Q3 2021 Aethlon Medical Inc Earnings Call
Good afternoon, everyone and welcome to the Athlon medical third quarter fiscal of 'twenty 'twenty, one earnings and corporate update conference call.
All participants will be in a listen only mode.
The assistance please see the other conference specialist by pressing the star key followed by zero.
After todays presentation, there will be and opportunity to ask questions.
Please also note today's event is being recorded.
At this time I would like to turn the conference call over to Mr. Jim Frakes, Chief Financial Officer, Sir. Please go ahead.
Thank you operator, and good afternoon, everyone.
Welcome to Athlon Medical's third quarter 2021 earnings conference call My.
My name is Jim Frakes, and I'm Athlons Chief Financial Officer.
And for 15 PM Eastern time today, Athlon Medical released financial results for its third quarter ended December 31 2020.
If you have not seen or received Athlon Medical's 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.
<unk> CEO, Dr. Chuck Fisher, who will provide an overview of <unk> strategy and recent developments.
I will then make some brief remarks on the Avalon financials.
We will then open up the call for the Q&A session.
Before I hand, the call over to Dr. Fischer. Please note that the news release today and this call will contain forward looking statements within the meaning of the Federal Securities Act of 1933.
And the Securities Exchange Act of 19 and 34.
The company cautions you that any statement that is not a statement of historical facts is of forward looking statements.
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 and forward looking statements.
And 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, 2020 and.
And and the company's other filings with the Securities and Exchange Commission.
Except as may be required by law. The company does not intend nor is the to undertake any duty to update this information to reflect future events or circumstances.
With that I will now turn the call over to Dr. Chuck Fisher F and Medical's Chief Executive Officer.
Thank you Jim and.
And thank all of you for dialing in today.
And as Jim said my name is Chuck Fisher, you May recall and I have spoken during previous earnings calls and my past and he is Athlons medical chairman of Medical's Chairman of the board and.
At the end of the October 2020, our board of Directors asked me to take on the CEO role and an effort to accelerate the company's clinical progression.
So this is my first earnings call as Athlon Medical's CEO.
I'd like to tell you about what we've accomplished in the past three months.
I'd like to start today by talking about our oncology program.
As you know.
Our lead oncology program is and head and neck cancer.
This program is actually focused on and early feasibility study the device of equivalent of the phase one trial and drug development.
And it is being conducted at the University of Pittsburgh Medical Center.
PMC.
And cancer Center.
We previously reported and we had.
IRB approval.
And the PMC and this trial and is now open and actively screening patients for enrollment.
You can find the details of the trial and clinical trials Gov.
We plan to enroll 10 to 12 subjects with advanced or metastatic head and neck cancer, we're going to receive and Brilinta Mam, which is known by its brand name of Keytruda and the improved standard of care for head and neck and the frontline setting.
Patients enrolled.
First be treated with our team of purifier for the purpose of decreasing the circulating exosomes load.
Prior to receiving their first Joseph of Keytruda.
Our first patient in this trial recently successfully completed all of the.
And the required.
Of your prior treatments and the Keytruda infusions.
Keytruda was approved for.
For frontline indication and.
In June of 2019, and previously been approved in the salvage setting prior to that.
The primary endpoint for this trial as with all early stage trials is safety with secondary endpoints, including clearance of Exosomes response rates and survival.
We should note again.
And yet the Hemopurifier has been used and <unk>.
150, patient exposures and humans, primarily and viral diseases.
With a very clean safety profile.
What is important to recognize here is key.
True to and similar products.
The immune oncology agents for checkpoint inhibitors and <unk>.
The dramatic effects with some patients Hugo lighting and a living for over five years of metastatic disease.
The only survive for months previously.
The majority of patients don't respond to Keytruda.
And head and neck cancer.
Net line setting and about 30% to 35% of patients respond to keytruda with a much lower survival percentage and the salvage setting.
The literature suggests the.
And in nature of mechanism by the switch patients fail to respond to these agents is mediated by the immunosuppressive <unk> zones, which are some selling and and particles shed by cancer cells.
As you May know.
The alpine from the purifier.
Is designed to clear excess zones, and additionally, clearing black concentrated viruses.
And it's also worth noting that Keytruda is one of the top selling drugs and the world and has recently been approved for frontline therapy.
And solid tumors, which could be and multiple opportunities line beyond our first indication of head and neck cancer.
We are now exploring multiple clinical and development opportunities and some of these additional solid tumors.
On the infectious disease from.
Previously disclosed.
The FDA has approved a supplement to our existing viral.
And to allow for the emergency use for the Hemopurifier of up to 40 patients with Sars Covid two.
The COVID-19, and up to 20 centers and the U S.
We now have IRB approval and the from sooner and the study which is non listed.
<unk> Dot Gov.
So you can see where you can see the details we're actively recruiting other centers.
And finally as discussed previously and our last call.
We've treated of single.
Critically ill patient with COVID-19 under the single patient emergencies pathway.
The patient had severe multi organ failure and.
We had little chance of surviving.
We completed.
Eight six hour.
And then purifier treatments over the course of 90 days.
Successfully wound the patient from the ventilator and the hospital transfer of the patient two and extended care facilities for rehabilitation of muscle strength and stiff joining us due to the prolonged hospitalization.
This patient has successfully demonstrated that the hemopurifier can be used and the critical care setting.
And then open the treating other patients under the pathway and centers, where our formal trial is not up and running.
In anticipation.
And the commencement of our multiple clinical trials, we've expanded our leadership team and App on medical.
And January of 'twenty, 'twenty, one and higher.
And to <unk>.
Senior executives to expand our executive team.
Even the erosion of MD joined our team as Chief Medical Officer.
And has hit the ground running Steve has extensive experience and successfully recruiting and running clinical trials.
Interacting with regulatory authorities participating and FDA hearings and successfully and successes.
The regulatory approvals.
Ive worked with me on the team might land and Eli Lilly is the key frontline physician on our activated protein and see.
Severe sepsis trial, leading to the first and only drug approved for severe sepsis.
And this.
Diagnosis of drugs.
EBIT focused on opening up hospitals for our studies training doctors and nurses to use our hemopurifier and stimulating patient enrollment and our clinical trials.
He has a solid academic background.
And congratulated from.
Washington University Medical school for it with is empty and he did his residency at the Cleveland Clinic, where we also work together for for years, including as Chief residency EBIT infectious disease Fellowship at mass General Hospital.
For two years.
<unk> NBA and joy.
And our team of senior Vice President and Chief Business Officer guidance.
Guidance responsibilities include overseeing business developments.
And shifts and strategic relationships and strategic development.
And for your line is an experienced fantastic package revenue for 20 years of experience and their pharmaceutical and biotech and medical device on the streets.
His extensive background includes corporate development strategic development alliance of interferon.
Product development activities for companies, such as Eli Lilly and.
And transform pharma, which was acquired by Johnson and Johnson for $230 million.
Thanks, Katie and therapeutics because of.
Acquired by Seattle genetics for $615 million.
And successfully completed over 25 deals of various types, including commercialization agreements and development agreements and discovery collaborations and distribution agreements across multiple therapeutic areas, including cardiovascular infectious disease oncology and the central nervous system.
And I had the privilege to work together and Cardiome pharma and among other and.
Along with another calling so key assets from that company to Merck for $800 million.
U S R. The at that time was $1 $2 billion Canadian.
And net time was the largest deal in Canadian history at the time.
And total guidance contributed in excess of $2 billion and deal value across all of the organizations. He has served.
Thanks background the earned.
The S E with high honors from Rochester Institute of Technology, and an MBA from the Kellogg graduate school of management and Northwestern University.
And some and Athlon and medical Executive management collectively is greater than the 130 years of experience and drug and device development and regulatory approvals.
The senior team has accomplished a lot in the first few months together and I speak for all of Us and we've seen the team and alkaline and she has exciting potential growth.
Of our company.
And to use our proprietary hemopurifier to help patients across multiple diseases.
At this point and I will turn it back over to Jim for the financial discussion and then open up for questions.
Thanks, Chuck and good afternoon again, everyone at.
At December 31, and 2020, we have of cash balance of approximately $12 1 million.
We recorded approximately $625000 and government contract revenue and the three months ended December 31 and 2020.
Compared to approximately $413000 and the three months ended December 31 and 2019.
Our consolidated operating expenses for the three months ended December 31 and 2020.
For approximately approximately $3 $7 million compared to approximately $1 $2 9 million.
For the three months ended December 31, and 2019.
This increase of approximately $1 $7 million to $8 million or 137, 9%.
And the 2020 period was due to an increase in payroll and related expenses.
Of approximately $1 one $2 million.
And general and administrative expenses of approximately $646000.
And and professional fees of approximately $15000.
The $1, one $2 million increase and payroll and related expenses.
And it was due to the combination of and $842000 increase and our cash based compensation expense.
And the $275000 increase and stock based compensation expense.
And the largest factor and the cash based compensation expense was the result of the recording an aggregate of $593000.
Related to severance costs associated.
With the separation agreement with our former CEO and the third quarter.
Additional factors were up $125000 increase and year end bonus payments and increased head count and salary increases.
The $646000 increase and our general and administrative expenses was primarily due to a $361000 increase and clinical trial expenses.
A $133000 increase and subcontractor expenses associated with government contracts and grants.
The $130000 increase from last suppliers and connection with the ongoing effort to continue to build and inventory of Hemopurifier for.
For our clinical trials and.
From a $40000 increase and insurance expenses.
For $15000 increase of professional fees was primarily due to a $28000 increase and contract labor.
Primarily research scientists higher amount of consulting basis and.
And the $23000 of increase in legal fees, which were partially offset by a $35000 decrease and our accounting fees.
Other expense was nominal during the three months ended December 31, 2020 and 2019.
As a result of the changes and revenues and expenses, but I just noted our net loss before non controlling expenses increased to approximately $244 million for.
For the three months ended December 31 2020.
For <unk> 20 per share for.
And approximately $821000 for the three months ended December 31, 2019 or.
For <unk> 28 per share.
And we included these earnings results and related commentary and our press release issued earlier this afternoon.
That release included the balance sheet for December 31 of 2020, and the statements of operations for the three months and nine month periods ended December 31, and 2020 and 2019.
We will file our quarterly the quarterly report on form 10-Q, following this call.
Our next earnings call will coincide with the filing of our annual report on form 10-K in June 2021.
And now Chuck and I will be happy to take any questions that you may have operator, please open the call for questions.
Ladies and gentlemen at this time and we'll begin the question and answer session.
The ask a question and you May press Star and then one using the touch tone telephone.
To withdraw your question you May press Star and two.
You are using a speaker phone and we do ask that you. Please pick up your handset before pressing the keys to ensure the best sound quality.
Once again that istar and that and wanted to ask a question.
I'll pause momentarily to assemble the roster.
Thanks.
And our first question today comes from Anthony Vendetti from Maxim Group. Please go ahead with your question.
Thanks, Thanks, Chuck and Jim.
Just wanted to for.
Follow up on the early feasibility study.
As you've mentioned.
It's designed to enroll 10 to 12 subjects.
And the.
The last update.
One one patient.
And then I know it's been treated.
In December you mentioned on the call.
Hi.
Can you give us a little bit more color on how that patient is doing now.
And how is the enrollment going.
For the other subjects.
And is that being stalled or or delayed at all by COVID-19.
Anthony Thanks for your excellent question.
During my commentary I made mentioned to the fact that the first patient treated.
And had completed his treatment.
Both of the cycles of the.
Hemopurifier as well of the Keytruda that patient has completed their therapy per the protocol.
And.
Obviously, it will be continue to be followed but has already completed that.
In terms of theme.
Activity.
The group, we're working with the University of.
Pittsburgh Med.
Medical Center.
Non cancer center are very keen and this trial they have screened numerous patients for us. Unfortunately.
<unk> dropped out after their initial screening as other factor for known.
Exclude them from them, but they are very active and are keen to continue to find good patients for us and are very pleased with the first patient.
And just on the last part of my question. There I know I'm sorry. It was a multi part question. There is COVID-19, delaying any enrollment or is it is it.
The screening process to make sure it's the right the right patient.
Before you can get to those 10 to 12 subjects.
And so.
COVID-19.
And when it hit this particular hospital group.
Based on how the other missed the first cycle. So initially there was a bit difficult on them just for all of the infrastructure issues, but as it relates to the cancer patients and kind of come through of different cycle and come to the oncology.
The environment, our screen there and then if they meet the criteria and <unk>.
And we feel all of the system and in advance and they would be taken to dialysis and the only effect that we've seen tension of effect of.
A lot of patients are getting dialysis for the COVID-19 is are the devices available we have not seen the shortage.
The effort to try and get these patients done and.
And patients we have treated they did go great directly to so I think they've worked out something with the dialysis people to have somebody scheduled okay try and run and get them through.
Okay, and then just shifting gears on the COVID-19 patient.
<unk>.
And based on your description of it sounds like that that particular patient.
What was in.
Pretty bad shape, the said severe multi organ failure and.
They received eight six hour treatment over 90 days and.
And have recovered.
How is that patient doing at this point.
Is that patients still and rehabilitation or has that patient and discharged.
I don't know specific status of whether that patient has been discharged from.
And the rehabilitation, because sometimes it's done and patient and the new migrate inpatient outpatient and go back and for US So I don't know.
And the specifics of this vulnerable or try and find that answer for you.
Okay, and if that trial with 40 patient goes well.
What's the what's the potential for the Hemopurifier.
Whether thats with COVID-19 treatments.
Or with other viruses going forward.
Well I think theres, a number of possibilities for us here, which I view all of US policy and the key is.
And of demonstrating in the past and continue to demonstrate that we bind all quite cost related viruses and.
And that also raises the specter of with these.
Some of the.
Newer mutants coming out and might we have continued buying and capability with them because our process is not based upon.
The specific antibody for specific target, it's based on the piece of the effect of our elect and.
Which theoretically and bind a variety of different guidance, we don't know that yet.
And that's kind of what our thinking is at this point.
Okay, Great I'll hop back in the queue. Thanks, so much.
Thank you.
And our next question comes from Marla Marin from Zacks. Please go ahead with your question.
Thank you.
Yes.
Now moving on.
And Jeff said in terms of the Covid stuff.
Study.
It does not.
Not specifically designed for Covid per se, but for true.
<unk>.
Terrified of intriguing and and.
It's not the specific strength with.
The new expense start thank you.
And that.
Is there.
Any kind of impact on the study going forward.
I didn't get the last part of your question Mara line could you just restated pleased it's kind of broken up.
Yes.
And so we're starting to see.
Yes.
Given what you just said.
And.
The takeaway from what you just said.
We will not likely be and impact on the bank.
John.
And the new strength from Covid that we are starting to flow.
And the culture.
Right.
There is couple of things to consider here of one not only do we bind.
Concentrated virus since we also buying the extra zones, which are also present and these patients and may contribute to some of their organ failures.
And most likely do particularly later in the disease. So.
That's we've kind of half of two part piece here and we're not just backing the virus, we're actually blocking some of the.
Inflammatory processes the curve and those patients that's one piece of.
And your commentary was and it's and forward looking statements and I'm going to be clear about that debt.
And if we had the opportunity to examine.
Ryan This spike proteins and the mutants and you might find that we're mining them because of our binding process is different and the antibody binding process.
Okay. Thank you and then.
Great.
And with that of Keytruda and Keytruda received.
The expanded the approval.
And for.
And then looking at that.
The.
And the expansion for Keytruda or there'll be takeaways.
That we can.
Look at in terms of potential of the <unk>.
Thanks.
Most of most of the disease states the key to.
Prudent and treating it.
Used as the primary agent will also have circulating exosomes, sometimes and then and the many millions so they would become potentially attractive.
For us because we can take those exosomes.
And as we mentioned earlier currently the data is roughly 30% to 35% of the patients treated.
Respond to Keytruda. So there is pretty vast opening for other opportunities. If we can like taking of exosomes make those patients more responsive to keytruda and that would be of big clients.
For the patients and for those that are treating the patients and we look at that space and saying yes.
And significant opportunity for us.
Okay. Thank you.
And our next question comes from David Levine from Trickle Research. Please go ahead with your question.
Hi, how are you doing.
And how are you find the good so.
And kind of you kind of got to some of my questions with some of the others, but I just wanted to make sure.
And then I understand I mean.
And you have on the cancer side, certainly the focus line exit zone removal and I'm wondering if this initial COVID-19 patient if if youre going to be able to gather things from the study of what you gathered from them.
And that May help you determine how maybe exit of zones.
Impact.
Other disease outside of cancer like Covid for example, and and I guess by extension could we learned something from that patient that would that would help us understand better maybe how what role exit zones do play in and.
And.
Viruses and things outside of cancer and is that a is that of path that's likely to.
Provide some visibility with that when you've learned something more about what you gathered from that patients and other patients for that matter as you go forward.
So I think your point is an excellent one and again.
We need to get the data before the May includes statements.
Deposits and the city.
To move Exosomes.
Carrying inflammatory packets of information.
And architectures and packets of information that should work and patient.
And the net.
The other broad.
Also worth, noting and some of the cancer patients for and feeding some cancers are among.
And the associated with the kind of viral.
Amit two of them, we may be able to help that removed the viral and online as well as the Exosomes and in addition to what effect.
Heather's and or in this case conclude and might have I think there and good opportunities for soon to make a statement I think.
And the answer on your hypothesis.
Had a quick question.
Yes. So so is it reasonable to think that I mean I.
I think as we look back sort of over the history of the Hemopurifier I mean, I think one of the things that's always been a challenge.
Is.
And just the clinical process to begin with but I think there is also this issue of if.
If it's determined that the Hemopurifier is helpful.
There's still this question of.
And when is it most helpful. Right I mean is it most helpful. At the front end of the disease are most helpful. At the end of <unk>.
As it progressed or somewhere in between and I guess I'm thinking debt.
With respect to the Hemopurifier has the ability to bind to the lectins. That's one advantage of it but then it's also.
<unk> it may be debt debt because of the combination of the two.
It may be effective.
Across the spectrum of that.
The progression of that disease is that reasonable.
One way you can make <unk> none of that is if we take the COVID-19.
More often than not and viral pace earlier on both of them.
Cellular and and the later phase with the.
Probably more of an inflammatory process thats made stimulated by the virus and also.
Recognizing the circumstance and the Exosomes and Thats how it.
Put those two pieces of information together on your hypothetical.
Okay. So let me just switch gears to the cancer side, a little bit I think you made reference to.
Two key keytruda being used more in the in the first line and I get that right.
Yes, it has been approved for frontline therapy and solid tumors.
Okay.
You give me a sense of how that.
Net.
And sort of impacts we're starting to see a lot of combination therapies obviously.
Around keytruda and other checkpoint inhibitors, which sort of makes sense from a.
And ethical perspective.
But can you can you is there anything to gather from the fact that share keytruda being used and the first line and how that may impact.
The success or maybe the ultimate approval of some of those other combination therapies, if they're allowed to be used in combination with keytruda in the first line and I guess, what I'm getting to is that the same idea of.
Things being more effective may be in the for.
Front end of disease progression as opposed to the the back end of the.
The worst portion of the progression I mean that seems really.
And then changes for some of those combination therapies that are allowed to be used in the first line with keytruda.
And Thats a reasonable question.
I think it's worth noting that in the the.
The current early feasibility trial that we're doing interaction using the and.
And the purifier.
Free circulating exosomes prior to the first Joseph.
So, whereas as much on the front of the line and as anybody and compete.
And that would the idea there is if we can reduce the circulating exosomes.
And potentially improve.
The only for Keytruda and have a higher rate.
<unk>.
And the patients lowered.
Because on loans.
For.
Estimate fit conceptually with what Youre, saying I can't speak to the other.
Combinations.
Specifically and appropriately and comment on them.
Okay, but I mean conceptually, it's certainly conceivable that hemopurifier could.
It helps somebody and combination with Keytruda and much more at the front end.
And at the back and not necessarily but certainly that's that's that's.
The potential debt.
Could potentially be true right.
Well the first part can be potentially true, but I wouldn't say.
And that there is done and affected by continuing the <unk>.
Later on.
For the cycle time between each dose.
And we want to keep the.
Circulating.
<unk> zone.
The lower level.
Early on and it makes sense I think of it.
Kerry throughout.
And do you actually.
And the feasibility study and get closer to having an answer to your specific question.
Great. Thank you.
Thank you thanks, David.
Yeah.
Yes.
And ladies and gentlemen at this time, we will and today's question and answer the second I'd like to turn the conference call back over to management for any closing remarks.
This is Chuck I just like the thank you again all of you for joining us today to discuss our.
Q3 results.
We're looking forward and keeping up to date on future calls during the fourth quarter. We will also participate and several investor events, including the Maxim Securities and 2021 and emerging growth the virtual conference and the H C. Wainwright.
Global Health care conference bolstered in March.
Thank you all for joining the call and we very much appreciate your excellent questions. Thank you.
And ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending you may now disconnect your lines.