Perimeter Medical Imaging TSXV:PINK could be a game changing healthcare stock. The shares are currently on the move, having picked up more than 76% in the last month alone. The stock had been heavily sold down up until the end of August, when it could have been bought on the TSXV in Canada for 33 cents.
Perimeter is a small cap medtech play which has the potential to change the post-surgery metrics in cancer treatment. It addresses the very serious post-op hit rate for cancer treatment, especially for breast cancer. The US Food & Drugs Administration has already approved its technology, which provides real-time, cross-sectional visualisation of excised tissue at the cellular level.
Beyond that, Perimeter also has next-gen tech in the form of AI-assisted analysis of cancer patients. This tech could further support a more successful hit rate for treatment. It has received USD 7.4mn from the Cancer Prevention and Research Institute of Texas. This is a company that used to trade at more than four dollars Canadian. It seems ludicrous that it can be had for 60 cents at the moment.
What’s gone wrong with Perimeter Medical Imaging?
Perimeter has suffered in part from a general malaise in the small caps market. This is not unique to Canadian small caps, but it has hit microcap tech and healthcare stocks. Perimeter has also suffered from the slower than expected roll-out of the company’s non-AI enabled version of its core tech plus worries about its balance sheet on the part of investors.
There has also been plenty of speculation from shareholders about the ongoing support of Canadian venture capitalist Chamath Palihapitiya, CEO of Social Capital. Palihapitiya is fast becoming a legend in North American private equity circles. He has a track record of backing successful ventures in the healthcare sector, and his involvement with PMI has been seen as a stamp of approval.
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Social Capital invested CAD 43mn in PMI in December 2021, coming in at CAD 3.00. Palihapitiya increased his stake in PMI via a private placement at 42 cents last month. SC Master Holdings – aka Social Capital – is the company’s biggest shareholder at the moment. Investors had been worried that the company would run out of cash by the end of this year. The latest financing removes that concern in the view of many close to the company.
Perimeter looks poised for a significant rally
If Palihapitiya starts voicing his support for PMI again, then this stock could really take off. Further excitement was recently generated by his appearance on the Joe Rogan podcast, where he spent four minutes talking about his enthusiasm for technology that can curb the rate of re-operation with cancer surgery. While PMI does not get mentioned by name – I suspect possibly for regulatory reasons – investors are taking this as a signal from the billionaire that he is still backing PMI.
Personally I don’t think one needs to read the tea leaves from a podcast: the ongoing financial commitment from Social Capital speaks more loudly, following the further finance it has committed last month (plus two seats on the board). If Palihapitiya was going to walk away from PMI, Social Capital would not be pushing for seats on the board.
PMI has been beleaguered by the emphasis on getting its non-AI tech into a commercially-viable form, plus the ongoing macroeconomic issues hitting small caps that just about every CEO and small caps broker I speak to these days complains about. But my guess is Palihapitiya is with this one for the long run.