Good afternoon, ladies and gentlemen, and welcome to the Perimeter Medical Q1 2025 Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. [Operator Instructions]. This 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 ImgAssist, Perimeter's ability to broaden its user base and 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 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 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 2.0 has been evaluated in a pivotal clinical trial in breast-conserving cancer 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 Brien, 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. And as a reminder, we also report in U.S. dollars. For the three-month period ending March 31, 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 31, 2024. Cash used in operating activities in the first three months ending March 31, 2025, was $3.8 million, compared to $3.6 million in Q1 2024. As of March 31, 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, and 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 and 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 millimeter 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 ImgAssist 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. So 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 ASBrS presentation highlighted several key findings from the trial. Up to 206 patients evaluated in the pivotal trial of the B-Series, 56 residual diseased margins in 35 out of 26 -- sorry, 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 results 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 super superiority performance goal for the primary endpoints with a p of 0.0050. Mean total lumpectomy tissue volume excise in the device arm of the trial was 74 cubic centimeters, 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 cubic centimeters 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 contain 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, but 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 have to wait and worry for up to 10 days after their surgeon -- 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. And 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 of 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 super superiority 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 ImgAssist 2.0 in mid-March. And 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 that Perimeter and we look forward to keeping you updated on our progress. And with that, I'll now open up for questions. Operator?

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. 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. So 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. And 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 model -- so, okay, our revenue model where -- 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. And then third are capital sales. So 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. And then with respect to the customer who purchased the capital, to be honest with you, so different hospitals have different philosophies around whether they can take place capital, whether they purchase capital, sort of how they want to do business with their vendors. And our objective right now is really just to meet them at where they are and be able to service them in whatever form. So there are hospitals that don't accept place capital and need to buy the capital and put it onto their balance sheet. So we're 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. And I think from a financial perspective, what's most important for us is to be able to continue to get that recurring revenue stream off of consumables. So 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. And that's core to the sort of the business model that we're driving towards.

Got you. Okay. Thanks, Adrian. Maybe this next question is for Andrew. It's to do with the result of the trial. So is a good explanation of different facets of the results provided in the press release and 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 they're, as the algorithm improve, as different conditions improve or change, if you see room for improvement in this -- in that 88.1% accuracy figure.

Yes, 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. So now we have more data and a better algorithm. So 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 to also accurately call negative margins, which the surgeons are really concerned about, because they don't want to be just taking lots of additional tissue because that has a cosmetic input on the patient. It also has a financial input. Every additional piece of tissue that they take costs $200 to $300. So if you're taking four or five extra pieces of tissue on that information, that all adds up. So when we look at this, we look at sensitivity as being the most important driver, but we also take specificity very highly important for the technology, for the reasons that I just outlined.

Okay. All right. Thank you very much, Andrew. And I guess, my last question will be on the nature of conversations you're of dialogue you're having with the FDA. Wonder if you could provide any color on, I guess the status of these conversations and generally what is being discussed.

Yes. Andrew, do you want to speak to that?

Yes. 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. And right now the questions that they're coming back with are more around how we put our study design together and like more of the mechanics behind it, rather than the actual nuts and bolts of the results. So they're just really forming picture in their minds of what exactly we did during this trial. And then once they have that figured out, it will be the next level down will be to get into the actual statistical analysis and making sure that how we produce the numbers are in line with our expectations. So I think the overarching thing is there hasn't been anything that has come back from them that we can't answer so far. And they seem to be a little bit ahead of where we anticipated. And 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. And 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 tattoo subject.

Yes. Like, I would temper our expectations there. I'm just saying when we get to the 100-day mark and they come back with all their fully pledge 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.

Got you. Okay. Thanks very much. Congratulations on all this and I'll pass it along.

Yes. Thank you.

[Operator Instructions]. 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, so this sale in this quarter was that a new placements or a kind of conversion of an existing placement that was under either a lease or other model that decided to acquire the equipment? And 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 at right?

This sale was a new customer. And 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. So those customers that have a device already placed there's no expectation that they would convert into a sale, right now on the B -- on the S S-Series. As we move to B-Series, those that might change. But for the moment, the capital sales we're doing are brand new placements, brand new customers, yes.

Yes. That's great. And 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? And obviously, kind of what the momentum out of the conference a few weeks ago, what that pipeline's looking like?

Yes. I think we're -- so we're approaching 20 placements now across the country. The momentum is very good, actually. So the ASBrS conference is two-and-a-half days of floor time, a few more days of presentations, and there's about 1,500 attendees. Breast surgeons is focused on breast surgeons from the U.S. and around the world really. And 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 a bit. We were talking -- our clinical team was showing the user interface for the B-Series to sort of prepare like give some -- give people a more visceral understanding of what that UI looks like. Dr. Thompson's presentation had a full house when he presented. And it was great because it was at the -- his presentation at the end of a block, and at the end of that block there was a break. And at the break, folks come to the exhibit hall. And so 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, 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, and sort of unprompted by us off the device, how they use it in the practice. So it was very encouraging for the team. It is leading into a significant number of new accounts in our pipeline. And I think one of the differences we're seeing this year versus others is it isn't so much, hey, let me learn more about the product. It's more like, okay, I'd like you guys to come into whatever city, my hospital, as soon as you can. And then we're going to start conversation with administration immediately. They started to see the data. Now they see the results. They've been hearing about this product. There's a great sort of momentum and groundswell happening within the surgeon community.

That's great. That's great to hear. And then, I know obviously, number of placements and facilities is one thing is important, but 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. So I don't know if there's any comments on maybe the number of surgeons that are currently trained and 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.

Yes. This is a focus for us. And so what we do is we sort of prioritize. So we've got a very small sales team. We've got a lot of customers that want to -- that want the device. And so 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. And so 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. So this is a big deal for us. I think this is also what is driving we've got a pretty sizable increase in procedures this past quarter, revenue, it's being driven by having, how to say this, having more surgeons, the same facilities in the device. And one of the nice things about that is once you go through what they call the value add committee to get the device place, 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. So 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. And we're starting to see some of that happen kind of now and then certainly in the pipeline it's there.

Yes. That's great. And 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 5, 10 plus 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, you can go hunting a bit more.

Yes, yes. Licenses to hunt is what our sales team calls this. And the answer is stay tuned.

Fair enough. That's great. Congrats guys. Thanks for taking the questions.

Your next question comes from the line of Doug Loe from Leede Financial. Your line is now open. Please go ahead.

Yes. Thanks, operator. And hi Adrian, congratulations on all progress summarized in your quarterly results here. Just most of the questions have been answered here, but just a supplemental one. I was just looking to see if any of your medical professionals that are relevant to your herd installed base have any of their own phase work academic research or sponsored clinical trials ongoing. And I didn't find any. So 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's it for me.

Yes, I think -- 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 we'll obviously that's done. There'll be manuscripts coming out and getting published to journals over the course of the next year as we continue to crunch through that data. So I think on the B-Series that's where you're going to see the bolus of information get published in scientific journals. With respect to the S-Series, that is an area that we focus on to work to 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's a few more studies that are in the works and hopefully will get published soon. So I think the answer is yes, there is more and more clinical data that's coming out. A whole bolus 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. Well maybe…

Just maybe I just add.

Yes, go ahead, Andrew. Yes.

We do have a clinical registry now set up, so 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. So that is in the works. And I think we have one site close to getting that through the IR base. So that's definitely a big push of ours.

Okay. That's good feedback. And I was just going to 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. But do you have any expectation on sort of over what timeline you 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 don't really have research staff on site. So 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. So we're just working through the process of getting them on Board and set up. So it's usually a bit of a longer task than you ever expect in a clinical trial. So fingers crossed we can get something out within this calendar year. But 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. And with that, thank you for your interest and for following us. We are 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 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 that Dr. Thompson, the presentation of data at ASBrS by Dr. Thompson was very important for us to actually get that a very controlled data set out analyzed and into surgeons hands and we're starting to see the results of that now in our sales pipeline, so 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.