Greetings. Welcome to the Perimeter Medical First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Jodi Regts. Thank you, Jodi. You may begin.
Thank you. Good afternoon. Thanks for joining us on this call and webcast to provide the first q uarter 2023 results for Perimeter Medical Imaging AI or Perimeter. Joining me on today's call is Jeremy Sobotta, Perimeter's Chief Executive Officer, who will provide an overview of Perimeter's progress. We will then 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 timing 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 news release summarizing this business update that was released today will be 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'll provide a brief review of the quarter, including commentary on our commercialization activities related to our S-Series flagship technology, as well as the clinical development of our next-gen investigational B-Series technology, augmented with our ImgAssist artificial intelligence software that is currently being evaluated in a clinical trial under our ATLAS AI project. I'll then provide a brief overview of our quarterly financial results before opening up the call for your questions. Beginning first with the commercial front, a key part of our go-to-market strategy is to successfully target early adopters of Perimeter's transformative technology.
The highly engaged champions of our technology at these newest accounts continue to build upon our foundation of reference sites, and our team is focused on training and supporting these surgeons as we drive towards future iterations of our AI-enabled technology that has the real potential to democratize it for more widespread adoption. As we continue to reach out to leading surgeons across the U.S. to educate about the benefits of our flagship Perimeter S-Series OCT, we're pleased to report the first commercial placement in the state of Utah. The momentum continues to build in our sales pipeline, resulting in increased leads and demonstrations with key opinion leaders like Dr. Tittensor, who represent the champions and initial adopters of our groundbreaking technology, and we look forward to updating you on additional deals nearing completion.
As noted on our last call, although we continue to add to our funnel and build upon the momentum that was kickstarted in the fourth quarter, our discussions with both customers and clinical investigators, you know, we're discussing some of the headwinds facing their adoption of new technologies more broadly in the broader medtech industry. Of note, staffing shortages and ongoing global inflationary pressures on the label, labor market continue to raise concerns, I'd say particularly for the research staff and those in specialty medicine applications.
You know, despite these macroeconomic pressures, we're encouraged by the caliber of surgeons and institutions adopting our flagship technology and believe the key opinion leaders at these reference sites are providing a strong foundation that validates our commercialization strategy, and as we strive to build a base of strong early adopters in advance of the expanded market opportunities when we launch our AI-enabled technology. As the overall sample size of S-Series-enabled procedures continues to grow, we continue to see positive results from our early adopter user base. With a backdrop of national average reoperation rates in the 20%-25% range, initial reports from our customers are reporting single-digit results when utilizing our technology to visualize their margins intraoperatively.
We're also encouraged and excited by additional supportive clinical evidence published this quarter in a white paper that featured case studies from the commercial use of Perimeter's S-Series OCT. Dr. Amelia Tower, a board-certified general surgeon with advanced training in breast surgical oncology, authored the paper and describes how she integrated our S-Series OCT system into her breast oncology practice. She concludes that when assisted by Perimeter S-Series OCT in these particular three cases, she was able to make intraoperative clinical decisions to excise additional tissue during the primary surgery, sparing those three patients the need for a second surgery and relieving the associated burden on the clinical, economic, and psychosocial resources.
It is these kinds of results that are driving excitement around Perimeter's technology, both from our existing user base and newly targeted surgeons who are learning more about our margin visualization technology and requesting evaluations in their own ORs. Further, it is this high level of engagement that continues to reinforce our belief that the next- gen B-Series OCT with ImgAssist AI has the potential to be a transformative technology that could democratize a new standard of care that would easily be adopted at a mass market scale. We have also made significant progress within our ATLAS AI project. As a reminder, that it is a multicenter, randomized, two-arm pivotal clinical trial evaluating the Perimeter B-Series OCT, combined with its proprietary ImgAssist AI software in approximately 333 patients, with study completion anticipated at the end of this year.
It's led by our principal investigator, Dr. Alastair Thompson, at the Baylor College of Medicine in Houston. The aim of the study is to assess unaddressed positive margin rates of surgeries utilizing Perimeter's technology compared to the standard of care. We believe that this further enhancement of using AI alongside our proprietary OCT imaging technology is going to empower surgeons with the toolset to improve healthcare outcomes. By the end of last year, we had activated all the initially planned clinical sites and received FDA approval to expand the number of institutions involved in our trial. I'm pleased to report that we have now initiated an additional clinical trial site at Baptist MD Anderson Cancer Center in Jacksonville, Florida, and continue to engage with other potential investigators to further accelerate study completion.
We continue to hear from the investigators involved in the clinical trial that suggests combining OCT with deep learning algorithms could assist surgeons to better identify regions of interest, supporting real-time decisions on margin status in the OR, potentially setting a new standard for specimen imaging technology during breast conservation surgery. With the number of users growing across both our commercial and clinical initiatives, we continue to have a strong presence at key medical conferences, including the International Conference on Surgical Cancer Care, hosted by the Society of Surgical Oncology, or SSO, in late March, and more recently at the annual meeting of the American Society of Breast Surgeons in Boston.
At our booth and Perimeter-led educational symposiums, we see many physicians across different surgical oncology specialties want to evaluate our technology and see the advantages of using S-Series OCT for their margin visualization in the OR. At the American Society of Breast Surgeons this year, we had a full room listening to a session moderated by Dr. Beth DuPree, as Drs. Beth Anglin and Michele Carpenter shared their experiences using the S-Series OCT in their operating rooms to help personalize clinical decisions for each patient at the point of care. Their excitement is inspiring. You know, we're committed as a team to educating about the benefits of Perimeter's technology and surgical practices, with the aim of improving patient outcomes and reducing healthcare costs. I would now like to turn my attention to a brief overview of our first quarter financial results.
For more details, please refer to the press release issued earlier today. As noted in our year-end results, the company changed its presentation currency from Canadian dollars to United States dollars. The change in presentation currency was made to improve investors' ability to compare the company's financial results with other publicly traded businesses in the industry. In making the change to U.S. dollar presentation currency, the company followed the guidance in IAS 21 and has applied the change retrospectively to all prior periods, as if the new presentation currency had always been the company's presentation currency. Operating expenses for the three months ended March 31st, 2023, were $3.8 million, compared to just over $3.8 million during the same period in 2022.
For the three months ended March 31st, 2023, the net loss was $3,259,459, compared to $5,087,044 during the same period in 2022. From a cash flow perspective, for the three months ended March 31st, 2023, cash use in operating activities was just over $4.5 million. As of March 31st, 2023, cash and cash equivalents were $23.6 million. With our strong cash position and prudent fiscal management, we're confident that we will be able to support our clinical development activities and fund the continued commercial rollout of our products. Finally, before concluding the call, I would also like to reiterate our gratitude to Dr.
Tony Holler for his many contributions to Perimeter over the years during his tenure on the board, his service as chair from 2019- 2022, in building a world-class group of directors. The entire Perimeter team wishes him well. Suzanne Foster, our current Chair, supported by a board of globally recognized experts, including our AI thought leader, Anantha Kancherla from Meta, will continue to provide strategic guidance as we strive to transform cancer surgery. On behalf of the Perimeter team, we firmly believe in the opportunity to deliver a transformative technology to improve patient outcomes, lower healthcare costs through our innovative medical imaging and AI platform, and we look forward to providing progress updates on future calls. I'll now turn the call over to the operator and open the line for questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question 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. Thank you. Our first question comes from Frank Takkinen with Lake Street Capital Markets. Please proceed with your question.
Great. Thanks for taking the questions. I was hoping I could start with one on new users evaluating the technology as well as placement expectations for 2023. I think last quarter or last conference call, you mentioned there was double-digit new users in evaluation. One, how does that look versus just probably about a month and a half ago? Two, how do you kind of think about placements for 2023 versus your, your six in 2022, if you count the two placements that were between December and January in the 2022 year?
Yeah, certainly. Thanks, Frank. Yeah, on the evaluation front, you know, we continue to actually progress in the active evaluations, but also, you know, the interest is growing, and we're shipping out new ones on a pretty much ongoing basis. I think, you know, the really continued encouraging thing I'd say about the composition of that funnel is we're continuing to see, you know, a variety of, you know, more physician-owned surgery centers, you know, kind of the smaller, closer to the customer kind of sites of care, but also the large academic institutions that again, you know, form part of our strategy to build these reference sites. The feedback from the clinical users and surgeons has been continuously positive. I think they're, you know.
They're evolving in their understanding of what the technology is doing. They see how it can enhance their practice and again, improve patient outcomes. You know, we're really excited about the clinical support we're seeing at the end of those evaluations. You know, some are taking longer than we would like, I will say. I think, you know, one of the things about an evaluation for us is, you know, we're avoiding a problem that doesn't happen every day, right? You know, they might only have a few patients a week, and in, you know, if there's not a positive margin for us to highlight in those few patients, then we have to, you know, go through a few more cases to really be able to let our technology shine.
The, you know, even with that, folks see the possibility there and continue to work with us to, you know, get more and more cases in for the, to see the aha moment, as we like to say, from a marketing perspective. That's been positive. You know, even post winning clinical support, then we continue through the contracting phase and, you know, feeling really good about our win rate and the folks that are moving along the funnel there. All that to kind of preface your second question, which is how do we think about, you know, 2023 compared to 2022 from a placement perspective? You know, we definitely want to continue to grow on that.
You know, the one placement in Q1, I'd say, was a little disappointing for us, just given that, you know, we wanted to continue to build that quarter-over-quarter progress. You know, I kind of look at placements similar to, like, a capital cycle where, you know, you can, you can make up with that, and it, you know, can be a timing thing instead of. It's not like a consumable business, where once the procedure is done, you can't make it up. You know, we're definitely looking for growth on last year.
You know, like we said on the last call, you know, we think, you know, somewhere in the, you know, the 12-15 kind of range, is a good, you know, anchor point to be thinking about what, a good body of reference sites would look like for us as we, start to shift gears, you know, early next year towards, thinking about the AI technology coming on the market.
Okay, that's helpful. Then maybe, for my second one, a two-parter on the clinical trial. One, where does enrollment stand today? I think the last update was 50% enrolled. Two, can you just remind us of the timeline, once it's fully enrolled, to get that product on the market?
Yep. Yeah, we're, you know, it hasn't been that long since the last call, so we're a little bit more of that now. We are, you know, continuing to think we'll be through the study, you know, at the tail end of this year. The path from there is, you know, we have to compile the evidence and submit the marketing application. Still, you know, are optimistic that we'll have the B-Series on the market, you know, sometime mid 2024.
Okay, thanks.
Really, no real change from the last call there. Sorry, Frank. Yeah.
Nope, got it. Appreciate the color.
Thank you. As a reminder, please press star one to ask a question at this time. Our next question comes from Scott McAuley with Paradigm Capital. Please proceed with your question.
Hey, Jeremy. Thanks for taking the questions. Just want to touch on kind of the utilization that you're seeing in these early sites. I don't know if you can touch on kind of the total number of cases that have been performed, or the number of cases in Q1, or any other way that you can kind of quantify how many cases these early adopter sites are doing at the moment.
Definitely. You know, I'll kind of segment it to, you know, just the commercial cases where, you know, not including the evaluation cases. I think the ramp up really across the board has been pretty consistent with our expectations. I'd say, you know, we have, on the whole, higher volume users picking it up. We're, you know, encouraged by that, and it hasn't been, you know, too much of a ramp to get them to be using it on a 100% of their patients. That's also, you know, really positive and I'd say consistent with expectations.
You know, we were just kind of doing some math on total case numbers, and I think we're up over 500 at this point, you know, across all of our different clinic or commercial users there. Again, the, you know, as I mentioned in the prepared remarks, the results continue to be on trend and continue to be, you know, really positive from a, you know, their actual results and reoperation rates being reduced. You know, it came out loud and clear from our presenters at, you know, the American Society of Breast Surgery or Breast Surgeons. It was. You know, they're excited about it.
They were telling their peers about it. I think some of the nuances that come out in those presentations are, you know, things like they're, you know, they feel like they're seeing more disease because they're looking at the entire specimen in real time versus waiting for a sample pathology slide. You know, they're able to kind of manage case, you know, patient cases easier because they, you know, if it's something where you have to go from a lumpectomy to a mastectomy, they can figure that out in one procedure instead of three procedures. A lot of, you know, really exciting, you know, anecdotes a la the case series from Amelia Tower coming out as we continue to expand those users.
That's great. A quick follow-up on that. You mentioned that some sites are kind of trending towards using the system on all of their cases. I don't know what you have in terms of kind of either on average or what the trend is in terms of getting more of those sites to use the system on all of the cases instead of just some.
Yeah, I mean, the vast majority are using it. Well, the vast majority of surgeons are using it on all of their lumpectomy cases. You know, we have some early indications on very specific applications in their, in some mastectomy cases, where surgeons are interested in the utility there as well. It's a little bit of a higher burden for them to want to take more tissue in a situation like that, but, you know, encouraged by that. You know, the preop diagnosis in the evaluation phase has been, you know, they want to see it used more on DCIS in the evaluation. I think once we demonstrate the utility in that phase, they pretty well quickly pick it up on regardless of the preop diagnosis.
The thing that, you know, we're continuing to build on more and more, you've, you know, you've seen it with, you know, with our public remarks around the way, different facilities have expanded within an integrated delivery network. Also the same thing occurs within a specific facility where, you know, one surgeon may be the initial champion, and then we start to pick up additional surgeon users. You know, I guess all of that to say, like, we're really pleased with the expanded utilization of each device, whether it's, you know, additional case mix or additional surgeon mix.
That's great. One of the things you kind of highlighted before, and we've seen with some of the early cases, is system or facilities requiring multiple systems. Are most or kind of most of the sites that you're looking at, are they interested in either having, you know, acquiring multiple systems because they have multiple sites that they think it would be useful for, or a single site that might be looking at acquiring multiple systems? Is that still a trend that you're seeing and working through?
Yeah, that remains consistent with kind of what we said later last year. I, you know, and that's, I guess, as a follow-on to the last remark, that's, you know, it hasn't always started that way, but once the colleagues are speaking and the peers are speaking, it's definitely continued to be, you know, momentum in multiple unit deals. Now, like we, you know, focused on later last year, that tends to take longer, but, you know, we're excited by the broad interest from each of those systems.
Got it. Lastly for me on the trial, you know, you're saying you're looking at bringing on new trial sites. Do you need to bring on those kind of additional trial sites in order to achieve the goal of kind of completing enrollment by the end of the year, or is that more of a nice to have?
I'd say it's more of a nice to have. You know, I think we're squarely moving down that path. We've done, you know, a lot of diligence from a site qualification perspective and have a couple additional candidate sites that we're really excited about. You know, I think we want to give those folks the opportunity to participate. You know, we'll be looking to, you know, share some news on that in the near future.
Got it. Thanks, Jeremy.
Yep. Thanks, Scott.
Thank you. As a reminder, press Star one to ask a question at this time. Our next question comes from Rahul Sarugaser with Raymond James. Please proceed with your question.
Good afternoon, Jeremy. Thanks so much for taking my question. Most of my questions have been answered, but just had one last sort of follow-up. Last call, you talked about the development of reference sites. Given sort of, you know, the establishment of now, you know, one or more, newer sites and then the balance of making sure that you're having sufficient commercial cases done, can you please maybe just give us a little update on how you're seeing your sites evolve as reference sites for, you know, the eventual AI-enabled device in the future? That's it.
Great. Thank you for the question, Rahul. I think, well, two things I'd say there. One, you know, you're seeing the geographic expansion here, which, you know, if you look at our early markets, as, you know, I want to say, are little microcosms of what we're trying to do more broadly. You know, once we get that, you know, initial foothold in a geographic area, that's turned into a reference site, even for the S-S eries. That's been really encouraging. You know, maybe more, you know, from a more long-term perspective, I think since the last call, we couldn't have a better data point than what happened at American Society of Breast Surgeons. That, for us, is our, you know, our big medical conference that we attend.
You know, we had a booth there, along with the presentations I mentioned in the prepared remarks. There, you know, the excitement about the technology, the impact on the technology onto those physicians' practices and just the results they're seeing, really proved to be infectious. You know, whether it was in the symposium where Dr. Carpenter and Dr. Anglin presented or, you know, them just in the buzz at the booth from them hanging around, talking to their colleagues and, you know, folks interested in evaluations coming over to hear from them. You know, so I think that part of our strategy is, you know, really playing out and just the foundation of that being built. You know, I think when you see names like Dr. DuPree, Dr. Carpenter, and Dr.
Anglin, you know, associated with the technology, you know, One of the really encouraging things I'd say from that conference this year is, you know, more surgeons coming over saying, "Yeah, I'm really interested to talk to you because I respect those doctors so much. You know, this isn't, you know, just a flash in the pan. Now I'm hearing people I actually respect using your technology, so I want to learn more and come to see it." You know, the, I'll call it, the grassroots of that strategy are really starting to sprout and excited about where we're going.
Great. Thanks so much, Jeremy. That's all for me today.
Yeah. Thanks, Rahul.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.