AEMD's Positive Recent Developments

Zacks Small Cap Research

By Brian Marckx, CFA

We have updated our 20-page report on Aethlon Medical (OTC BB:AEMD) for several recent developments.  See below for access to our full report on the company. 

Hemopurifier Status Update

AEMD appears to be close to getting an answer from FDA on their application for Investigational Device Exemption (IDE).  As a reminder, in early January 2013 AEMD announced that they submitted an IDE to the FDA seeking approval to commence a 10-patient safety and effectiveness feasibility study of Hemopurifier.  Included in the submission was data from the recent and ongoing studies at hospitals in India as well as HCV capture data, the latter which that the FDA had requested at a pre-IDE meeting in 2011.  Then in late-March, following response from FDA which included comments and study design considerations, AEMD resubmitted the IDE.

FDA has since communicated that they are withholding clearance of the IDE until AEMD addresses the agency's safety concern, namely that the company detail their training and monitoring procedures for heparinization  - the anticoagulant used during dialysis and with the Hemopurifier.  AEMD noted in early May that they were gathering the requested information and expected to have it submitted to FDA in the coming week (i.e. - by mid-May).  This will hopefully be the final step and initiation of the U.S. study will be forthcoming.  

The proposed trial, which we expect would begin shortly following an approval by FDA of the IDE, would enroll 10 end stage renal disease patients infected with HCV and be conducted by the Renal Research Institute, a partnership between Fresenius Medical Care (FMS), a leader in dialysis products and services, and Beth Israel Medical Center in NYC.

Cancer / Infectious Disease Presentation

Dr. Annette Marleau, AEMD's Director of Tumor Immunology, made a poster presentation titled, "Extracorporeal Exosome Removal: A Therapeutic Strategy to Address an Evolutionary Survival Mechanism Shared by Cancer and Infectious Viral Pathogens" in April at the 2013 International Society of Extracellular Vesicles conference in Boston.

The presentation addressed cancer-secreted exosomes and the role these exosomes play in cancer progression.  Aethlon's Hemopurifier directly targets exosomes in infectious diseases and is also being investigated to target cancer-secreted exosomes, something that current cancer drugs fail to sufficiently address.  Pre-clinical studies with the Hemopurifier have shown that it can capture exosomes of various cancers including breast, melanoma, ovarian and colorectal.

While cancer currently remains somewhat of a back-burner application for AEMD, the company has been fairly active in pursuing additional research into the role Hemopurifier could play in cancer therapy.  Aethlon's focus with cancer had until recently been mostly in the treatment of HER2 breast cancer, although they are also seriously looking at other cancers including melanoma, ovarian, colorectal and lymphoma as they believe their device could also have potential utility with targeting different pathogens and with treating other types of tumors. In particular and based on recent research, melanoma may hold promise for treatment with the Hemopurifier which Aethlon may also pursue in the near future. Furthering AEMD's quest towards application of Hemopurifier in treatment of cancers, in October 2012 the company announced that a U.S. patent was issued to them entitled "Extracorporeal Removal of Microvesicular Particles" which gives AEMD the exclusive right to remove immune suppressive microvesicular particles, which include but are not limited to exosomes from the circulation of treated patients.

Relative to melanoma Aethlon noted in a press release in June 2012 that based on findings from a study led by Cornell University and published in the (online version) journal Nature, that the company may pursue a melanoma treatment study that has been proposed by a (unnamed) U.S. cancer research institute.

The Cornell study found that exosomes released by melanoma cancer cells facilitated the spread of the disease throughout the body and to other organs and bones. There was also a predictive relationship between exosome levels and severity of cancer with late-stage (IV) patients presenting with much greater exosomes levels compared to earlier stage patients. This indicates that removal of exosomes from circulation could reduce progression of the deleterious effects of melanoma to other parts of the body and potentially improve patient outcomes.

Aethlon has previously demonstrated in pre-clinical testing that their Hemopurifier can capture exosomes from patients with late stage melanoma.

Melanoma, the incidence of which is growing rapidly, is the most deadly form of skin cancer, accounting for approximately 4% of all skin cancer cases. Melanoma can be lethal, especially if it penetrates the lowest skin layer and enters the lymph system. Statistics show that five-year survivability is as high as 97% if melanoma if diagnosed and treated at its earliest stage (IA) but this drops precipitously as the disease progresses. As such, a device that could effectively treat these late-stage melanoma patients would have massive appeal, not just in the U.S. but worldwide.

As a melanoma study is still in the early proposal stage and Aethlon remains focused on the near-term opportunities with HCV and the DARPA contract, management does not currently have a timeline when a melanoma or other cancer study may commence. This proposed melanoma study could potentially speed Aethlon's cancer program along, although still likely to be more of a back-burner application as Aethlon pursues their near-term endeavors. Nonethelract, management does not currently have a timeline when a melanoma or other cancer study may commence. This proposed melanoma study could potentially speed Aethlon's cancer program along, although still likely to be more of a back-burner application as Aethlon pursues their near-term endeavors. Nonetheless, we view this as a positive development, potentially offering another opportunity for Aethlon and their Hemopurifier.

In September 2012 AEMD made a presentation at the MD Anderson Cancer Center in Houston entitled, "The extracorporeal removal of tumor-secreted exosomes: An adjunct strategy to reverse immune suppression and inhibit metastases in melanoma". The presentation focused on the potential of the Hemopurifier to be combined with chemo and immunotherapies as a strategy to improve melanoma treatment outcomes.

Battelle Subcontract

In mid-April AEMD announced that they have been selected as a subcontractor by Battelle Memorial Institute under Battelle's $22.8 million systems integrator contract with DARPA related to the sepsis DLT program.  The systems integrator is responsible for integrating the various component technologies developed under the DLT program by the various participating organizations, including AEMD.  The contract will pay AEMD on a cost (time and materials) plus margin basis so the total that AEMD will eventually bill will not be known until their work is completed.  AEMD noted that they began work on this subcontract in early April.  Meanwhile, AEMD continues to work on their DARPA contract and has so far completed eleven milestones.

AEMD's Bioterror Program Potentially Revitalized

Another somewhat back-burner application for AEMD's technology has been bioterrorism.  Earlier in vivo studies conducted by Aethlon and in conjunction with other organizations, including the Centers for Disease Control and Prevention (CDC), have shown the Hemopurifier was able to rapidly clear viral particles and remove glycoproteins in cell cultures fluids.  Pre-clinical studies have shown success with the capture of several Category A (i.e. most serious) pathogens including the Ebola virus, Dengue virus, Lassa virus, West Nile virus, Monkeypox virus, H5N1 Avian flu virus and the H1N1 Swine flu virus.

Aethlon, in collaboration with the United States Army Medical Research Institute for Infectious Diseases (USAMRIID) and other organizations, have worked in the past to validate Hemopurifier for use against Category A threats.  Studies have yet to move forward, however - possibly as enrolling for a trial with Ebola infected patients would present serious challenges.  As a result, Aethlon's bioterror program had been in somewhat of a holding pattern.

AEMD's bioterror program could potentially be revitalized, however, and sparked by renewed federal funding for bioterror countermeasures (including medical countermeasures) through the Pandemic and All-Hazards Preparedness Reauthorization Act (PAHPRA) of 2013.  The CBO estimates that $11 billion will be spent on PAHPRA from 2014 to 2018.  Included in the scope of the program is countermeasures against the new strains of bird flu.  Given Hemopurifier's success in pre-clinical studies in capturing the H5N1 Avian flu virus and the H1N1 Swine flu virus, AEMD may be in a solid position to pursue any grant funding targeting the new strains of bird flu.         

A copy of the full research report can be downloaded here >>  Aethlon Medical Report

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