Q2 2026 Aethlon Medical Inc Earnings Call
Speaker #1: Good.
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Speaker #3: be enough. Good day.
Speaker #4: And welcome to the AETHLON MEDICAL second quarter fiscal 2026 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.
Speaker #4: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad and to withdraw your question, please press star then two.
Speaker #4: Please note today's event is being recorded. I would now like to turn the conference over to Jim Frakes, CEO and CFO. Please go ahead.
Speaker #5: Thank you, operator. And good afternoon, everyone. Welcome to AETHLON MEDICAL's fiscal second quarter 2026 earnings conference call. My name is Jim Frakes and I'm the Chief Executive Officer and Chief Financial Officer of AETHLON MEDICAL.
Speaker #5: At 4:15 p.m. Eastern Time today, AETHLON MEDICAL released financial results for its fiscal second quarter ended September 30, 2025. If you have not seen or received AETHLON MEDICAL's earnings release, please visit the investors page at www.AETHLONMEDICAL.COM to view it.
Speaker #5: Following this introduction and the reading of the company's forward-looking statement disclaimer, Dr. Steven Larosa, our Chief Medical Officer, and I will provide an overview of AETHLON's strategy and recent developments.
Speaker #5: I will then make some brief remarks on AETHLON's financials, we will then open up the call for the Q&A session. Before we start the business portion of the call, please note that the news released 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.
Speaker #5: 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.
Speaker #5: 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, 2025.
Speaker #5: The company's most recent quarterly report on Form 10-Q, and in the company's other filings with the Securities and Exchange Commission. Except as may be required by law, the company does not intend, nor does it undertake any duty to update this information to reflect future events or circumstances.
Speaker #5: And now I will turn the call over to Dr. Larosa who will cover updates on the Australian Oncology Trial and on our R&D efforts.
Speaker #5: Steve?
Speaker #6: Thank you, Jim. I'll start off with the clinical update. Ongoing progress has been made in our Australian Oncology Trial of the hemopurifier in participants with solid tumors not responding to a regimen that includes immunotherapy with an anti-PD-1 agent.
Speaker #6: We've completed hemopurifier treatments in the three participants in cohort one. All three participants completed a single four-hour hemopurifier treatment without any device deficiencies or immediate complications.
Speaker #6: At the pre-specified seven-day safety follow-up, none of the three participants experienced a dose-limiting toxicity or a device-related serious adverse event. An independent data safety monitoring board that was convened on July 11th, 2025, recommended advancing to the second cohort where participants will receive two hemopurifier treatments during a one-week treatment period.
Speaker #6: All three investigative sites in Australia have been busy pre-screening potential participants for the second cohort. Potential participants have been identified by these screening efforts, and these participants are currently reviewing the informed consent document.
Speaker #6: In an attempt to accelerate enrollment, AETHLON has embarked on a three-pronged strategy. First, we held a virtual investigator meeting with the three Australian principal investigators and sites to share best practices for identifying potential participants and describing the trial to those participants.
Speaker #6: Two, we are working with our Australian CRO, Rescue, to identify one to two additional new sites. And three, we've engaged the company Trial Facts to perform clinical trial advertising, online pre-screenings, and referral of potential participants to the investigative sites.
Speaker #6: As a reminder, the primary endpoint of the approximate nine to eighteen patient safety feasibility and dose-finding trial is safety. Safety is determined by monitoring for the incidence of adverse events and clinically significant changes in blood tests following the hemopurifier treatments.
Speaker #6: The trial involves patients who are not responding to a treatment regimen that includes an anti-PD-1 agent, and the participants will receive either one, two, or three hemopurifier treatments during a one-week treatment period.
Speaker #6: In addition to monitoring safety, the study is designed to examine the number of hemopurifier treatments needed to decrease the concentrations of extracellular vesicles, or EVs, and if changes in these EV concentrations improve the body's own natural ability to attack tumor cells.
Speaker #6: These exploratory central laboratory analyses will inform the design of later efficacy and safety trials including a pre-market approval study known as a PMA study required by the FDA and other regulatory agencies.
Speaker #6: As described in our press release from October 7th, 2025, the laboratory of Professor George Grau at the University of Sydney has performed analyses of extracellular vesicle EV number and lymphocyte counts on samples before and after the HP treatment in the three patients in the first cohort.
Speaker #6: EVs are nanoparticles that participate in cell-to-cell communication and are implicated in the spread of cancer, known as metastasis, the growth of new blood vessels to the tumor, known as angiogenesis, and also inhibit the body's T cells, which are important for killing tumor cells.
Speaker #6: Two of the three participants in the trial showed decreases in large EVs, known as microvesicles, following the hemopurifier treatment. When examining the subsets of EVs, decreases were also noted in large and small platelet-derived EVs in two of the three patients.
Speaker #6: We observed decreases in the subset of large EVs carrying the ligand PD-L1 in all three participants during the hemopurifier treatment. Persistently elevated counts of EVs with PD-L1 have been associated with a lack of response, anti-PD-1 agents.
Speaker #6: Following a single four-hour hemopurifier treatment, decreases were also observed in seven out of ten microRNAs examined in two of the three participants. MicroRNAs are about one component of the cargo of extracellular vesicles and have been previously reported to promote cancer growth and metastasis.
Speaker #6: After a single four-hour treatment, improvements in laboratory ratios associated with responses to immunotherapy were noted in two of the three participants. These ratios included the neutrophil-to-lymphocyte ratio, monocyte-to-lymphocyte ratio, lymphocyte-to-albumin ratio, and the systemic immune inflammation index.
Speaker #6: Increases were noted in total T cells, CD8, and CD4 T cell subsets, and tumor-specific CD137-positive T cells in participants following the hemopurifier treatment. Heterogeneity was noted in the time to these changes in the three participants and the magnitude of the changes observed.
Speaker #6: Additional data from the subsequent two cohorts will help to determine whether these observations are reproducible and whether there is a dose-response with additional hemopurifier treatments in terms of the magnitude and the duration of these changes.
Speaker #6: I'll now switch to an update on the preclinical R&D activities. AETHLON MEDICAL presented preclinical data on August 12th, 2025, at the Keystone Symposium on Long COVID and other post-acute infection syndromes.
Speaker #6: Longstanding symptoms following acute COVID-19 infection, known as Long COVID, have been demonstrated to affect approximately 400 million individuals worldwide with a global economic burden of $1 trillion per year.
Speaker #6: No treatment has been approved by a regulatory agency for the treatment of Long COVID. Extracellular vesicles have been implicated in the pathogenesis of Long COVID.
Speaker #6: The data we presented demonstrated that large and small extracellular vesicles from Long COVID patients bound to the GNA lectin and the lectin affinity resin that's present in the AETHLON hemopurifier.
Speaker #6: Following this presentation, AETHLON's R&D lab has focused on studying the cargo of the extracellular vesicles removed from the Long COVID patient samples. We are currently preparing a manuscript for submission with these results with plans on submitting to a preprint server and a peer-reviewed journal in a publication that's being done with our collaborators at UCSF Medical Center.
Speaker #6: Recently, Aethlon Medical signed a material transfer agreement (MTA) to study the compatibility of the Aethlon hemopurifier with a system that utilizes a single small lumen vascular catheter and a simplified blood pump.
Speaker #6: Currently operation of the hemopurifier requires a large double lumen dialysis catheter, a more complicated dialysis machine, as well as supervising nephrologist, dialysis nurses, and the requirement for a dialysis unit bed.
Speaker #6: The research done under this MTA could lead to a simplified system for performing hemopurifier treatments in oncology units in the future. With that, I'll turn the call over to Jim for the financial
Speaker #1: Let's touch briefly on the financials . As of September 30th , 2025 , we had a cash balance of approximately $5.8 million . Our consolidated operating expenses for the three months ended September 30th , 2025 were approximately $1.5 million , down by approximately $1.4 million , or 48% , from $2.9 million in the same period of 2024 .
Speaker #1: The decreases were reflected across our expense categories of payroll , general and administrative expenses , and professional fees . Our payroll and related expenses decreased by approximately $778,000 , reflecting lower headcount , reduced bonus accruals , and absence of prior year severance charges .
Speaker #1: Our general and administrative expenses declined by approximately $437,000 . Driven by lower clinical trial costs and in part due to a $218,000 R&D tax incentive credit from the Australian Government , as well as reductions in supplies , insurance and other operational costs .
Speaker #1: And our professional fees decreased by approximately $177,000 , mainly from reduced investor relations and contract labor expenses , partially offset by higher legal , tax , audit and financial services costs .
Speaker #1: As a result of factors , our these operating loss for the quarter decreased to $1.5 million . Again compared to $2.8 million in the prior year period , reflecting solid progress in resources with our strategic priorities .
Speaker #1: You can find detail on these expense changes in our more 10-q , which breaks down drivers by specific category . We included these earnings results and related commentary in our press release issued this afternoon .
Speaker #1: The release also included the balance sheet for September 30th , 2025 , statements of and the operations for the three and six month periods ended September 30th , 2025 and 2024 .
Speaker #1: We will file our quarterly report on Form 10-q following this call . Our next earnings call for the fiscal third quarter ending December 31st , 2025 , will coincide with the filing of our quarterly on Form Report 10-q .
Speaker #1: In February 2026 , and now we would be happy to answer any questions that you may have . Operator , please open the call for questions .
Speaker #2: Thank you . We will now begin the question and answer session . To ask a question , you may press star , then one on your telephone keypad .
Speaker #2: If you are using the speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question is addressed and you'd like to remove yourself from the queue, please press star then two.
Speaker #2: Today's first question from comes Mala Marin with Xanax . Please go ahead .
Speaker #3: Thank you . So I just want to understand one thing in terms of the recruitment for cohort two . To what will extent potential participants understand ?
Speaker #3: You know that that you're moving forward and that there were some positive responses in cohort one or that doesn't come into play at all ?
Speaker #4: Yeah . Hi , Mark . Yeah . So it's a good question . So when we had our virtual investigator meeting , we went over again with the investigators .
Speaker #4: What we observed in terms of the T cell EVs in the cohort is important, and we want to make sure the team understands these observations so they can explain them.
Speaker #4: And then we also had a very I think , good discussion about how to describe this trial to the patients . And there was a lot of input from good all three PiS .
Speaker #4: So I think the investigator meeting had a lot of value from that perspective .
Speaker #3: Okay . And then also so you had as you have been , you know , explaining for a while , there was the follow up with the cohort , a one participants , seven day follow up .
Speaker #3: Is there any sense in terms of , you know , subsequently , whether you know , there's that group , those those three people are still performing at in the way that you would expect or that wouldn't be in any way , statistically meaningful data .
Speaker #3: It has .
Speaker #4: Well , we have the the observations were based on the labs that went out to eight weeks . So we have all that data for those patients .
Speaker #4: So there's no subsequent EV or T cell we data that expect from that group of patients . And then although we are following them clinically , that is not an end point .
Speaker #4: This is an early safety and feasibility trial . So we can't make any comments about the clinical response .
Speaker #3: Okay . Right . That makes sense . And with cohort two can you just remind us in terms of you're looking for . This is a dosage finding a study as well as safety studies .
Speaker #3: So . should we be thinking What about once you you know down the road when you release topline data , what you'll be looking for .
Speaker #4: Yeah . So great question . So in cohort two . During a one week period , the patient will get the participant will get two HP treatments .
Speaker #4: So Friday would be the Monday schedule as opposed to a single treatment . So what we would like to see not only most importantly can someone tolerate two treatments in a week .
Speaker #4: That's the main objective . But what we'd like to see is that the EV decreases , that we observed in the first cohort would be more profound , because they're getting two treatments instead of one , and that the the that the T cell changes would also increase over time .
Speaker #4: So a dose response , even though it's a device , not a drug , a dose response . And then of course , reproducing what we saw in the first three patients .
Speaker #4: So I think the next tranche of data will , you know , more more give us information than we have right now .
Speaker #3: Yes . Okay . Yeah . That that makes sense . And you're , you know , as I think you've said in the past , you're not walking away from some of the other indications where you think the hemopurifier can be effective , but , you know , given the realities of , you know , budgets and time constraints and all , you're not investing a lot of time or money in some of these other indications .
Speaker #3: So the paper that you wrote and then the presentation at the medical forum , are those the kind of things that should , we you know , think about for you ?
Speaker #3: You know , going forward in the near term to try to keep , you know , people apprised of what's going on with the hemopurifier .
Speaker #4: Yeah . No , as we've talked about before , I think EV reductions are relevant in a large number of indications . We've got to focus our efforts because of our staff and and amount of funding .
Speaker #4: I would expect in the near term that we will have a preprint on our long Covid data . So that's look forward to .
Speaker #4: something to And that that data will also simultaneously get submitted to a peer reviewed journal , which of course gets , you know , you know , as peer I said , review .
Speaker #4: So that would be the next. So the long COVID data then we, and as we can, we will look at EVs and other diseases.
Speaker #4: But again to be focused based on our resources .
Speaker #5: Right ? Right .
Speaker #3: Okay .
Speaker #1: So so we are monitoring other other indications , but you know , we're trying to stay focused .
Speaker #5: , right ?
Speaker #3: No , no , I get it . And then Jim question for you in terms of , you know , you're always looking for to ways stretch .
Speaker #3: You know , optimize your . I'm spending , I'm guessing that at this point you really you know , there's not a lot that you can do because you've pretty much optimized your spending in of terms , you know , in the past , like quite a long ago , time there were some , you know , you had access to some sort of , you know , government funding that was non-dilutive .
Speaker #3: Have you thought about that again ? Or is that really not applicable now , as you're moving through clinical trials ?
Speaker #1: Well , if it the a government contract was aligned close to perfectly with our goals , we would be interested . But if it was , you know , an excursion different field , it just especially with the current administration cutting overhead on these contracts , they weren't all that profitable before .
Speaker #1: And now with the overhead reductions , I think that it's probably break even or close to break even at best . So it would have to dovetail really well with our our goals to help us get to those goals more efficiently .
Speaker #1: So we're not averse to doing it . But but it has to be the right contract or grant .
Speaker #3: Okay . All right . Thank you very much . That's that's that's it for .
Speaker #5: Me .
Speaker #1: Thank you Marla .
Speaker #2: Thank you . Next question today comes from Jeremy Perlman at Maxim Please Group . go ahead .
Speaker #6: for taking Okay . Thank you my question . Good evening . So you had you had approval for to move on to the second cohort , roughly four months ago , maybe if you could explain or why hypothesized why you think it's taking so long to recruit patients .
Speaker #7: Okay .
Speaker #4: Yeah . It's , you know , as we've kind of said before , this is not an easy sell to patients , cancer patients don't usually get a large catheter put in and get their blood filtered over a machine .
Speaker #4: And that takes so I explaining . So think and there's there's a lot of time points where patients have to get samples done .
Speaker #4: So, and then explaining to a patient what the safety and feasibility would be, the value would be to them. We had a lot of discussions at the investigator meeting.
Speaker #4: So it's you know it's a it's a EV removal in cancer is a novel concept . And therapies extracorporeal for cancer patients are is a novel concept .
Speaker #4: And that just requires some explaining to to them . And so the slow enrollment to me is not all that unexpected .
Speaker #6: Okay . Understood . And based on that , based on these new initiatives , you're instituting to try and , you know , accelerate enrollment , do you still think by a timeline for completion of the second cohort by the end of , let's say , mid 2026 ?
Speaker #6: Is that is that reasonable or how should we look at the , you know , based on these timelines ?
Speaker #4: Yeah , I mean , we've tried to say that we would anticipate a patient per month . One of the things one must bear in mind is that it is now summer in Australia .
Speaker #4: So people are going on vacation and it's the holidays . So a slowdown during the I would not holidays . be unexpected , but I one patient a month what is we've what we're We targeting .
Speaker #4: do hope that we're not standing pat as , as I've said , we've engaged this company called trial . So they're actually doing digital marketing .
Speaker #4: They're doing an online screening form , and then they're referring potentially eligible patients to the sites . I think that will help . And we're actually looking for an additional 1 to 2 sites .
Speaker #4: So we're we're trying to exhaust every avenue to try to , to ramp things up .
Speaker #6: Okay . That's great . And then just question related the last to some of the data that you talked about earlier on the call , and that was in the press release today , is that does that fit in with your hypothesis that this could help , you know , extend the life or patient help improve patients who have who are going under as immunotherapy well ?
Speaker #6: it not Or is enough of a decrease yet in the in the T cells and the EVs ?
Speaker #7: Yeah . So I'm always .
Speaker #4: Cautious because it's three patients . That's probably the most important thing . So the more patients the more confidence one would have . So but directionally EV decreases we want is what to see .
Speaker #4: we're seeing And that overall . And in some subsets and some improvement in in different lymphocyte populations that are involved in tumor killing there going directionally in the right way .
Speaker #4: So if we see that this is reproducible in the next cohort and that the magnitude of the changes are is is increased , that would give one more confidence .
Speaker #4: So yeah , things at least what we're seeing now , we're seeing directionally directional changes that we wanted to see .
Speaker #6: Okay okay . Great . Thank you very much . And I'll hop back in the queue .
Speaker #1: Thank you Jeremy .
Speaker #5: Thank you .
Speaker #2: Thank you . And our next question today comes from at Sean Lee H.C. Wainwright . Please go ahead .
Speaker #8: Hey, good afternoon, guys. This is Sean here for RQ, and thanks for taking my questions. I just have two quick ones.
Speaker #8: First , on the Australian study regarding the lower EV levels that you saw . Was that directly following treatment or after a period of time , and were you able ?
Speaker #8: Was that stable following that , or did the EV levels rebound after a while ?
Speaker #4: Yeah . So so what we did is we got a sample before they went on the machine , went on the before they device , one at two hours into the treatment and one at four hours .
Speaker #4: So at the end of the treatment and then a subsequent weeks one , two , three , four and eight following treatment . And so we saw again , particularly in the larger EV populations , decreases during the treatment .
Speaker #4: So at the two hour and four hour time point and as because EVs are being produced continuously , you do see a rebound usually over the course of a couple of weeks .
Speaker #4: And so yes , they do start going back up . So what you'd like to now examine , because this is a dose finding study as well , is that more with treatments in a given week , the EVs will both go down further and stay down longer .
Speaker #4: But we've only got the single treatment so far. So yes, they go down during the treatment, and then they do start rising after a couple of weeks after the treatment.
Speaker #1: Which was expected .
Speaker #4: But that's totally expected . Yeah .
Speaker #8: for Thanks that . I think you mentioned that their follow up for eight weeks during cohort one , for cohort two . Are you expected to follow them any longer , or are we still looking at the eight weeks data and maximum .
Speaker #4: the EV and T cell data only goes out to You know , post-treatment . Week eight . We don't go any further than that .
Speaker #8: Okay . Got it . That's all the questions I have . Thanks .
Speaker #1: Thank you Sean .
Speaker #2: Thank you . And that concludes our question and answer session . I'd like to turn the conference back over to Jim Frakes for any closing remarks .
Speaker #1: to thank I'd like you again for joining us today in our discussion of our fiscal second quarter results . And we look forward to keeping you up to date on future calls .
Speaker #1: Thanks again . Goodbye .
Speaker #2: Thank you . That concludes today's conference call . We thank you all for attending today's presentation . You may now disconnect your lines and have a wonderful day .