Aethlon Medical, Inc. (NASDAQ:AEMD) Q3 2024 Earnings Call Transcript
Aethlon Medical, Inc. (NASDAQ:AEMD) Q3 2024 Earnings Call Transcript February 14, 2024
Aethlon Medical, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and welcome to the Aethlon Medical Third Quarter Fiscal 2024 Earnings and Corporate Update. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Michael Miller with Rx Communications. Please go ahead.
Michael Miller: Thank you, operator and good afternoon everyone. Welcome to Aethlon Medical’s third quarter fiscal 2024 earnings conference call. My name is Michael Miller with Rx Communications. At 4:15 p.m. Eastern Time today, Aethlon Medical released financial results for its third fiscal quarter ended December 31, 2023. If you have not seen or received Aethlon Medical’s earnings release, please visit the Investors page at www.aethlonmedical.com. Following this introduction and the reading of the company’s forward-looking statement, Aethlon’s Interim Chief Executive Officer and Chief Financial Officer, James Frakes; and Aethlon’s Chief Medical Officer, Dr. Steven LaRosa, will provide an overview of Aethlon’s strategy and recent developments.
Mr. Frakes will then make some brief remarks on Aethlon’s financials. We’ll then open up the call for the Q&A session. Before I hand the call over to Mr. Frakes, 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, and the company’s most recent report on Form 10-Q and in the company’s other filings with the Securities and Exchange Commission. Except as maybe required by law, the company does not intend nor to undertake any duty to update this information to reflect future events or circumstances. With that, I’ll now turn the call over to Mr. James Frakes, Aethlon’s Interim Chief Executive Officer and Chief Financial Officer. Jim?
James Frakes: Thank you, Mike, and I’d like to thank all of you for dialing in. This is Jim Frakes, Interim CEO and long-time CFO of Aethlon Medical. In October 2023, Aethlon received clearance from the Drug Controller General of India, or DCGI, the country’s Central Drug Authority to conduct a Phase I safety, feasibility and dose finding trial of the Hemopurifier in patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatment, such as KEYTRUDA or Opdivo. The trial is expected to begin following completion of an in vitro binding study of relevant targets and subsequent approval by the respective ethics boards of interested sites in India. In addition to an interested initial site in India, we have three interested sites in Australia that are also awaiting the data from our in vitro binding study.
Our in vitro binding study of relevant oncology targets is complex and stands on the cutting edge of extracellular vesicle science. Our goal is to quantify the potential impact of our Hemopurifier on plasma from cancer patients who have been treated with anti-PD-1 monotherapy treatment in order to provide preclinical evidence to support our trial design. While our R&D team has started to quantify our internal data, the results to date are inconclusive. Therefore, while our internal team continues to fine-tune their work, in parallel, we have now engaged several third-party laboratories who independently perform assays on the samples. We are also continuing the study – to study the use of our Hemopurifier as a treatment against life-threatening viral infections through our COVID-19 trial in India.
We have two participating sites for this trial, the Medanta Medicity Hospital and Maulana Azad Medical College or MAMC. One patient has been treated to-date. Recently, we have been informed by our contract research organization that a new COVID-19 subvariant has been detected in India. Our COVID-19 trial in India remains open in the event that there are COVID-19 admissions to the intensive care units at our two participating sites. Finally, since being named Interim Chief Executive Officer 3 months ago, I have focused our efforts on our oncology program as well as on reducing our expenses. As previously reported, we disclosed some interesting preclinical proof-of-concept data of the Hemopurifier in organ transplantation. As a result, we do plan to submit one or more articles for publication on our preclinical organ transplantation data.
With that, I will now turn the call over to Dr. Steven LaRosa, Aethlon’s Chief Medical Officer.
Steven LaRosa: Thank you, Jim. The clinical team in Aethlon continues to make strides toward initiating oncology studies in India and Australia. As a reminder, these studies will examine the safety and feasibility of the Hemopurifier in patients who are not responding to anti-PD-1 antibodies following an initial 60-day treatment period. The trial will also examine exosome removal by the Hemopurifier and the downstream effects on reversal of T cell immunosuppression. Three interested sites have been identified in Australia and one in India. Two of the 3 sites in Australia have already completed successful site qualification visits, known as SQV. And we are in the advanced stages of budget and clinical trial agreement or CTA, negotiation.
The major milestone to site activation and enrollment is approval by each hospital’s ethics committee. The three main documents that these committees examine are: one, the clinical trial protocol; two, the informed – the patient informed consent known as the IPF; and three, the clinical investigator brochure known as the CIB. The Aethlon team has finalized the protocol and the informed consent documents. The clinical investigator brochure can be finalized once the results of the in vitro binding studies are available. Additionally, we are finalizing other important documents necessary for the conduct of the trial, including the electronic case report form known as the EDC, the safety monitoring plan, the statistical analysis plan and the charter that the independent Data Safety Monitoring Board will use.
In short, we are poised for site activation once our in vitro studies are completed. With that, I’ll turn the call back over to Jim for the financial discussion, and he will open it up for questions.
James Frakes: Thanks, Steve, and good afternoon again, everyone. As of December 31, 2023, Aethlon Medical had a cash balance of approximately $8 million. During December and January, we raised approximately $236,000 through common stock sales under our at-the-market program. Now as I’ve been previously encouraged not to cover our expenses on such a granular basis, as I did on prior calls, I will try to keep my remarks a bit more high level this quarter. You will find detailed expense information in the financial statements attached to our earnings release that just hit the wire or in our soon-to-be filed quarterly report on Form 10-Q. Our consolidated operating expenses for the 3 months ended December 31, 2023, were approximately $3.6 million compared to $2.8 million for the 3 months ended December 31, 2022.
This increase of approximately $717,000 or 25.2% in the 2023 period was due to an increase in payroll and related expenses of approximately $871,000, offset by decreases in general and administrative expenses of approximately $92,000 and in professional fees of approximately $61,000. The $871,000 increase in payroll and related expenses was primarily due to separation expenses for our former CEO of $873,000 and an increase in salary expense of $81,000 associated with an increase in average headcount. This was offset by a decrease in stock-based compensation of $83,000. Now I’d like to note that without the $873,000 separation expense that was accrued related to our former CEO. Both our payroll expense and our overall operating expenses would have actually decreased from the 2022 period.
The $92,000 decrease in general and administrative expenses was primarily due to a decrease in clinical trial expense of approximately $399,000. That decrease was offset by a $284,000 increase in supplies for manufacturing and R&D and a $31,000 increase in insurance expense. That increase in insurance expense included $16,000 of health insurance expense related to the separation agreement with our former CEO. And the $61,000 decrease in professional fees was due to a $54,000 decrease in scientific consulting, a $22,000 decrease in marketing, a $21,000 decrease in recruiting and a net $33,000 decrease in contract labor related to general R&D. These decreases were offset by an increase of $44,000 in legal expenses, primarily related to the reverse stock split, an $11,000 increase in director fees associated with the addition of a new director, and a $14,000 increase in investor relations and accounting fees.
As a result of the changes in expenses that I just noted, the company’s net loss increased to $3.6 million for the 3 months ended December 31, 2023, from $2.8 million in the 3 months ended December 31, 2022. We included these earnings results and related commentary in our press release issued earlier this afternoon. That release included the balance sheet for December 31, 2023, and the statements of operations for the 3 and 9 months ended December 31, 2023 and 2022. We will file our quarterly report on Form 10-Q following this call. Our next earnings call for the fiscal fourth quarter ending March 31, 2024, will coincide with the filing of our annual report on Form 10-K in June 2024. And now, Steve and I would be happy to take any questions that you may have.
Operator, please open the call for questions.
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