Perimeter Medical Imaging AI, Inc. (OTCPK:PYNKF) Q2 2022 Earnings Conference Call August 24, 2022 5:00 PM ET
Company Participants
Mark Komonoski – Integrous Communications, Investor Relations
Jeremy Sobotta – Chief Executive Officer
Chris Scott – Chief Financial Officer
Conference Call Participants
Frank Takkinen – Lake Street Capital Markets, LLC
Rahul Sarugaser – Raymond James Financial, Inc.
Scott McAuley – Paradigm Capital
Brad Conacher – Richardson Wealth Ltd.
Hugh Cleland – Roadmap Capital Inc.
Operator
Greetings. Welcome to the Perimeter Medical Imaging AI Second Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.
I will now turn the conference over to Mark Komonoski, Investor Relations. Thank you. You may begin.
Mark Komonoski
Good afternoon. Thank you for joining us on this call and webcast today to provide the second quarter 2022 update for Perimeter Medical Imaging AI or Perimeter. We will open the call with a business update from Jeremy Sobotta, Perimeter’s Chief Executive Officer; and then Chris Scott, Perimeter’s Chief Financial Officer, will provide a financial summary. Following Chris’ prepared remarks, we’ll open up the call for your questions.
Please be advised that during this call, we will make a number of statements that are forward-looking, including 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 benefit of our products including Perimeter S-Series OCT, Perimeter B-Series OCT and Perimeter ImgAssist. The efficacy of our clinical trial designs, the timing and anticipated enrollment in our clinical trials and the timing of potential publication or presentation of future clinical data.
Forward-looking statements are subject to numerous risks and uncertainties, and many of which are beyond our control, including the risks and uncertainties described from time to time in our SEDAR filings. Our results may differ materially from those projected on today’s call. We undertake no obligation to publicly update any forward-looking statements. For additional information about the risks and uncertainties facing our business, management encourages you to review the company’s public filings and press releases, which are posted at www.sedar.com.
The press release summarizing this business update was released today, August 24, 2022, will be made available under the Investors section of our website at www.perimetermed.com and filed with SEDAR.
Now, I’d like to turn the call over to Jeremy Sobotta.
Jeremy Sobotta
Good afternoon, and thank you everyone for joining us today. I’ll begin today’s call by commenting on our commercialization progress and updating you on our outlook for the rest of the year followed by an update on our ATLAS AI project. Then, I will cover general operation updates before turning the call over to Chris for review of the second quarter financial results. On our previous calls, we have spoken about our commercial rollout strategy for our flagship S-Series technology, namely, they’re focused on early adopters who can develop a broad-based expertise with the technology and from our long-term bench of reference sites, and we’re seeing great progress in the execution of this strategy.
From a macro perspective, the commercial team is seeing increased access to customers, which is critical as we educate this user community on our novel technology. However, our customers are continuing to react to uncertainties in their operations and supply chains around things like staffing shortages and other pressures that are challenging value analysis committees across the country, and this is impacting decisions from site of care for procedures to capital budgets and long-term procurement contracting decisions.
That said, interest from our end user surgeon community is strong and growing. Just a few weeks ago, we announced the first commercial placement of our Perimeter S-Series OCT system in the state of California at Pavilion Surgery Center, an affiliate of St. Joseph Hospital in Orange, California. The new medical imaging technology will be used under the direction of Michele Carpenter, MD, a breast surgeon who performs breast conservation and other surgeries at Pavilion Surgery Center.
This is a major milestone for Perimeter as not only are we thrilled to partner with such an esteemed physician as Dr. Carpenter, but also we are excited to have one of our early installations in the ambulatory setting. A site of care we believe will continue to form a greater proportion of procedures going forward, and a shift that is only accelerating giving the staffing challenges facing providers today.
We now have systems placed at multiple sites and are actively working on growing this footprint. And it’s worth noting that some of these institutions are some of the most advanced in medical care and want to stay on the forefront of medical technologies. Our pursuit of these types of institutions stems from our strategy to connect with leading healthcare institutions, and to train and support innovative physicians, who see the true benefits of using our technology in their surgical practices and these leaders can then in turn train others as we look to expand our commercial footprint.
Additionally, current proposals may start with a single system interest, but then have a rollout of multiple units. And while we are excited about the response of our customers wanting to make our technology the standard of care across our institution, it does introduce additional procurement steps for our customers and a higher level of volatility introduced by any one individual deal.
With that, we have revised our full year outlook on commercial installations to increase the range to 10- to 20-unit. We have assembled an experienced commercial team that is executing on our strategy, and do foresee our rollout gaining momentum to close out the year and beyond. And I also do not want to overlook the performance of our early customers.
Our sample size of procedures continues to grow across placements and evaluations over an increasing number of surgeon users. And we continue to see that results are outperforming our ex-ante expectation, whether users are starting from national average type reoperation rates of 20% to 25%, or as low as 10%. They are achieving early single-digit results utilizing our technology [Technical Difficulty] margins intraoperatively, and this is the ultimate value creation for their practice.
In terms of our ATLAS AI project, which includes the clinical pivotal trials the B-Series with ImgAssist AI, it is progressing with 7 out of 8 sites up and running. However, despite great engagement from our investigator partners, the staffing issues plaguing providers more generally are also impacting the enrollment rates within our study.
That said, we are actively pursuing strategies to mitigate the risks imposed by shortages of staff, ranging from research support to pathology staff. But as the current environment persists, we do not see enrollment completing until early 2023. And just as a refresher, the goal of the study is assessing on address positive margin rates of surgeries utilizing Perimeter’s technology compared to the standard of care.
We believe that this further enhancement of our technology using AI is going to empower surgeons with a supercharged toolset to improve healthcare outcomes. We couldn’t be more pleased by the engagement of our physician investigators in this study, and their feedback about what participation in it mean for them.
Finally, from an operational perspective, we previously announced the addition of Chris Scott to the team and his appointment was a vital step to filling out the management team. Chris brings a wealth of experience directly relevant to Perimeter and as in his previous role; he helped lead another medical device company through from IPO and scale up to achieving revenue CAGR over 20%, 5 times headcount growth and growing market capitalization from a pre-IPO value of approximately CAD10 million to a peak of over CAD600 million at the end of 2021. We’re grateful to have Chris on our team and look forward to his contribution.
The other addition, we announced this last quarter the appointment of Anantha Kancherla to our Board of Directors from the nomination of Social Capital. We’re thrilled to have Anantha on our board, and having someone with his AI expertise on our team really gives us an asset. Anantha is currently Engineering Director at Meta where he is head of AI platform. And additionally, he has a background of applying artificial intelligence and machine learning software solutions at companies such as Microsoft, Facebook, and Lyft, and will be invaluable as we advance our next-gen ImgAssist AI technology.
We are very excited about the product pipeline in this part of our business. And we look forward to his insight and his ability to leverage his AI experience and knowledge as we execute on our new product development strategy.
With that, I’ll turn the call over to Chris for a review of our Q2 financial results.
Chris Scott
Thank you, Jeremy, and good afternoon, everyone. As Mark mentioned, we issued a press release summarizing our second quarter 2022 financial results earlier today. Unless otherwise noted, I will state financial figures and Canadian dollars. Operating expenses for the 3 months ended June 30, 2022 were CAD6.3 million compared to CAD3.1 million during the same period in 2021, primarily reflecting the increased activity in both the commercialization and clinical fronts.
The net loss for the 3 months ended June 30, 2022 was CAD0.4 million, compared to a net loss of CAD3.2 million for the 3 months ended June 30, 2021. In addition to the higher expenses related to our commercialization and clinical efforts just mentioned, net loss was favorably impacted by higher finance income, primarily driven by the revaluation of the warrant liability, and higher net foreign exchange gains recognized during the quarter when compared to the prior year quarter.
From a cash flow perspective, for the 3 months ended June 30, 2022, cash used in operating activities was CAD6 million. The cash used during the quarter was mainly driven by expenditures, supporting our growing commercial operations, research and development activities, and an increase in our receivables for project-related costs.
Finally, as of June 30, 2022, our cash and cash equivalents totaled approximately CAD45 million. With our strong balance sheet, we are very confident that we will be able to fund the continued commercial rollout of our products.
Now, I’ll turn the call back to Jeremy for some final comments.
Jeremy Sobotta
Thanks, Chris. Everyone at Perimeter is laser-focused and remains committed to transforming cancer surgery with advanced imaging AI and machine learning tools to improve patient outcomes, lower costs within the healthcare system. We believe we have the opportunity to provide something transformative. As our commercial rollout continues to gain traction and the ATLAS AI project progresses, we continue to see steps towards the validation of what we are pursuing.
If I step back and think back to the 2 largest areas of value creation for this organization today, we are exceeding progress on both of them. First, the clinical outcomes our physicians are achieving with the technology is exceeding expectation. This is a validating leading indicator of our ability to become the standard of care. Secondly, the product development pipeline around what our artificial intelligence software can bring to really democratize this technology has accelerated over the last few months with the appointment of Chris and Anantha. And I am very excited about what the future holds for that part of our business.
And as always, I would like to thank our growing team of employees and stakeholders for everything they do. Truly excited for what we are building here and I look forward to updating you on our progress on future call.
I’d now like to turn the call over to the operator and open the line for questions for either myself or Chris. Operator?
Question-and-Answer Session
Operator
Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed with your question.
Frank Takkinen
Great. Hey, thanks for taking my questions. I wanted to start on the commentary around the single-system to multi-system order potentially you’re talking about, Jeremy, it sounds like that’s a pretty exciting development. So maybe bring us just a little bit deeper into what exactly is happening with that specific or if there’s multiple those specific single orders transitioning to multi system orders? And just how does this impact procurement process around timing? And is this a late time in this year that we see the placements occurring? Or is just maybe get pushed into the front half of 2023?
Jeremy Sobotta
Certainly, thanks, Frank. Yeah, I think, despite the volatility – it creates in our numbers, we’re extremely excited about the response we’re seeing from some of the larger name institutions. So, again, maybe taking a step back a little bit and thinking about where our technology sits on, really the 2 extreme ends of the scale, one being your smaller community hospitals, your standalone surgery centers, where they may not have the resources to manage this problem, just because of funding and scale. So they might have a higher re-excision rate to begin with. So we can impact the higher re-excision rate across the lower number of patients and places like that. Versus the other end of the spectrum, the leading edge institutions, the name-brand hospitals that we would all know, they have a better re-excision rate, but they have more patients.
And, we’re in institutions like that we are there – we’re in our pipeline. And what’s happened is the response from the directors of the program, and the evaluation has been extremely positive. They’re seeing the kind of use cases that we expect they will see and they don’t want to have just a single institution or a single installation at the main campus. They want to see it expand to the satellite facilities as well, so fantastic reaction, which is really, really positive.
Now, your comment on, what it means from a procurement perspective definitely changes the authorization levels that have to take place. And, there are more stakeholders to get involved through value analysis committee or physicians at those satellite facilities. So things do become less predictable from a timeline perspective, but still feel really good about some of those falling, as we get through the additional steps that we need to do some of those falling this year, and really, it’s made us more bullish about our long-term pipeline than we ever have been before.
Frank Takkinen
Got it. That’s really helpful. And then maybe just shifting over to the Pavilion win a little bit, can you just talk about your expectations around what ASCs will – how ASCs will play into the deployment of the S-Series? Do you think that ASCs are going to be the majority? Or is it ASC hospital mix? And how does that look as you deploy the technology?
Jeremy Sobotta
Yeah, I think, well, they will certainly – ASCs will certainly become a big part of our business. There’s no two ways about that. And I think the last 12 to 24 months has really only accelerated that trend. So, I think, probably in the near-term, you’ll see more of the larger institutions, the – more innovative leading edge kind of institutions be the larger percentage of the customer base. But, even today, more and more we’re hearing our surgeon partners say, I’m having a hard time getting a lot of time at the main hospital. So I’m moving more of my procedures to the ambulatory setting. Staffing challenges at the main [ph] are making it difficult to do as many procedures there. So I’m moving procedures to the ambulatory setting.
And I think, breast lumpectomies particularly are a fantastic candidate, to move to that lower cost closer to the patient kind of site of care. So I really think over time, it will become the lion’s share of where our business happens, for sure.
Frank Takkinen
Okay, that’s helpful. And then maybe just one more related to reimbursement. My understanding, there’s some temporary reimbursement out there that you’re having some success with one, can you update around how the temporary code has been performing? Or if you’ve been, or if doctors have been receiving reimbursement of that temporary code, and then 2 just kind of outline the reimbursement strategy we should be thinking about over the next couple years?
Jeremy Sobotta
Yeah. You are correct. You may have heard that at the ASBrS meeting. So, I’d say, if we think about the purpose or the true reason for having a temporary code out there, the primary reason is to track utility across the different payer environment. So that really is our number one objective, as we get a broader base of users using it on more patients, the payers who see that code connected though patients can track the overall cost per episode of care for those patients and track utility of what Perimeter’s technology means.
Now, that said, there is real value in to using the technology, and both the physicians and the facilities can claim for reimbursement under that T-code. And we are seeing some payments happening, I think, it’s definitely on a case by case basis today, but really supports the longer-term strategy. And as we continue to develop that real world utility from the T-code being used over time, combined that with the clinical publications that are coming out the data we anticipate having from the randomized control trial that’s underway today, all form – really the evidence to support graduation to a more permanent code, as well as coverage and payment from the different payers, whether that’s CMS or the commercial payers for sure. And we’ll continue to move down that path.
Frank Takkinen
Perfect. That’s really helpful. I’ll stop there. Thanks for taking the questions.
Jeremy Sobotta
Thanks, Frank.
Operator
Our next question comes from a line of Rahul Sarugaser with Raymond James. Please proceed with your question.
Rahul Sarugaser
So let’s start with the interplay between placements at community hospitals versus larger teaching hospitals. Jeremy, I think I believe in response to Frank’s question, you said that most of the placements will likely be at the larger teaching hospitals. Could you maybe speak a little bit of higher level in terms of the strategy of where you’re looking to place these between the two types, as well as how you then tend to leverage that installed base of the current S-Series towards the AI-enabled device as that for the democratizes of the tech?
Jeremy Sobotta
Definitely. Thanks for the question, Rahul. I’ve kind of described the commercialization phase we’re in today, as really the trainer phases, the way I like to describe it. And, you could even – somewhat even argue that we’re pretty early adopter at the moment where you not kind of ground zero customers from that perspective. And, I think, getting into the teaching hospitals is a tried and true path to really proliferating the technology across – the future fellows and residents that are in those teaching hospitals today. So they tend to be the institutions that are willing to adopt these new emerging technologies.
And the leaders of the departments are eager to be on the front end, so that their students and fellows can learn on the new technology as they’re learning and growing their practices. So definitely, we’ll have those kinds of name-brand institutions squarely in our strategic efforts in an act of evaluation today.
That said, everything I just described about what we’re struggling with from staffing at our customer partners is necessitating, being in some of those community hospitals today, and really validating the model in those environments. So even physicians that are operating at those teaching institution, they may as well or may also have credentials at a surgery center and just prefer to do some of these lumpectomies there, because they’re less complicated, and they can push through more volume. So it really is an important part of the commercial model, and really can add value in both ends of that spectrum and want to focus on both ends of those spectrums.
And then, so as it relates to leveraging that user base, we’re building the future KOLs prior to the enhancement with the artificial intelligence, and focusing on the reference sites that, again, are putting a lot of residents and fellows through their program. They’re the ones that are recognized as educators, they’re the ones that people want to call to learn about this new technology, and they’re the ones that have the podium presentations when we go to the industry conferences. So, they – as I mentioned in my prepared remarks there, the future bench of our teaching – our teachers, our KOLs down the road, as it really look to expand the commercial footprint much more broadly.
Rahul Sarugaser
Perfect. That’s a great color. Thanks, Jeremy. So my second question is bit of a two part. Now recognizing that you’ve adjusted your guidance of 10 to 20 units, and with the first placement in California, could you give us a maybe a little bit more color in terms of confidence of reaching even the bottom end of that range? And then my second question is, around the business model, given that the sort of your first capital equipment sale, how should we be thinking about again the interplay and balance between capital equipment and potential recurring revenue as you continue to develop your business model?
Jeremy Sobotta
Yeah, definitely, I think – I’d say, we expanded the range because of the circumstances I’ve described in that each individual deal is becoming a bigger proportion of the overall numbers. And it’s really less of a, I’d say it’s more of a timing aspect from that perspective. So we’re working on bigger deals that may or may not fall in the timing we expected. So that’s really kind of the thought process behind the updated guidance. But we feel really good about where we’re at from a pipeline perspective in hitting the low end of the revised guidance, for sure.
Now, we’ve got a number of deals in active evaluation today, that gives us a lot of confidence and a greater number of deals in value analysis committees going through the process across the procurement cycle in a number of those kind of multiunit type deals as well. So feeling really bullish the sales teams were more competent than ever, that they’re out there doing the right thing. And they’re feeling the confidence from in surgeons.
And, as I mentioned, like the actual event like if I combine the results from early installations, the results from our evaluations like the technology – physicians using our technology are seeing much better results than I would have expected or would have told you to anticipate 12 months ago, and that at the end of the day will drive deals through the pipeline and will make things happen. So that’s why we’re so bullish about the next kind of 4 months, and really the next and beyond from that perspective. So – sorry, the second part of your question?
Rahul Sarugaser
It’s about between capital equipment sales versus potential recurring revenue?
Jeremy Sobotta
Got it. Yeah, that’s actually we’re seeing some interesting dynamics there, I think, we still want the speedy path through the procurement cycle. We want to stay in the operating budget of our customers, so still running an offense of placement first. And really they require the use of the capital equipment through the purchase of that consumables. Now that said, just give them unpredictability in the P&L of our customers were there tend to actually what we’re feeling is a little bit looser capital budget. There is a desire – an increasing desire of customers to have a capital purchase option. And that seems to be a growing trend, as we’re out there today. So I still think the lion’s share the vast majority in the placement model, but we’re not going to say no to an institution that absolutely needs to have a capital purchase option to get this technology to impact their patients’ lives, so working through all that.
Rahul Sarugaser
Got it. And then, Jeremy, just one more quick question. So, of course, the next generation AI device is critical for the future of the company. So could you perhaps talk about how these potentially the base of future KOL, and reference sites that you’re establishing now, and the strategy of how they are going to be leveraged for really that that next phase and shortening that initial adoption cycle of the AI device? And how which – and what sort of timeline we should be thinking about as the adoption ramp for that next-gen rate?
Jeremy Sobotta
Indefinitely. I think, I – twofold from that perspective. One, we’re out there with the S-Series today. And these users are learning the technology without any assistance from artificial intelligence, now they have our field based clinical team or administration [ph] and specialists out there doing a great job to help them learn and train and they’re kind of learning on the job. So, I think that that set of future KOLs is really becoming image interpretation experts, they’re having to deal with things in the workflow that are a little more cumbersome without the support of the AI. So, definitely, want them to be excited and ready to have – they can see they know the AI under the hood, right, prior to the AI happening.
But then the other end of that spectrum of the 8 clinical sites that we have in the pivotal study. And they’re the ones learning the technology with the AI. And, I think, you’ve probably heard me say several times at this point, we couldn’t be more excited about the investigator partners that we have in the study. And those 8 sites represent folks that are – the respective chair of advisory committees in the American Society of Breast Surgeons. We have the nonprofit large 500 bed hospital, investigators working on it.
And then we have community center, community-based hospitals are in rural areas that are just excited to have technology like this to help them and they’re going to be the ones that have the ImgAssist experience and expertise as we look to democratize that. So you’re exactly right both sides of the commercial KOLs that we’re building as well as the investigators that are going through the study. We expect them to be great partners, as we look to really continue to build out our educational platform and continue to have educational events across the country where their peers can learn about our technology specifically.
And from a timeline perspective, I think, we’re constantly innovating from the AI perspective as we go as well. And Gen2 is, as I kind of alluded to, I’m so excited about what’s in the pipeline from a depth perspective on the AI side of their business. So Gen2 is going to be even better than Gen1. But we’ve really, I would expect the inflection point considering when will be on the market, and just the general procurement cycles that we’re working through. I think you’ll start to see that curve in the back half of next year bend up and really accelerate at an accelerating rate as we enter into 2024 and beyond.
Rahul Sarugaser
Great. Thanks again, Jeremy. And thanks again for taking my question. I’ll get back in the queue.
Jeremy Sobotta
Yeah. Thanks, Rahul.
Operator
Our next question comes from the line of Scott McAuley with Paradigm Capital. Please proceed to your question.
Scott McAuley
Hey, Jeremy and Chris, thanks for taking my questions. I just wanted to dig a bit deeper into the kind of utilization and re-excision rates that you’re seeing with kind of the current users. I don’t know if you can share any kind of details on how many cases that, Dr. Tower and Dr. Carpenter, or others have kind of performed on that commercial system? And any estimates on the re-excision rates that you’re seeing? I know you’d highlighted in the spring that Dr. Tower had yet to have a re-excision at that point. So how that usage is evolving over time?
Jeremy Sobotta
Yeah, thanks for the question, Scott. The thing I – the area that I that I mentioned in the prepared remarks, this is a leading indicator that the technology is working, and it’s working better than I think any of us would have expected. So, if we do kind of consolidate, now these are clinical study numbers in the commercial setting. So, we’re tracking, we see when cases are done, we know how many consumables are used and those kinds of things. But, we’re up – well over 100 procedures at this point, and across users beyond just the 2 placements you mentioned, but also in the evaluation setting, and some of those areas, and we’re seeing early very low-single-digit reoperation rates from those users.
And that to me is just extremely exciting, I think, at the validation that we’ve got the right early users. So, I think, you’ve probably heard me, say, in this early phase of revenue, it’s less about how many installations we’re making and more about the quality of the installations we’re making, and we’re seeing that quality play out. And, it’s also a validation of the support, we’re giving those users out there with our educational platform that we’re developing and the image training specialists that are out there in the field, shoulder to shoulder with those users. So couldn’t be more thrilled to see the tech – the way the technology is impacting those practices. And it’s only a matter of time until that word of mouth starts to get to their peers, and we really begin to proliferate it further.
Scott McAuley
Yeah. No, that’s very exciting stuff. On the installations and kind of the increase in size that you’re seeing an interest in kind of the number of installations per site or per contract. I don’t know didn’t give any kind of indication of like is this going from an institution looking at just installing 1 site or 1 system to installing 2? Or is this going from installing one system to installing five just as kind of a gross order of magnitude kind of increase that you’re seeing in the interest, it’s kind of per site?
Jeremy Sobotta
Yeah, I think, it’s all across that range, depending on the kind of institution. So, in some of those indications are pretty early, but I think, it – you’re exactly right. So there are – some that are 1 to 3, some that are 1 to 5, and others kind of 1 to 8 type tech numbers, as we think about in engagement at the integrated delivery network level. And some of those things, and we’re super excited about that response, there’s a lot to work through to make some of those bigger numbers happen and a lot more stakeholders like I mentioned to get involved, but couldn’t be more thrilled. That’s the – and typically we’re starting at the flagship campus to write. So that’s a great position to be in for sure.
Scott McAuley
Yeah. No, that’s great for that additional detail. And I don’t know if you can comment on kind of the demo activity. So in terms of either number or kind of engagement have kind of that early stage in the pipeline of placements, or engagement on kind of a demo level.
Jeremy Sobotta
Yeah. Well, we’ve got lots happening from a demo perspective really, I think, if I were to kind of characterize it, it’s across the country and across both of those kinds of customer profiles I’ve described. So the feedback from the end physician at all those evaluations has been super positive like the – that’s the one thing that the surgeons are seeing the kind of results are seeing better results, and we all would expect, and that’s what’s driving the rest of the procurement cycle at those facilities. And, as I mentioned earlier, there’s a lot of facilities out there in inactive evaluation, but kind of double or triple that in value analysis committees that are going through the process to try to get into evaluation.
So, as we think about the health of the pipeline, and from early to late stages of the pipeline, we’re really excited about the rest of the year and into next year.
Scott McAuley
That’s great. And one last one for me. If I believe, I read that there’s 7 of the 8 sites for the trial are up and running and active. Do you have an estimate on standing up that last trial site? And obviously, there’s some of the challenges with kind of staff turnover and things like that? Are you investigating kind of expanding to adding additional sites to that 8? Or is it really about kind of doubling down and improving the throughput on those existing sites?
Jeremy Sobotta
So the status on 8 sites, we’re just waiting for the final IRB approval. So that as we expect to be really any day now at this point. And then on the second half of the question, yeah, I’d say, we’ve encountered issues from staffing shortages that are really not exactly what you would read in the headlines from other MedTech companies or other providers, making their announcements. And I think the situation really delaying startup in some cases, and enrolled in another cases was particularly acute in the research staff side of the equation supporting the study. So that’s been – we’ve really been doing all we can to help the investigator partners keep that all staffed, and those the staff that trying to help them through recruitment or contracting or whatever that may be.
And then, as I mentioned in the prepared remarks, all the other end of the spectrum all the way to the pathology labs, where the specimens can’t be processed after the study, because there is no staff at the pathology lab to process it. So, interesting dynamics there, I think, we’re doing both of the mitigation strategies that you mentioned, so one really partnering with the sites to increase the patient awareness through different kinds of campaigns. And that’s really twofold, one to try to increase the population of patients that are going to that particular site. But also, once they’re going through the screening and consenting process, making sure those patients are – well informed and excited about what this study can do for the future of surgical breast cancer surgery, for sure, so that we get a higher hit rate on consents.
And then the other end, evaluating whether or not it makes sense to add another site to try to increase the overall enrollment, the rate of overall enrollment across the different sites. So working on both end of the spectrum that, I think, we’ll see now that we’re kind of exiting summer vacation time, and our procedure volumes normalize a little bit for each individual investigator. I think, we’ll have a much better read on what the right mitigation strategies are going forward.
Scott McAuley
That’s great. I totally appreciate that, Jeremy and Chris, thanks again for taking the questions and congrats on the quarter.
Jeremy Sobotta
Yeah. Thanks, Scott.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Brad Conacher with Richardson Wealth. Please proceed with your question.
Brad Conacher
Hi. Sorry, guys, you answered my question, Jeremy. Actually, the previous questions are asked what I was going to ask about the volumes, but that’s why I appreciate it. Good luck. Thank you.
Jeremy Sobotta
Yeah. Thanks, Brad.
Operator
Thank you. Our next question comes from the line of Hugh Cleland with Roadmap Capital. Please proceed with your question.
Hugh Cleland
Hey, Jeremy. Hey, Chris. I’ve got 2 questions. One, I believe the top 4 cancer hospitals in North America, I think in order MD Anderson, Memorial Sloan Kettering, Cleveland Clinic and Mayo Clinic. Are you making any progress in engaging with any of those institutions in terms of commercial placements before the AI studies complete? I mean, are they willing to engage in discussions about commercial placements before the AI studies complete?
Jeremy Sobotta
Yeah, definitely. I think we talked a little bit about as in our strategy of teaching facilities. And you may recall that MD Anderson was part of our clinical development, they were in the data collection study for the AI development process prior to engaging into this pivotal study. And those are certainly the kinds of institutions that we are working with today. And they’re the kinds of institutions that want to be on the front end of this kind of these technological advances. And we’re really excited to be – to have name-brands like that thinking about enrolling or thinking about using the technology and evaluating the technology prior to the AI, you’re exactly right.
Hugh Cleland
Okay. So in my career of investing in these earlier stage companies and watching them grow, there’s often some interesting anecdotes, which gives them insight into the value of the technology or what it’s doing differently. And maybe you have a couple of you can share. But one question that occurred to me is, right, if you’ve got these cancer surgeons in demos, or what have you, where they’re going from a re-excision rate, historically of Dr. Tower, for example, 20%, 25% down to 0%, I don’t know just hadn’t yet. But how are the pathologists reacting when they see surgeons’ re-excision rates plunge from the historical norms down to almost zero? What are you getting – or pathologists kind of engaging and getting excited about what they’re seeing? And has that sort of flowing through into market development activities?
Jeremy Sobotta
Yeah. Well, we’ve – since day one, we’ve said pathology is effectively a secondary champion for us through the sales cycle. And, we – I think there is a perception that we’re trying to replace the gold standard pathology that’s not the case at all, and we want to partner with them, and we want them to be excited about what this technology can do for the overall workflow. And we are seeing that, so I think it’s less of an observation from them about what the reoperation rates are like and more about precision of what our surgeons are able to accomplish. And, I think, there’s a couple anecdotes of just the surprise or kind of blindly knowing that something has changed, because the shave that surgeons are taking are much more targeted.
And on top of that, the shaves that were taken are much more precise. And, that’s part of, again, as we point to particularly community hospitals, where they don’t have pathology on site, and they might have a pathologist that’s driving 90 minutes to come and deal with the procedures for them to be able to see the images coming out of the OR [ph] know where they need to process the specimen to take their blocks for evaluating margins. And that kind of stuff is really a finer nuance to some of the softer value add that we have, but is really exciting to see that collaboration happened between the OR and pathology lab, and just the excitement across both of those champions.
Hugh Cleland
Okay, thanks.
Operator
Thank you. Our next question comes from the line of private investor, [Lawrence Burch] [ph]. Please proceed with your question.
Unidentified Analyst
Hey, Jeremy, thanks for taking my question. Can you remind me of how long after all the patients are enrolled, the database lock will occur and the results will be at least the top-line results will be available?
Jeremy Sobotta
Yeah, certainly, so we have a pretty kind of quick turnaround on observing kind of our patient state. Given that, if we do have a positive margin that requires re-excision, that patients should be getting back as quickly as possible. So, we would expect the database lock/top-line results to be somewhere in the kind of 2-month range after the patients are fully enrolled. We have one secondary outcome that does require post-op follow up to get specific patient reported outcomes as far as cost basis and satisfaction from that perspective goal. But, that being said, we will know the – our primary endpoint of any of them served on address positive margins in pretty short order following enrollment.
Unidentified Analyst
Thank you. And one more follow-up. Have you sort of that about partnering at all with groups that are developing AI-powered [Technical Difficulty] to do the pathological just like companies like Porsche [ph]?
Jeremy Sobotta
No, we haven’t. I mean, other than just soft industry networking relationships, we haven’t really had a need to partner with them for the path. Obviously, the path workflow will happening much later in the continuum of care than where we are. And their imaging being staying and process is a little bit different from us. But, obviously, we’re active in like the AI in medical imaging community. So we collaborate and trade ideas from that perspective, but nothing formal.
Unidentified Analyst
Thank you very much.
Operator
Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. This does conclude today’s conference. And you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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