Q4 2020 Aethlon Medical Inc Earnings Call
Good afternoon, and welcome to the Atlas Medical fourth quarter fiscal 2020 earnings corporate update.
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Now, let's turn the conference over to Dr., Jim Frakes, Chief Financial Officer. Please go ahead.
Thank you operator, and good afternoon, everyone.
Welcome to Athlon Medical's fourth quarter 2020 earnings conference call.
My name is Jim Frakes, and I'm Aethlons Chief Financial Officer.
At 415 PM Eastern time today, that's one medical released financial results for its fiscal year ended March 31 2020.
If you have not seen or received Aethlon medical <unk> earnings release. Please visit the Investor is page at Www Dot after one medical Dot com.
Following this introduction and the reading of our forward looking statements.
That's one CEO Dr. Tim Rodela.
And our chairman Dr., Chuck Fisher will provide an overview of athlon strategy and recent developments.
I will then make some brief remarks on Aethlons financials. We we'll then open up the call for the Q and a session.
Before I hand, the call over to Dr. Rudelle. Please note that the news release today and this call contain forward looking statements within the meaning of the federal securities active matching 33.
The Securities Exchange Act of 1934.
The company cautions you that any statement that is not a statement of historical fact is a forward looking statements.
These statements are based on expectations and assumptions.
The data 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 and the company's annual report on form 10-K.
For the fiscal year ended March 31 to 29 team.
And then the company's other filings with the Securities and Exchange Commission.
Except as may be required by law the company does not intend.
Or 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 Dr., Tim Rodale Aethlon medical CEO.
Thank you, Jim and thanks to everybody on the line for dialing in.
As you can see from our recent announcements and and more to come today, we've had a busy and productive few months since our last call.
On the oncology front, we now have I'd be approval to initiate or early feasibility study.
Which to remind you as a device equivalent of a phase one study for a drug.
In head and neck cancer at the human cancer Center at the University of Pittsburgh under the direction of Dr. Dan Sandberg.
It was a very bright young medical oncologist, who specializes in head and neck cancer.
And also collaborating with basic researchers there who are world experts in the role of Exosomes in cancer progression in metastasis.
We expect that the trial will be opened for patient enrollment within the next few weeks and it will be listed on clinical trials Dot Gov.
In the next day or two.
Once that listing goes up on clinical trials, Doug will put a link to it on our website and you'll be able to see more details of the trial.
But in brief.
The trial, which will enroll 10 to 12 subjects in an open label design will combine hemopurifier treatment with pembrolizumab or trade named Keytruda for Merck.
Patients with advanced and or metastatic disease in the frontline setting.
Pembrolizumab was approved in the frontline setting last June based on studies showing that improve survival by several months on average, but like other checkpoint inhibitors or immuno oncology agents in other solid tumors such as melanoma.
And non small cell lung cancer its impact is substantial but on a minority of patients. Some patients may have striking outcomes with multiyear survival in advance disease, which prior to the advent of these agents who is unheard of but the majority of patients Unfortunately show little or no improvement.
Studies have shown that a major mechanism of resistance to these agents may involve tumor derived immunosuppressive exosomes, which as we've previously described.
Or some cellular particles that are shed from tumor cells and circulate in these patients.
We previously shown dental laboratory version of the Hemopurifier can clear exosomes for multiple tumor types as described in a poster that we presented at the online a CR American Association for cancer Research meeting. This week you can find a linked to this poster on our website.
In the trial, we will treat enrolled patients with a four hours hemopurifier treatment immediately prior to their first to every three week Pembrolizumab administrations.
The primary endpoint for this trial as always in these types of early trials is safety with secondary endpoints, including tumor response survival and most importantly from a mechanism of action perspective, we will be able to investigate the clearance and characterization of exosomes and potentially.
To understand that clearance and its relationship to improved outcomes.
Now to move onto infectious disease, we announced last week that the FDA has proved a supplement to our existing viral I D or investigational device exemption to allow for the treatment with the hemopurifier of up to 40 patients with Sars Covina.
To Kobin 19, a disease at up to 20 centers in United States.
The supplement is very similar to the one that was approved several years ago for Ebola in both the United States in Canada and that supplement remains open.
We previously discussed and put up a statement on our website the potential use of the Hemopurifier in cobot 19.
And we noted that we have data with multiple viruses in vitro and in humans, including a version of the Mers virus, which like service Koby too is a beta corona virus so closely related.
Showing that the Hemopurifier or lab version of it clear substantial quantities of virus in circulation.
Well at the time, we posted that statement, we did not have data with service koby too. We now have shown that we can clear a specific service koby to protein in the lab.
We have not demonstrating clearance of of whole virus because of safety issues that it would have to be done.
In a much higher level.
Seclusion facility, but given the data with all of the other viruses that we've shown and our ability to very effectively clear. This protein we have a high.
The degree of confidence that the Hemopurifier will trap the service koby to cobot 19 virus.
We also also discussed at that time the question of whether clearing circulating virus would have an impact on a disease, where the proximate target is the long.
The literature has evolved very rapidly as many of you probably know I'm since the original a description of the outbreak in China.
And the literature regarding the disease is now very clear that although the lung is frequently one of the first oregons involved.
In many patients and particularly in the most severe severely affected ones. This is a systemic disease that potentially effects all organ systems and that the second six patients out sickest patients outcomes, maybe driven by other organ involvement, including cardiac disease and the profound coagulopathy.
Coagulopathy use or abnormalities blood coagulation that characterize their courses.
In fact, there's some evidence that the lung disease may in fact, the initiated in many patients not from the top from the alveoli, but in fact through the micro circulation in the long.
We're now in the process of identifying centers to initiate the investigation of the Hemopurifier in this disease.
Finally, before I ask for Chuck's thoughts on turn it back over to Jim I want to comment on a New addition to the management team.
We recently recruited Tom to Chini to the position of Vice President of manufacturing and product development.
Tom as an industry veteran with more than 35 years of experience in mechanic medical devices and expertise in manufacturing product development quality systems regulatory affairs and program and project management.
He is already in place and as having a major impact on helping to advance our manufacturing capabilities.
What many observers of or industry generally don't recognize is a critical role that manufacturing and product development play in the process of getting the market.
Clinical development gets most of the attention, but no product gets approved without reproducible scalable reliable and well characterized manufacturing processes and we're devoting very substantial resources to make sure.
This is not rate limiting in the development of the Hemopurifier.
This is doubly important and products for life, threatening diseases, where development could move very quickly.
To remind you the hemopurifier is the subject of to break through device designation by the FDA, one for viral disease and one for oncology and in this setting the regulatory process and the development process can move very quickly. So we have to be prepared.
By the time more ready to up to filed for approval, assuming our development programs are successful.
Thomas a great addition to the Ti.
But I would also be remiss, if I didn't point out that all of what I've been talking about was done in a very short time with a small but incredibly talented and motivated team of scientists and development professionals to whom we are profoundly indebted.
And well our group is taking all appropriate precautions to protect each other during these challenging times, including working remotely wherever possible. We have continued research on our laboratories, we continue our manufacturing operations to manufacture hemopurifier as for our clinical trials.
With that I'd like to get Chuck's thoughts and observations before turning it back over to Jim for the financial section of the call Chuck.
Make sure you're not on mute Chuck.
Thanks, Dan.
All of you for joining our call today.
As we all know this year as presented significant challenges to all of us.
Working from home the team has been able to keep up by strong pace to move things through the regulatory process as was the trial design and institutional review board approvals in a timely fashion.
I want to emphasize clinical critical importance and product development as Tim mentioned, Tom to change as a strong addition to our management team and has hit the ground running in addition to advancing.
Part production, we're working hard on developing a stockpile as you know purifiers in anticipation of increased use.
Further we are updating our documentation.
Operation for future filings with regulatory agencies.
You know from our prior calls and filings Hemopurifier as Tim mentioned has to breakthrough designations and we will soon be in the clinic for both covert 19, and head and neck cancer thing life, threatening viral disease and excellent second cancer.
We're now delivering on that and outlined here, though that is strong and engaged board of director who are focused on developing goals and ensuring that we achieved oh.
Ill now hand, the call back over to Jim Frakes, our CFO for the financial presentation Jim.
Thanks, Chuck and good afternoon again, everyone.
Our net loss was approximately $6.4 million or one dollar and 87 cents per share for the fiscal year ended March 31, 2020 <unk>.
Compared to a net loss of approximately $6.2 million four or $5 in 13 cents per share the fiscal year ended March 31 2019.
We recorded government contract revenue of approximately $650000 in the fiscal year ended March 31 2020.
This revenue resulted from work performed under our phase two melanoma cancer contracts with the Unsi <unk>.
We recorded government contract revenue of approximately $230000 into fiscal year ended March 31, 29 team.
Our operating expenses for the fiscal year ended March 31 20, Tony.
For approximately $6.58 million.
In comparison with $6.23 million for the fiscal year ended March 31 2019.
This increase of approximately $350000 or 6% in.
In the fiscal year ended March 31, 2020 was due to increases in professional fees, the $537000 and in general and administrative expense of $595000.
Which were partially offset by a decrease of $781000 and payroll and related expenses.
The 537000 dollar increase in our professional fees and the fiscal year ended March 31 2020.
It was primarily due to a 694000 dollar increase in our legal fees.
And then 111000 dollar increase in our accounting fees.
Which were partially offset by decreases of $245000 and consulting fees.
The increase in legal and accounting fees related to increased activity in our registration statement filings and an intellectual property auctions among other matters.
The 595000 dollar increase in general and administrative expenses in the fiscal year ended March 31 2020.
It was primarily due to a combination of about 316000 dollar increase in our clinical trial expenses.
198000 dollar increase in sub contracting and other costs related to our government contracts.
And an increase in $87000 in laboratory supplies.
The 781000 dollar decrease in payroll and related expenses in the fiscal year ended March 31 Twentytwenty.
It was due to a combination of a decrease in our stock based compensation a $475000.
And a decrease of $306000 and cash based compensation.
Primarily due to the termination of consulting and severance payments to our former Chief Executive Officer and former President.
Other expense in the fiscal year ended March 31, 2020 consisted of a noncash loss on debt extinguishment interest expense and a gain on share for worn exchanges.
And then the fiscal year ended March 31, 2019 consisted of interest expense only.
Other expense for the fiscal year ended March.
The $450000.
Compared to other expense of approximately $220000 for the fiscal year ended March 31 2019.
At March 31, 2020, we had a cash balance of approximately $9.6 million.
And in June 2020, we raised additional cash through the sale of approximately $2.7 million 2.7 million shares of common stock.
Under our ATM facility.
I had an average price of $2.70 per share.
<unk> aggregate net proceeds to us.
Approximately $7.3 million.
Those sales under our ATM represented approximately 2% of the trading volume on the data the sales.
And were completed with minimal transaction costs and no warrant issuances.
The cash received from the June it's the ATM sales puts the company and its and its strongest cash position.
These 12 years.
We did land the large phase two NCR contract last fall.
And we do intend to continue to apply for additional government grants some contracts as sources of non diluted funding non dilutive funding.
We included these earnings related commentary in a press release earlier this afternoon.
That release included the balance sheet for March 31, 2020, and the statements of operations for the fiscal years ended March 31, 2020 and 2019.
We will file our annual report on form 10-K, following this call.
Our next earnings call will coincide with the filing of our quarterly report on form 10-Q in August.
And now Chuck Tim and I would be happy to take any questions that you may have.
Operator, please open the call for questions.
They will now begin the question and answer session.
Ask the question really press Star then I'm wondering what are your Touchtone phone.
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At this time, well pause momentarily to assemble our roster.
Our first question today will come from Brian Marckx with that.
Hi, guys. Congrats on the on all the the developments recently can you hear me okay.
There you find thanks, Brian.
Okay great.
If I start with Ah the cancer side of the business.
Did the ex vivo presentation was that sort of a prerequisite to start at or was it. It's just kinda coincidental that it came out.
You know run them same time.
If you're talking about the AMC, our post or no that post or actually is based on data that's been generated over the last.
Year or two by a net Barlow, our senior director of research and I'm Teresa Whiteside at her group.
At the University of Pittsburgh. It a lot of that was generated actually I'm under two previous grants or contracts from the end sea ice. So that's kind of a it's a summary of a number of different studies and that was really not part of the review process for the.
The oncology I'd. He obviously all of those data were available to ft, a but no we were not waiting for those data for the trial to start let me make up let me make a comment though about about trial start up very quickly and that is as as.
You on data only know and everybody on the call knows when you're doing trials in large cancer centers is generally a multi step process. Once the I'd. He is open to get a trial open up and running and in fact, I've run molding Center trials, 40, and 50 cent or trials in which some of the larger cancer centers actually.
Didnt get IR be approval and open and treatments all the trial was virtually completely enrolled so you know one of the advantages obviously as we have a huge amount of expertise there in a very large patient pay patient PAMA they'll patient population, but it is a big institution with multiple levels levels of review.
That also potentially raises the question of whether the cobot 19.
Pandemic slowed us down I'm actually don't think it did and the reason I say that isn't the well some clinical research in less you know sort of a life threatening areas may have been slowed down and there's been a lot of press about that around the country. The the review process I'm at that Pittsburgh.
M.C. continued I'm on during the so.
I think that the startup of that trial again, I'm going to try and not be forward looking but I'm also going to try and give you an indication I would say, it's it's a reasonably eminent we're putting the final touches on them on getting it open for enrollment.
Okay and Tim It remind me the the this is just a single site study is that right. It's a single site site study yet it's very typical for we're you know what would be a phase one.
Study and and incidentally I should say that just the protocol for this trial was a joint collaboration.
Between Apple on and the head and neck group at the University of Pittsburgh. So there really is I'm very much joint ownership I'm of the Oh the trial. The other thing I would say however is that if you're familiar with hill minutes of stunningly Good Oncology Center cancer Center Pittsburgh is.
Terrific institution, and that's a very busy practice I'm. So you know I think in terms of available patients. It's as good of places any for us to be.
Tim relative to the recent presentation. The ex vivo studies is there anything that you can draw from that in terms of the data that you got from that relative to.
A collection of.
Tumor derived exosomes, the quantity and and then what that may translate into in terms of outcomes in in patients with cancer or is that to kind of big of a leap well no I don't think it's a big leap it and it's great question. The quantitative part of it is.
And to be a little bit difficult to get to what we did show until we get clinical data what we did show in those ex vivo studies is that we can clear or at least the mini version of the Hemopurifier, which runs on the bench I'm is able to clear exosomes from multiple different tumor types.
Including breast melanoma and others. So we know that the mechanism of the Hemopurifier is capable of doing us what quantitatively needs to happen in order to allow more patients to respond to checkpoint inhibitors is a question that we.
I expect to be answering in this study I would remind you that the levels of circulating tumor derived exosomes in these patients can vary by three to four orders of magnitude. So they may have anywhere from 10 to the ninth tend to the 12 exosomes tumor derived exosomes.
Per milliliter of circulating blood I'm now the Hemopurifier is capable theoretically of clearing very high quantities, but until we actually hook up a patient with head and neck cancer and look at the quantity of the exosomes in their circulating brought blood prior to treatment and the costs.
One of the at the end of treatment, we're not going to be able to answer that question. What I would say is again, it's a wonderful question and I think we probably the only people right now I'm in the country or the world.
Going to be able to answer the other thing I would say is that one of the advantages of doing a trial like this which is open label is that we're going to be able to get data essentially in real time in terms of what quantities of Exosomes are we clearing we're going to be able to get the exosomes out of the.
Cartridges afterwards, so we're going to be able to not only quantitate them, but also characterized them. So there's a huge amount of science to be learned here.
[noise] 10, with a with a new <unk> the new I'd supplement for covert for that study now that you've got to potential human studies ongoing is there any concerns relative to your resources to be able to conduct both studies at same time.
[laughter], it's a it's a good question, we pay a lot of attention to that and I'm very confident that we have the resources available and then mostly in place I'm already we are very small as you know I think I was employee number six and we have eight full time employees right now, but we we very.
He was very heavily contractors and and consultants where appropriate to expand our resources. So we have a group actually based in Colorado and made up of people, whom I've worked with before that are very experienced clinical research people regulatory people, so I'm pretty confident again I've.
<unk> multiple large multi center trials and I know what resources or are necessary, but it's a good question, we have to pay attention to it but based on what we have on our in place right now I think were appropriately resourced.
[noise] that's great. So so relative to the the covert study congrats again on on a on the I'd supplement.
Can you give us kind of a sort of a big picture I guess in terms of.
Your.
Viewpoint on being able to find the appropriate patients what does that patient profile look like in terms of the general Cove. It patients that would that would be [noise].
That would test positive.
And yeah <unk>.
<unk> in terms of the 2020 study sites can you give us kind of a big picture view of what that would look like time wise, yeah in terms of being able to unravel Yeah. Let me let me answer the second part of the question first the 20 sites, we don't intend to open 20 sites simultaneously, but I think as everybody.
Hi, This is honest called one of the characteristics of this pandemic is that it's going you know that can number of cases are going up in some places. The number of cases are going down in some places and unfortunately this disease is going to be with us for a while and so we identified what we.
We propose a fairly large number of sites for a trial like this again not because we intended to open them all at once.
But if we opened a site in New York and things go down there at all of a sudden cases started to spring up other places, which is happening all the time as we speak in fact parent that likely I'm, Southern California isn't getting absolutely hammered now and a lot of those patients are coming from from the Imperial Valley.
Alley, many of them are in the migration I'm worker community. So we wanted to be in a position to essentially go to where the disease is.
And that's the reason for that number of sites, but we'll be opening a reasonable number as quickly as we possibly can we've already identified several or in their earn the process of and putting the documentation in place to get that open in terms of what the patients look like obviously, you know we're not going to new.
As an extra corporeal circulation process in somebody who is in pretty sick.
And the other point there is that the target population for this is the patients who have circulating virus in there there's a fairly good literature and evolving literature out there that says that the patients who actually you can detect virus in their circulation are the ones, who do the worst they have the highest mortality the law.
Longest ventilator times, if they survive at all so our target population is sicker patients. In addition, so there are a number of inclusion criteria, which you'll be able to find but but it's going to be patient essentially all who are already in the I see you in general.
Most patients with this disease, who are in the I see you ventilated are not have some element of acute kidney injury and so many of these patients.
Will already be on dialysis or continuous renal replacement therapy, and that's one of the bomb inclusion criteria. The other point I'd make.
Is that obviously, there's a huge amount of research going on and everybody out there is working on both vaccines, but also treatments Ram Deveer up now has an open emergency use authorization I expect that is going to turn into a commercialization approval fairly quickly, but one of the striking things about that drug is that if you look at.
The data that were published in the New England Journal, just a couple of weeks ago. The effect of that drug is almost entirely on the patients with less severe disease, and the patients who either or not on supplemental oxygen at all or on a nasal prongs three or four religious financial products, but the effect in patients who are ventilated and are very sick.
It was limited or nonexistent.
[noise] do you have any I'm kinda insight and and maybe particularly given the the re spike and then a code cases.
And obviously you taking into consideration the patient profile that you need how long it might take two to enroll 40 patients or is that just too early for us.
I would say it's too early there would be a very dangerous prediction for me to make up as you well no. You know until you actually have sites open and look at the way the patients are screened and what reasons. There are for patients not a meeting inclusion and exclusion criteria, it's really very hot.
To predict you know I know, we I wish that I thought that this was going to be over before we could get 40 patients and but I I I can pretty much guarantee that it's not going to be it's gonna be with us for a while it's gonna be with us even if there is a vaccine and.
Those are still a little ways away, but to say how long it's gonna take can get 40 patients would be probably a little bit risky for me right now.
There is there a certain of our certain parameters or data that you'll be collecting in this study that you may be able to to use to move to another study and show support for you know a formal.
After signing or whatever in whatever way you might go it. It's a great question and and you know if you sort of if you compare this trial to what we're doing in cancer with Exosomes. That's one of the great things about this product about this device is that we can look at the mechanism very.
Quickly so we will be looking.
At quantitative PCR before and after treatment I should also point out incidentally that the literature. The data that are available on quantitative PCR. These patients is very limited most hospitals are only doing qualitative is there a virus present or not.
So we will be able to get those kind of quantitative data.
I think that we need to be the so we'll know whether we're clearing the virus secondarily as we did with hepatitis C N Ebola.
In the past, we can actually look at the stem Hemopurifier jusino purifiers, any loot virus off and quantitate, how much virus or actually getting out.
So you know those are those will be very good mechanistic points in terms of what the impact of that is on clinical endpoints. Then later time survival those kinds of things obviously, it's a small study, but I think that we should be able to get a good inkling with a reasonably limited number of patients on whether we're doing so.
Thing and obviously, we're going to be looking at the earliest time point, if we get data that are I'm, suggesting for getting into a larger and more controlled trial that potentially could as you said serve as a basis for commercialization.
Alright, great all right great. Thanks life.
Thanks, Good to hear your going on Craig's Guy.
Thank you. Thank you.
This concludes my question answer session and I would like to turn the call back over 10 rodolph for any closing remarks.
Thank you personal 'em we appreciate.
Everybody who's that was dialed in its own origin and a and good group. We appreciate your continuing interest in what we're doing.
We're delighted to be able to to be able to offer some some some evidence today of the amount of progress that we've made I know that there have been times when people thought we'd been a little bit silent, but as you can tell it's not because we haven't been doing things.
There's a there's been a huge amount going on.
We're very excited about what's happened and whats coming up in the future. So again. Thank you all for your time, thanks for dialing in and we hope the to stay safe and stay well and we'll talk to you next quarter. Thanks very much.
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