Q1 2024 Aethlon Medical Inc Earnings Call

Good afternoon, and welcome to the Athlon medical first quarter fiscal 'twenty 'twenty four earnings and corporate update conference call.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Please note. This event is being recorded I would now like to turn the conference over to Jim Frakes, our chief.

Chief Financial Officer. Please go ahead.

Thank you operator, and good afternoon, everyone. Welcome to one Medical's first quarter fiscal 'twenty 'twenty four earnings conference call.

My name is Jim Frakes, and I'm, Alphonse Chief Financial Officer.

At 415 P M. Eastern time today, Athlon Medical released financial results for its first quarter first fiscal quarter ended June 32023.

If you have not seen or received Athlon Medical's earnings release. Please visit the investors page at Www Dot Athlon medical dotcom.

Following this introduction and the reading of our forward looking statement Athlons, Chief Executive Officer, Dr. Charles J Fisher Junior.

And our Chief Medical Officer, Dr. Steven The Rosa provides.

Provide an overview of athlon strategy and recent developments.

I will then make some brief remarks on avalon's financials.

We will then open up the call for the Q&A session.

Before I hand, the call over to Dr. La Rosa. 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.

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-K for the fiscal year ended March 31, 2023, our most recent report on Form 10-Q.

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. Stephen The Rosa Athlons Chief Medical Officer.

Thank you Jim and thank all of you for dialing in.

Hi, This is Steven the Rosa.

Due to the timing of our March 31st fiscal year. This first quarter report false only about five weeks.

After our recent call on June 20th.

Half one medical is continuing the research and clinical development of the Hemopurifier.

The therapeutic blood filtration system that can bind and remove harmful eggs is and life threatening viruses from the blood.

These qualities of the Hemopurifier has potential applications in oncology.

We're cancer associated extra zones may promote immune suppression and metastasis.

As well as in life, threatening infectious diseases and the organ transplant field.

Our ongoing COVID-19 trial in India for patients in the intensive care unit at <unk> City Hospital remains open for enrollment.

With one patient treated to date.

In May 2023, our second clinical site Molina Azad Medical college known as M. A M C.

<unk> received ethics board approval partition to participate in the trial.

Site activation activities are currently underway.

Patients with COVID-19 infections that require hospitalization continue to occur in India.

And the addition of M. A M C. As a second high quality clinical site may.

It may improve the enrollment of patients who go on to require ICU care for severe infection.

In the oncology indication Athlon medical continues to work with its contract research organization <unk> L. L C.

To initiate a clinical study in Australia.

Specifically this is a safety feasibility and dose finding trial in solid tumors failing treatment with anti PD one antibodies.

As one medical believes that the data generated from this trial will help inform the design of future oncology efficacy trials of the Companys hemopurifier.

Ongoing activities include site active identification and qualification.

Mineralization of necessary documents for ethics Board submission.

The case report form development and selection of a data safety monitoring board.

With that I will now turn the call over to Dr. Charles J Fisher Athlons, Chief Executive Officer.

Thanks, Steve and good afternoon, everyone.

Hi, My name is Chuck Fisher.

We recently announced that we are investigating the use of the hemopurifier in the organ transplant setting.

Initially focusing on the potential removal of harmful viruses and action zones from recovered kidneys.

Our initial objective is to confirm that the hemopurifier and translational studies.

When incorporated into a machine perfusion organ preservation circuit.

Can remove harmful viruses and exosomes from recovered donor kidneys.

Last month, we signed a research collaboration agreement with 34 lives P. B C.

To investigate the use of our proprietary Hemopurifier and 34 lives, Oregon evaluation on preservation system.

The goal of increasing the simple the supply of usable donated kidneys for human transplant.

Okay.

Yeah.

We have previously demonstrated the removal of multiple viruses and extra zones from buffer solutions in vitro utilizing a scaled down version of our human purifier.

This process may potentially reduce complications following transplantation of the recovered Oregon.

Can include viral infection.

Delayed graft function and rejection.

We believe that this new approach could be additive to existing technologies that are currently in place to meaningfully increase the number of viable kidneys from transplant.

On a personal note as a physician.

And foremost Chief Division Chief at three major research hospitals.

I have seen many potentially usual oregon's discard and that is always troubling me greatly.

There are up to eight potential oregon's it can be transplanted and typically only two to two five oregon's are actually transplanted proved donor.

Okay.

CMS is currently applying pressure on the organ procurement organizations to increases average.

Tms as a payment source for the majority of kidney transplants, because it reduces the burden on the U S government to cover ongoing dialysis treatments for citizens that have failed to kidney kidneys.

Dialysis cost.

The U S taxpayer $120 billion in 2019, which equals 34% of Medicare as total $350 billion of outreach patient services budget.

Okay.

Kidney transplants.

Our cost effective to Medicare saving up to $250000 per year from each recipient.

With an average kidney transplant lifespan of 10 years, this becomes $2 $5 million in lifetime savings pre transplant.

There are currently 750000 Americans receiving dialysis.

Or more hours per week.

In the U S.

105000 of those patients need their transplant, but the average waiting time for kidney is six years.

In 2020, only 17581 patients or 17% received a transplanted kidney.

12293 died.

Waiting or became too sick to receive a transplant.

In 2021, approximately 7800 kidneys that were recovered from transplant or left on news that perhaps could have been.

Our objective is to increase the number of reusable organs that can be introduced into the transplant community.

In conclusion on this topic.

Excited about this addition to our focus at Avalon and believe this could be a significant business opportunity.

With that I'll turn the call back over to Jim for the financial discussions and then open up the.

The call for questions.

Thank you.

Thanks, Chuck and good afternoon again, everyone.

As of June 32023, Athlon medical had a cash balance of approximately $12 $9 million.

During the first quarter ended June 32023, we raised net proceeds of approximately $1 $1 million.

Under the aftermarket agreement with H C Wainwright.

Now.

Some of you that listened to our previous quarterly calls have generally encourage me not to cover our expenses in such a granular basis.

So I'll try to keep my remarks, a bit more high level this quarter.

Okay.

You can find detailed expense information and financial statements attached to our earnings release that just hit the wire or in our soon to be filed report on 10-Q.

Our consolidated operating expenses for the three months ended June 32023.

Approximately $3 $4 million.

Compared to $2 $9 million for the three months ended June 32022.

This increase of approximately half a million dollars or 17, 3%.

In the 2023 period was due to increases in general and administrative expenses.

Of approximately $276000 professional fees of $133000.

And in payroll and related expenses of approximately $91000.

Yeah.

The $276000 increase in G&A expenses was primarily due to a combination of factors.

Those factors included a $344000 increase in the purchase of raw materials for.

For the production of the Companys Hemopurifier.

C $133000 increase related to our Australian subsidiaries activities and.

And a $105000 increase in depreciation and equipment maintenance associated with leasehold improvements.

And new equipment for manufacturing and lab facilities.

Those increases were partially offset by a $160000 decrease in clinical trial expenses and a $140000 decrease in subcontractor expenses associated with our former government contracts.

C $133000 increase in professional fees was due to an increase of $123000 in investor relations expenses associated with facilitating it facilitating investor awareness and assistance with war more widespread dissemination of company new.

News.

An increase of $37000 increase associated with accounting and legal services for our new Australian subsidiary.

And $86000 of legal expenses associated with year end filings and general corporate matters.

Those increases were offset by decreases in regulatory services of $85000.

And recruiting expense of $28000.

And then the $91000 increase in payroll expense was due to a $56000 increase in salary expense.

Weighted to an increase in head count.

And a 33 excuse me a $35000 increase in stock based compensation related to employee stock option grants.

As a result of the factors that I just noted the company's net loss increased to approximately $3 $3 million in the three months ended June 32023 from approximately $2 $9 million in the three months ended June 32022.

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

That release include included the balance sheet for June 32023, and the statements of operations for the three months ended June 30, 'twenty 23 and 2022.

We will file our quarterly report on Form 10-Q and in this call.

Our next earnings call for the fiscal second quarter, ending September 32023, well cost side with the filing of our quarterly report on Form 10-Q in November 2023.

And now Chuck Stephen I would be happy to take any questions that you may have.

Operator, please open the call for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

So first question is from Marla Marin with sacks. Please go ahead.

Thank you.

I'm just wondering do you have any sense, you talked a little bit about what you're doing right now to prepare for the oncology trials.

In Australia do you have any sense of what's the potential timeline is so it's too early for that.

Hi, My legs people to Roger Thanks for the question. So currently we're working with NASA and we have interviewed a.

A number of sites we have four that are now interested and we have to engage in the.

Mission and we're fine.

Women.

And then we will have to go through.

Are there questions there, where we're planning to do this.

Oh.

By the by the end of this by the end of this year.

Mhm, Okay. Thank you and is the possibility you had talked about it at certain points in the path of expanding them.

Trials in India, expanding into the oncology space is that something that is still you know potentially on the horizon.

Yes, so we're working with <unk> L. L C R <unk>.

CRO in India, and they have identified Madonna Mehta Citi as a as a hospital that's interested and again we'd have to go through the same process.

Articulated for Australia.

Got it Okay and then last question is on the organ transplant side.

So you are going to be starting looking at trends that translational.

Transplants, I guess of kidney.

And I think I read the kidneys are the most.

Frequently transplanted organs.

So the results that you get from these first studies will they.

Be telling you.

What's the potential.

It would be for the Hemopurifier and are there any transplant patient although Oregon.

This is Chuck Fisher. Good question. So the first part about the translational research is to establish that we can remove.

From Oregon, suppose and Vince when she has already been working on as well is currently working on human organs and have been.

Rejected but sent to our partner to be perfused from that we get.

Profuse eight and Emily.

Test that with our devices here.

Ashwin medical to see them removing things process has just been initiated recently and we'll expect to get some results.

In the relatively near term.

That would help us understand how best to characterize it as it relates to Oregon from different parts of the body.

Later stage in this process.

Some.

More inclined to have inflammatory mediators and some may not but.

That's really an unknown scientific area that we would like to explore a ideally we would like to have an effect on as many recovered Oregon's from.

The donors as possible. These are not donors that are living related these are great.

Brain dead donors with beating Hearts and that we would expect that might see.

A number of these same inflammatory mediators.

Okay. Thanks, very much for the answers.

Thanks for the question.

The next question comes from Vernon Bernardino with H C. Wainwright. Please go ahead.

Yeah.

Hi, Chuck and Jim. Thanks for taking my question just wanted to follow up on that last question regarding the potential use of hemophilia pure foreign organ transplant and organ transplant setting.

And that's in particular.

So.

Again as far as increasing the number of viable kidney transplant, but.

You stated in your press release and previously.

<unk> the complications following transplantation of the recovered Oregon.

That seems like it's possibly.

Two.

Even though it's.

The same organ transplant that has the same procedures same person, but it sounds like it could be potential to users.

Clarifier.

Please.

Correct me, if I'm wrong, and what would be the thinking there as far as clinical trials, what that'd be two clinical trials or.

That would all be in the same clinical trials patients etcetera.

Okay. Thanks for your question this is Chuck.

Hey, John I think I think it's yeah.

Okay, So well post question.

Issue at the beginning will be for instance, delayed graft function typically is a marker listen the first seven days is the kidney is not functioning and making urine.

We have a problem.

And that would be the first thing that we would look at in the kidneys and then over time.

Six months in one year, Mark we ought to be looking at the same thing as a kidney continue functioning well so in that sense.

Functioning well.

We would probably have our some of our answers Alternatively, yes, we would.

Potentially and expect to have some level of them delayed graft function or a further delay graph or some.

Dysfunction in the kidney at some point over time in which case, we could go back but for the for the time being will be primarily a.

Our initial study.

Until we have more information to determine what we need to do a follow on study in addition.

Yeah.

Terrific and onto a different part of it.

Or your announcements today regarding the trial in India.

One patient treated to date.

What would be the potential for.

And even a celebration.

Patient enrollment and treatment this year.

Vernon This is Steve the Roger So we know from Hey, Hi, So we know from communication with with the concept that there are in fact getting hospitalized.

To date, but they are.

The patients who need to be enrolled in the study has to be in the ICU. So there's that potential and then with the second site that's a large.

It's also seeing COVID-19 admissions as well so we think the second site.

May help with enrollment we're still at the Mercy of the virus. If you will of whether it's going to it's changes over time are going to resolve it.

Probably following.

Yeah.

It remains to be seen if thats going to translate into severe cases that would be eligible for the study.

Do you have any indication there.

That they are seeing some of the same dynamics youre seeing here, which is.

Increased hospitalization increased infections.

Increased hospitalizations due to the environment of interest.

Five.

Yes, where we're hearing the same thing that the case numbers are still up and there is still a hospitalization, but they haven't seen as many ICU patients.

Okay. Okay. Thanks for taking my questions and my follow ups I appreciate it.

Well. Thank you thanks Ryan.

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

Thank you operator, and thanks, everybody for listening and asking very good questions.

We'd like to thank all of you for joining us today.

And.

Be here to discuss our quarterly results and we look forward to keeping you up to date on our future calls.

I wish everybody a good day and thanks again for joining.

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