Call is being recorded on Tuesday, May 13, 2025. I would now like to turn the conference over to Mr. Stephen Kilmer of 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 Img 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 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 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 Img 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 Img Assist 2.0 has recently been evaluated in a pivotal clinical trial in breast conserving surgeries, or BCS. On the call representing the company are Adrian Mendes, Perimeter's Chief Executive Officer, Andrew Berkeley, Perimeter's Chief Innovation Officer and Co-founder, and Sara Brian, the company's Chief Financial Officer. With that said, I'll now turn the call over to Sara.
Thanks, Steve. Good afternoon, everyone, and welcome to our First 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 greatly appreciate your continued interest and support. I will turn the call over to Adrian in a moment. However, before I do, I'd like to provide a brief update on our financial results. To streamline things, all of 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 ending March 31st, 2025, the company recorded revenue of $550,000, which consisted of the sale of consumables, the sale of ESP warranty programs, and our first-ever capital unit sale. This represents a 460% increase over Q1 2024.
Operating expenses for the first quarter were $4.6 million, essentially unchanged from the same period in 2024. First quarter 2025 net loss was $4.3 million, compared to $2.1 million in the first three months ending March 31st, 2024. Cash used in operating activities in the first three months ending March 31st, 2025, was $3.8 million, compared to $3.6 million in Q1 2024. As of March 31st, 2025, cash and cash equivalents were approximately $2.4 million. This amount does not include a Cancer Prevention and Research Institute of Texas grant receivable of $931,000, which is related to the reimbursement of pivotal clinical trial project costs at the end of the first quarter. As you can see, the company needs additional capital in order to continue to execute on our growth strategy.
To that end, at the end of March, we filed a preliminary short-form prospectus and amended and restated preliminary short-form prospectus with the securities regulatory authorities in the provinces of British Columbia, Alberta, and Ontario in connection with an offering of units of the company. While we cannot provide additional color on the offering on this call, we can say that we were able to start marketing just recently and are now working diligently towards completion. With that, I'll now turn the call over to Adrian.
Thanks, Sara. Thanks again, everyone, for your time and attention today. Over the past few quarters, I've been describing what we've been doing inside the company to set us up for future growth. As you can see from today's press release, these moves are starting to deliver the results we've been working toward. We've seen this momentum building within our day-to-day operations for a while, and it's very exciting for us now that it's becoming visible in our external metrics. As Steve mentioned, we are currently commercializing our first FDA-cleared intraoperative imaging technology, the S-Series OCT, which provides surgeons with image resolutions capable of visualizing tissue structures at the cellular level down to the critical 2 ml depth when assessing margins real-time in the operating room.
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 next-generation system, the B-Series OCT with ImgA ssist AI 2.0. I would like to take a moment here to summarize how far we've now come toward achieving that. We saw a significant increase in sales of our current S-Series technology in Q1, and that positive momentum has continued into our current second quarter. We also achieved multiple commercial milestones for the product. In April, a record number of patients' cases were supported by Perimeter's S-Series. We saw the highest-ever number of consumables shipped, 88% of eligible devices were covered by paid ESP warranty programs, and last but not least, our 2025 billings, which are purchase orders for consumables, new devices, and ESP warranty programs, surpassed $1 million.
To put that level of billings through the first four months of 2025 in perspective, our total revenue for all of 2024 was $846,000. Clearly, we're not only growing, we're accelerating this business. With respect to our upcoming B-Series, we filed a pre-market approval application for the device with the FDA in mid-March. On the heels of that, just over a week ago, Dr. Alastair Thompson, the principal investigator for the pivotal trial of Perimeter B-Series, which supported the FDA PMA application, presented previously embargoed detailed study results to a packed audience of researchers and clinicians at ASBrS, the world's premier breast cancer surgery conference. Dr. Thompson's ASBrS presentation highlighted several key findings from the trial.
Of the 206 patients evaluated in the pivotal trial of the B-Series, 56 residual diseased margins in 35 out of 206, that's 17% of patients, remained after intraoperative standard of care. Use of the B-Series after that standard of care evaluation resulted in correct detection of residual disease in 14 out of 35, or 40% of additional patients, fully clearing half of those patients of all residual disease and meeting the pre-specified supersuperiority performance goal for the primary endpoints with a P of 0.0050. Mean total lumpectomy tissue volume excised in the device arm of the trial was 74 cu cm. 76.4% of the volume was from the primary lumpectomies. 19.9% was from 499 standard of care shaves, and only 3.8%, which is 2.8 cu cm, was from 115 B-Series directed shaves.
This is important because it's very important to lumpectomy patients to preserve as much tissue as possible while getting those clean margins. The overall Perimeter B-Series margin accuracy was 88.1%. In total, 26 patients benefited clinically from the identification of residual disease by OCT AI after standard of care was completed. Importantly, this includes six patients with B-Series aided shaves, which contained pathology-confirmed disease missed by both standard of care and histopathology at the previous margin. I want to pause there for a moment to make sure this is understood. Without our device in this trial, those six patients would have gone home after their surgery hoping they were disease-free, and 70 days later, they would have received their pathology report telling them they were disease-free. In fact, they would not be.
The additional tissue the surgeon removed after using our B-Series device did indeed contain cancer, and that would have gone completely unnoticed, but for our OCT AI technology. As I've said before, the ultimate product promise of Perimeter's B-Series is greater peace of mind, both for the BCS surgeon, who no matter how skilled, currently faces nearly one in five odds of needing to perform repeat surgery due to positive margins, and also for the breast cancer patient, who under the current paradigm typically has to wait and worry for up to 10 days after their surgery to receive a post-operative 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.
The FDA PMA submission for Perimeter B-Series was a major milestone, our first regulatory approval application for our AI-enabled wide-field OCT technology, as well as for a specific indication label. The B-Series has an FDA breakthrough device designation, and we are pleased to report that we've already had very good dialogue with the agency as it reviews our PMA application. If and when FDA clearance for the B-Series is obtained, that will allow for the full commercial launch of the B-Series, representing the next major step in our go-to-market strategy and an opportunity to significantly broaden our user base across the U.S. As you can hopefully see from today's press release and call, we're at the stage now where we can confidently say we have reached the first of what I hope to be many potentially major value inflection points for Perimeter.
I would characterize 2024 as a transition year, 2025 as time to get ready, and 2026 as go. To summarize, we are seeing continuing positive commercial traction with our current S-Series product, as demonstrated by our 460% Q1 revenue growth, achievement of several commercial milestones, such as our first capital unit sale, record patient cases, record shipments, and service contract coverage and billings, and recent expansion to three new states: New Mexico, Tennessee, and Arizona. In November 2024, we announced that the pivotal trial of our next-gen AI-enabled B-Series system met its primary endpoint, achieving a statistically significant reduction in patients with residual cancer during surgery. These results demonstrate a supersuperiority of the B-Series' ability to aid surgeons in achieving clear surgical margins during surgery, potentially lowering the need for reoperation.
Based upon the positive pivotal trial results, we filed the FDA PMA application for B-Series OCT with Img Assist 2.0 in mid-March. Finally, we're excited to see the presentation of previously embargoed detailed results from the B-Series pivotal trial at the 26th Annual Meeting of the American Breast Cancer Surgeons earlier in May. It's an exciting time for all of us at Perimeter, and we look forward to keeping you updated on our progress. With that, I'll now open up for questions. Operator?
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star, followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star, followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Michael Freeman from Raymond James. Your line is now open. Please go ahead.
Hey, good afternoon, Adrian, Andrew, Sara. Congratulations on these compelling results and on the full publication of your data from the trial. They're also quite important to read. Okay, my first question is, I wonder if you could give us a brief overview of your revenue models, and I wonder if you could give us a bit of color on this customer that undertook a capital sale this quarter. I guess what motivated toward undertaking the capital purchase as opposed to any other means that they could access the device?
Sure. Okay, so our revenue model, there's basically three revenue streams that we've got today. One is from the consumable immobilizers. Second are from service contracts upon the hardware that's placed inside the hospitals. Third are capital sales. Those are the three right now. As we move forward in time and the AI is brought to market, that might change, but for the moment, that's what it is. With respect to the customer who purchased the capital, to be honest with you, different hospitals have different philosophies around whether they can take placed capital, whether they purchase capital, sort of how they want to do business with their vendors. Our objective right now is really just to meet them at where they are and be able to service them in whatever form.
There are hospitals that do not accept placed capital and need to buy the capital and put it onto their balance sheet. We are happy to do whatever works for the customer. What we are looking for right now really is getting the placement, getting surgeons using the device. I think from a financial perspective, what is most important for us is to be able to continue to get that recurring revenue stream off of the consumables. No matter whether the machine is placed or sold, there will always be a component of revenue that is from the sale of those immobilizers. That is core to the business model that we are driving towards.
Gotcha. Okay, thanks, Adrian. Maybe this next question is for Andrew. It's to do with the result of the trial. So it's a good explanation of different facets of the results provided in the press release, in the paper. I wonder if, I guess, just the overall 88.1% accuracy figure, I wonder how you're thinking about this as sort of a headline figure for this trial and if there, as the algorithm improves, as different conditions improve or change, if you see room for improvement in that 88.1% accuracy figure?
Yeah, definitely room to improve. We already have a new model that has outperformed the AI model that was in the trial. We also can get access to a lot of the data from the trial that we can use to train this algorithm. Now we have more data and a better algorithm. Of course, we expect to get the accuracy as high as possible, up into the 90s as a first step, and then keep going until we max out, up into the late 90s. Accuracy is an important measurement because not only does it measure the ability of the device to find disease, but it also accurately calls negative margins, which the surgeons are really concerned about because they do not want to be just taking lots of additional tissue because that has a cosmetic input on the patients. It also has a financial input.
Every additional piece of tissue that they take costs $200-$300. If you're taking four or five extra pieces of tissue on bad information, that all adds up. When we look at this, we look at sensitivity as being the most important driver, but we also take specificity as very highly important for the technology for the reasons that I just outlined.
Okay. All right. Thank you very much, Andrew. I guess my last question will be on the nature of conversations or dialogue you're having with the FDA. If you could provide any color on, I guess, the status of these conversations and in general, what is being discussed.
Yeah, Andrew, do you want to speak to that?
Yeah. So we're actually quite pleased at the speed of the response coming back from the FDA. I think we kind of feel that they're a little bit ahead of where we thought they were at. Right now, the questions that they're coming back with are more around how we put our study design together and more of the mechanics behind it rather than the actual nuts and bolts of the results. They're just really forming a picture in their minds of what exactly we did during this trial. Once they have that figured out, the next level down will be to get into the actual statistical analysis and making sure that how we produced the numbers are in line with our expectations. I think the overarching thing is there hasn't been anything that has come back from them that we can't answer so far.
They seem to be a little bit ahead of where we anticipated. We do have a meeting coming up next month with the FDA on our 100-day mark, where we will probably get a much bigger insight into where their further questions will lie.
Okay. Given that these guys are a little bit ahead of where you expected, do you have, I guess, updated expectations around when approval should come? I know this is a tough subject.
Yeah, I would temper expectations there. I'm just saying when we get to the 100-day mark and they come back with all their fully fledged questions, I think then is the point when we will know how much further this is going to take. Right now, they're just getting through their initial process quite efficiently, but the big questions will come a little bit later.
Gotcha. Okay. Thanks very much. Congratulations on all this. I'll pass it along.
Yeah, thank you.
As a reminder, if you wish to ask a question, please press star one. Your next question comes from the line of Scott McAuley from Paradigm Capital. Your line is now open. Please go ahead.
Thank you. Afternoon, everyone. I think I know the answer to this first one, but just to check. This sale in this quarter, was that a new placement or a kind of conversion of an existing placement that was under either a lease or other model that decided to acquire the equipment? I guess kind of related to that, are there any of the sites that you currently have under a lease or placement model that now they have the initial experience with the system that are looking to acquire the capital equipment outright?
No, this sale was a new customer. Typically, like I said, customers will generally be able to do a capital sale, I mean, sorry, be able to do a placement or not. Those customers that have a device already placed, there is no expectation that they would convert into a sale right now on the S-Series. As we move to B-Series, that might change. For the moment, the capital sales we are doing are brand new placements, brand new customers. Yeah.
Yep. That's great. Great to see the new systems in the new states. Can you speak to the current kind of number of installations or agreements that you have? Obviously, kind of what the momentum out of the conference a few weeks ago, what that pipeline is looking like?
Yeah. We're approaching 20 placements now across the country. The momentum is very good, actually. The ASBrS conference is two and a half days of floor time, a few more days of presentations. There's about 1,500 attendees. Breast surgeons is focused on breast surgeons from the U.S. and around the world, really. There was a, I mean, just speaking anecdotally from our booth, there was a ton of traffic going through our booth, folks wanting to look at the S-Series product, get a little bit of hands-on, sort of play around with it a bit. We were talking, our clinical team was showing the user interface for the B-Series to sort of prepare, give people a more visual understanding of what that UI looks like. Dr. Thompson's presentation had a full house when he presented.
It was great because his presentation was the end of a block. At the end of that block, there was a break. At the break, folks come to the exhibit hall. It was really nice after his presentation to see the amount of traffic in our booth of surgeons who had just got off from hearing his presentation and seeing all the data, and then wanted to come see the device in person. It was very energizing for our team. It was great that there were, on multiple occasions, current customer surgeons there talking to either colleagues they already had or other surgeons that they had just met, kind of talking about their experience sort of unprompted by us off the device, how they use it in their practice. It was very encouraging for the team.
It is leading into a significant number of new accounts in our pipeline. I think one of the differences we are seeing this year versus others is it is not so much, "Hey, let me learn more about the product." It is more like, "Okay, I would like you guys to come into whatever city of my hospital as soon as you can. Then we are going to start conversation with administration immediately." They have started to see the data now. They see the results. They have been hearing about this product. There is a great sort of momentum and groundswell happening within the surgeon community.
That's great. Yeah, that's great to hear. I know, obviously, a number of placements and facilities is one thing that's important. I know something you've highlighted in the past is having multiple surgeons using any kind of one device, which obviously increases utilization and that throughput of the consumables. I don't know if there's any comments on maybe the number of surgeons that are currently trained in using it or kind of the average number of surgeons that are using any one given installation or trends you're seeing in terms of new surgeons getting trained up at an institution that already has a system in place?
Yeah, this is a focus for us. What we do is we sort of prioritize. We've got a very small sales team. We've got a lot of customers that want the device. The way we prioritize our pipeline, who we service, is both geographically, but also those facilities where there are multiple surgeons that are all in the same facility that can use the same device. I'll use HonorHealth just as an example, which we announced, I don't know, a little while ago. That facility's got three surgeons that are trained on the device that are using that single device. We've got a couple more hospitals in the pipeline that are pretty near to completion, getting signed, where, again, there's multiple, three, four, five surgeons in that single facility. This is a big deal for us.
I think this is also what is driving we've had a pretty sizable increase in procedures this past quarter, revenue. It's being driven by having—how do you say this?—having more surgeons in the same facility using the device. One of the nice things about that is once you go through what they call the value-add committee to get the device placed, which tends to be the more cumbersome part of the sales process, it's much easier to get a new surgeon already in that facility to use that same device that's there. The goal here and sort of the quickest path to increasing revenue quickly is to get the device in a hospital, in a system that has multiple surgeons, and then be able to quickly get more and more surgeons on that. We're starting to see some of that happen kind of now.
Certainly in the pipeline, it's there.
Yeah, that's great. I guess lastly, for me, and related to that, is any discussions on more kind of system-wide contracts or agreements where a system that might have five, 10+ individual facilities across either a state or multiple states where you can get in, get a single agreement that would apply for all of those, and then say you don't need to go through the value-added committee at each institution, and you can go hunting a bit more?
Yep. Yep. Licenses to hunt is what our sales team calls it. The answer is stay tuned.
Fair enough. That's great. Congrats, guys. Thanks for taking the questions.
Your next question comes from [Doug Lowe] from [Reed Financial] . Your line is now open. Please go ahead.
Yeah. Thanks, Operator. Hi, Adrian. Congratulations on all progress summarizing your quarterly results here. Most of the questions have been answered here, but just a supplemental one. I was just looking to see if any of the medical professionals that are relevant to your current installed base have any of their own phase IV academic research or sponsored clinical trials ongoing. I did not find any. I was just wondering if any of your current users have any aspirations of publishing any of their own clinical data that you might be able to use in support of selling the B-Series or S-Series for that matter, and if you have any insights as to whether supplemental clinical trials might fold out from your existing installed base going forward. That is it for me.
Yeah. Okay. So on the B-Series, the only surgeons that have used that were the ones involved in the clinical trial that we just wrapped up. So obviously, that's done. There will be manuscripts coming out and getting published to journals over the course of the next year as we continue to crunch through that data. I think on the B-Series, that's where you're going to see the bowls of information get published in scientific journals. With respect to the S-Series, that is an area that we focus on to work with surgeons on their performance and how their re-excision rates and other information has come down. We're fully supportive of that. There are some—we published a white paper last year. There are a few more studies that are in the works, and hopefully, we'll get published soon. I think the answer is yes.
There is more and more clinical data that's coming out, a whole bowl that's from the B-Series, and then we do have sort of performance-based data on the S-Series that our surgeons are working through.
Okay. Maybe.
Maybe I just add.
Oh, yeah. Go ahead, Andrew. Yep.
We do have a clinical registry now set up. Any of our new adopters can sign up to the registry. That allows them to collect data in a very precise way so that they can publish individually, but we can also then collate all of the data eventually and then look at trends, do broader publications, multi-site publications. That is in the works. I think we have one site close to getting that through to IRB. That is definitely a big push of ours.
Okay. That's good feedback. I was just going to add, supplementally, I mean, it sounds like you do have a lot of collaborative activity underneath the surface. I mean, it's always tough to tell when peer review concludes. Your papers could be published this year, next century, for all anybody knows. Do you have any expectation on sort of over what timeline we might be able to see things, the supplemental studies in the peer-reviewed medical literature? Anything that you think has a high probability of being published, say, before end of year?
Anything that we would get out probably in this calendar year is going to have to be retrospective. One of the other challenges is a lot of our early adopters come from community settings where they do not really have research staff on site. The collection of the information that gets fed into the clinical registry is difficult. We have identified one particular site where they do have some research resources that could help. We are just working through the process of getting them on board and set up. It is usually a bit of a longer task than you ever expect doing a clinical trial. Fingers crossed we can get something out within this calendar year. Again, it will be all retrospective data.
Perfect. Thanks for that feedback. Thanks.
There are no further questions at this time. Please continue, Mr. Adrian Mendes.
Okay. Thank you for your interest and for following us. As I mentioned in my earlier remarks, we are starting to see the traction of all the work that we've been doing recently. It's starting to come through in terms of customers who are using the product, revenue increasing. The first capital sale is showing that there's starting to be some great demand for the product in different ways. I think the presentation of the data at ASBrS by Dr. Thompson was very important for us to actually get that very controlled data set out, analyzed and into surgeons' hands. We are starting to see the results of that now in our sales pipeline. Very exciting time for us. I think the employees within Perimeter are very excited about what's happening and seeing what's upcoming and just keep following us.
There's more to come. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.