Good afternoon, everyone. Welcome to PropThink's Digital Conference. My name is Daniel Mero, editor of PropThink. I will be hosting today's event. PropThink Digital Conferences is a platform designed to give you access to subject matter experts, including investors, executives, and others with unique insights into the healthcare space. So before we jump into the discussion, just as a reminder for the audience, that there will be forward-looking statements made, which are based on assumptions. We are not registered investment advisors, so nothing in this presentation should be taken as investment advice. Always consult a professional before making any decisions. With that said, let's get into the agenda and speakers today. So we've invited two renowned experts in Breast Cancer and artificial intelligence to discuss the current landscape and ongoing trends in the space. The experts include Dr. Amelia Tower, a board-certified surgeon and fellow of the American Board of Osteopathic Surgeons and the American College of Surgeons. Dr. Tower serves as the Medical Director of the Breast Program at Texas Health Harris Methodist in Fort Worth, as well as the program director of the general surgery residency. We're also joined by Adrian Mendes, the CEO of Perimeter, Perimeter Medical Imaging. He's a seasoned executive in the technology space, having built and scaled several companies. Most recently, Adrian was the chief operating officer at Grok, an AI hardware company, where he was critical in scaling operations from a small team of under 10 employees to over 200 across the U.S. and Canada, and also achieving a unicorn status with a valuation greater than $1 billion. So we will open the call with a roundtable discussion and close with Q&A. With that, let's get to it. Dr. Tower, Adrian, welcome. I've been looking forward to this discussion as it combines what I think are two very important and trendy topics. Adrian, let's start with you. So you obviously have a lot of commercial tech experience, most recently at Grok, the AI hardware company that hit a billion-dollar valuation. Earlier this year, you joined Perimeter, which is an early-stage commercial medical device company, quite different from your, your, your past experience. What about the technology, the data, and the people drove you to make this move? Yeah. Thanks for having me, Daniel. A great question. So you're right, it is quite different to be in a medical devices company versus a computer and AI hardware company, but there's a lot of similarities. So when I first got introduced to Perimeter, I looked at it from the same way probably many of your audience look at it, from an investor standpoint, right? So the first thing I looked at was, is there a big problem that this company is trying to solve? The answer is, of course, yes. A very, very big problem from a human level for obvious, you know, reasons, and then a very big economic problem as well. So there's a big problem here. Okay, great. Does the technology this company have, you know, does it address the problem? Do the customers like it? And as you'll hear from Dr. Tower today, you know, the customers like it. The technology does address the problem. All right, so there's checkbox number 2, checked. And then the next thing I looked at was the technology itself inside the company. Does the company have depth to what they're doing, or is it sort of a one-trick pony or a little bit of a surface, you know, surface amount of technology? And the answer is no. There's actually a lot of technology within the company. The two major tracks are along the OCT track, which is the optical coherence tomography, which we'll talk a little bit about more. So an entire area of expertise there, you know, that the team has. And then also on the AI side, a very, very world-class team on AI. So it's got depth of technology that they're bringing together in a very interesting way. So I'm looking at from the outside. I then had the chance to meet the team, and what I found was a very committed team. The cofounders are still with the company, you know, since 2013, so 10 years. Still, obviously very involved, full-time employees here. And so we've got a deep team, good technology, big market. Customers are like the product. So for me, that checked all the boxes from a, from a company standpoint. And then at a personal level, I... As you mentioned, I came from a company called Grok, which is a hardware, AI hardware company. I spent the last seven years there, grew it from very, very small, you know, helped grow it, really, from a very, very small company to the size that you described. And so that was wonderful. AI is something that's really, I think, really gonna change a lot of aspects of our lives. That was very deep in the technology stack, hardware, all the way down to the semiconductor level. And this, what this offers up is an opportunity for me to see firsthand and participate firsthand in AI, impacting everyday people lives in a very, very meaningful way. So when the opportunity was presented to me, it was kind of a no-brainer by the time I did my homework. And since I've been here for the past six months, five months, it's been wonderful. All my sort of initial theories have been confirmed, and it's been very exciting. That's great. That makes a lot of sense. So let's talk a little bit about the story itself. So studies show that about 23% of lumpectomies patients must return to the operating room for a second surgery to get clean margins in breast cancer, and breast societies have called this the re-excision epidemic. And this question is for you, Dr. Tower. As a board certified surgeon with advanced training in breast surgical oncology, can you talk to us about how these re-excisions impact patients, and what strategies have surgeons such as yourself used to address the re-excisions? G ood afternoon. Thank you so much for this opportunity to speak on this amazing technology and to discuss this further. So I think it's important right now to answer and understand exactly what a re-excision is. So a lumpectomy, which is also called a partial mastectomy, is breast conservation therapy. That essentially means, as surgeons, our goal is to remove the cancer with healthy tissue or what we call a rim of tissue around it on all sides. And whenever you think of this, think about a box. It's a 3D object, so there's six sides or what we call margins. What happens is that a pathologist will evaluate that tissue and then ensure us that there is no further cancer left in that specimen we submit and remove from that patient. But that's done in the post-operative setting after we've already completed the surgery, and pathology commonly can take up to 10-14 days to receive the final results. If there is cancer at the margin, then we have to talk to the patient and potentially, and the standard of care is to go back to the OR to remove that, to have healthy margins. So whenever we look at how a positive margin or re-excision impacts patients, essentially there's four ways that it impacts the patient. It's emotional trauma for the patient, it can be physical trauma for that patient, it can be financial trauma for the patient in the hospital, but it can ultimately, things can also lead to a delay in other adjuncts and for the overall prognosis and care of the patient. So I briefly want to go over those because it really is important to understand each element of this. It's all multifactorial, but it all comes together for best patient care, and in oncology, it always matters. So whenever we look at a patient, the worst thing is to tell a patient, "You have breast cancer." But it's equally awful to tell a patient, "You have..." What they can do is result in emotional trauma for the patient. It can be under 36% of those patients, actually, they decide not to go back to the OR, or I'm sorry, they go back to the OR, but they convert their operation, not from a re-excision, but to a mastectomy, which is complete removal of the breast, because they're not confident that we can get the tissue we need with a re-excision. All of those things combined lead to emotional trauma that we want to avoid as surgeons. Whenever I say physical trauma, if we go oncologically at a patient to do Breast conservation therapy, well, our primary goal is to remove the cancer. But we're also, as surgeons, trying to leave limited evidence that we were ever there, and for not only the quality of the breast but the cosmesis of the breast. So whenever we have to return to take more tissue, oftentimes there's post-operative inflammation that can also result in taking excessive tissue that otherwise we wouldn't necessarily have to take in the first operation had we known. That can result in dissatisfaction of the cosmesis of the patient, and ultimately that can also add to that emotional trauma. The financial trauma is significant. It can not only affect the patient, but the hospital. We know from our studies that every re-excision can ultimately result in about $16,000 for cost. So that's an important consideration. But all of these things, whenever we have a re-excision, can also lead to delaying further adjuncts. Primary cure for or primary treatment for breast cancer is surgery, but we work as a team to effectively reduce the risk of recurrence or it coming back. And so we have to implement our adjuncts, which could include radiation, it could include chemotherapy, and it could include anti-estrogen or hormonal therapy, and these have to be disseminated on a certain timeline. And so if we're delayed because we're allowing healing and second surgeries, up to 50% of those patients in the global setting, which is 90 days after the surgery, they can have further complications, such as wound infections or dehiscence. This can all lead to delay of the adjuncts. All of that can affect prognosis. So while that's so important, we as surgeons have tried multiple ways, multiple strategies to eliminate all of that. We're trying to do our best for our patients. Some of that has been, well, a lot of surgeons routinely take what are called shave margins. That's where we routinely take 6 additional edges or sides that can result in cosmetic dissatisfaction and also removing healthy tissue. Some surgeons utilize other technologies, such as ultrasound intraoperatively to get a better view. They also use additional technology that can use electromagnetic ways to decide if there's potentially further cancer in the specimen or not. Those are not always reliable. They're not always effective. There's also ways that we can utilize our pathology colleagues. We can do what's called a frozen section or touch prep. Unfortunately, that actually can compromise our specimen. What Perimeter OCT does is it doesn't compromise the specimen. It's non-destructive to anything that we remove. We also sometimes utilize our radiology colleagues. We do localizations with wireless or wire or needle localizations, and that's effectively placing something pre-operatively that requires another procedure that is invasive to help us find exactly where the tumor is, and some of the technology can even give us information about the depth. Well, all of those things can result in essentially delay in O.R. It can also result in additional trauma or emotional impacts to the patient. Whenever we look at all the strategies, unfortunately, we just haven't found one that works. This, using OCT intraoperatively, it gives you information and empowers a surgeon intraoperatively to make real-time decisions. It's non-destructive to the tissue, and it ultimately can work and help reduce re-excision, which if we can in any way reduce the fact that we have to tell a patient, "You have to go back to the OR a second time," then it's an amazing technology that surgeons can potentially utilize and help with their outcomes and their best patient care. So, Dr. Tower, you touched on some other imaging technologies that were currently being used. What are some of the gaps in these other imaging technologies that are used in the OR right now? T hat's a great question. So there's a lot of new technology that's coming into the operative suite. As far as looking at how reliable this technology is, how effective it is, how accurate it is, and also how cost-effective it is, all of that is still not established. So one of the things that also is a differing agent with this technology is there's nothing comparable that provides the visionary structures of the tissue and the microstructures that this technology gives you. So the only thing that's comparable is potentially having a pathology colleague in the operating room with you. And so that's where this technology differs from other technology that's currently available, and looking at essentially trying to figure out how we can reduce our positive margins. Got it. Okay. So, Adrian, you mentioned while answering the prior question, you mentioned OCT technology, and that's been around for over 30 years and used in other spaces like ophthalmology, cardiology, as well as other indications. Perimeter's technology is the first OCT imaging tool on the market for oncology surgeries. Can you talk about the differentiating factors of OCT, its benefits, and why it took this long to be introduced into the operating room? Yeah, absolutely. So, as I mentioned earlier, there's two main technology tracks that our company is really investing heavily in, in terms of research and development. The first is OCT, the second is AI. So we'll get to AI later. But on the OCT side, so it's called optical coherence tomography. And so let me just give a little bit of a background on it. I'm an engineer, so I apologize if this gets too deep, but I'll try to keep it high level. It was developed in 1991 out of MIT. Doctors Fujimoto and Dr. Swanson were the inventors of it. And, sort of coincidentally, just last month, October, they both won an award. They were at the White House. They won an award for a national award for innovation and technology, for this technology. As Dr. Tower mentioned, it is used, or perhaps you mentioned, it is used in ophthalmology about 30 million times a year currently. The way to think about this is it's similar to ultrasound. So it emits. You know, ultrasound emits sound waves, emits waves, collects them after they bounce back against whatever, you know, is in the environment, and then from that, you construct a picture. Except what we use with OCT, what OCT uses is infrared light waves. What that gives is a couple of things. It gives a resolution that's much higher than ultrasound or X-ray, which then allows someone observing the images to see at a much more detailed level what is happening inside of the tissue. To Dr. Mi-- Dr. Tower's point, it's almost like, you know, you get that level of structure that you need when, when, when looking at an image. It penetrates 2 millimeters, 2-3 millimeters into the tissue type. So versus an ultrasound, which goes, you know, much, much deeper, obviously. However, that's the perfect application for margin assessment, right? So you get the resolution you need, and you get into that several millimeter range into the, into the tissue. Okay, there's a science behind it, right? Then there's the engineering piece of it. So, so how do you take that technology and apply it into this space? What... There were many engineering challenges, and the company was founded in 2013, so we're 10 years in right now, and many of the early years were developed, not so much on the science, but more on the engineering piece of it, of applying it to, you know, to this application. There's many challenges, you know, some of them are easier to understand than others. One easy-ish sort of example is that OCT generally has a field of view of about 1 cm by 1 cm, which is too small for this application. You need to be about 100 times bigger to have, you know, a product that's actually gonna be useful, you know, here. So there was a significant amount of work figuring out how do you get the size of image that you need to be useful in this application. Another one, because the resolution is so high, having stability in the image, like, you don't want a blurry picture, right? So you have to have a lot of stability. So a significant amount of engineering work goes into that. The flatness, you're looking at 2 millimeters. You need a very flat surface to take the picture on. And those are just three examples of the engineering work. There's many, many other examples I could go on about. Okay, so a lot of work being developed has been done and continues to be done on the OCT technology from an engineering perspective. We got FDA clearance in 2021. So we've been in markets since that point in time, been a couple of years now. You know, you've heard from Dr. Tower, some of the, you know, the feedback from those customers about the technology. So we've been in operating room since then. I think that's the, I know that's the story. Well, it's, that's good. I thought you were gonna go into much more detail, putting us to sleep on the engineering side of it, but I think you kept it- Don't tempt me! H igh level. So- I'm going to photons. Look out. Dr. Tower, you were a strong advocate of being the first surgeon to use the S-Series OCT commercially in the U.S. What led you to your decision, and was there a so-called like aha moment? There were several factors in me utilizing this technology. As a fellowship-trained surgeon, and also I am a program director of a general surgery residency, so I'm helping to train the next generation of surgeons. I am a progressive surgeon. I look for innovative surgical equipment and techniques to not only help and train new surgeons that are coming in to take care of future generations, but also to give my patients the best possible care I can. As breast surgeons, we're typically in the surgical arena. We are early adopters of a lot of technology that are advanced and help us to achieve our amazing oncologic outcomes that we do whenever we surgically manage our patients and provide intervention. So whenever I was given the opportunity to, you know, be educated on this, I was first enticed chiefly by the fact that it is something that I strongly feel and know is there's nothing else comparable to it currently, and it is meeting a significant deficiency that is in the OR whenever we undergo and we take on the challenge of breast conservation therapy for our patients. It is essentially providing us information that we otherwise have to wait for. There's nothing else that you can take a specimen and remove it from a patient and look at it in real-time and see the microstructures underneath. By having that information that can either give you assurance or can give you, invaluable, results that can change or impact a patient, perhaps having a second surgery, to me, is, is priceless, and as a surgical oncologist, is, is something that I'm gonna utilize if I have the opportunity. But before I implemented it into my practice, I did have to have a lot of considerations, because when taking any technology on board as a surgeon, you have to essentially weigh the risk and benefits. You have to essentially figure out how it's gonna be integrated into your workflow of the OR. You have to figure out if it's gonna be time-effective, and if it's gonna be accurate and work for you. By doing my own research, I essentially was looking at the, you know, the studies and the case reports of how OCT has been utilized in other surgical specialties. So that was not only reassuring to me that there were some benefits in the breast cancer arena, but also confirmed that I definitely wanted to participate and try this on my patients. Whenever I did make the decision to move forward with this technology, the aha moment, you know, there is old adage, seeing is believing, really did happen, and it essentially happened on the second case that I utilized this equipment. I was able to see something that was suspicious. I was able to intraoperatively make the decision to return back to the operating table, while the machine is in the OR with me, and within minutes, take additional tissue, rescan that tissue, be confirmed that I was happy with the results, close my patient, and then the follow-up pathology correlated with, had I not done that step, had I not utilized this technology, had I not turned around and taken an additional superior margin on that specific patient, then I would have been having that conversation that I spoke of earlier. And so that moment to me, I guess, was my aha moment, but it really was seeing is believing, because as surgeons, we are somewhat skeptical species sometimes. Whenever we can see something that works for us, with us, and not against us, especially in the challenges of being in the operating arena and managing complex cancer patients, then it's something that we'll definitely spend the time to utilize. I guess that's what led me to it, and that's what made me a believer, and that's what has sustained me in utilizing OCT for my patients. That's great, Dr. Tower. It really does sound like a breakthrough technology, especially for patients. I don't know if you've had any patient feedback because I guess during the surgery, they're not, you know, in there talking to you. No, we... As surgeons, we don't like to talk to our patients or operate on them. No, it's to briefly talk about that, you know, anytime we're utilizing technology and processes, that is included in our surgical preoperative discussion. So, I did inform my patients I was utilizing a new FDA-approved technology. I, you know, did not give the engineer version that Adrian did, but I did give the surgical version of how this has been utilized for ophthalmology, for cardiology. So, hey, this is safe. One of the big things that's important with patients is letting them know this technology is not utilized inside their body. It's actually utilized on the specimen that is removed from the body. And that's a big and a very important thing to disclose, and also that it is not destructive to the tissue. And so, by informing the patients, the patients actually that utilized or I utilized it on, they have essentially that's included in their informed consent. Because I think that it's very important to be transparent and let them know what we are utilizing in their operation, because it's a collaborative effort to go to the OR. And so it was pretty... It was very impactful and having that conversation with that patient and showing the results of the pathology. Had we not used this machine, had we not taken that extra tissue, what we would be talking about right now, unfortunately, you have to go back to the OR, not because I failed, not because, you know, we failed at the operation, but because cancer never—it never behaves by the rules, and cancer is microscopic in a lot of cases. And so this is something that there's no other technology that intraoperatively you can utilize to see these ductal and microscopic tissue structures, that otherwise you would have to wait days, that is essentially processed and placed on a slide for a pathologist to review. Right. So, Adrian, we got the surgeon's point of view. We have some feedback from patients, how are hospitals looking at this technology from a ROI perspective? Yeah, great question. So actually, the slide you put up is a wonderful one. So on the left side of the slide here is the current standard of care. And so what we're illustrating here is we just took lumpectomies as the example, and in the United States, there's about 230,000 lumpectomies a year. With about 23% on average re-excision rate, that ends up being about 53 procedures that what I call are waste, right? Again, not because a surgeon did the wrong job, but because cancer is bad, it's evil. And so what that waste, when you dollarize it, you know, times the $16,000 that Dr. Tower mentioned earlier, it's a lot of money. It's $850 million that we're wasting from a payer standpoint, right? Now, imagine, if you could bring that down into the single digits, right? So, you know, for illustrative purposes only, imagine you get it down to 3%, instead of 0.3%. That's a lot of money, that's potentially available to us, you know. So taking my engineer hat on, put my business hat on, significant opportunity here. Even if we don't consider any of the traumatic, you know, the emotional tr-- and, and patient effects, that Dr. Towers, you know, very eloquently talked about. There's significant savings to the healthcare system that we can provide. These dollars are just for the U.S. only, and also just for, lumpectomies, just, you know, breast cancer. So of course, there's great expansion beyond that. Okay. When we look at that from the hospital side, so this is a payer, you know, if I was a payer, this is what I'd be looking at. These are the savings I can have. There are some hospitals that pay, but as you know, in the U.S., usually the payer is separate from the hospital. So there's a couple of things the hospitals get out of this. One is they get improved patient care, right? So as we start to move to a value-based care system, the ability to reduce re-excisions, improve outcomes, improve quality ratings, patient satisfaction scores, that's a very, very big deal to hospitals. So that's one element of it. The other element of it is sort of related, but it's the ability to... Now that we're, you know, 2021, right? So now that we've had this product in market for a couple of years, we're starting to get some good data from the surgeons that are using it. And some of those hospitals are starting to now think creatively about how do we market this, market our surgeons as being able to provide care to patients to potentially increase our top-line revenues. So this is the view that hospitals are looking this in terms of an ROI standpoint. A lot about the R. On the I side of the ROI, the most common business model that we have is where we place the hardware device, you know, at no cost into the hospital. And then we have a consumable element of the product, we use one per patient, one per procedure, and we charge for that. So it ends up being a relatively low barrier of entry from a hospital to get the technology in. And then as the surgeon uses the product, you know, then they pay on a per-use basis, which then allows the surgeon to get a feel for it, to start to see some of the results. And it's not like they need to make a huge upfront financial commitment ahead of seeing some of those results. Uh-huh. Okay, got it. That makes a lot of sense, especially on the numbers side. I think the way that you compare both the, you know, the 23% re-excision rate and then the 3%, there could be a lot of savings, not only for hospitals, but just the healthcare system in general. So, Dr. Tower, this question is for you. From these comments and testimonials, obviously, you and your colleagues have seen a clear benefit here. And can you talk about. S o when there's a new technology is introduced, there is an investment of time to learn how to use the device and then also make the adjustments into your workflow. Can you share your experience in implementing this technology into your operating room and workflow? Yeah, so anytime that you essentially take on new technology in your operative room, it's very important to have an idea of an effective way to implement it. But every surgeon has their own way to do everything. In preparation, there is somewhat of a learning curve with reading the OCT images. That being said, it is pretty quick. As breast surgeons, we do focus a lot of our surgical you know preparation and have been trained to read a lot of these images anyway. So the learning curve is typically about after 5 or 10 cases, that Perimeter staff comes in and helps read and helps work the machine. People feel comfortable doing it independently. Everybody's experience with that is different. That being said, there's also some learning, some teaching module preparation beforehand, and then just an atlas of images that you can review. So those are all advantageous to kind of prepare where you can quickly review the images. To integrate this technology into the workflow in the OR was actually very easy, so it made sense to incorporate it. The typical process of a breast conservation therapy surgery is we essentially perform the partial mastectomy or the lumpectomy, so we remove that tissue. We perform what's called an in-- we orient it. So orientation is done with sutures, it's done with clips, it can be with radiographic clips as well. But in some way, we denote the sides, which would be the margins for the pathologist to review. And then we do an intraoperative assessment radiograph, which is essentially performed to document and for us to be assured that we removed the previous biopsy clip that is placed to diagnose the breast cancer, and also that we retrieved in entirety any potential localizing apparatus if that was placed preoperatively. At that point, that's where it can be scanned, and again, it's nondestructive to the specimen. So you can scan 1 focus margin, or you can scan all 6. I typically think if I'm gonna use it, I'm gonna use it, so I use all 6 margins, why not? And each scan is about 1-2 minutes. So essentially, you're looking at 12-15-minute process. You can speed up by doing some other things intraoperatively as part of your procedure. You do not have to break what we call sterile. You can stay sterile, or you don't have to break scrub. It is a process that while scanning, I prefer to do myself. You can also train the operative staff to do it, which is an opportunity to have other people assist you, so you, the surgeon, can continue the operation. But also in reading the images, again, it becomes very quick and almost second nature. So the whole process is about 15-20 minutes in its entirety, but it can be changed or modified to whatever surgeon's workflow or patterns they have in the OR. For somebody like me, I utilize and train medical students and residents, so they can always participate in it. But it's an opportunity to integrate a technology that does not cause a lot of undue, I guess, training for staff. It doesn't destroy or destruct any kind of, of the tissue that you remove or compromise anything. It doesn't add excessive time onto that operating, you know, clock that you have ticking, and it really just is a seamless process to consider and integrate, and it gives the surgeon the opportunity to kind of modify it and individualize it into their workflow as they want to, and then make adjustments. Sounds quite easy, I guess. So, Adrian, Perimeter is developing this next- This is where you make a crack up to 30 years of medical training. Yeah, maybe we don't need to have resident three-year fellowship training. Perfect segue into the robots taking over. This, yeah, this is why we're moving into AI now. So the company, Adrian, is developing this next generation called the B-Series OCT system- Yeah W hich uses AI. There's an ongoing pivotal clinical trial right now, which is comparing the B-Series against the current standard of care to assess the impact on these re-excision rates. Can you share some of the details of this trial, and what is the next milestone there, the readout? Yeah, absolutely. So let me back out a minute and just talk about the AI for a moment. You know, I talked about there being two major technology tracks within the company. OCT is one of them. We talked about that already. AI is the other one. We've got an AI team. They're world-class. We've got some world-class experts on our board of directors who are deep AI, you know, engineers and scientists and business people. We've got a lot of depth of experience in our company. The nice thing about that is that a lot of people when they think about AI in medical imaging, they think about the image recognition piece of it, the piece of AI that, you know, for non-AI people, that kind of draws the boxes around your friend's faces on Facebook and things like that. Which is kind of the base technology that is inside of the B-series, which is going through the clinical trial right now, which I'll get to in a moment. But I just wanted to say a point first, which is that there is a, we've got approximately 4, maybe 5 other AI projects ongoing in the company that are outside of that image recognition piece, that are deeper inside the machine, that help the machine creates high-resolution images, helping the machine speed up the scanning, helping the machine take noise out of the images. So we've got sort of AI built, helping our training, sort of... You know, we talked a little bit about training, so helping our training development. So we've got AI sort of, like, built throughout the company in, within our, you know, within everything that we deliver, which is super important to, you know, for what we're trying to do. Now to the B-series. What the B-Series adds in on top of the S-Series, which is the product that's in market right now. What the B-Series has is an AI layer on top of it. And what this does is it will help the surgeon sort through all the images that are created, and it'll highlight areas of interest. So it actually doesn't make decisions. It's not a diagnosis tool, but what it does do is it helps the surgeon look at the areas that have the highest probability of being suspicious, and helps them zoom in quicker. Only two impacts of that. One, is it should help just time in the operating room. And the second benefit of that is it does help expand, you know, what I'll say is expand our user base because it reduces the barrier, you know, the learning barrier to adopt the technology. So this will help from a sales standpoint scale the technology to even more and more surgeons and to get it into more and more patients' hands. The trial is ongoing right now. It's at the current rate, we're projecting to finish enrolling patients in the trial towards the end of 2024. We have an opportunity to do what they call an interim analysis on the trial in the second quarter. We'll be able to look at the data and then make a decision whether we want to continue the trial to gather more data, or if we want to stop the trial at that point and submit to FDA. So we'll have a better view of that in the second quarter. We've got 10 sites that are participating in the trial all across the U.S., the Mayo Clinic, MD Anderson, Baylor, so some very prestigious sites out there. And as we get more information from this, we'll, you know, we'll continue to update people. So the B-Series is using AI predictive algorithms to assist surgeons in making real-time decisions. Where are you getting all this data from? Yeah. So, with respect, if we focus just on the, the B-Series, so the image recognition portion, we've got a database of... Dr. Tower refers to them as Atlas. We've got this AI Atlas database, what we call it, which has got over 2 million images in it, which we use to train and to validate, and verify the, the models. It's growing all the time. We've collected that from, like, actual samples, right? So, we've, you know, we've got hundreds of samples from patients over time that we've collected. We've imaged them on the machine. So we've used those to create sort of a set of data. Then there are techniques you can use in AI to create even more data sets from that data augmentation methods, and out of that, you create many, many, you know, training, you know, a training set that's very, very deep. So we're at about 2 million right now. That continues to increase. We add to that all the time. Those are just on the breast side, and then we've, you know, we've got more in other places. So we collect this data in real time, we label it. We've got another area we've got some AI activity going on is in developing, in using AI to help the labeling, which is obviously a very labor-intensive exercise, so we've got techniques that are using AI to help with some of the prelabeling. So this is, you know, I think this is actually one of the... You know, if I back out for a moment and just think about the company from a corporate valuation standpoint, when you think about, you know, AI, it's kind of a hot topic right now, maybe a little bit overblown in some manner, but there's fundamental value in it, right? So the market will figure out where that settles in over time. But you really do need it to move your business forward. There's three different areas that just sort of generate value with AI. One is the sophistication of your algorithms, which we've got, we've got incredible algorithms. Two is your data set, and this is a huge value for us. We're the only company that can create OCT images, which means we're the only company that has the ability to create this data sets and has the ability to continue to grow the data sets. And we're the only company, and, of course, that can label this data. So there's a huge amount of value in that, and there's a lot of different applications of that. Right now, we're talking about how we can use that data intraoperatively, and there's opportunities to move that also, and to use that up at the biopsy level, possibly down at the pathology level, possibly. So a great expansion. Once you have the data, you know, your mind starts to get very creative in how you can use this to help people do their jobs. Right. And, Dr. Tower, from your perspective, how would AI help you in your analysis and decision-making in the OR? So in relation to this, I think the AI, in utilizing all those specimen that Adrian just spoke of, these algorithms are essentially creating a big database of, of the common patterns and anomalies that you would see with breast cancer, so that it can be easily identifiable with AI, which essentially, right now, I just described the workflow. You take the specimen, you scan the sides, and you're interpreting the images. So with the S series, that's now in commercial use, the physician scrolls through the images. The B series will provide those suspicious images that the surgeon can readily look at and focus on. Not only am I interested to see and really just excited to learn more about the precision it's gonna add to the surgery, but I think that the speed that it assists with this already speedy technology, I think that that's gonna really be exciting on our surgical forefront for breast cancer surgery whenever we're doing breast conservation therapy. Because whenever we have those images right there for us to review very quickly and in such an effective and expeditious manner, I think that that's gonna help more people be amenable to adopt the technology and implement it, and use. And again, this is all saving us from... It's not taking place of or eliminating the pathology. That's the gold standard of processing our specimen. But what it's doing is it's giving us that critical and invaluable information that we can go and either be assured that we have had a successful operation right then and there, or that we may need to take additional tissue to ensure that we get a negative margin. And so that real-time information, that AI, I think, obviously, will make it quicker, is pretty exciting that we're just looking forward to the future. Yeah, it does sound like a very helpful add-on tool. I think a lot of people, when they think about AI, they think it's gonna replace surgeons or, you know, have- I hope not, because I need a job. I think the patients think the same way as you do, Dr. Tower. I don't think everyone's comfortable having a doctor, sorry, an AI, you know, running their surgery on them. So, Adrian, let's talk about the potential and the pathway for Perimeter's technology to be used in other specialty areas. We'll focus on cancer, so like, you know, we have lung, head and neck, prostate, colorectal, and others. What is the total addressable market in these other indications, and what is needed to expand into them? Yeah. So, you know, if you think back to the previous slide that I had with the two pie graphs on it, right? There was 230,000 breast, well, lumpectomies, actually. If you look at those graphs, Well, there's, you know, 230 are lumpectomies, and then the remainders are mastectomies. But that only represents, you know, you can eyeball this a little bit, about 15% of the total cancer procedures, in the U.S. alone, right, which is almost 2 million diagnoses are happening every year in the U.S. alone. And the U.S. only represents about 10% of global cancer cases. So it's a massive market. And then the question is, from a business standpoint, is: how do you march through that market and bring this technology to those other places? So we know that margin analysis and getting the margins right isn't just applicable to breast cancer, it's really applicable to any type of cancer, that you're gonna excise from the body. So, we do have work, initial, really early investigation work going on in multiple other areas. We're seeing some promising results. As we continue to develop those, we're starting to get. L ike I mentioned before, I think we're starting to gather data, images from these other, other tissue types. And I think what will end up guiding us as to where we expand next. So expanding into other tissue types is a definite. The question is, which ones do we expand into? As you can see from this pie graph, there's three very big other areas, right? Colorectal, lung, prostate, head and neck is very significant as well. And so what will guide that decision is sort of where we see some of the easiest areas to identify, where we've got an advocate surgeon in one of those specialties that is willing to work closely with us to help, you know, develop further in those areas. And then we'll go through. The good news is that our S-Series in market right now has a general tissue indication. So it can be used for any tissue type. So that's wonderful because we can be out in the, you know, in the market starting to explore areas. In terms of the AI piece of it, which will eventually come, we will, like I mentioned, for breast, we've got 2 million+ images on the breast tissue type. We'll have to not create, but grow our database in other tissue types to then be able to apply that, to as we expand out these pipelines. So clearly, there are many applications that OCT technology can go into, and Perimeter has already existing commercial efforts that also need to be funded. As of September of this year, the company had $80 million, and you can be, you can be winning additional grants from this, Biden Cancer Moonshot Initiative, that's on the slide here. Can you talk about how this initiative impacts Perimeter, and what will you be focusing on primarily within your budget? Yeah, it's a wonderful question. So when this initiative was announced in September, we were amazed. We're like, "Wow!" This is a problem we've been working on for 10 years. As you know, we have surgeons; we've seen patients. We all have, probably, someone in our lives that's had to go back for a second surgery. So in one hand, it was, like, really nice to see the recognition that you get at the level, you know, at this level, at the White House level, that this is a problem that needs solving, number one. Number two, it's a problem that the government is willing to put money behind to help solve because there really aren't a lot of... It's a, it's greenfield, right? We've heard that from Dr. Tower right now. There really aren't a lot of great solutions out there. And so from a government perspective, they're working really hard to try to help solve this problem. And that was the motivation behind funding ARPA-H, and then funding the, Precision Surgical Intervention, PSI Fund, specifically under ARPA-H. That fund's got about $300 million assigned to it, with the sole purpose of reducing second surgeries. So we submitted an abstract in September, that got approved. We were invited to submit a full proposal. We did that a few weeks ago. So now that's going through their selection process. I think there was 130-ish initial abstracts that got filtered down to 20 full proposals that were submitted. So we were obviously one of the 20. In Q1, I think February sometime, we'll get a decision. Okay, so our proposal is somewhere in the $50 million-20 million range. That'll be coming over three years or so, right? So that'll help with the $80 million we have on the balance sheet right now. And the target for that money is really, is to, it's targeted, it's non-dilutive funding for one thing, so, so that's nice. And it's focused on research and development. So this will really help, and we talked previously about area, you know, our two technology tracks. We've got lots of ideas on how to improve those technology tracks. The wonderful thing about this is it doesn't force us at all to move off of our strategic plans. The only thing it does is it allows us to accelerate those strategic plans. By bringing more money in, allows us to staff up quicker, allows us to accelerate. So next tissue types, we'll be able to gather more samples quicker. We'll be able to develop the AI algorithms quicker. We'll be able to develop some more of the AI. I was talking about AI sort of throughout the machine to increase resolution, to increase speed. A lot of those things we'll be able to bring to market much faster. There's just some fundamental physics that we can work on in terms of the infrared sensors and light emitters that we will work on with the money as well. So it really helps in our R&D efforts. It allows us to focus, you know, assuming that we get this, we'll be able to speed up R&D efforts and allows us to free up some money that we would otherwise be spending in R&D and focus it more towards the commercialization side of the business. Great. So, Dr. Tower, coming back to you, it always just comes back to improving patient care, right? How do you... Just to tie everything together, how could this technology, especially with the AI add-on, impact the standard of care in assessing margins during surgery? That's a great question. As a Breast Surgical Oncologist, I can tell you that it's a privilege and a pleasure to be able to take a patient who has a life-threatening disease. A nd to surgically eradicate it. Our goal is to always have the most successful outcome. And with technology like this, it not only enhances our precision with surgery, but it can reduce those re-excisions and reduce all of those negative impacts that we talked about earlier. But overall, I think that it is going to, it does help with the patient outcomes. And so with that incorporated and utilized as a standard of care in the breast cancer arena, what that offers is a higher quality of care that surgeons can provide all patients. And what it also accentuates is value-based care with our ever-changing landscape of healthcare, we're definitely going toward. And so with the technology like Perimeter OCT, again, I think that there's nothing comparable to. I've seen the positive effects it has. It works, can easily be utilized, and I think that we are going to have a lot more information in the future and with the AI component. I think that this is a way that is going to continue to reduce re-excisions and continue to positively affect multiple facets of breast conservation therapy and the challenges that we've been trying for decades in the surgical world to eliminate. So I'm excited for the future. Thanks for that, Dr. Tower. So we'll now start the Q&A portion of the event. You may submit a question using the text box at the bottom right corner of your screen. Let's just wait a few seconds. I think I already have a few that have been submitted. So the first question here is, I guess for Dr. Tower: How many surgeries have you done with OCT? And an approximate, how, what has been the re-excision rate using OCT versus, I guess, the standard of care? So re-excision rates are different for every surgeon as far as how they're looked at and calculated in a healthcare system. I started adopting and utilizing the technology whenever I was coming to a new healthcare system, which was an amazing advantage for me to be able to utilize it, because otherwise, you're integrating your new surgical equipment and technology and essentially working with new pathologists and radiologists. It was a really good opportunity to see how this could effectively go across the board. Whenever I started, I essentially was approaching around a 20% re-excision rate. And with that, utilizing OCT, it immediately dropped to 0%. In fact, whenever I quit utilizing OCT routinely for all my surgeons, just for a brief episode or time, I immediately had one re-excision, so it was confirming how valuable this was. So re-excisions are always different for every surgeon. Some surgeons won't admit them. But, you know, it is one of those things that also it depends on how cases are submitted, because remember, I talked about earlier, whenever you talk to a patient and you counsel and you say, "you know, we got a positive margin, obviously, we have to surgically manage this," some of these re-excisions essentially return to the OR, not as a re-excision, which is a different CPT code, but essentially count to that total mastectomy. So that's where sometimes it depends on the healthcare system, how they actually, essentially have a re-excision rate. But it definitely changed my re-excision rate. Let's see, what is some of the other questions? Is this technology being used in Canada? Yeah. So is this technology being used in Canada? So, the answer is no. We have FDA clearance. We're focusing on the U.S. market at this point. We've got FDA clearance. We haven't gone through the regulatory, you know, hurdles or whatever it brings you have to jump through in Canada yet. It's on our list of things to do. Of course, our company was founded in Toronto. I was born and raised in Toronto, so I am Canadian. So I would love to bring this technology there. Excellent. For all my friends and family that happen to be in Canada as well. And so we'll get there. We'll get there. We're just not there yet. The next question, Adrian, is I think it's for the clinical trial that is currently being run. The question is: What is the current standard of care being used in trial, and is the benchmark the 23% rate that we were referenced earlier? Yeah. So the current standard of care is, Well, I can probably ask Dr. Tower to describe current standard of care better than I would be able to from the outside. But basically, the way the trial works is the surgeon does their standard of care, and then just before they're gonna close, they open an envelope, and it literally is an envelope. And inside the envelope, it'll say either device or control. And if it's a control arm, then the surgeon closes, and that's the end of the procedure. And if it's a device arm, the surgeon takes the sample, the tissue, and uses the OCT machine to scan it, and then acts upon whatever they find. So that's ongoing right now. We don't have. It's a blind trial, of course, we don't have data of how, you know, things are happening in the trial. The 23% is the national average based off of studies that have been done in the U.S. So we, you know, we're expecting that that's what we will see. But once we get the data from the trial later next year, we'll know. The next question, and this is for you, Dr. Tower. How are hospitals and physicians reimbursed for the use of the technology in the U.S.? Do the hospitals incur the cost of the re-excision, or do they get additional payment for the second surgery by the insurance company? I guess, how does coverage work? So that's also can vary with systems and also with insurance. One of the things to know about this particular technology is whenever you're utilizing new surgical technology, CPT codes, which is what we use to bill our procedures, they're essentially called temporary codes, so oftentimes they don't have any reimbursement. But already I was able to get reimbursed for the hospital as well as with potential—with a specific commercial for the surgical aspect of actually performing the utilizing the technology and doing the interpretation. So there are currently codes, and it's 0351T and 0352T, and essentially adding a modifier 26, which shows that intraoperatively I interpreted those images, and I acted with a surgical intervention based on that interpretation. So it is... I included in the operative note, and it's submitted, and it has been reimbursed in some cases. That's the question, right? Yeah. Yes. Looks like there's another question now. When you say you use six scans? Okay, yeah, that's a great question. So each, every time you utilize it, there's one disposable that is used, essentially $900. That's just that one disposable. But essentially what happens is, it's a vacuum, and so you push a button, and the vacuum sucks it down, so you can get a really good read and then release it, and then that's the six scans, is whenever you essentially are scanning each side, but you're utilizing the same disposable, which is really great because you're not having to use a bunch of equipment, and that doesn't increase the cost. So it's a, it's a one use of this disposable, with the machine, and not all surgeons and not all cases necessarily necessitate the six scans. Again, that's that three-day specimen. It's, think about a box. There's top, bottom, front, back, sides. That's a lumpectomy. So, again, I'm not really a betting person, so if I have it, I'm gonna use it. So I just do the six scans. And whenever I say scan, the scans take one to two minutes per side, and then the images pop up, and you can actually be reading or interpreting the images of, say, your superior margin, while your inferior margin, you release that vacuum, you place it in, you put that. You hit the button, the vacuum hits again, and sucks down, and then it's scanning that inferior. So you can do a lot of it at the same time. The next question is also for you, Dr. Tower. What decision or decisions do you need to make, or how do you think about what you need to do if you see an OCT image showing you a suspicious area? That's a good question. So this is a biopsy-proven cancer, right? And the purpose is I'm utilizing the technology to intraoperatively get a real-time margin assessment. So if I see something that I deem suspicious, which I've done the training, I've reviewed the images in the atlas, I've, you know, done my cases, I've gotten over that learning curve. If I see something, say, for example, a dilated duct approaching the surface of the tissue, which is 2-millimeter slices. If I see a dilated duct with calcifications, that again, I've practiced and read and feel comfortable calling, then I will, you can actually find exactly, very precisely where that is on the tissue. And that's another advantage because the plate will project exactly where you find that area of suspicion. You can make a box on it, and right then and there, you can turn around and have a very precise, big size area of tissue, and that can eliminate what we call as a shave margin. And a shave margin is essentially taking the entire, aspect of that margin. And so it can lead to more focused, and a more accurate area for re-excision. So that is another advantage that we hadn't previously discussed about. So that's a great question. Go right after the area and double-check it? That kind of is a double-check. The double check would be, you can... You have the option to utilize that vacuum again, and you can rescan if you re-excise tissue. And so, if I'm kind of one of those people that if I see something suspicious on my specimen and I re-excise more tissue, I'm gonna scan that tissue I've re-excised until I'm confident that I got a negative margin and there's nothing else suspicious. And these structures are highly identifiable. These suspicious areas are very, very identifiable with training, obviously, from the otherwise normal or healthy tissue that you're scanning within the specimen. So, I think the next question, Adrian, you might have answered already, which was the, the Biden propo—the Biden PSI. The proposal was, fifteen to twenty million, if I'm not mistaken, that you submitted? That's correct. Yes. Yeah, that's correct. And then the question after that, what are some of the challenges that the S-Series has faced in terms of scaling and capturing more of the market? It isn't so much on the demand side. There's pull, there's customers that want this, obviously. You know, we're, in fact, as we continue to get more and more embedded in certain markets, especially Dallas, where you know our U.S. headquarters is, we start to now get surgeons talking to their peers, and we're starting to get some great pull out of hospital groups and various surgeons, which is wonderful. So now it's more of an organizational, like, how do we grow the organization in a way that we can support the demand? We've got very deep pipeline in our sales pipeline, which is very encouraging. And so I think you're going to see over the next, you know, year and into the future, our sales really start to accelerate. Then the next question, I think this is for you, Dr. Tower. If the pathology is the gold standard, is there an ability to make pathology available in the OR, or is that simply just not doable? I think it's the time maybe that limits it. It's the resources and the time. They don't necessarily... There's other OR cases going on, and a lot of healthcare systems don't have the resources or enough pathologists to commit to that. But another differentiating factor to consider is, intraoperatively, they can do things like frozen section or touch prep that are quick, about 7 minutes. What that can do is destroy some of the tissue. You're compromising some of the tissue because the gold standard pathology review, they have to do stains, let it process. So, it still takes time and a certain process to do specimen, a true specimen analysis. So with the Perimeter, it provides you that information, and it does strongly correlate with your final pathology. But again, you get it real-time while you're in the OR. The next question is: So will the trial results, Adrian, for the B-Series impact reimbursement coverage of the S-Series? Is there any read-through between the two? No. So they're two separate products from the way the, you know, the reimbursement schemes look at things from the FDA standpoint. It'll help. Obviously, once we have S-Series coverage, it'll help on the B-Series side as well. Because they are so closely related, so we'll be able to point to the results we're seeing in the S-Series to help the B-Series coverage. But they're treated as separate products from an FDA standpoint. Got it. Okay. I think this is the last question I see here. Interim analysis will occur in Q2. How confident are you in the study being positive? And if the study isn't stopped, when would final data be available? Right. So, we're hopeful, but until we actually see the data, it's gonna be very hard to make a projection on whether it will be successful at that point or not. So, Dr. Tower said she's not a betting woman. I am a betting man. I, I'm hopeful. If we decide to continue past that interim analysis standpoint, it would be in the fourth quarter of next year that we finish enrolling all the patients, which would—There's a few months of data gathering and analysis that need to be done, which would make the data available, you know, either towards the end of the year or early into, like, 2025. So those are sort of the two milestones that we're running the company towards. Got it. Perfect. Well, those are all the questions that I see in the queue right now. Adrian, would you like to add any, any final remarks? I'm excited about what we're doing here. It's a very big market. We have... We've got a technology that really seems to be making an impact. We've got customers that really like the technology. We're starting to get what I consider, you know, critical mass of our devices out there and information starting to flow back into us from use cases. I think that's exciting for the company. I think the fact that this is a product that's being recognized at a national level is very exciting as well, because that'll give us some more wind behind our sales. I'm hopeful that we will be successful in our grant, the ARPA-H grant. I'm hopeful that our estimated, you know, amount of money that we'll get from that, which is really just an estimate until we get the answer back, will be close to what we are hoping for, and that we're planning for. So we've got a number of very significant catalysts coming up here from a business standpoint over the next few months. So I'm excited. I know the product works, and I know it's having a great impact on our customers. That's great. Thank you, Adrian. So, Dr. Tower, Adrian, thank you so much for your time. I think the event obviously proved to be very insightful. This concludes the presentation and the Q&A portion. The event was sponsored by Perimeter, Perimeter Medical, and if you're interested in getting in touch with the company, you may do so via their website, perimetermed.com. If you're interested in learning more about PropThink, you can visit our website, propthink.com, or follow us on Twitter at PropThinkers, our handle. Thank you for attending, and I hope to see everyone again. Good afternoon. Thanks, Daniel. Thank you.