Aethlon Medical Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2024

There are 5 speakers on the call.

Operator

Good day, and welcome to the Aethlon Medical Fiscal First Quarter 2025 Earnings and Corporate Update Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Michael Miller of Rx Communications. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. Welcome to Aethlon Medical's fiscal Q1 2025 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 fiscal Q1 ended June 30, 2024. 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 disclaimer, 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 Aethlon's strategy and recent developments. Mr.

Speaker 1

Frakes will then make some brief remarks on Aethlon'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, 2024, the company's most recent quarterly 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. With that, I'll now turn the call over to Mr.

Speaker 1

James Frakes, Aethlon's Interim Chief Executive Officer and Chief Financial Officer.

Speaker 2

Thank you, Mike, and I would like to thank all of you for dialing in. This is Jim Frakes, Interim CEO and longtime CFO of Aethlon Medical. Aethlon Medical is continuing the research and clinical development of its Hemopurifier, a therapeutic blood filtration system designed to bind and remove harmful exosomes and life threatening viruses from blood and other biological fluids. These qualities of the hemopurifier have potential applications in oncology where cancer associated exosomes, which we also refer to as extracellular vesicles, may promote immune suppression and metastasis, also in life threatening infectious diseases and in organ transplantation. Now before I turn the call over to Doctor.

Speaker 2

Stephen LaRosa, who will give you an update on our efforts to date on the oncology front, on the milestones we just hit and on other potential milestones that we hope to achieve later on this year. I would like to take a moment to emphasize that we are starting to achieve the two goals that I stated were our objectives when I was appointed as interim CEO last November. Those goals were to get the company moving forward on our oncology indication and to reduce our expenses. As you will hear shortly, we have made measurable progress on both those fronts. I'm gratified by this progress and hope that if it continues, then our shareholders will be rewarded by that progress.

Speaker 2

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

Speaker 3

Officer. Thank you, Jim. As announced on August 12, 2024, 2 days ago, the Belvary Human Research Ethics Committee, the BHREC, granted full ethics approval to the pandara private hospital for a safety, feasibility and dose finding clinical trial of the Hemopurifier in patients with solid tumors who have stable or progressive disease during anti PD-one monotherapy treatment, such as Merck's Keytruda, pembrolizumab or Bristol Myers Squibb's Opdivo, nivolumab. The approval is valid for 1 year until August 6, 2025, after which time it will be eligible for renewal. The trial will be conducted by Doctor.

Speaker 3

Marco Matos and his staff at the Findara Private Hospital located in Queensland, Australia. Earlier on June 18, 2024, the Human Research Ethics Committee of the Central Adelaide Local Health Network, the CALHN, granted full ethics approval for this same multicenter clinical trial. The approval is valid for 3 years until June 13, 2027. The trial will be conducted at this site by Professor Michael Brown and his staff at the Cancer Clinical Trials Unit at CALHN Royal Adelaide Hospital in Adelaide, Australia. Going forward, the next steps are to receive approval from the research governance offices at each hospital.

Speaker 3

The research governance office reviews indemnities and insurance. Once these approvals are obtained, ATHLON, in concert with our Australian contract research organization, RESCU, will conduct site initiation business, known as SIVs, after which patient enrollment in the trial may proceed. We expect that we will be open for enrollment in mid to late September 2024. We anticipate several upcoming potential value creating milestones, including submission to the governance committee at an additional site in Australia that is under the jurisdiction of the Belbury HREEC, which has already reviewed the study for the Pindara site. The timeframe for activation of this 3rd site should be in line with the activation of the other two sites.

Speaker 3

We also await the response from the scientific committee at a site in India with the expectation that that will be followed by a Human Research Ethics Committee review. As a reminder, the primary endpoint of these studies is a 9 to 18 patient safety, feasibility and dose finding trial and the primary endpoint is safety. The trial will monitor any adverse events and clinically significant changes in lab tests of Hemopurifier treated patients with solid tumors, with stable or progressive disease at different treatment intervals after a 2 month run-in period of PD-one antibody anti PD-one antibody, either KEYTRUDA or Opdivo. Patients who do not respond to the anti PD-one antibody therapy will be eligible to enter the Hemopurifier period of the study, where sequential cohorts will receive either 1, 2 or 3 Hemopurifier treatments during a 1 week period. In addition to monitoring safety, the study is designed to examine the number of Hemopurifier treatments needed to decrease the concentration of extracellular vesicles.

Speaker 3

And if these changes in extracellular vesicle concentrations improve the body's own natural ability to attack tumor cells. These exploratory central laboratory analyses are expected to inform the design of a subsequent efficacy and safety trial, including a pre market approval known as a PMA study required by the FDA and other regulatory agencies. Currently, only approximately 30% of patients who receive pembrolizumab or nivolumab will have lasting clinical responses to these agents. Extracellular vesicles produced by tumors have been implicated in the spread of cancers as well as the resistance to these anti PD-one therapies. The Aethlon Hemopurifier has been designed to bind and remove these extracellular vesicles from the bloodstream, which may have may improve therapeutic response rates to the anti PD-one therapies.

Speaker 3

In preclinical studies, the Hemopurifier has been shown to reduce the number of EVs in cancer patient plasma samples. The company also stands poised to address outbreaks and pandemics due to life threatening envelope viruses, which no treatment exists. We have previously demonstrated the ability of a bench top version of the Hemopurifier to bind a number of envelop viruses of interest in in vitro experiments. These include dengue not limited to, but include dengue and H51 avian influenza, known as bird flu. Additionally, the company's COVID-nineteen trial in India remains open to enroll patients with severe COVID-nineteen infection who require admission to the intensive care unit.

Speaker 3

To date, one patient has been treated. The company is actively evaluating COVID-nineteen admissions at our site and potential enrollment against the ongoing costs of maintaining this trial. With that, I'll turn the call back over to Jim for the financial discussion and then open up for questions.

Speaker 2

Thanks, Steve, and good afternoon again, everyone. I will try to keep my remarks on our financial discussion at a high level. You'll find detailed expense information in the financial statements attached to our earnings release that just hit the wire or in our soon to be filed quarterly report on Form 10 Q. As of June 30, 2024, Pathon Medical had a cash balance of approximately $9,100,000 Our consolidated operating expenses for the fiscal quarter ended June 30, 2024, were approximately $2,600,000 compared to $3,400,000 for the fiscal quarter ended June 2023. This decrease of approximately $800,000 or approximately 24% in the 2024 period was due to a decrease of approximately $600,000 in general and administrative expenses and a decrease of approximately $300,000 in professional fees, partially offset by an increase in payroll and related expenses of approximately $100,000 The approximate $600,000 decrease in G and A expenses in the fiscal quarter ended June 30, 2024 was primarily due to a $447,000 decrease in supplies related to the purchase of raw materials for manufacturing of the Hemopurifier and for lab supplies.

Speaker 2

The approximate $300,000 decrease in professional fees was primarily due to a $136,000 decrease in consulting expenses, primarily related to termination of services with a contract manufacturing organization, a $110,000 decrease in scientific consulting and a $78,000 decrease in legal fees relating to general corporate matters. The approximate $100,000 increase in payroll and related expenses was primarily due to an increase in separation expenses of approximately $300,000 related to the termination of an employee. That increase was partially offset by a decrease of $111,000 in stock based compensation and an $89,000 decrease in general and administrative personnel expenses. As a result of the factors I just noted, Aethlon's net loss decreased by approximately $700,000 to approximately $2,600,000 in the fiscal quarter ended June 30, 2024 from approximately $3,300,000 in the fiscal quarter ended June 30, 2023. I'd like to note and emphasize that if we exclude the $300,000 provision related to that employee termination, our operating expenses decreased by over $1,000,000 quarter over quarter.

Speaker 2

We included these earnings results and related commentary in a press release issued earlier this afternoon. That release included the balance sheet for June 30, 2024 and the statements of operations for the fiscal quarters ended June 30, 20242023. We will file our quarterly report on Form 10 Q following this call. Our next earnings call for the fiscal Q2 ending September 30, 2024 will coincide with the filing of our quarterly report on Form 10 Q in November 2024. And now Steve and I would be happy to take any questions that you may have.

Speaker 2

Operator, please open the call for questions.

Operator

The first question comes from Marla Marin with Zacks. Please go ahead. Thank you.

Speaker 4

So just I wanted to Jim, I want to get back to something you just said about the operating expense. If you normalize it to exclude the payment to the former employee, is that a good run rate going forward, understanding of course that as some of the clinical development efforts begin to ramp, we will see that reflected in higher R and D?

Speaker 2

Hi, Marlo. That's a good question. We have things moving in different directions. On the expense reduction side, and this is public information now if you look at our website and filings, we changed law firms and accounting firms

Speaker 4

to

Speaker 2

firms that should be somewhat less expensive. So we didn't have that benefit in the June quarter. So there should be further expense reductions from those professional fees going forward. But as you noted, starting in September, month to month, we expect much more activity in the Australian clinical trials. Steve and some colleagues are going to fly over there and do the site initiation to train the people.

Speaker 2

So there will be additional and it will probably remain higher on the clinical trial front on the expenses. So they may offset. We can't predict exactly, but they should be somewhat offsetting.

Speaker 4

Okay. So then follow-up to Steve, in terms of any kind of training that you have to provide, do you expect that to be a relatively short term process? And how will you provide support once you've left and you return back to the states?

Speaker 3

Yes. Great questions. Thank you, Marla. So as I mentioned, the research governance approvals are both that review process is underway. We've already got the site initiation visits at those 2 sites scheduled in September, provided the governance goes okay.

Speaker 3

Once you're done with the site initiation visits, which me and my colleague at Aptland will participate in virtually, those sites can actually begin screening and enrolling patients. That's kind of the on switch. That will be followed by a site an investigator meeting in the October timeframe, which will actually travel to Australia and meet with all the personnel at the sites. But those sites will already be the 2 sites will already be open for enrollment by then. At both the site initiation visit timeframe and the investigator meeting timeframe, there'll be lots of technical training on the actual device.

Speaker 3

And then we are also in the phase now of interviewing people for a technical position at Athlon who would provide real time assistance to those sites, so that actually be boots on the ground, if you will, to help the site. So, yes, there'll be, as well as my colleague and I here who will be available, of course, at all times for any patient that's enrolled.

Speaker 4

Okay. Thank you. And then last question, it's really more of a housekeeping question. I just want to make sure that I'm understanding what you said in your prepared remarks. As far as like the paperwork at your end, you've completed all of the paperwork from that you needed to submit.

Speaker 4

Is that correct?

Speaker 3

Yes. For both the ethics committees, we had a paperwork that had to be submitted and responses. And so we're through that phase. And now we've provided our CRO rescue with all the paperwork that they need from our end for the governance review. Yes, we've done all we've done everything we could do.

Speaker 3

We're waiting for the governance offices at

Speaker 2

those two sites to rule.

Speaker 4

Okay, great. Thank you.

Speaker 2

And again, Marla, those are just kind of straightforward business issues. We're showing them our insurance policies. We've signed indemnities. I think they've even countersigned some of them or we're tracking down a PI. Agreed upon budget.

Speaker 2

Budget or agreed upon. So, I just don't think it's straightforward business thing to nail down.

Operator

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

Speaker 2

Thank you, operator, and thank you again everybody for joining us today to discuss our 1st fiscal quarter results. We're pleased that we're making progress and we look forward to keeping you up to date on future calls. Goodbye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Key Takeaways

  • Received full ethics approval from both the Belvary and CALHN Human Research Ethics Committees for a safety, feasibility and dose‐finding trial of the Hemopurifier in solid tumor patients on anti–PD-1 therapy, with enrollment expected by mid-late September 2024 and additional sites in Australia and India under review.
  • Achieved a 24% reduction in operating expenses year-over-year, lowering consolidated expenses to approximately $2.6 million and net loss to $2.6 million, and maintained a cash balance of $9.1 million as of June 30, 2024.
  • The Hemopurifier is being advanced for dual applications in oncology (removal of immunosuppressive extracellular vesicles) and life-threatening viral infections (including dengue, H5N1 and severe COVID-19), supported by in vitro and preclinical data.
  • Preparing for site initiation visits and an investigator meeting in Australia and hiring technical support staff to train clinical teams, streamlining trial execution and accelerating patient enrollment.
A.I. generated. May contain errors.
Earnings Conference Call
Aethlon Medical Q1 2025
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