Greetings, welcome to the Perimeter Medical Third Quarter 2022 Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jodi Regts with Investor Relations. Please begin.
Good afternoon. Thank you for joining us on this call and webcast today to provide the third quarter 2022 update for Perimeter Medical Imaging AI. We will open the call with a business update from Jeremy Sobotta, Perimeter's Chief Executive Officer, and then Chris Scott, Perimeter's Chief Financial Officer, will provide a financial summary. Following Chris's prepared remarks, we will open the call for your questions.
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-Series OCT, Perimeter B-Series OCT, and Perimeter ImgAssist, the efficacy of our clinical trial designs, the timing and anticipated enrollment in our clinical trials, and the times of potential publication or presentation of future clinical data. 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 statement.
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 SEDAR at www.sedar.com. The press release summarizing this business update was released today, November 15, 2022, and will be made available under the investors section of our website at www.perimetermed.com and filed with SEDAR. Now, I would like to turn the call over to Perimeter's CEO, Jeremy Sobotta.
Thank you, Jodi. Good afternoon, and thank you everyone for joining us today. I'm proud of the progress we made over the third quarter despite continued headwinds impacting both our customers and our clinical partners' operations. I will begin today's call by commenting on both our commercialization activities as well as the clinical development of our next-gen technology currently being evaluated in a clinical trial under our ATLAS AI project. I will then turn the call over to Chris for a review of the third quarter financial results. On the commercial front, we made another large step forward in the execution of our go-to-market strategy with our flagship S-Series OCT technology.
We remain focused on closing the subset of the market who can be strategic early adopters, able to develop expertise with the technology without the assistance of AI, and to form our long-term base of reference sites as future iterations of the technology democratize it for more mass market utility. Our pursuit of these types of users stems from our strategy to connect with leading healthcare institutions and to train and support innovative physicians who see the true benefits of using our technology in their surgical practices. These leaders will become our bellwether sites to help shape and support more broad-based adoption of the technology supported by ImgAssist AI. Although the pace of installations is not what we expected, we are confident in our rollout, made good progress in the quarter, and have continued to build strong momentum in our commercial pipeline.
As noted during our last call, in Q3 we successfully completed the first commercial placement in the state of California at Pavilion Surgery Center, an affiliate of St. Joseph Hospital in Orange, California. We believe this segment of the market to be of strategic importance to our commercial plans. This installation was also important as it's in the ambulatory setting, a site of care we believe could continue to form a greater proportion of procedures going forward. More recently, we announced the commercial placement of our Perimeter S-Series OCT system at a hospital that is part of one of the largest healthcare networks in North Texas and is particularly significant for us because it's part of a large national healthcare system across the U.S.
Also mentioned in our Q2 call, while many of our current proposals may start with interest from a single user and a single system, we know there is potential for a rollout of multiple units in reaching new champions of our technology. This morning's announcement demonstrated that is the case here with our second installation within this customer network. We believe our technology provides a solution which resonates across many different stakeholders and healthcare providers, including administration leadership within integrated delivery networks like these, and we look forward to expanding on these relationships and placing additional units with this customer. While deals like this often take a bit longer to close, as it does introduce additional procurement steps for our customers, the potential upside in the mid to longer term with increased ability to expand our customer base is significant.
Looking at the commercial macro environment, I should note that our sales team continues to work in a challenging environment. We, like many others in the healthcare sector, are feeling the effects of staffing shortages occurring in hospitals across the country. This is broad across our med tech industry, and we are seeing and hearing from healthcare providers, therapeutic companies, and medical device and technology companies who are all struggling with the resulting surgery cancellation and procedure backlogs. This is impacting decisions from site of care for procedures to capital budgets and long-term procurement contracting.
In light of these continued issues facing healthcare providers, which are in turn introducing additional elements of volatility in our sales cycle, we have elected to withdraw our installation guidance of 10-20 units in the calendar year. However, we are encouraged by the growing number of facilities requesting evaluations and the building momentum in our commercial pipeline. We now have active or pending in-service evaluations at more than 10 sites across the country. We share this leading indicator with you today to give you this one-time insight into the health of our pipeline as we make this transition. Going forward, we will continue to provide updates on our commercialization progress, and we'll comment on our placement outlook once sales cycles return to a more normalized rate.
While staffing and other macro pressures persist for our customers, we believe the caliber of users and institutions adopting the technology are incredibly strong indicators of the validity of our stated early commercialization strategy, that is building future reference sites and key opinion leaders with our flagship S-Series OCT. I also do not want to overlook the performance our early customers are experiencing. Our sample size of procedures continues to grow across placements and evaluations over an increasing number of surgeon users, and we continue to see results that outperform our expectations. Whether users are starting from national average type reoperation rates of 20%-25% or as low as 10%, they are achieving early single-digit reoperation rates utilizing our technology to visualize their margins intraoperatively.
Next, turning to our ATLAS AI project, which includes the clinical pivotal trial of the B-Series with ImgAssist AI. We have activated the initial eight planned clinical trial sites. Further, we have received FDA approval to expand the number of institutions involved in our trial to support the goal of accelerating patient enrollment. In parallel to our request to the FDA for expansion sites, we have been executing diligence on potential expansion sites and believe we have qualified options available to us that we can quickly work to get enrolled. While the staffing shortage headwinds I've already described have had an impact on clinical trials across our industry as well, I'm pleased to report that we are executing on our site expansion plans and other mitigation strategies to increase patient enrollment.
Further, we believe the high level of engagement from our existing investigators and the significant interest we have received for expansion sites reflect the belief within our end user community that our B-Series OCT with ImgAssist AI has the potential to be transformative technology. As a reminder, the aim of the study is to assess unaddressed positive margin rates of surgeries utilizing Perimeter's technology compared to the standard of care. Our goal is to gather data from approximately 330 patients and complete that patient enrollment in the first half of 2023. We believe that this further enhancement of using AI along with our OCT image, imaging technology is going to power surgeons with a toolset to improve healthcare outcomes.
Lastly, in terms of future growth initiatives for Perimeter and to give a glimpse into future indications, we were pleased to announce the two poster presentations at the annual meeting of the College of American Pathologists 2022, which took place from October eighth to eleventh in New Orleans, Louisiana. The research presented validates the potential use of Perimeter's S-Series OCT to intraoperatively image specimens across a variety of tissue types such as breast, thyroid, kidney, liver, lung, colon, heart, pancreas, spleen, and adrenal gland. This research helps to demonstrate that Perimeter S-Series has the potential to be used in a variety of additional settings and to also bridge the gap between surgeons' need for immediate real-time info in the operating room with images that correlate to histological results with a process that does not interfere with surgical procedures or final pathology.
With that, I would like to turn the call over to Chris Scott to give a financial overview. Chris.
Thank you, Jeremy, and good afternoon, everyone. As Jodi mentioned, we issued a press release summarizing our third quarter 2022 financial results earlier today. Unless otherwise noted, I'll state financial figures in Canadian dollars. Operating expenses for the three months ended September thirtieth, 2022 were approximately CAD 5.9 million compared to CAD 3.7 million during the same period in 2021. Net loss for the three months ended September thirtieth, 2022 was approximately CAD 819 thousand compared to approximately CAD 3.9 million for the same period last year. From a cash flow perspective, for the nine months ended September thirtieth, 2022, cash used in operating activities was approximately CAD 13.1 million. Finally, as of September 30th, 2022, our cash and cash equivalents total of approximately CAD 43.2 million.
With our strong cash position and prudent financial management, we are confident that we will be able to support our clinical development activities and fund the continued commercial rollout of our products.
Thank you, Chris. Even in a challenging macro environment, I'm encouraged by the growing momentum we are seeing in our sales pipeline and the acceleration of enrollment in our clinical trial. As we look to the future, we are optimistic about the near-term catalyst. All of us here at Perimeter are purely focused and committed to transforming cancer surgery with advanced imaging, AI, and machine learning tools to improve patient outcomes and lower costs within the healthcare system. We truly believe we have the opportunity to provide something transformative. As always, I'd like to thank our team of employees and other stakeholders for everything they do. I'm proud of what we're building here, and I look forward to updating you on our progress on future calls. I'd now like to turn the call over to the operator and open the line for questions for either myself or Chris. Operator?
Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad and a confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Rahul Sarugaser with Raymond James. Please proceed.
Thanks, operator. Hi, Jeremy. Thanks so much for taking our question today. So my first question is, of course, you know, we are certainly seeing broad, you know, hospital limitations in terms of rolling out early-stage technology. Given that, you know, Perimeter really focus on things, one, which is commercializing the tech, but also really advancing the AI-enabled clinical trial, you know, could you maybe talk about the balance of resource deployment in terms of your commercial activity, which, you know, is sort of facing headwinds versus, you know, potentially accelerating your clinical program for, you know, for the asset that's really gonna hopefully drive long-term revenue?
Certainly, Rahul. Thanks for the question. Yeah, I think, you know, as we embarked on really the commercial launch of the S series, we, you know, we had the stated strategy where we're not really going after the whole market. We're focused on these early adopters that can help proliferate the technology when, to your point, the B series and the AI is on the market. We, you know, we came out of the gate, I'd say, pretty reserved from that perspective, always wanting to maintain optionality to deploy more resources towards that commercialization effort if the market gave us that feedback. You know, to your point, we're experiencing, you know, a lot of macro headwinds and just, you know, our customers frankly are experiencing macro headwinds and staffing shortages and labor input costs, you know, that are impacting their operations.
You know, we haven't really, what I would say is kinda exercised that option based on where we're at today. You know, I think if you listen to the prepared remarks there, you know, we've got a lot going on to accelerate the patient enrollment in the clinical study. Super excited to have the FDA approval to expand the number of sites. You know, obviously there's a little bit of a balancing act there on picking a site that is, you know, somewhere between high volume and quick to start up for us. You know, we've been actively engaged in conversations, but even that to, you know, to your point, a lot of sites responded and self-selected out saying, you know, we don't have additional research staff, or we can't take on any more research activities.
It's, you know, a little bit of threading the needle there. As far as deploying resources, we've done a number of additional kind of site-specific activities around some things like direct-to-patient marketing in those communities, assisting some of our investigator partners with, you know, some new spots during Breast Cancer Awareness Month and things like that. You know, I'd say it's still pretty early days yet, but exiting Q3, we definitely started to see a pickup in the pace of enrollment as we got new sites up and running and as folks came back from their summer holidays, et cetera.
You know, I'd say, you know, that what you described as a constant balancing act we're working through, but, you know, wanna continue to have some efforts focused on the commercialization so we can make sure we're priming the pump when the B series does come to market.
Thanks. That's great, Jeremy. Just one follow-up question. Given the accelerating timeline on the clinical trial, can you maybe just remind us of you know, you're hitting the milestones? Do you expect to go and finish the trial on time? You know, and that'll be all for me today.
Yep. Certainly, yeah. I think, you know, we've got some puts and takes there as far as, you know, the macro headwinds we talked about, but the mitigating strategies we're deploying and executing on. I feel pretty good about holding our timeline to completing patient enrollment first half of next year. You know, obviously that's a little broad as we just land on who this additional site is and see what the impact to enrollment's gonna look like. Holding firm on that, and then once patient enrollment's complete, you know, consistent with what we've said historically, there's a couple of months of follow-up data analysis and then the, you know, the marketing application to the FDA.
We're still bullish on that being a de novo application and, you know, expect kinda the FDA to meet their typical recent de novo timelines for getting that to market.
Okay. Thanks so much, Jeremy. We'll get back to the queue.
Yep. Thanks, Rahul.
Ladies and gentlemen, again, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed.
Great. Hey, thanks for taking my questions. Maybe just to start on the multisystem orders. I think last quarter you called out there was a couple multisystem orders under evaluation. I was hoping you could provide an update around those systems under evaluation and if there is any thought process around when some of those could convert into placements.
Yep. Yeah, we continue to have great feedback there. You know, we've had successful evaluations at a couple of those. I think today's news is a good indicator of one of those. You know, consistent with what procurement looks like in particularly the for-profit side of those multi-unit installations, we think we're gathering kinda good support at the corporate level. Like today's was a pretty fast follow-on from the initial installation in that integrated delivery network. There is the individual hospital process that we still need to go through to kind of, you know, check their boxes and make sure that our users, end users there are excited about the technology and ready to go. We're continuing to work through that.
Bullish on, you know, some of the evaluations I alluded to in the prepared remarks being multi-unit installations and, you know, just working through contracting phase and evaluation phase to get to the other side of that.
Got it. That's helpful. Maybe on the utilization front, I realize it's very early, given a lot of these placements just went into effect in the last 90 or so days, but maybe any early anecdotal feedback from how utilization could ramp over the next, call it, three, six, and 12 months at these commercial sites that were recently brought on board?
Yeah. I would, you know, maybe echo your qualifier there that it is early days, and I think we're still a bit in the discovery phase as we have really, you know, users across the spectrum from big academic institutions to ambulatory surgery centers. That being said, you know, I think the ramp-up looks extremely positive. You know, the early users are definitely expressing great excitement around the technology. I think they, you know, the early ones that have been at it a little longer, you know, are utilizing the technology much more. There's been a lot of, you know, effort to expand into additional users in the installations we already have.
You know, I think the trend should continue in the right direction, and I think, you know, what we're seeing is it's a pretty quick ramp-up to getting to kinda 100% utilization on the cases that are eligible for our technology. You know, a lotta good momentum being built there.
Got it. Just last one from me. I heard the comment, I think you said, early reoperations into the single digits. If I remember correctly, I think it was your first user had reoperations all the way down to 0%. Understanding that's probably not the best proxy for the entire installed base going forward, but maybe if you could just touch on that user and if their reoperations continue to be as robust as they were in the early days. How do you kinda think about reoperations over a longer period of time based on your early learnings?
Yeah. I continue to be pleasantly surprised at how effective, you know, the results that our users are getting with the technology. You know, that is a great sign, and I think it speaks to the experience they're having and why they're so excited about using it. I think, you know, I would be pleasantly surprised if this kinda aggregate early single digits number continues going forward as the number of users and their independence grows. You know, there's a lot of room for getting back to kinda what we had initially expected around the S-Series, it being that, you know, kinda 50% reduction number.
you know, the early user continues to have very robust results, and that seems to be replicated across the additional add-on users we've had since.
Got it. Okay. That's great color. Thanks for taking my questions. I'll stop there.
Yep.
Thank you. This concludes the question and answer session, and this will also conclude today's conference. Thank you for your participation. You may now disconnect your lines.