Perimeter Medical Imaging AI, Inc. (PINK) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Perimeter B-Series OCT Pivotal Trial Top Line Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 20, 2024. 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 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 [indiscernible] from time to time public filings and press releases, which are posted on SEDAR+. 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 statements 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 high -- ultra-high-resolution, real-time advanced imaging tools to address areas of high unmet medical need. Our FDA-cleared Perimeter S-Series OCT system 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 ImgAssist 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 ImgAssist AI is currently being evaluated in a pivotal clinical trial in preventing cancer surgeries. On the call representing the company are Adrian Mendes, Perimeter's Chief Executive Officer; Andrew Berkeley, Perimeter's Chief Innovation Officer; Sara Brien, the company's Chief Financial Officer; and Dr. Sarah Butler, our Vice President, Clinical and Medical Affairs. With that said, I'll now turn the call over to Adrian.

Thanks, Steve. Good afternoon, everyone, and welcome to our call. Before we get to the prepared remarks, I'd just like to take a moment and just talk a little bit about how excited I am about what we're going to talk about today. I was introduced to Perimeter about 1.5 years, 2 years ago by our largest shareholder. And immediately, I was intrigued by the idea of using AI in the health care space. I've been in the AI industry for close to a decade now, and what got me really excited about Perimeter was what it had technologically. It has a unique imaging modality, OCT, and we have a large proprietary image library upon which is sort of a key ingredient to building AI algorithms and AI solutions. And so the job was how do we take these and bring it to market. So what today's news represents actually is a -- it's really a major milestone in this journey to be able to bring this to patients and to surgeons. And so for me, this is great. I've been here 1.5 years. Some of the -- most of the company has -- is as excited -- all of the company is as excited as me about this. Some of the company has been here much, much longer than I have. Andrew Berkeley, who's on the call right now, our Chief Innovation Officer, is a Co-Founder, who's been here since day 1. And I can just say that for all of us within the company, very excited about this. This is a new phase in the company with this behind us. This is an inflection point. And so with that, let's move to our prepared remarks, and we'll get into the details. So let's see, I'm very pleased to have this opportunity to discuss the positive outcome of our pivotal trial designed to support our planned FDA PMA submission for approval to market our next-generation Perimeter B-Series OCT system for intraoperative cancer margin assessment during breast-conserving surgeries. On behalf of the management team and really everyone at Perimeter, I would 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. I'll turn the call over to Q&A in a few moments. However, before I do, I'd like to provide a brief summary of the positive top line results we announced today and share how truly excited we are about them. As Steve mentioned at the start of the call, we're committed to making a real difference in the lives of patients by creating and commercializing innovative intraoperative imaging technologies. In fact, not only technologies but full solutions to address long-standing, unmet needs in cancer care. Today, despite many incredible advancements in the operating room, intraoperative margin assessment remains one of the most pressing problems that breast cancer surgeons face. The promise of the B-Series OCT with ImgAssist AI 2.0 is greater peace of mind, both for the surgeon who, no matter how skilled, currently faces nearly 1 in 5 odds of needing to perform repeat surgery due to positive margins and for their patients who, under the current paradigm, typically has to wait and worry for 2 to 7 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. A couple of months ago, on October 1, we announced the completion of patient enrollment in the pivotal trial -- pivotal study evaluating the use of Perimeter B-series OCT with ImgAssist AI 2.0 in breast-conserving surgeries. In this prospective multicenter randomized clinical trial, 206 breast cancer patients undergoing breast-conserving surgery for the treatment of stage 0 to 3 invasive ductal carcinoma and/or ductal carcinoma in situ were evaluated to measure the effectiveness of the combined B-Series OCT imaging system with ImgAssist AI 2.0. As compared to lumpectomy current standard methods such as palpation, specimen radiography, intraoperative pathology and ultrasound in addressing positive margins. Patients were recruited from multiple clinical sites across the United States. The B-Series OCT with ImgAssist AI 2.0 enables surgeons to more effectively address residual cancer at the surgical margin during surgery as compared to current standard methods. The pivotal trial easily met its primary end point, achieving a statistically significant reduction in patients with residual cancer during surgery. These results demonstrate super superiority of the Perimeter B-series OCT with ImgAssist AI system's ability to aid surgeons in achieving clear surgical margins during surgery, potentially lowering the need for reoperation. To help put the primary end point results into perspective, the target p value in the trial was 0.025, and we achieved a p-value of 0.005. Moving forward, we expect the full results of the pivotal trial to support our submission, FDA PMA submission for the system in early 2025. Let me stop here for a moment. And some of you who have been following us for a while may be asking why we expect it to be a premarket approval application instead of a de novo request. There are currently 2 products with a similar intended use for examining margins in breast cancer. Both are classified as Class III devices. The FDA has recently suggested to us that the pivotal trial for the B-Series OCT with ImgAssist AI device will also fall under the Class III designation, which requires a PMA submission. So while not final, we believe that this will be the regulatory pathway we will be using. The benefits of a PMA submission are: one, that the PMA applications tend to have a higher chance of approval; and two, if approved, additional assurance of market exclusivity because the technology cannot be used by competitors as a 510 predicate device. And also, since this will be our first PMA application, there won't be any filing costs associated with submissions. As Steve mentioned earlier, B-Series OCT with ImgAssist AI was previously granted a Breakthrough Device Designation by the FDA. The goal of the FDA's Breakthrough Device program is to provide patients and health care providers with timely access to medical devices that provide for a more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions by speeding up their development, assessment and review. Among other benefits, this designation allows for accelerated interactions with the FDA during product development and prioritized review of future regulatory submissions. I can tell you that our interactions with the agency have been very positive and constructive to date, and we look forward to that continuing. If FDA approval is obtained, that will allow for the full commercial launch of the Series-B OCT with ImgAssist AI representing the next major step in our go-to-market strategy and an opportunity to significantly broaden our user base across the U.S. And assuming the overall data set from the pivotal trial is as positive as the primary end point data, we believe this technology has the potential for rapid acceptance and adoption by breast cancer surgeons in the United States. And with that operator, please let's open up the line for Q&A.

[Operator Instructions] Your first question comes from Michael Freeman of Raymond James.

Congratulations. This has been a long time and it looks like a spectacular result. So big congratulations to you and the team. Really important move for patients, I think. So my first question, I wonder if you -- super impressive statistical result. I wonder if you're able to put in simple terms the, I guess, number of patients in the test arm that are -- yes, I guess, simply the test arm, I guess, that had cancer remaining. I wonder if you could describe these results in as simple terms as possible.

Yes. So in the test arm, we had 206 patients. The primary end point was really looking at things at a positive margin level. So there's much more data that we have to come through that we need to analyze. What we wanted to do was get just the top line results out as quickly as possible. Taking a step back. The goal of this trial is really to get the AI into the marketplace, right? And so the top line result is the most important thing, which we were able to achieve with -- well, we talked about the p-value that we got to. Over the coming months, we'll have a lot more data coming through that we'll be able to provide. That will end up being published through -- at various conferences in studies where we're able to dig into it a bit more and give you much more detail around -- more specific results around that. But really, the focus here is were we able to achieve the primary end point and with that, what does that do to our ability to bring it to market, both being, of course, very positive based off of the numbers that we've announced today.

Okay. Maybe I'll ask in a slightly different way. The white paper you published on the S-Series and ability to reduce reoperation, and I recognize that there's a different end point or a piece of data than the primary end point here, was around a little less than 6% versus 23% for general population standard of care. Was the results of the B-Series with ImgAssist superior to the -- what you've seen with the S-Series in the real world?

Right. So the primary end point, which is really the only data we have right now, wasn't -- did not measure re-excisions. It measured positive -- it was the positive margin results. So that information is what will continue -- data that we will continue to -- we need to analyze and get out. So I can't give you a direct comparison of that because we just don't have the re-excision data available yet. That wasn't the way the trial was designed. The primary end point that we agreed to with the FDA was looking at a positive margin result versus a re-excision result, which is additional information but was not the primary end point.

All right. Okay. I'll leave that there. My last question is are there -- when we're thinking about approvals -- and thanks for explaining the PMA path versus a de novo for 510(k). Are there any major differences between the core imaging platforms of the S-Series and the B-Series? So I guess the question is will the FDA need to be evaluating both the performance of the AI alongside the physical imaging device? Or will this be focused on the AI aspect of this platform?

Yes. So it's together. It's -- they're looking at holistically. So this approval would be both for the sort of the hardware imaging device as well as the AI algorithm together. That's what the B-Series is. It includes both the AI -- the imaging tech as well as the software.

Your next question comes from Scott McAuley of Paradigm Capital.

Again, just to reiterate, congrats on the great trial results. It's always exciting to -- when we get these kinds of numbers out in the world after a long trial. Mike already asked some of the questions that I had. I guess one follow-up is around the label. So once you apply for the PMA, so great to get that nailed down a little bit, is there specific language or -- that you're targeting for that label that you would like to see?

Yes. The answer is yes. Perhaps I'll hand this over to Dr. Butler to answer. Sarah?

Sure. Thank you. Yes, absolutely, right? It's -- we're also looking at breast cancer in surgery, margin reductions. I think there's a lot of things that we will be looking at for here. I think we kind of mentioned before, there's a wealth of information. We're excited about this primary end point and really getting this out. But there's a lot of secondary information and additional information that will come, that will really come together and kind of tell a story, and that's what we're looking at. In the PMA, there's going to be a lot of things to add, but some of these claims are going to be very important to moving this in breast cancer space, which is very much the population and intended use. So there will be a lot of claims around that, that should be easily met as well.

Got it. So is the target language around margin assessment? Or are you potentially targeting the actual being able to claim reduction in reoperation rates? Or is there a difference? Does it matter?

Yes, there is a difference. So reoperation rates is a little more subjective. It's because it takes a lot of other things into consideration. So the physician and the surgeon as well as the patients, right, is involved with this, patient's history, a lot of other things, age, that goes into consideration, which isn't measured in our primary end point. But again, with all of the information that's coming out from this trial, this is the pieces that we will be taking to the FDA for those claims. But the intended use was surgical in breast cancer care and really moving that forward at addressing those surgical margins where cancer may have been missed.

Yes, that's helpful. And I guess on the publishing the full results, I know you highlighted taking a bit of time to process all of that. Is there a target for either conference or a particular venue that you're hoping to present the -- both the fulsome data from a primary end point but also all the secondary end points as well?

Yes, absolutely. So we'll be targeting some conferences as well as a full manuscript. But as I mentioned, there's a lot of information. So we're just kind of getting the first information in from our statisticians. We don't even have any of the secondary or anything else yet. So we're kind of excited to get that out as well. So we'll be targeting early probably 2Q or so for conferences, and then we'll have the publication that will follow sometime after that.

That's great. And then lastly, around the Breakthrough Device Designation and Adrian, thanks for highlighting that. From -- I know I think there's been some back and forth at the FDA and the kind of regulatory bodies in the U.S. on additional reimbursement and potential kind of accelerating that for devices that had Breakthrough Device Designation. Is that something that's an opportunity? Is that something you're looking at? Or is that kind of not a focus right now? It's obviously getting it approved in the commercial rollout. But does having a Breakthrough Device Designation help you on any potential future kind of reimbursement discussions that you might be having down the road?

Yes. The answer is, yes, we believe it will help us. Now that we've got the trial sort of at the state it's in -- I mean, as Sarah said, there's still a lot more data to analyze. And then we do have to focus on getting the submission into FDA as quickly as possible, early next year. But reimbursement for obvious reasons is a significant part of what we are thinking about in terms of being able to bring it to market. So yes, the precise answer to your question is that Breakthrough Device Destination should help speed that along. And as we get into it, we'll understand sort of how to pull those levers to move it as fast as we can.

[Operator Instructions] Your next question comes from Doug Loe of Leede Financial.

Congratulations, Adrian, to the team on the solid performance in the trial. Just a couple of things for me just kind of filling the gap. So thanks for the transparency on when you would expect to complete final analysis of all data coming out of the trial and time lines to prospectively publishing everything. Just -- maybe just a little more granularity on time lines, the PMA filing. To file in early 2025 would be a pretty aggressive time line if you hadn't already substantially advanced your filing efforts with the FDA. I was just wondering if you have submitted any preliminary documents maybe specifically on manufacturing or quality control to whatever extent that applies to the device and the AI platform. So just maybe just a little bit more granularity on what your specific expectations would be for filing and on time lines to review thereafter.

Okay. I'll hand it over to Dr. Butler in a moment. But just to sort of preface it, we have been -- knowing that we would either be a Class II or Class III but not knowing precisely which path we would end up on until we got some clarity quite recently through a conversation with the FDA. We have been working on the background, preparing documentation, preparing the systems, preparing everything. So there's a lot of under-the-hood work that we've been doing in parallel over the past year plus to get prepared for that just because timing is like -- it's everything for us. We just need to get this through quickly. So we wanted to waste no time. Sarah, do you want to describe a bit more some of the details around what we need to submit and the time lines of that in answer to Doug's questions?

Sure. So one of the things is with the PMA, as Adrian mentioned, we've been running kind of in parallel pretty much all the way through. So even though it's a little bit of extra work, it's not really that much extra work. So we kind of been planning for the PMA in the background. And assuming if it was de novo, fantastic, but if not, we were at least prepared to submit a PMA. We have not submitted any of the quality work, but the protocol, the statistical analysis plan and all of that has all been, of course, agreed upon by the FDA and reviewed. We have used some of what they call sprint conversations, which are also part of the Breakthrough Device. So we've used some of these other avenues with the FDA. So it's not that they haven't seen anything and we'll be coming to them with the submission at the end that they haven't been part of. They've been a really good partner with us, and we've been keeping them involved right from the very beginning. So I think this -- and we're hoping as well for a very smooth transition of getting this through. But we are preparing for a PMA, and we'll be ready sometime in early 2025.

That's perfect feedback. And again, just another curiosity question here. So you indicated that you had substantial improvement in outcomes in comparison to the standard of care and appreciate that you mentioned that standard of care was a little bit of a dog's breakfast that involves just visual inspection, radiography, presumed histopathology, ultrasound imaging. Just wondering if maybe you can provide us a little bit of color on what specific techniques actually do dominate standard of care and if there is any one particular standard of care subsegment in that list that you outperformed in comparison to the others.

In general -- yes, go ahead, Sarah. Go ahead.

Yes. I was just going to say, that's a great question. And we're really -- these are things that we mentioned in this release that were used during the trial. So it will be really interesting to kind of look at some of those, but that's not data that we have currently. So that will come in some of these layer analysis that we'll be seeing. I'd love to give you that answer, but unfortunately, we don't have that yet.

Maybe if I can add, if you wanted to talk generally, though, Doug, the standard methods would be take the specimen out and to use a specimen X-ray to visualize the gross location of the lesion. Some centers, if they're fortunate enough, may have intraop pathology where pathologists would come and help examine the specimen visually. But for the most part, it is a review of a specimen X-ray image would be the main driver with standard of care.

Perfect feedback. That's great. Once again, congratulations to your team, to all of you. Congratulations.

There are no further questions at this time. I would hand over the call to Adrian Mendes for closing remarks. Please proceed.

Okay. Thanks, operator. So hopefully, as you can see, we are incredibly excited about the positive top line pivotal trial results today. We believe the primary end point data combined with the secondary end points and additional reporting to come should serve as an important catalyst for the business going forward. So just to summarize, number one, the pivotal trial met its primary end point, achieving both a clinically and statistically significant reduction in breast cancer patients with residual cancer during surgery. Number two, in the study, Perimeter B-Series OCT with ImgAssist AI 2.0 demonstrated super superiority compared to standard of care with our technology achieving a p-value of 0.005 versus a target p-value of 0.025. Number three, we would, of course, like to thank the patients, the investigators and the study personnel for their participation in the pivotal trial. And finally, four, supported by the positive pivotal trial results, we expect to submit our FDA PMA application for B-Series OCT with ImgAssist AI in early 2025. Thank you again for all your time and interest, and we look forward to keeping you updated on our progress throughout the remainder of '24 and are excited about all of the major milestones, important milestones that lie ahead. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.