We don’t often cover the medtech sector, but Perimeter [TSXV: PINK] recently caught our eye. This is a listed medical technology company that has been developing ultra high-resolution, real-time imaging tools to assist with cancer surgery.
The need for this technology stems in particular from the results of cancer surgery. Cancers left behind unwittingly post-surgery leads to the need for further operations (aka recurrence risk). From a purely bottom line perspective, this can cost the medical sector around USD 16000 per patient for reoperation.
Perimeter’s S-Series OCT (see below on optical coherence technology) has been developed to give surgeons a much clearer picture of what they are looking at prior to a pathology assessment. Beyond this the company also provides hospitals with tissue immobiliser devices and an image library that supports further training and reference activities.
Perimeter is also now working on an AI-based software package which is currently in trials. This will bring with it additional predictive qualities and will also allow surgeons to excise and analyse samples that can support ‘real time’ assessment during surgery. In our view this is something of a game changer. AI trials are currently underway led by Dr Alastair Thompson at Baylor College of Medicine.
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From the perspective of the medical sector, this technology offers scope to radically reduce the need for further operations. Re-operation rates for breast cancer, for example, are still up in the 20-25% range in North America. With all countries constantly revisiting their healthcare budgets, solutions like this, which can increase efficiencies and reduce costs per cancer patient by achieving better outcomes, are going to look very attractive.
Perimeter has an initial target market of over 500 hospitals which are carrying out high volume cancer surgery. The AI software package is going to be pointed at intraoperative breast cancer surgery in the first instance. But the addressable market scope is potentially very large. Perimeter puts it at over USD 3.7 billion. This covers both other areas of cancer surgery but also new areas outside core surgery like intervention radiology.
Optical Coherence Technology: how does it work?
- Real-time, cross-sectional images of tissue structures down to 2mm
- Analogous to ultrasound imaging but using light instead of sound
- Very dense features will reflect the light completely
- Can differentiate between calcifications, cysts and fibrous tissue
- Much faster, cellular-level resolution
- Can provide visualisation within three minutes
Perimeter was issued two patents on its technology in 2021, which has resulted in five issued patents in total in the US and internationally. Three patents are going to expire in 2033, one in 2037 and one in 2038. The company’s intellectual property stretches to cover its advanced image processing and reconstruction algorithms, AI auto image assessment algorithms, tissue management system and advanced probe registration system, among other elements.
Also protected is the company’s now considerable library of over a million cancer images.
Perimeter is listed in Toronto. It reports 6.3m options outstanding against 64.3m common shares. There are a further 18.6m warrants issued. The company has a market cap of around C$102m, which has stayed fairly steady. It is currently trading at around C$1.64.
