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AEMD: Heading Into FY2016 With Accelerating Momentum

By Brian Marckx, CFA


Fiscal 2015 saw several highlights with progress of both the Hemopurifier program as well as with ESI.  In addition, management made tremendous progress with shoring up the balance sheet, eliminating almost all debt.  Aethlon Medical (AEMD) built on their operational momentum over the last few months including a Nasdaq uplisting, $6 million equity raise and further progress with expanding the potential indications for Hemopurifier.  Icing on the cake was an invitation to ring the Nasdaq closing bell tonight (July 24). 

AEMD began trading on Nasdaq in mid-July which followed a 1 for 50 reverse split.  This should provide for greater investor visibility and, with the stock trading well over $5, provide greater access to institutional investors..  The shares have been on a nice rally since, which we think relates to a combination of the improved investor access as well as operational and financial progress. 

The $6 million ($5.6M net) raise was done at $6.30/share and came with 75% warrant coverage ($6.30 strike, five years).  As we mentioned in our June 24 investor note, this raise continues to confirm the company's ability to bring on additional capital at reasonable terms and without compromising the balance sheet - which had been an issue in the past.  It also should provide a substantial runway for the company to further its development programs.

AEMD has also been very aggressive in looking for potential new indications for Hemopurifier.  As a reminder, HCV had been the only real main focus for the company just a couple of years ago.  Since then they have ramped up activities in several other areas, most notably cancer and Ebola, and at the same time made significant progress on the HCV indication.  Clinical studies in all of these areas have already been planned, the U.S. HCV study is enrolling, and studies in other indications could start in the near-term. 

The company now has another shot on goal.  In early June management announced an agreement with the National Institute of Virology to commence testing of Hemopurifier for treatment of Chikungunya.  Chikungunya is a virus passed from mosquitoes with recent outbreaks in the Americas, Europe and Asia.  Records indicate that people in at least 44 countries have had exposure to Chikungunya.  Symptoms include fever, sometimes severe, and joint pain which can last from weeks to years.  During one outbreak in 2006 over 50% of those infected reported long-term joint pain.  As there is no currently known treatment for the virus, Hemopurifier, if deemed effective and safe, could be the eventual standard of care.  We expect to hear more about this collaboration and planned studies in the near future. 

We are maintaining our Buy recommendation.

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