Aethlon Medical Q1 2024 Earnings Call Transcript

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Provided by Quartr
August 10, 2023

There are 6 speakers on the call.

Operator

Afternoon, and welcome to the Aethlon Medical First Quarter Fiscal 2024 Earnings and Corporate Update Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jim Frakes, Chief Financial Officer.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. Welcome to Allyn Medical's Q1 fiscal 2024 earnings conference call. My name is Jim Frakes, and I'm Aethon's Chief Financial Officer. At 4:15 p. M.

Speaker 1

Eastern Time today, Aethlon Medical released financial results for its 1st fiscal quarter ended June 30, 2023. If you have not seen or received Aplon Medical's earnings release, Following this introduction and the reading of our forward looking statement, Aethlon's Chief Executive Officer, Doctor. Charles J. Fisher, Jr. And our Chief Medical Officer, Doctor.

Speaker 1

Steven LaRosa, provide an overview of Aethlon's strategy and recent developments. I will then make some brief remarks on Aethlon's financials. We will then open up the call for the Q and A session. Before I hand the call over to Doctor. LaRosa, please note that the news release today and this call contain forward looking statements Within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.

Speaker 1

The company cautions you that any statement that is not a statement of historical fact is a forward looking statement. These statements are based on expectations and assumptions as of the date of this conference call. Such forward looking statements are subject to significant risks and uncertainties and actual results may differ materially from the results anticipated in the forward looking statements. Factors that could cause results to differ materially from those anticipated in forward looking statements can be found under the caption Risk Factors In the company's annual report on Form 10 ks for the fiscal year ended March 31, 2023, our most recent report on Form 10 Q and in the company's other filings with the Securities and Exchange Commission. Except as may be required by law, the company does not intend nor does it undertake any duty to update this information to reflect future events or circumstances.

Speaker 1

With that, I will now turn the call over to Doctor. Stephen LaRosa, Aethlon's Chief Medical Officer. Thank you, Jim,

Speaker 2

and thank all of you for dialing in. Hi, this is Steven LaRosa. Due to the timing of our March 31 fiscal year, This first quarter report falls only about 5 weeks after our recent call on June 28. Aethlon Medical is continuing the research and clinical development of its Hemopurifier, a therapeutic blood Filtration system that can bind and remove harmful exosomes and life threatening viruses from the blood. These qualities of the Hemopurifier have potential applications in oncology where cancer associated Exosomes may promote immune suppression and metastasis as well as in life threatening infectious diseases and the organ transplant field.

Speaker 2

Our ongoing COVID-nineteen trial in India for patients in the intensive care unit at Madanta Medici Hospital remains open for enrollment with 1 patient treated to date. In May 2023, A second clinical site, Milana Azad Medical College, known as MAMC, received Ethics Board approval to participate in the trial and site activation activities are currently underway. Patients with COVID-nineteen infections that require hospitalization continue to occur in India, who go on to require ICU care for severe infection. In the oncology indication, Aethlon Medical continues to work with its contract research organization, NAMSA LLC, to initiate a clinical study in Australia. Specifically, this is a safety, feasibility and dose finding trial The data generated from this trial will help inform the design of future oncology efficacy trials of the company's Hemopurifier.

Speaker 2

Ongoing activities include site identification and qualification, finalization of necessary documents for Ethics Board submission, the case report form development and selection of a data safety monitoring form. With that, I will now turn the call over to Doctor. Charles J. Fisher, Aethlon's Chief Executive Officer.

Speaker 3

Thanks, Steve, and good afternoon, everyone. Hi, my name is Chuck Fisher. We recently announced We are investigating the use of the human purifier and the organ transplant setting, initially focusing on Our initial objective is to confirm that the hemofurifier in translational studies When incorporated into a machine perfusion organ preservation circuit, can remove harmful viruses and exosomes from recovered donor kidneys. Last month, we signed a research collaboration agreement with 34 Lives PBC. To investigate the use of our proprietary human purifier and 34 Life's organ evaluation and preservation system with the goal of increasing We have previously demonstrated the removal of multiple viruses and exosomes from buffer solutions in vitro utilizing a scaled down version of our human purifier.

Speaker 3

This process may viral infection, delayed graft function and rejection. We believe The number of viable kidneys for transplant. On a personal note, as a physician Informal Division Chief at 3 major research hospitals, I've seen many potentially usable organs There are up to 8 potential organs that can be transplanted And typically, only 2 to 2.5 organs are actually transplanted per donor. TMS is currently applying pressure on the organ procurement organizations to increase its average. TMS is the payment source for the majority of kidney transplants because it reduces the burden on the U.

Speaker 3

S. Government to cover Dialysis costs The U. S. Taxpayer $120,000,000,000 in 20.19, which equals 34% Medicare's total $350,000,000,000 of outpatient services budget. Kidney transplants are cost effective to Medicare, saving up to $250,000 per year From each recipient, with an average kidney transplant lifespan of 10 years, this becomes $2,500,000 in lifetime savings There are currently 750,000 Americans receiving dialysis of 20 or more hours per week in the U.

Speaker 3

S. 105,000 of those patients need the transplant, But the average waiting time for a kidney is 6 years. In 2020, Only 17,581 patients or 17% received a transplant kidney, While 12,293 died while waiting or became too sick to receive a transplant. In 2021, approximately 7,800 kidneys that were recovered from transplant were left unused that perhaps could have been used. Our objective is to increase the number of usable organs that can be introduced In conclusion on this topic, we are excited about this addition to our focus at Aethlon With that, I'll turn the call back over to Jim for the financial discussions and then open up the call for questions.

Speaker 3

Thank you.

Speaker 1

Thanks, Chuck, and good afternoon again, everyone. As of June 30, 2023, Aethlon Metcalfe had a cash balance of approximately $12,900,000 During the Q1 ended June 30, 2023, we raised net proceeds of approximately $1,100,000 under the aftermarket agreement with H. C. Wainwright. Now some of you that listened to our previous quarterly calls Gently encouraged me not to cover our expenses on such a granular basis.

Speaker 1

So I'll try to keep my remarks a bit more high level this quarter. You can find detailed expense information and financial statements attached to our earnings release that just hit the wire or in our soon to be filed report on 10 Q. Our consolidated operating expenses for the 3 months ended June 30, 2023, were approximately $3,400,000 compared to $2,900,000 for the 3 months ended June 30, 2022. This increase of approximately $500,000 or 17.3 percent in the 2023 period was due to increases in general and administrative expenses of approximately $276,000 Professional fees of $133,000 and in payroll and related expenses of approximately $91,000 The $276,000 increase in G and A expenses was primarily due to a combination of factors. Those factors included a $344,000 increase in the purchase of raw materials and a $105,000 increase in depreciation and equipment maintenance associated with leasehold improvements and new equipment for manufacturing and lab facilities.

Speaker 1

Those increases were partially offset By a $160,000 decrease in clinical trial expenses and a $140,000 decrease and subcontract expense associated with our former government contracts. The $133,000 increase in professional fees was due to an increase of $123,000 In Investor Relations expenses associated with facilitating investor awareness and assistance with more widespread dissemination of company news, an increase of $37,000 increase associated with accounting and legal services for our new Australian subsidiary and $86,000 of legal expenses associated with year end filings and general corporate matters. Those increases were offset by decreases in regulatory services of $85,000 and recruiting expense of $28,000 And the $91,000 increase in payroll expense was due to a $56,000 increase in salary expense related to an increase in headcount and A $35,000 increase in stock based compensation related to employee stock option grants. As a result of the factors that I just noted, the company's net loss increased to approximately $3,300,000 in the 3 months ended June 30, 2023, from approximately $2,900,000 in the 3 months ended June 30, 2022. We included these earnings results and related commentary in a press release issued earlier this afternoon.

Speaker 1

That release included the balance sheet for June 30, 2023 and the statements of operations for the 3 months ended June 30, 20 23 2022. We will follow our quarterly report on Form 10 Q following this call. Our next earnings call for the fiscal Q2 ending September 30, 2023 will coincide with the filing of our quarterly report on Form And now Chuck, Steve and I would be happy to take any questions that you may have. Operator, please open the call for questions.

Operator

The first question is from Marla Marron with Zacks. Please go ahead.

Speaker 4

Thank you. So I'm just wondering, do you have any sense you talked a little bit about what Do you have any sense of what potential timeline is or it's too early for that?

Speaker 2

Hi, Myla, it's Steve LaRosa. Thanks for the question. So currently, we're working with NAMSA and we have interviewed A number of sites, we have 4 that are now interested and we have to engage in the Epic And we're finalizing those documents and then we'll have to go through their questions there. We're planning to do this and All by the end of this year.

Speaker 4

Okay. Thank you. And is the possibility you had talked about at certain points in the past of expanding Trials in India expanding into the oncology space, is that something that is still potentially on the horizon?

Speaker 2

Yes. So we're working with Qualtran LLC, our CRO in India, and they have identified Medanta Metacity As a hospital that's interested and again we'd have to go through the same process I articulated for Australia.

Speaker 4

Got it. Okay. And then last question is on the organ transplant side. So you're going to be starting looking at Translational, transplants, I guess, of kidneys. And I think I read that kidneys are the most Frequently transplanted organs, will the results that you get From these first studies, will they be telling of what the potential would be for the Hemopurifier in other in the transplantation of other organs?

Speaker 3

This is Chuck Fisher. Good question. So the first part about the translational research is to Established that we can remove from organs, both ant organs, which we've already been working on, as well as Currently working on human organs that have been rejected, but sent to our partner to be perfused. From that we get perfusate and then we test out with our devices here at Aethlon Medical To see are we removing things and the process has just been initiated recently and we'll expect to get some results in relatively near term. So that would help us understand how best to characterize it.

Speaker 3

As it relates to organs from different Parts of the body at a later stage in this process. Some may be more inclined to have inflammatory mediators and some may Not, but I think that's really an unknown scientific area that we would like to explore. Ideally, we would like to Have an effect on as many recovered organs from the donors as possible. These are not donors that are living related. These are Brain dead donors with beating hearts and in that we would expect that we might see A number of these same inflammatory mediators.

Speaker 4

Okay. Thanks very much for the answers.

Speaker 3

Thanks for the question.

Operator

The next question comes from Vernon Bernardino with H. C. Wainwright. Please go ahead.

Speaker 5

Hi, Chuck and Jim. Thanks for taking my question. Just wanted to follow-up on that last question regarding the potential use of Hemopurifier in organ transplant in the organ transplant setting. And that's in particular. So, I get as far as increasing the number of viable kidneys for transplant, but, as you stated in your press release and Previously, reducing the complications following transplantation of the recovered organ, That seems like it's possibly 2, even though it's The same organ transplant that is the same procedure, same person that sounds like it could be What would be the thinking there as far as clinical trials?

Speaker 5

Would that be 2 clinical trials or that would all be in the Same clinical trial, same patient, etcetera.

Speaker 3

Thanks for your question. This is Chuck.

Speaker 2

Hi, Chuck.

Speaker 3

I think It's a well posed question. The issue at the beginning will be, for instance, delay graph function typically Is a marker within the 1st 7 days as the kidney is not functioning and making urine that you may be having a problem. And that would be the first thing that we would look at in the kidneys. And then over time, at the If they're functioning well, we probably have some of our answers. Alternatively, we would Potentially expect to have some level of delayed graft function or a further delayed graft or some Dysfunction in the kidney at some point over time, in which case we could go back.

Speaker 3

But for the time being, it will be primarily Initial study until we have more information to determine would we need to do a follow on study in addition.

Speaker 5

Terrific. And on to a different part of your announcements today. Regarding the trial in India, one patient treated to date, what would be the potential For any acceleration in patient enrollment and treatment this year?

Speaker 2

Vernon, this is Steve La Rosa. So we know from communication With Vedanta that there are in fact COVID-nineteen getting hospitalized to date, but they are The patients who need to be enrolled in the study have to be in the ICU. So there's that potential. And then with the second site, that's a large Site that's also seeing COVID admissions as well. So we think the second site may help with enrollment.

Speaker 2

We're still at the There remains to be seen that that's going to translate into severe cases that would be eligible for the study.

Speaker 5

Do you have an indication there that they're seeing some of the same dynamics we're seeing here, which is increased Increased infections, increased hospitalizations due to the variant of interest, PT5.

Speaker 2

Yes, we're hearing the same thing that the case numbers are still up and there are still hospitalizations, but they haven't seen as many ICU patients.

Speaker 5

Okay. Thanks for taking my questions and my follow ups. Appreciate it.

Speaker 2

Welcome. Thank you. Thanks Ryan.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Chuck Fischer for any closing remarks.

Speaker 3

Thank you, operator, and thanks everybody for listening and asking very good questions. We'd like to thank all of you for joining us today, and we'll be here to discuss our quarterly end results. I look forward to keeping you up to date on the future calls. And I wish everybody a good day, and thanks again for joining.

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Key Takeaways

  • Aethlon’s Hemopurifier COVID-19 ICU trial in India is open with one patient treated to date and a second site recently approved to accelerate enrollment.
  • A safety, feasibility and dose-finding oncology trial for the Hemopurifier in Australia is being initiated with NAMSA, with sites qualified and ethics submissions underway.
  • In collaboration with 34 Lives PBC, Aethlon is integrating the Hemopurifier into organ preservation circuits to remove viruses and exosomes and potentially increase the number of transplantable kidneys.
  • As of June 30, 2023, the company held approximately $12.9 million in cash, raised net proceeds of $1.1 million, and reported a net loss of $3.3 million for the quarter.
  • Operating expenses rose 17.3% year-over-year to $3.4 million due to higher raw material, depreciation, professional, and payroll costs.
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Earnings Conference Call
Aethlon Medical Q1 2024
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