Aethlon Medical Q3 2024 Earnings Call Transcript

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Provided by Quartr
February 14, 2024

There are 6 speakers on the call.

Operator

Good day, and welcome to the Aethlon Medical Third Quarter Fiscal 20 24 Earnings and Corporate Update. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask Please note today's event is being recorded. I would now like to turn the conference over to Michael Miller with Rx Communications. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. Welcome to Aethlon Medical's Q3 fiscal 2024 earnings conference call. My name is Michael Miller with Rx Communications. At 4:15 p. M.

Speaker 1

Eastern Time today, Aethlon Medical released financial results for its 3rd fiscal quarter ended December 31, 2023. If you have not seen or received Aethlon Medical's earnings release, Please visit the Investors page at www.aethlonmedical.com. Following this introduction and the reading of the company's forward looking statement, Aethlon's Interim Chief Executive Officer and Chief Financial Officer, James Frakes and Aethlon's Chief Medical Officer, Doctor. Steven LaRosa will provide an overview of Aptlon's strategy and recent developments. Mr.

Speaker 1

Frakes will then make some brief remarks on Aptlon's financials. We'll then open up the call for the Q and A session. Before I hand the call over to Mr. Frakes, 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. The company cautions you that any statement that is not a statement of historical fact is a forward looking statement.

Speaker 1

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, and the company's most recent report on Form 10 Q and in the company's other filings with the future events or circumstances. With that, I'll now turn the call over to Mr. James Frakes, Aethlon's Interim Chief Executive Officer and Chief Financial Officer.

Speaker 1

Jim?

Speaker 2

Thank you, Mike, and I'd like to thank all of you for dialing in. This is Jim Frakes, Interim CEO and longtime CFO of Aethlon Medical. In October 2023, Aethlon received clearance from the Drug Controller General of India or DCGI, the country's Central Drug Authority To conduct a Phase 1 safety, feasibility and dose finding trial of the Hemopurifier in patients with solid tumors We have stable or progressive disease during anti PD-one monotherapy treatment such as KEYTRUDA or Opdivo. The trial is expected to begin following completion of an in vitro binding study of relevant targets and subsequent approval by the respective ethics boards of interested sites in India. In addition to an interested initial site in India, we have 3 interested sites in Australia that are also awaiting the data from our in vitro binding study.

Speaker 2

Our in vitro binding study of relevant oncology targets is complex and stands on the cutting edge of extracellular vesicle science. Our goal is to quantify the potential impact of our Hemopurifier on plasma from cancer patients We have been treated with anti PD-one monotherapy treatment in order to provide preclinical evidence to support our trial design. While our R and D team has started to quantify our internal data, the results to date are inconclusive. Therefore, while our internal team continues to fine tune their work, in parallel, we have now engaged several third party laboratories to independently perform assays on the samples. We are also continuing to study the use of our Hemopurifier as a treatment against life threatening viral infections through our COVID-nineteen trial in India.

Speaker 2

We have 2 participating sites for this trial, the Medanta Medacity Hospital and Maulana Azad Medical College or MAMC. One patient has been treated to date. Recently, we have been informed by our contract Research organization that a new COVID-nineteen sub area has been detected in India. Our COVID-nineteen trial in India remains open in the event that there are COVID-nineteen admissions to the intensive care units at our 2 participating sites. Finally, since being named Interim Chief Executive Officer 3 months ago, I have focused our efforts on our oncology program, as well as on reducing our expenses.

Speaker 2

As previously reported, we disclosed some interesting preclinical proof of concept data of the Hemopurifier in organ transplantation. As a result, we do plan to submit 1 or more articles for publication on our preclinical organ transplantation data. With that, I will now turn the call over to Doctor. Steven LaRosa, Aethlon's Chief Medical Officer.

Speaker 3

Thank you, Jim. The clinical team in Aethlon continues to make strides initiating oncology studies in India and Australia. As a reminder, these studies will examine the safety and feasibility of the Hemopurifier in patients who are not responding to anti PD-one antibodies following an initial 60 day treatment period. The trial will also examine exosome removal by the Hemopurifier and the downstream effects on reversal of T cell immuno 3 interested sites have been identified in Australia and 1 in India. 2 of the 3 sites in Australia have already completed successful site qualification visits, known as SUVs.

Speaker 3

We are in the advanced stages of budget and clinical trial agreement or CTA negotiation. The major milestone to site activation and enrollment is approval by each hospital's ethics committee. The 3 main documents that these committees examine are 1, the clinical trial protocol 2, the patient informed consent known as the ICF and 3, the clinical investigator brochure known as the CIB. The Aslan team has finalized the protocol and the informed consent documents. The clinical investigator brochure can be finalized once the results of the in vitro binding studies are available.

Speaker 3

Additionally, we are finalizing other important documents necessary for the conduct of the trial, including the electronic case report form known as the EDC, the safety monitoring plan, the statistical analysis plan and the charter that the independent Data Safety Monitoring Board will use. In short, we are poised for site activation once our in vitro studies are completed. With that, I'll turn the call back over to Jim for the financial discussion, and he will open it up for questions.

Speaker 2

Thanks, Steve, and good afternoon again, everyone. As of December 31, 2023, Aethlon Medical had a cash balance of approximately $8,000,000 During December January, we raised approximately $236,000 through common stock sales under our at the market program. Now, as I've been previously Encouraged not to cover our expenses on such a granular basis as I did on prior calls, I will try to keep my remarks a bit more high level this quarter. You will find detailed expense information in the financial statements attached to our earnings release that just hit the wire Our soon to be filed quarterly report on Form 10Q. Our consolidated operating expenses for the 3 months ended December 31, 2023, were approximately $3,600,000 compared to $2,800,000 for the 3 months ended December 31, 2022.

Speaker 2

This increase of approximately $717,000 or 25.2 percent in the 2023 period was due to an increase in payroll and related expenses of approximately $871,000 offset by decreases in general and administrative expenses of approximately $92,000 and in professional fees of approximately $61,000 The $871,000 increase in payroll and related expenses was primarily due to separation expenses for our former CEO of $873,000 and an increase in salary expense of $81,000 associated with an increase in average headcount. This was offset by a decrease in stock based compensation of $83,000 Now, I'd like to note that without the $873,000 separation expense that was accrued related to our former CEO, Both our payroll expense and our overall operating expenses would have actually decreased from the 2022 period. The $92,000 decrease in general and administrative expenses was primarily due to a decrease in clinical trial expense of approximately $399,000 That decrease was offset by a $284,000 increase in supplies for manufacturing and R and D and a $31,000 increase in insurance expense. That increase in insurance expense included $16,000 of health insurance expense related to the separation agreement with our former CEO. And the $61,000 decrease in professional fees was due to a $54,000 decrease in scientific consulting, a $22,000 decrease in marketing, a $21,000 decrease in recruiting and a net $33,000 Decrease in contract labor related to general R and D.

Speaker 2

These decreases were offset by an increase of $44,000 in legal expenses, primarily related to the reverse stock split, an $11,000 increase in director fees associated with the addition of a new director and a $14,000 increase in investor relations and accounting fees. As a result of the changes in expenses that I just noted, the company's net loss increased to $3,600,000 for the 3 months ended December 31, 2023 from $2,800,000 in the 3 months ended December 31, We included these earnings results and related commentary in a press release issued earlier this afternoon. That release included the balance sheet for December 31, 2023, and the statements of operations for the 3 9 months ended December 31, 2023, 2022. We will file our quarterly report on Form 10 Q following this call. Our next earnings call for the fiscal Q4 ending March 31, 2024, will coincide with the filing of our annual report on Form 10 ks in June 2024.

Speaker 2

And now Steve and I would be happy to take any questions that you may have. Operator, please open the call for questions.

Operator

Thank you. We will now begin the question and answer session. Today's first question comes from Marla Marin with Zacks. Please go ahead.

Speaker 4

Thank you. Hello. So I have a couple of housekeeping questions and then one sort of broader picture question. So In India, regarding your continued COVID trials, if there is an uptick in COVID cases, Will that make it easier for patient enrollment in your trial there? Steve,

Speaker 3

do you want to take that? Hi, Marla. So, yes, the trial, as you'll recall, is For severely ill patients, so those are patients in the intensive care unit. So what we know from our CRO is that cases are occurring with this new variant, It's JN1 variant. We don't know yet if that's going to translate into the critically ill population or not.

Speaker 3

But The sites are open and open for enrollment. And so if those patients are in the ICU, yes, we'd be able to enroll them.

Speaker 2

And we have hemopurifiers there awaiting the doctors that have been trained. In fact, the doctors at Medata and Medaciti I have very deep experience using the Hemopurifier in prior trials. So

Speaker 3

So they're at the ready, so to speak. It's just whether the patient's critically ill Population is there or not.

Speaker 4

Got it. Okay. And that also, Jim, what you just said leads me to another question, which is, Are we to understand that you have a sufficient number of Hemopurifiers at the moment to support All of the clinical efforts that you're looking to conduct, at least in the near term?

Speaker 2

We do for the planned oncology trials. If all hell broke loose with COVID, that's an unknown, but We do we have a cash of Hemogura virus in India waiting at those two sites. So It would need to be a massive outbreak with a lot of people in the ICUs to cause a problem. So I think we're in pretty good shape actually more

Speaker 4

Okay. And then you talked about some one off costs in the Q3, one off expenses associated with The separation from the former CEO, are there any one off costs that are going to spill over into the Q4?

Speaker 2

No. The accounting treatment was to analyze all those costs and book the accrual into the December quarter, Which was the quarter in which he left the company. So while not all that large sum Didn't go out as cash, a small portion did. We've accrued it and it will be It just paid out over the year. We're paying him over a 12 month separate period.

Speaker 2

We have pretty extensive detail on that in our quarterly report 10 Q that will go on file shortly. So I'd encourage anybody that's interested in that to take a look at the footnotes.

Speaker 4

Got it. Okay. And then last question So in order to move forward with the oncology trial, you said you need to do some preclinical work, in vitro work, correct, In order to see if the plasma from cancer patients that are enrolled and being treated with anti PD-one Treatment, the response when the Hemal purifier was used. Can you just give us some color on how you get those patients involved? How you're able to obtain Access to the plasma from these patients pre moving COGS.

Speaker 3

Yes. So Marlo, the kind of the work plan, if you will, for the preclinical studies is there are commercially Available sources of plasma from cancer patients, the patients have already signed consent, so they've agreed to Allow the use of theirs. So we've acquired plasma samples from patients with malignancy, particularly those who have been treated with anti PD-one therapy. We then run those over a smaller version of our Hemopurifier. And then, we count things like exosomes and exosomes of PD L1 and effects on T cells.

Speaker 3

So that's the process that we're in and we're still working on getting a definitive answer from those studies.

Operator

Our next question comes from Anthony Vendetti with Maxim Group. Please go ahead.

Speaker 5

Yes, thanks. So, yes, Jim, on the studies in India, just How many patients are enrolled at this point and just go through again, That should help, right, bringing over those results over to the U. S.

Speaker 3

So, Anthony, the COVID study, which is the one that's open right now, can enroll up to 15, 15 patients. We've enrolled 1 To date, but it's designed in a manner that, yes, the data, including the biomarker data, would be useful For submissions to regulatory agencies. But again, the issue has been with the evolving COVID Epidemic, there are patients who are affected who aren't critically ill. And that's the population that's eligible for the study.

Speaker 2

And the FDA, Prior studies in India did accept and use that data. So It's useful information.

Speaker 5

So you said that they found a new variant in India. Is that different than the JN. 1 in the U. S, the most prevalent

Speaker 3

right now in the U. S? No, JN. 1, but what they're finding is it's the predominant and they don't know what the Downstream clinical consequences are going to be, meaning is it going to translate to more hospitalized and critically ill patients? That's an unknown right now.

Speaker 5

Okay. And then in terms of the oncology Trial data, is that being done in Australia?

Speaker 3

The planned studies, Safety feasibility and akin to dose finding, how often you have to give the Hemopurifier treatment. Those 2 individual trials Are going to be one trial is going to be conducted in India, one is going to be conducted in Australia. Again, we're awaiting Our in vitro data to submit to the ethics force to get those studies started.

Speaker 5

Okay. So neither of them are started at this point. Okay.

Speaker 2

That's correct. That's correct. We're poised. I've been really pushing hard on this, Anthony, since I Was named interim CEO. And we've come a long way on the R and D effort.

Speaker 2

They couldn't even count The PD L1 on the extracellular vesicles 2 months ago and now they can count the total Aggregates, but there have it's just inconclusive. That's why we're engaging outside labs to get to the bottom of exactly where we are.

Speaker 3

Yes. And to reiterate Tim's So there's a whole as you can imagine, there's a whole host of activities that have to be done to start a trial. And so we've been pushing to get Every one of those done so that once we have this data, we can go, if it's a go.

Speaker 5

Understood. Okay. And then lastly, I think you did mention at the end of your prepared remarks an update on the Organ transplant progress, is that maybe just Just give me a little more color on that is that I know the oncology is taking priority, but maybe just an update on where that's at? Well,

Speaker 2

I did push to make the oncology effort as the highest priority, but there was Momentum with the organ transplant work. We have generated additional data. It's pretty interesting stuff. And we do plan to write 1 or more articles. We have the data.

Speaker 2

We're far enough along with the oncology studies that Some of the more senior people can move their head wrap their head around getting the articles written and Try to get this published. So we haven't stopped that work. We may very well have things to talk about on future calls on the urban transplantation front.

Speaker 5

Are you still working with 34 lives on the transplant side?

Speaker 2

We are. They've been busy getting their clinical trial going. We've been busy with the oncology stuff. But yes, we're still We have a collaboration agreement with them. And now that they I don't really know where they are with the point of becoming a private company.

Speaker 2

We couldn't talk about it publicly even if we knew. But yes, we're still working with them, and I think the time to MoveForward may be coming soon. They may have gotten things going, but I don't know. It's not our business.

Speaker 5

Okay, great. All right, guys. Thanks for the update. I'll hop back in the queue.

Speaker 2

Thank you, Anthony.

Operator

Thank you. And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Jim Frakes for closing remarks.

Speaker 2

Thank you again for joining us today to discuss our quarter end results. We look forward to keeping you up to date on future calls. Bye.

Operator

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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Key Takeaways

  • Received DCGI clearance for a Phase 1 safety, feasibility and dose‐finding trial of the Hemopurifier in solid tumor patients failing anti-PD-1 therapy, with one site in India and three sites in Australia poised to activate pending ethics approval.
  • Ongoing in vitro binding studies on patient plasma have yielded inconclusive results, prompting the engagement of multiple third-party labs to independently validate exosome and PD-L1 removal data.
  • Continuing the COVID-19 intensive care trial in India at two sites—one patient treated to date—with enrollment opportunities dependent on new ICU admissions from the emerging JN.1 variant.
  • As of December 31, 2023, Aethlon reported a $8 million cash balance, raised $236,000 via equity sales, and recorded a $3.6 million Q3 operating loss primarily due to a one-time $873,000 CEO separation expense, while core expenses actually decreased year-over-year.
  • Advancing preclinical proof-of-concept data for the Hemopurifier in organ transplantation, with plans to submit one or more articles for publication on these findings.
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Earnings Conference Call
Aethlon Medical Q3 2024
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