Q2 2021 Aethlon Medical Inc Earnings Call

Good afternoon, and welcome to the Aethlon Medical second quarter 2020 earnings Conference call.

All participants in the listen only mode.

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After todays presentation, there will be an opportunity to ask questions.

Jessica.

Brad.

The risk than one.

Your telephone keypad.

<unk> session. Please.

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Please note this event will be recorded.

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So choose.

Jim Frakes CFO.

Please go ahead Sir.

Thank you operator, and good afternoon, everyone.

Welcome to Aethlon Medicals second quarter 2021 earnings conference call.

My name is Jim Frakes, I know once chief financial Officer.

At 415, P.M. eastern time today.

One medical released financial results for its second quarter ending September 32020.

If you have not seen or received Aethlon medicals earnings release. Please visit the investors page at Www Dot Athlon medical Dot com.

Following this introduction and the reading of our forward looking statements.

That's one CEO Dr., Tim Rodale NRT.

And our chairman Dr. Chuck Fisher.

We'll provide an overview about on strategy and recent developments.

I will then make some brief remarks on aethlons financials.

And then we will 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 Act of 933.

The Securities Exchange Act of 934.

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.

Be found under the caption risk factors in the company's annual report on form 10-K for the fiscal year ended March 31 2020.

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 nor does it undertake any duty to update this information to reflect future events or circumstances.

With that I will now turn the call over to Dr., Tim Rodale Aethlon medical CEO.

Thank you Jim and thank you everybody for dialing in this afternoon.

I'd like to start today by talking about our oncology programs.

As you know our lead program in oncology isn't headed back cancer and we're initially focused on an early feasibility study or eat MFS, which is the device equivalent of a phase one study that.

That is being done at the University of Pittsburgh Kilbane Cancer Center.

We noted earlier I think on our last call that we have institutional review board approval I'm at the University of Pittsburgh.

Gilman cancer Center.

And I'm happy to say today that the trial is now open for patient enrollment.

You can find the details of the trial.

Including all the detailed inclusion exclusion criteria and endpoints on clinical trials Dot Gov, but let me review them briefly here.

In this trial, we plan to enroll 10 to 12 subjects with advanced and or metastatic head and neck cancer, who are going to receive Pembrolizumab also known as Keytruda from Merck as standard of care in the front line setting. So these are not previously treated patients.

Keytruda was approved for this indication in June of last year. Although it had been previously approved has had other immuno oncology agents in the salvage setting prior to that so for patients who had failed primary rob previous chemotherapy.

The primary endpoint for this trial as with all early stage trials is safety.

With secondary endpoints, including clearance characterization of Exosomes response rates and survival, but progression free and overall with respect to safety. We should remind you. However that the hemopurifier has been used about 150 times in humans wouldn't borrow less.

Leaves us with a very clean safety profile.

Now what's important to recognize here is that while keytruda and similar products I've known as immuno oncology agents or checkpoint inhibitors have dramatic effects in some patients with patients living for over five years with metastatic disease, who would have only survive for months previously and this includes patients.

Melanoma with Bob non small cell lung cancer in patients with head and neck cancer, but unfortunately, the majority of patients don't respond. So the improvements in survival that are seen in the overall population are generally driven by a minority of patients.

In head and neck cancer.

In the frontline setting, where we are working only about 30% to 35% of patients respond in the frontline setting any much lower percentage.

In the salvage setting.

Now the literature, the medical literature suggests that a major mechanism by which patients fail to respond to these agents is mediated by immunosuppressive Exosomes, which we've discussed in the past. These are sub cellular particles that are shared by cancer cells that as you know the hemopurifier is does.

Turning to clear along with Glycosylated virus is which I'll get to in a minute.

And as you May know Keytruda is one of the top selling drugs in the world.

The revenues are still growing.

No there are multiple mechanisms by which exosomes are involved in advancing cancers, but this particular setting that he was in combination with checkpoint inhibitors. They represent one of the most significant opportunities.

The story is similar for other solid tumors with Keytruda and other checkpoint inhibitors, which could mean that there may be multiple opportunities beyond our first indication of head and neck cancer. So we view this as being essentially a beachhead that potentially can lead to other tumor targets and we're now beginning to invest.

Again some of these addition, additional solid tumor targets.

[laughter] now to move onto infectious diseases as we previously disclosed the FDA has proved to supplement to.

To our existing viral investigational device exemption.

To allow for the treatment with the Hemopurifier of up to Port 40 patients with I'm, sorry, as koby to COVID-19 disease at up to 20 centers in the United States.

We have now.

Started up we're in the process of starting up the first centers. In this study we have our would be approval on them and we're working through the final administrative details.

This trial is now listed as a couple of days ago on clinical trials Dot Gov. So that you can see the details of the trial design and also the centers that are involved as they are.

We're in the process of recruiting a number of other centers.

[noise] not finally as I discussed on our last call we have treated one patient so far.

COVID-19 under the single patient emergency use pathway that allows for treatment of patients who are in extremis without.

Pre approval from after yeah.

On the last call I think I used the term uneventful for that treatment and that may have been misinterpreted for privacy reasons, we can't talk about the patients overall course.

Nor would one expect one patient to give us meaningful information about efficacy, but to give a little bit more information here. We can say that we completed with this patient eight six our hemopurifier treatments over nine days successfully confirming that the hemopurifier can be used.

In this setting.

We remain open to treating other patients under this pathway and senators, who our foam formal trial is not up and running.

So I'll stop there I'd like to turn it over to Chuck to comment on our.

Recent events and then anything that I've said and then we'll turn it back over to Jim for the financial discussion and then open up for questions Chuck.

Thanks, Jim.

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On our oncology <unk> early feasibility study as Tim mentioned the primary endpoint of this trial is safety, but the secondary endpoint, including a grandson axis homes as he has just mentioned.

Also as Tim mentioned.

Literature suggest that a major mechanism associated with failure to respond.

In cancer is mediated by <unk>.

That's actually zones as Jim also mentioned.

And with that I'll turn it back over to Jim just want to emphasize those two points.

Thank you Chuck.

And good afternoon again, everyone.

At September 32020, we had a cash balance of approximately $14.5 million.

Our consolidated operating expenses for the three months ended September 32020.

Were approximately $1.77 billion.

Fair to approximately $1.7 million for the three months ended September 32019.

This increase of approximately $70000 or 4.1%.

In the 2020 period was due to an increase in general and administrative expenses.

Of approximately $212000.

Which was partially offset by decreases in professional fees of approximately $106000.

And in payroll and related expenses approximately $37000.

The 212000 dollar increase in our general and administrative expenses.

It was primarily due to a 143000 dollar increase in lab supplies.

In connection with our ongoing effort to continue to build in inventory of Hemopurifier.

For our clinical trials, but.

Remember don't shop Fisher just mentioned.

And also to a 54000 dollar increase in our clinical trial expenses themselves.

The $106000 decrease in our professional fees was primarily due to a $94000 decrease in our legal fees.

And 60000 dollar decrease in our accounting fees.

Which were partially offset by a 38000 dollar increase in scientific consulting expenses.

The $37000 decrease in our payroll and related expenses was due to the combination of a $159000 reduction in stock based compensation expense.

And the $122000 increase in our cash based compensation expense.

The cash based compensation expense was in turn due to additions to our headcount and salary increases.

There was no other expenses during the three months ended September 32020.

While in the three months ended September 32019.

Other expenses, primarily consisted of approximately $4000 of losses.

On share for warrant exchanges.

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As a result of the changes in expenses that I just noticed I just noted.

Our net loss before non controlling interest increased to approximately $1.77 million for the three months ended September 32020.

Or 15 cents per share.

From approximately $1.71 million for the three months ended September 32019.

For one dollar and 29 cents per share.

We included these earnings results and related commentary in the press release issued earlier this afternoon.

That release included the balance sheet for September 32020.

And the statements of operations for the three months and six month periods ended September 32020 and 2019.

We will file our quarterly report on form 10-Q, following this call.

Our next earnings call will coincide with the filing of our quarterly report on form 10-Q in February 2021.

And now.

Chuck Kim and I would be happy to take any questions that you may have.

Operator, please open the call for questions.

[noise].

Well now begin the question and answer session.

To ask a question in the press that's true then one on your telephone keypad.

They are using a speakerphone please pick up your handset before pressing the keys.

To stray a question please press <unk>.

At this time, we will pause momentarily to assemble.

Mr.

The first question comes from Mara married with Acs.

Thank you.

No I haven't seen questions, which is.

We're all reading about what's going on right now in terms of bikes and Koby cases, so can you talk a little bit about how.

You see that impacting your timeline.

On the clinical trial.

[noise], but.

This is Tim and thanks for the question mom, but it's a great question I think that you know you've seen are you read a lot about the impact of.

You have to understand.

Dan I'm on the conduct of clinical trials, particularly international trials, but you.

You know I think that the answer is somewhat different for the two indications first of all with respect to the cancer trial, we don't see it having any impact on that.

The reason for that is that patients with advanced head and neck cancer can't really wait to be treated so they're going to continue to be coming into the clinic and be treated with in the case of our study with Keytruda. So I don't think its going to change.

How things will happen with respect to that with respect to to COVID-19 trial. It means that a lot of centers are going to get our already getting very busy and are seeing a lot of patience.

As you know the pandemic is moving around we said on the last call.

Part of the reason we wanted to have 20 sites available. So that we could be in a position to open up where the where the patients are we're now seeing a second wave of starting up in the northeast, but one of the major areas more patients or.

Starting to or starting to to be seen 'em isn't the Midwest I'm.

California, I'm in our neighborhood, including double Orange County, where our first trial sites for Kuvin as open remains very busy.

And I think that I said I think we're going to continue to see a lot of patients. There. The other point I would make is that I think everybody is aware that there were hundreds if not thousands of different trials going on using vaccines using drugs using therapeutic antibodies.

But if you actually look at our trial design and the patients that are going to qualify for our trial in fact, our the sicker patients they will be in the high seizure, but many of them will be on ventilators, and so I don't see us.

Keating with most of the other things that are going on out there for patients. So it's an important question, but I think we're well positioned to to to manage it.

Okay. Thank you know.

And during your prepared remarks, he talked about additions to head count.

Can you just give us a little bit more color on that is that primarily to support.

And of course file.

It's it's to support a number of things. So you know the the part of.

The part of this that that people tend to forget is that an order to run clinical trials and develop products you need a product or do you actually need a drug or in our case, we need hemopurifier, which we're currently manufacturing under GMP conditions.

To support our clinical trials and one of the major things that we have to be in a position to do is to scale up manufacturing and to advance. It. So that we have a product that potentially could be a commercial product if and when we if and when we get approval. So we are adding head count I'm not huge numbers, but we announced earlier that we hired a vice.

Very experienced vice president of product development and manufacturing Tom to Cheney, who is already making up substantial contributions we do need.

Additional people to up to work on the manufacturing side, but in addition.

Earlier this year before the pandemic really struck our primary clinical program was the program at the University of Pittsburgh.

Which.

As a single center trial, I'm Rolling 10 to 12 patients and that doesn't require a huge amount of head count or more operational staff, but now that we're running oh or initiating a multi center trial I mean up to 20 centers, we do need additional clinical operations personnel and those are the two primary places.

We're increasing head count and again, that's not going to be a huge numbers of people, but we do need adequate resources to address both of those areas.

Okay. Thanks, and my last question when you have a sizable cash balance at the end of the quarter could you just remind us of no you're thinking in terms of you know everything that Youre currently.

With.

You could give us some color on you know where you see that taking <unk>.

Yeah, Let me, let me hand that Jim because that's his his daily let Jim.

Sure.

That's a good question Mark that we focus on quite a bit.

Historically, we burned about 1.3 million in cash a quarter.

That was the case in the June quarter and in the previous June quarter and.

And in fact, our cash only went down by 1.2 million from 15.7 to 14.5 and.

In the September quarter.

But.

I think we've been pretty clear that we are.

Modestly expanding our head count on it.

I think a lot of money for our little company into building.

Hemopurifier cartridges for the clinical trials, so our burn rate will increase on purpose.

Not.

Sensibly.

So I wouldn't want anybody to take that 14.5 million, we have right now and divide by 1.3 and see.

We had three years of cash should because our burn rate is going to increase.

But on the other hand these.

Initial safety trials are not.

It's small numbers of patients not that many Christians trick treatments for patients so.

They're manageable.

So we're not in a position where we have to raise cash.

Horrible terms.

If we if and when we raised cash.

It may be with a strategic investor or we're opportunistic terms.

We hope to be in a stronger position I.

We've been in the past.

One reason front.

Okay, I'm, sorry, I can't be more specific.

That was helpful. Thank you.

My pleasure.

This concludes our question and answer session.

I'd like to turn the conference back over to Tim Rudelle CEO for any closing remarks.

Yes. Thank you Greg So I'm just once again, thank you all for dialing in thank you for your continued interest and support and we look forward to talking to you again on the next quarterly call.

And between now and then stay safe and be well. Thank you.

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

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