Technology by Perimeter Medical Imaging AI (Perimeter Medical Imaging AI Stock Quote, Chart, News TSXV:PINK) has the potential to become part of the standard of care in breast cancer treatment, according to healthcare research firm Encode Ideas\u2019 Hogan Mullally, who initiated coverage of the stock on October 21. Toronto-based Perimeter Medical with US headquarters in Dallas, Texas, has a imaging platform, an optical coherence tech called OTIS for providing real-time, ultra-high resolution, subsurface imaging of excised tissue. OTIS can rapidly image large tissue surfaces such as an excised tumour at ten to 100 times the resolution of ultrasound or MRI. On the OTIS platform, Mullally said breast conservation surgery is the near-term commercial focus for Perimeter but that once installed he expects surgeons will use OTIS in other intraoperative settings. \u201cOTIS can fit seamlessly within a surgical suite, allowing for intraoperative tumor tissue imaging, in order to determine if positive margins remain, and additional tissue should be removed,\u201d Mullally wrote. \u201cInitially, Perimeter will be focused on breast conservation surgery, also known as lumpectomy, where it is estimated that between 20 and 30 per cent of women will require a repeat surgery due to positive margins (cancer left behind) being found via histology two to five days after the initial surgery. Currently, there are limited options for intraoperative tissue assessment, and those available are expensive, inconvenient, and cannot be scaled easily. OTIS has the potential to become part of the BCS standard-of-care, which we estimate to be an annual addressable market of $400 million in the US,\u201d Mullally said. Perimeter will be launching OTIS in 2021 with an eight to ten-person commercial team, initially focused on high-volume breast conservation surgery hospitals, while the company is also scheduled to complete in 2021 their clinical development of an artificial intelligence (AI) plug-in for OTIS, called ImgAssist AI. The company is currently running a 400-patient sample study on ImgAssist to determine its accuracy versus histology and will also run a 600-patient randomized clinical trial comparing breast conservation surgery reoperation rates for OTIS with ImgAssist versus the current standard-of-care, with data anticipated to be available in the fourth quarter 2021. Mullally said there should be an FDA De Novo 510(k) submission in early 2022 and potential commercial clearance for ImgAssist by the second half of 2022. Mullally said at a price of $150,000 per OTIS unit and with a $750 per treatment consumable, Perimeter can build a \u201cmeaningful commercial business\u201d with peak annual sales of $50 million by 2025. With ImgAssist available in 2022, that projection grows to peak annual sales of $160 million by 2025. Mullally wrote, \u201cWe believe there is a high probability that ImgAssist AI will be FDA-cleared and commercialized, and therefore ascribe a 70-per-cent probability to our best case scenario playing out. Probability adjusted, we get to a $11.45 implied stock price which would equate to a return of ~567 per cent from today\u2019s level.\u201d Micro cap stock Perimeter Medical, with a current market capitalization of $85 million, went public in early July via reverse takeover of New World Resources, announcing in late June the closing of an oversubscribed $10-million private placement financing round. The stock has done well since its debut at $1.50 per share, now climbing to $2.19 by Friday, November 6. Perimeter has a main shareholder in Toronto-based private equity firm Roadmap Capital, which controls about 16.7 million shares or 44 per cent of shares outstanding, with Roadmap\u2019s principal, Hugh Cleland, sitting on Perimeter\u2019s board of directors. \u201cWe have achieved a number of key milestones in the last few months, including successfully transitioning to a public company and raising approximately $9.4 million in net proceeds from a private placement offering,\u201d said president and CFO Jeremy Sobotta in an October 15 press release. \u201cWith the potential for further capital proceeds of approximately $13.5 million from the exercise of associated warrants, along with approximately $8 million of available funding from the grant received from the Cancer Prevention and Research Institute of Texas, we believe Perimeter is well capitalized in order to support our clinical development and commercialization plans,\u201d Sobotta said. As of the end of June, Perimeter had a cash balance of $11.2 million, not including a US$7.4-million grant from the Cancer Prevention Research Institute of Texas for the company\u2019s Atlas AI Project, a two-stage clinical program for ImgAssist. Mullally said, \u201cWe believe Perimeter\u2019s cash balance is sufficient to fund operations into 2022. We anticipate the company could raise additional capital in the second half of 2021 as part of a listing on a US national exchange and to support the commercial ramp from the anticipated FDA-clearance of ImgAssist AI.\u201d In the company\u2019s second quarter 2020 release, delivered on October 15, Perimeter reported operating expenses for the Q2 of $2.0 million compared to $2.2 million a year earlier and a net loss of $4.6 million compared to a loss of $3.7 million a year earlier. (All figures in Canadian dollars except where noted otherwise.) Mullally said, \u201cAlthough Perimeter will be generating revenue in 2021 off a small but growing OTIS install-base, we caution investors from putting too much emphasis on the income statement during this initial commercialization phase. Rather, we feel emphasis should be on where OTIS is being installed, and who are the surgical champions \/ key opinion leaders (KOLs) driving OTIS adoption.\u201d Disclosure: Never invest in any stock featured herein unless you can afford to lose your entire investment. Neither Encode Ideas LP, nor its employees and affiliates are registered as investment advisors or broker\/dealers in any jurisdiction whatsoever. The information contained herein is based on sources that Encode Ideas LP believes to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Readers should always do their own due diligence and consult a financial professional. 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