By Brian Marckx, CFA
Secondary Offering Nets $5.3M, AEMD Regains NASDAQ Compliance
On October 4th Aethlon (AEMD) closed on a secondary public offering of 5.4M shares at $1.10/share, with 100% warrant coverage (5yrs, $1.10 strike), for gross and net proceeds of $6.0M and $5.3M, respectively. Pro forma for the financing, fiscal Q1 2018 (ending June 30, 2017) cash balance would equal approximately $5.6M.
On August 1, 2017 AEMD received notice from NASDAQ that their stock would be de-listed from the exchange due to non-compliance of the > $35M market cap requirement. The recent stock sale, however, allowed AEMD to regain NASDAQ under the alternative (5550b) requirement of having stockholder’s equity of at least $2.5M.
Phase I NCI Grant for Isolation of Cancer-Related Exosomes
In mid-September AEMD announced that they scored a Phase I grant funded by the National Cancer Institute. The contract, dubbed "Device Strategy for Selective Isolation of Oncosomes and Non-Malignant Exosomes” is for $299,250. The University of Pittsburgh and Massachusetts General Hospital (researchers at Mass General were part of the tumor exosomes study discussed below) will work under AEMD to complete the contract which involves evaluation of AEMD’s technology in the capture of circulating tumor-derived exosomes.
Hemopurifier For Cancer Treatment…
As a reminder, Aethlon has long been considering the potential role that Hemopurifier might play in treating cancer given evidence of its ability to capture tumor-derived exosomes. That interest has strengthened as of late given additional (published) evidence further supporting the role that circulating exosomes may play in tumor growth.
This includes an article titled, "Extracellular Vesicles: Emerging Target for Cancer Therapy" published in the April 2014 issue of the journal, Trends in Molecular Medicine. The article, written by researchers at Harvard Medical School, Massachusetts General Hospital and University of Oxford explores evidence that extracellular vesicles (i.e. - exosomes) play a key role in cancer development and progression and suppression of immune response. As such, extracellular vesicles (EVs) have increasingly become targets for anticancer therapy. This coincides with AEMD's cancer research and how Hemopurifier, via the removal of circulating cancer-secreted exosomes, could have utility in the treatment of cancer.
The authors also believe that EVs may also increase the body's resistance to cancer drugs and hinder their effectiveness. They further note that, while early evidence suggests that inhibition of EV biogenesis may have beneficial effects in the treatment of cancer, that a challenge has been to find therapies that can specifically target cancer-related EVs without affecting normal cell function. The researchers specifically reference Hemopurifier as a potential therapy to overcome these challenges, noting that with the use of Hemopurifier might be possible to specifically capture tumour cell-derived EVs on an antibody-coated matrix during extracorporeal dialysis. For example, in human epidermal growth factor receptor-2 (HER-2) overexpressing breast cancer, where HER-2-expressing EVs have been shown to interfere with therapy and are associated with tumour aggressiveness, anti-HER-2 antibodies could be used to remove HER-2-expressing EVs from circulation with the aim of improving therapeutic outcome. In principal, this approach could be tailored for other tumour types, as long as the tumour cell-derived EVs are enriched for tumour-specific proteins. However, whether the level and duration of EV depletion
after ADAPT (i.e. - Hemopurifier) therapy would be sufficient to achieve a clinically relevant outcome remains to be
The authors note that their current understanding of EVs role in cancer development and progression is still in the relatively early stages and is based on data from in vitro experiments. Their acknowledgement of Hemopurifier as potentially having utility in the treatment of cancer is also largely based on the supposition that removal of circulating EVs may be beneficial in interrupting the development and spread of tumors - which is still just a theory at this point. Nonetheless, we think this research does add meaningful credibility to Hemopurifier's potential role in cancer suppression and adds additional support to AEMD's research which indicates the same.
In addition, the NCI grant is also an early, yet potentially substantive step towards additional acknowledgement of tumor-derived exosomes’ role in cancer and validation of Hemopurifiers’ ability in capturing the substances.
FDA Grants EAP Designation For Hemopurifier in Treatment of Life-Threatening Diseases
On September 12th AEMD announced that FDA approved AEMD's application seeking Expedited Access Pathway designation for their Hemopurifier with the following proposed indications for use; "The Hemopurifier is a single-use device indicated for the treatment of life-threatening highly glycosylated viruses that are not addressed with an approved treatment." This implies a fairly broad indication given its non-specificity to a particular virus, disease or condition as well as the fact that many of the highly glycosylated viruses lack an effective therapy.
As a refresher, viruses use glycosylation as a means to avoid detection by the body's immune system. Highly glycosylated viruses, such as HIV, HCV, Ebola, West Nile and pandemic flu strains (among a host of others) have proven to be particularly resilient and difficult to treat. The filter within the Hemopurifier contains galanthus nivalis agglutinin (GNA) which binds to the glycan shield of these viruses, thereby removing it from the bloodstream prior to the toxins infecting other cells or organs.
While we had anticipated that FDA would approve the EAP pathway, confirmation of that is nonetheless a significant event given the benefits of the program. Management noted during a presentation at BIO Investor Forum earlier this week that since receiving notice of EAP designation, the company has been in contact with FDA, including with the personnel that will be working directly with them. AEMD expects to schedule an in-person meeting with FDA in the near-term.
FDA Finalizes Guidance on Real-World Data For Regulatory Decision-Making
On August 31, 2017 FDA finalized their draft guidance (issued July 27, 2016) on the “Use of Real-World Evidence to Support Regulatory Decision-Making for Medical Devices”. The document is available here (http://bit.ly/2xDKXG1).
While randomized, controlled studies (RCTs) will almost certainly remain the gold-standard for approving most Class III (i.e. high-risk) or other devices that are mandated to follow FDA’s PMA pathway, the agency has recently begun to embrace the idea of using “real world data” (RWD) and “real world evidence” (RWE) to make approval and other regulatory decisions. In 2015 FDA approved more than eight new medical devices and expanded the label on several others through supporting RWD – this included several high-risk, implantable devices.
FDA’s recent move towards greater acceptance of RWD in decision-making has to do, in part, with the idea that traditional clinical trials are too rigid in some circumstances as well as the fact that “traditional clinical trial(s) may be impractical or excessively challenging to conduct” (as AEMD’s might be for highly virulent viruses). That could mean that (for example), in lieu of a randomized clinical trial, the sponsor may be allowed to use an existing database or medical registry as the control arm for a pivotal study.
FDA’s recently appointed commissioner Dr. Scott Gottleib’s remarks to The National Academy of Sciences on September 19, 2017 provide some additional insight into the regulators’ thoughts towards greater application of RWD and RWE in their decision-making processes. While the full text can be found here (http://bit.ly/2yJG4ex), some of the highlights include:
➢ “The hierarchy of evidence is evolving as a consequence. This is the hierarchy that has long defined the reliability of clinical evidence, and puts the randomized, prospective, placebo controlled trial at the top of that pyramid. This pyramid has remained unchanged, even as our tools for collecting practical data have advanced; even as the constructs that fall underneath the fully randomized, prospective, placebo-controlled trial are expanding, and their usefulness for informing our decisions becoming more apparent; even as the reliability of other forms of evidence is increasing as the methodologies for evaluating different forms of data continue to improve. That includes RWE.”
➢ “FDA needs to think of itself as a curator of information. Not just an arbiter, where a single truth standard is secured to a fixed orthodoxy. The latter concept is increasingly at odds with the way decisions are being made by others who depend on reliable evidence to guide their paths, including doctors and health plans. FDA is often an important, independent evaluator of information.”
➢ “The fact is there’s often no single truth standard when it comes to the evidence used to support medical decisions. Clinical choices are made all the time, based on a mosaic of information of various precision and certainty. That continuum includes real world evidence, as well as the facts gleaned from rigorous and carefully fashioned trials...and a lot of evidence constructs in between.”
➢ “…there’s nothing in our statute or regulations that prevent FDA from using a broad range of informative sources of evidence. On the contrary, many of our statutory responsibilities boil down to one principal calculus: What do we know, and how do we balance benefits and risk based on the fullest possible information.”
➢ “For those who’d challenge the suitability of our effort to incorporate real world evidence into our regulatory model, I’d challenge you with the opposite intention: Should a product be marketed based on a data set that speaks to a limited and rigidly constructed circumstance, when the clinical use, and in turn the evidence we might have to evaluate the product, could have been far richer, far more diverse, and more informative?”
➢ “That means embracing the full continuum of evidence that informs their [i.e. novel medical devices] clinical use. We see this approach gaining more rapid and widespread acceptance when it comes to some medical products. But we need to continue to more widely advance this life cycle concept of regulation.”
Could RWD Facilitate and Help Define Hemopurifier’s FDA Pathway?...
As we have noted in our recent coverage of AEMD, we expect Hemopurifier will be required to follow a PMA pathway under the recently designated EAP program and expect this will require clinical trials. Yet, as we have also noted, the next-steps towards validation are largely unknown given that it is not feasible to conduct clinical studies for targets such as highly virulent viruses or pandemic threats. The benefits of EAP designation, particularly AEMD’s ability to have earlier and more significant involvement with regulators – can be of great help in designing an appropriate validation program.
We do not know if the use of Real World Data is potentially on the table in designing a U.S. regulatory program for Hemopurifier or even if it is, if it can be of any benefit. But given the (effective) impossibility of conducting, for example, an RCT in Ebola, yet the lack of any serious treatment-related adverse events in any human application of Hemopurifier, coupled with the complete dearth of any drug or device that can effectively treat many of these glycosylated viruses and evidence that Hemopurifier can capture these substances, it makes sense to us that RWD will be (at least) under consideration. And if that is the case, it could help to define a feasible U.S. approval pathway.
Production Capabilities Secured
Perhaps an indication of management’s expectations of eventual commercialization, earlier this week Aethlon announced a formal collaboration with iBio, Inc (IBIO), a plant-based biopharmaceuticals company, to provide (as-needed) large-scale production of the plant-derived lectin (a recombinant form of Galanthus nivalis agglutin, or GNA) housed within the Hemopurifier cartridge that captures circulating viruses from the blood.
As a reminder, Aethlon had noted during their U.S. feasibility study that they had leveraged their contract with DARPA to fund current good manufacturing practice (cGMP) systems for the production of the Hemopurifier. The DARPA grant included two manufacturing-specific milestones – the first of which AEMD completed during year-three of the contract and the other which they completed during year-four.
AEMD’s recent press release mentions that they have completed a study with iBio, confirming their ability to produce GNA under cGMP. Per iBio’s website, their CDMO development and manufacturing facility, located near Houston, is capable of growing over four million plants as “in process inventory”. The large-capacity facility is also capable of meeting high production quotas which could be important, particularly in the event of high on-demand need such as, for example, if Hemopurifier was cleared for use as a countermeasure against certain pandemic outbreaks.
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By Brian Marckx, CFA