic acquirers out there.
Speaker Change: Industry as a whole.
Speaker Change: So we're playing right in a very.
And a great space in that in that respect.
Speaker Change: Additionally, this will be the first breath.
Speaker Change: Breast cancer surgical.
Speaker Change: <unk> with AI that will be in market, So which of course is another huge focus for not just health care, but for overall industry looking at how to integrate AI into products to make them better and more useful for our customers. So I think we hit fairly well on both of those fronts.
Speaker Change: And then not only that are between the image library that we've built over 2 million images of breasts.
Speaker Change: Issue, both cancer unhealthy between that library, and the algorithms and the OTT just the raw imaging technology. There are applications not only with other tissue types, but also.
Speaker Change: Even further outside of the operating room for breast cancer care.
Speaker Change: And so that's there's huge value creators that we've got within our company and so that doesn't go unnoticed in the industry.
Speaker Change: And so we'll see we'll see as the as.
Speaker Change: Our product developed that's a market develops.
What happens, but yes, there is definitely a good space.
Speaker Change: And there's good interest in our technology and what we've been able to do with it.
Speaker Change: Definitely and yeah, we got serious potential upcoming B series.
Speaker Change: Did you say a different tissue types different parts of the care pathway, so potentially a number of whole alphabet a different series.
Speaker Change: Essentially follow in the years to come.
Speaker Change: Yes, hopefully with better branding, but yes.
Speaker Change: Yes, the whole alphabet.
Speaker Change: No.
Speaker Change: That's great I think that kind of covers.
Speaker Change: Most of my questions. So.
Speaker Change: Thanks, a lot for taking the time and for taking the questions and I'll pass it back back to you for any other remarks.
Speaker Change: Okay, great. Thanks, Scott and thanks Sara.
Speaker Change: So just to wrap up.
Speaker Change: As you can hopefully see from what Dr. Butler, Scott I just reviewed we are quickly approaching what could potentially be a major value inflection point for our perimeter.
Speaker Change: And to summarize a few key points, we're seeing continued positive commercial traction with the F series OTT as demonstrated by our installed base and our revenue growth in Q3.
Speaker Change: And on top of that patient enrollment in the pivotal trial evaluating use after b series with image AI images. This AI.
Speaker Change: Was completed a few weeks ago, and we're eagerly anticipating the release of the topline final results in the coming days. So we look forward to keeping you updated on our progress throughout the remainder of 2024 and are excited by many of the many important milestones that lie ahead.
Speaker Change: Yes.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Yes.
Speaker Change: Okay.
Yes.
Speaker Change: Yeah.