Ticker Symbol: PINK (TSX Venture Exchange)
Shares Outstanding: 36,680,785
Market capitalization (08-18-2020): $64.9 million (CAD)
Total Addressable Market Size: $3.5 billion (WHO Projections for 2020)
Latest News From Perimeter Medical Imaging AI Inc
Aug 28: Top-Performing Medtech Sales Executive, Steve Sapot, Joins Perimeter Medical Imaging AI as Chief Commercial Officer
Aug 26: Senior Officer Of Profound Medical (Nasdaq: PROF) Joins Perimeter’s (TSXV:PINK) High Profile Board
1) Backed by a multi-million dollar grant from the prestigious Cancer Prevention and Research Institute of Texas (CPRIT), Perimeter is revolutionizing cancer surgery by developing an artificial intelligence (AI) and machine learning “plug in” to augment their proprietary, innovative medical imaging system (which has 100x higher resolution than MRI). Perimeter is currently focused on reducing the debilitating re-surgery rate (approximately 1 in 4 surgeries) resulting from cancer cells left behind during initial tissue-preserving breast cancer surgery. Combined with a recent $10 million IPO and potential for “in the money” warrants exercise, the Company is confident it has enough financial firepower to bring its platform to market.
2) Although Perimeter’s initial focus is breast cancer surgery, this is a platform technology that could potentially be used in any cancer surgery where margin assessment or tissue preservation are important: prostate, liver, lung, kidney, pancreas, colorectal, skin, etc. The consumable portion of the breast cancer market alone is worth $794 million, while the Total Addressable Market in consumables exceeds $3.5 billion.
3) Unlike most emerging medical device companies, Perimeter is addressing an unmet medical need (i.e., NOT competing with technology already in the market from giants such as Medtronic, Stryker and Intuitive Surgical) with a technology that provides 8x to 100x improvement over existing imaging technologies (i.e., 100x higher resolution than MRI, and 8-10x higher resolution than ultrasound and X-Ray).
4) How AI can add value:
i) In August of 2019, Perimeter was the only medical imaging company (out of almost 30 applicants) to be awarded a company relocation product development research grant by CPRIT to develop the AI component of its platform. This US$7.4M grant was awarded after thorough due diligence by third parties evaluating the technology, business model, and intellectual property.
ii) Applying AI to medical imaging technologies is an exciting theme that is getting a lot of attention in Silicon Valley and globally. Perimeter owns this technology 100% and has total control over the only unique library of images capable of training the AI component, ImgAssist. This is a key differentiator and positions Perimeter ahead of competitors in medical imaging AI, giving it a uniquely valuable position.
iii) Perimeter’s proprietary AI can potentially accelerate the adoption of its platform by a wide variety of surgeons, beyond the approximately 1,000 centres of excellence and teaching hospitals to above 5,000 in the Western world.
5) From an investor standpoint Perimeter has an extraordinarily powerful “razor/razorblade” model in which a high margin consumable gets used with EVERY surgery. Based on an assumption of an average of 3 breast cancer surgeries per week per installed device in 1,000 hospitals, the consumable portion of the business could generate significant ongoing revenue, on top of one-time device sales and service contracts.
Including all cancer surgeries that could use Perimeter’s technology, and adding in the pre-operative biopsy and post-operative pathology markets, the complete TAM based on WHO data is approximately US$3.7B/year, just for the consumable.
6) Validation from Key Opinion Leaders (KOLs) and world-class cancer centers:
Dr. Frank Prendergast, former Director Emeritus of the Mayo Clinic’s Cancer Center (who sat on Eli Lilly’s Board for 22 years) joined Perimeter’s Board of Directors during the fall of 2017; and Dr. Ted James, the Chief of Breast Surgical Oncology at Harvard Medical School and the former President of the American Society of Breast Cancer Surgeons, has been a clinical advisor to Perimeter since 2014.
World-class centers that are actively collaborating with Perimeter or have previously participated in research include: MD Anderson (#1 cancer hospital); Memorial Sloan Kettering (#2 cancer hospital); Mayo Clinic (#3 cancer hospital); and Princess Margaret (#5 cancer hospital).
7) Perimeter has attracted world-class leadership.
Jeremy Sobotta recently joined as President and CFO in December of 2019, having been part of deploying over $4B in capital into M&A from the acquirer side while at Stryker. In fact, Jeremy was directly involved in multiple transactions in the breast cancer surgery market, including the US$200M acquisition of Invuity by Stryker in 2018. He brings an extraordinary breadth and depth of device-commercialization and M&A experience from category-leading medical device companies such as Stryker and Smith&Nephew.
Based on that experience, Jeremy sees Perimeter as a natural M&A fit for medtech companies, as evidenced by the amount of activity from strategic acquirers in women’s health and computer-assisted surgery.
Texas-based Tom Boon joined as CEO in April of 2020, with more than thirty years of commercial leadership experience in the diagnostic imaging space, including Eastman Kodak Medical, and 10 years as President of the division of Summit Industries that sells X-Ray equipment to hospitals and out-patient clinics.
The Board includes Dr. Frank Prendergast, former Chairman of the Mayo Clinic’s Cancer Center (discussed above) and Suzanne Foster, a current Cardinal Health executive, former Medtronic executive, and breast cancer survivor.
Dr. Tony Holler became Chairman of the Board in September of 2019. Tony has been founding CEO and/or Chairman of 3 publicly-traded companies that exceeded C$600M in market cap (including ID Medical which was bought by GSK for almost $2B, and CRH Medical which hit a C$900M market cap in 2017).
While still under the radar in the broader investing community, the Perimeter story is gaining traction.
The $3.5 billion market opportunity for Perimeter’s proprietary ultrahigh resolution imaging platform, OTIS, has attracted top tier management and financial backing from the prestigious CPRIT (Cancer Prevention and Research Institute of Texas).
With a pre-commercialization market capitalization of only $65 million, Perimeter Medical Imaging AI, Inc. (TSXV:PINK, FSE:4PC) is well positioned to deliver above average returns for early shareholders.
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