Aethlon Medical - Earnings Call - Q3 2025

Executive Summary

• Aethlon achieved a key clinical milestone: the first oncology patient was treated with the Hemopurifier in Australia with no device-related complications; protocol amendments were approved across all three sites to accelerate enrollment. The company also reported materially lower operating expenses (~50% YoY) and a reduced net loss.
• Fiscal Q3 2025 (quarter ended Dec 31, 2024): no revenue reported; total operating expenses were $1.81M (down from $3.57M YoY), net loss improved to $1.75M ($0.13 per share) from $3.47M ($1.37 per share) a year ago; quarter-end cash was ~$4.83M.
• Management tightened focus on oncology, implemented cost cuts, and highlighted a 43% Australian R&D cash rebate on eligible trial spend as a financial offset.
• Street estimates: S&P Global consensus data could not be retrieved; coverage appears limited and comparisons vs estimates are unavailable at this time (SPGI request error; see Estimates Context).

What Went Well and What Went Wrong

• What Went Well

  • First Hemopurifier oncology treatment completed without device issues; 7-day follow-up showed no adverse events or clinically significant lab changes for the treated patient. “We are pleased to report that the patient tolerated the procedure without complications, making a critical milestone…” (Jim Frakes).
  • Protocol amended to remove the two-month run-in and broaden eligibility (all approved PD-1 regimens), with HREC/RGO approvals at all three sites to speed enrollment and data generation.
  • Operating expenses reduced ~50% YoY to $1.81M, driven by payroll, professional fees, and G&A reductions; net loss improved to ~$1.75M.

• What Went Wrong

  • Enrollment friction: of three enrolled patients, two did not reach treatment per pre-specified criteria; only one received Hemopurifier in the quarter, underscoring screening/run-in attrition (now addressed by protocol amendment).
  • No revenue and continued cash burn; quarter-end cash was ~$4.83M, emphasizing financing and execution risks typical for development-stage companies.
  • Clinical timelines depend on enrollment pace; management acknowledged OpEx could rise as cohorts advance, and Australia/India trial spend may increase as sites progress.

Transcript

Operator (participant)

Good day, and Welcome to the Aethlon Medical third quarter fiscal 2025 earnings and corporate update call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jim Frakes, Chief Executive Officer, as well as Chief Financial Officer. Please go ahead, sir.

Jim Frakes (CEO and CFO)

Thank you, Operator. Good afternoon, everyone. Welcome to Aethlon Medical's fiscal third quarter 2025 earnings conference call. My name is Jim Frakes, and I'm the Chief Executive Officer and Chief Financial Officer of Aethlon Medical. At 4:15 P.M. Eastern Time today, Aethlon Medical released financial results for its third fiscal quarter ended December 31, 2024. If you have not seen or received Aethlon Medical's earnings release, please visit the investors' page at www.aethlonmedical.com to view it. Following this introduction and the reading of the company's forward-looking statement disclaimer, Aethlon's Chief Medical Officer, Dr. Steven LaRosa, and I will provide an overview of Aethlon's strategy and recent developments. 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. 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, 2024, 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. With that, we will now cover the business update portion of this call.

Those of you that have been following our company may recall that when our board of directors initially asked me to handle the interim CEO role in November 2023 and then as permanent CEO in October 2024, both in addition to my long-term role as CFO, I announced that I would focus the efforts of the company on oncology and on reducing operating expenses. I am pleased to cover the highlights of the December 2024 quarter and subsequent events to date to discuss how the results of that focus are really starting to show. I'm gratified by this progress and expect that our shareholders ultimately will be rewarded by our efforts. Dr. Steven LaRosa, our Chief Medical Officer, will now give an update on our oncology trial efforts, and then I will touch on our financials, including the improvements in operating efficiencies. Steve?

Steven LaRosa (Chief Medical Officer)

Thank you, Jim. Steady progress has been made in our Australian oncology trial of the Hemopurifier in patients with solid tumors. To date, three patients have been enrolled. Two patients did not advance to the Hemopurifier treatment phase of the study due to pre-specified stopping criteria during the two-month run-in period. One showed a clinical response to anti-PD-1 therapy alone, while the other experienced toxicity to the anti-PD-1 agent. A third patient who did not respond to the anti-PD-1 therapy completed a four-hour Hemopurifier treatment at Royal Adelaide Hospital on January 29, 2025. The treatment was completed with no device-related issues or immediate complications. At the pre-specified day seven safety follow-up visit conducted on February 4, 2025, the patient was noted to not have experienced any adverse events and did not have any clinically significant changes in the safety laboratory measurements.

Samples were also collected before and after Hemopurifier treatment to be analyzed for extracellular vesicle removal and changes in anti-tumor T cell numbers by the device. This data will be available once all three patients in this patient cohort are treated. Once the seven-day safety follow-up period has been completed on the three patients in this first study cohort, an independent Data Safety Monitoring Board, known as a DSMB, will convene regarding advancing to the second cohort, where patients will get two Hemopurifier treatments during a given week. Following the investigator meeting with the three clinical sites, Aethlon received valuable feedback from the sites suggesting protocol modifications that could possibly improve enrollment speed, reduce screen failures, shorten the time to Hemopurifier treatment, and the time to data. In response, the Aethlon team swiftly developed a protocol amendment incorporating these recommendations.

Key changes made in the amendment included enrolling patients only after they had been confirmed to not be responding to anti-PD-1 therapy. This adjustment eliminates the need to identify patients within the first two weeks of starting anti-PD-1 therapy, while also removing the two-month running period previously required to assess response to therapy. Additionally, restrictions on commonly prescribed concomitant medications that would not impact patient safety were lifted. The amended protocol also broadens eligibility to include patients receiving all approved dosing regimens of pembrolizumab and nivolumab rather than limiting enrollment to patients on specific schedules of those medications. The company is pleased to announce that the Human Research Ethics Committees, known as HREC, and Research Governance Offices, known as RGO, have all approved this amendment at all three sites. The two currently active sites, Royal Adelaide Hospital and Peninsula Private Hospital, can enroll under this amended protocol presently.

The third site, GenesisCare Royal North Shore Hospital, can begin enrollment under this amendment following a site initiation visit to be conducted this week, on February 14, 2025. The company continues to pursue approval of a similarly designed clinical trial in India. HREC approval has been obtained at Medanta Medicity Hospital, and we are currently awaiting approval from the regulatory agency CDSCO in India. Recent regulatory changes in India have introduced additional documentation requirements that were previously not necessary. Aethlon is actively responding to CDSCO's queries through the company's India CRO, Qualtran. As a reminder, the primary endpoint of the approximate 9 patient-18 patient safety, feasibility, and dose-finding trial is safety.

The trial will monitor any adverse events and clinically significant changes in labs of the Hemopurifier-treated patients with solid tumors who have stable or progressive disease at different treatment intervals after a two-month running period of anti-PD-1 therapy, either Keytruda or Opdivo. Patients who don't respond to the anti-PD-1 therapy will be eligible to enter the Hemopurifier arm of the study, where sequential cohorts will receive either one, two, or three Hemopurifier treatments during a one-week period. In addition to monitoring safety, the study is designed to examine the number of Hemopurifier treatments needed to decrease the concentration of extracellular vesicles, EVs, and if these changes in EV concentrations improve the body's own natural ability to attack tumor cells.

These exploratory central laboratory analyses are expected to inform the design of a subsequent efficacy and safety trial, including a pre-market approval study known as a PMA study required by the FDA and other regulatory agencies. Currently, only approximately 30% of patients who receive pembrolizumab or nivolumab will have a lasting clinical response to these agents. Extracellular vesicles produced by tumors have been implicated in the spread of the cancers, as well as the resistance to anti-PD-1 therapy. The Aethlon Hemopurifier has been designed to bind and remove these EVs from the bloodstream, which may improve therapeutic response rates to anti-PD-1 antibodies. In preclinical studies, the Hemopurifier has been shown to reduce the number of EVs in cancer patient plasma samples. The company is closely monitoring developments related to bird flu in the United States, Marburg virus in Rwanda, and Ebola virus in Uganda.

Aethlon has direct experience with these viruses, having previously generated in vitro viral binding data for all three viruses and treated an Ebola patient in Germany under emergency use conditions. Aethlon will continue to monitor these situations carefully and be poised to respond if currently available treatment strategies are deemed ineffective. Finally, we have previously disclosed that we receive samples from patients with long COVID through the LIINC known as the long-term impact of infection with novel coronavirus study cohort at the University of California, San Francisco Medical Center. EVs, including those containing SARS-CoV-2, have been implicated in the pathogenesis and the resulting symptoms seen in long COVID. Our research team has been testing these long COVID samples to see if the proprietary GNA resin in our Hemopurifier binds the EVs in these patient samples. We plan to share this data in the future.

With that, I'll turn the call back over to Jim for the financial discussion, and he will open it up for questions.

Jim Frakes (CEO and CFO)

Great. Thanks, Steve. And good afternoon again, everyone. Now, on to the financial portion of our remarks. Aethlon has implemented strategic cost-cutting measures to optimize company resources, enabling us to maintain a strong focus on the high-impact oncology trials in both Australia and India. These initiatives are designed to improve resource allocation, reduce operational expenses, and support the continued advancement of our clinical programs. I will keep our financial overview brief with a focus on key points. For a more detailed analysis, you can refer to 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. As of December 31, 2024, Aethlon had a cash balance of approximately $4.8 million.

Our consolidated operating expenses for the fiscal quarter ended December 31, 2024, decreased by approximately $1.8 million or approximately 50% to $1.8 million compared to $3.6 million for the fiscal quarter ended December 31, 2023. This reduction was driven by a $1.3 million decrease in payroll and related expenses, a $300,000 decrease in professional fees, and a $200,000 decrease in general and administrative expenses or GNA expenses. The approximate $1.3 million decrease in payroll and related expenses was primarily attributable to a reduction of $900,000 in separation expenses related to the separation agreement with our former CEO that had been recorded in the December 2023 period, as well as a decrease of approximately $400,000 due to a reduction in headcount. Of the approximate $900,000 of separation expenses related to the departure of the former CEO, approximately $400,000 related to the acceleration of vesting of stock options.

The approximate $300,000 decrease in professional fees was primarily due to an approximate reduction of $200,000 in legal fees resulting from the transition to a new legal firm and a decrease of $200,000 in scientific and operational consulting fees, largely attributable to completed projects. These decreases were partially offset by an approximate $100,000 increase in investor relations and accounting fees. The approximate $200,000 decrease in GNA expenses was primarily driven by a $300,000 reduction in supplies, largely related to the raw materials and components used in the manufacturing of the Hemopurifier, with no comparable purchases during the current period. Additionally, there was an approximate $100,000 decrease in insurance expenses associated with a reduced headcount and various other operating expenses. These reductions were partially offset by a $200,000 increase in clinical trial expenses related to our ongoing clinical trials in Australia and India.

As a result of the factors I just noticed, our net loss decreased to approximately $1.8 million in the fiscal quarter ended December 31, 2024, from approximately $3.5 million in the fiscal year ended December 31, 2023. We included these earnings results and related commentary in our press release issued this afternoon. The release also included the balance sheet for December 31, 2024, and the statements of operations for the three and nine-month periods ended December 31, 2024, and 2023. We will file our quarterly report on Form 10-Q following this call. Our next earnings call for the fiscal year ending March 31, 2025, will coincide with the filing of our annual report on Form 10-K in June 2025. Steve and I would be happy to take any questions that you may have. Operator, please open the call for questions.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble a roster. The first question will come from Marla Marin with Zacks. Please go ahead.

Marla Marin (Senior Analyst)

Thank you. I would like—I'm wondering if we can get a little bit more color on the first three patients enrolled in the study. The study is expected to ultimately enroll 9 participants-18 participants, correct?

Steven LaRosa (Chief Medical Officer)

Hey, Marla.

I'm sorry, go ahead. Please continue.

Marla Marin (Senior Analyst)

The fact that two of the people who had been enrolled did not proceed to treatment, I'm wondering whether the range there of the 9-18 means that you won't lose any—there's no opportunity cost in terms of gathering data for support of Hemopurifier treatment because you can move closer to that 18 number, or is that not the right way to look at it?

No, the 9-18, Marla, refers to 9-18 Hemopurifier-treated patients. To date, we only have one Hemopurifier-treated patient. Those two patients still provide valuable information about T cells and EVs over the course of their running period. It is valuable data. To your question, you have to have 9-18 Hemopurifier-treated patients. It could be as few as nine if none experience a serious adverse event related to the device or a dose-limiting toxicity. It could be just three in each patient cohort or nine, but they have to be treated with the device.

Okay. So essentially, the two that did proceed, there's no data from them, and it's almost as if you just have to add two other people at some point to that cohort.

Steven LaRosa (Chief Medical Officer)

That's correct.

Marla Marin (Senior Analyst)

Okay. Got it. Good.

Jim Frakes (CEO and CFO)

Marla, following up on your question, the new protocol that Steve described, that eliminates the two-month running period and only patients that are failing or are neutral on their anti-PD-1 therapy, Keytruda or Opdivo, it should simplify things so that the two-month running period goes away. All the other ones that qualify will be eligible.

Steven LaRosa (Chief Medical Officer)

Right. You will.

Anybody screened that goes through screening will go right into Hemopurifier treatment.

Marla Marin (Senior Analyst)

Got it. Got it. Right. Yeah. That's understood. Will this new protocol, will that also inform the trial design once you launch the trial in India?

Steven LaRosa (Chief Medical Officer)

Yeah. We're actually submitting the same—I mean, they haven't started in India, so we have the ability to submit that same amendment to the ethics committee there, and we're doing that. Yeah, they'll do the same exact study. Again, the only thing—the thing is there's looser requirements with respect to concomitant meds and dosing intervals, etc., and you get rid of the two-month running period. You shorten the time to Hemopurifier treatments and hopefully the time to data as well.

Marla Marin (Senior Analyst)

Right. Okay. Got it. My last question of this—this is for you, Jim—the roughly $200,000 increase in expenses related to clinical trial expenses on the portion that is related to Australia. I'm thinking that perhaps the greater percentage of that $200,000 was related to Australia. You do expect to get 43% back on that portion. Is that correct?

Jim Frakes (CEO and CFO)

That's correct. I mean, it's the vast majority related to Australia. Yes, any life science-oriented work in Australia, we can apply for that 43% tax rebate, which is a cash rebate, not a tax credit. It's cash. That's one of many reasons we're doing it in Australia. Great science, great scientists, great doctors, but also that's a very attractive element that they have going for them.

Marla Marin (Senior Analyst)

Right. Would you please just remind us of the timing of that when you submit your?

Jim Frakes (CEO and CFO)

Oh, the tax? Yeah. It's an annual submission. I think we do it in the June quarter. Our fiscal year-end is March 31, as you know, so that's also the fiscal year-end for our Australian subsidiary. It's after we conclude the books for the subsidiary. We met in May, June, and we might receive the money well after that.

Marla Marin (Senior Analyst)

Right. Okay. Thank you.

Operator (participant)

The next question will come from Anthony Vendetti with Maxim Group. Please go ahead.

Anthony Vendetti (Executive Managing Director)

Thanks. Good afternoon. You have two sites activated. The third site is supposed to be activated this month. It has not been activated yet, right? It is going to have—you are expecting it any week now, right?

Steven LaRosa (Chief Medical Officer)

We will do what's called the site initiation visit on our Thursday, which is Friday in Australia. So it's dated the 14th. Within a day to two days, they will be fully active to enroll patients, recruit and enroll. Yes.

Anthony Vendetti (Executive Managing Director)

Okay.

Steven LaRosa (Chief Medical Officer)

The hospital is located in Sydney.

It's the largest facility in North Sydney, Royal North Shore Hospital. They have a huge patient pool with Stephen Clarke, who is a well-regarded, successful investigator. We have great—it's been a bureaucratic process, but we're through that. We have high confidence in actually the team and think that they'll be able to draw from a large patient base.

Anthony Vendetti (Executive Managing Director)

Okay. That's great. Okay. It is the largest hospital in Sydney, North Shore Hospital. That's great. Do you believe then with that third site activated in Sydney that the pace at which you could sign up—it sounds like the pace at which you could sign up patients should accelerate once that hospital is activated, right?

Steven LaRosa (Chief Medical Officer)

We think that, yes, they have a huge patient pool and they're a seasoned group. We think that coupled with the fact that the previous two sites, which are active and have amendment approval, they're already screening. We think all three of those factors should increase enrollment. Yeah.

Anthony Vendetti (Executive Managing Director)

No. Based on that, I know it's obviously based on patient population and so forth, but internally, do you have a sort of expectation when you can get to that 9 patient-18 patient population? Is it by the end of calendar 2025, hopefully sooner? How do you look at that?

Steven LaRosa (Chief Medical Officer)

Yeah. I don't have specific estimations. One would hope for—sites usually estimate a patient per month, but again, anything would be an estimate.

Anthony Vendetti (Executive Managing Director)

Okay. That is—.

Steven LaRosa (Chief Medical Officer)

You would hope for—we're in February, so you would hope you would see a few patients over the next couple of months that we would get through—we get through that first cohort, which is the first big inflection point in that kind of timeframe.

Anthony Vendetti (Executive Managing Director)

Okay. Okay. Switching gears, I know you made some comments about some of the other viruses, and I know you've treated Ebola before, but I guess the one that seems to present the nearest-term opportunity as we continue to learn about new bird flu cases, whether it's livestock or different chickens and so forth throughout the United States, and some of those have been, at least for the farmers that have been treating or interacting with some of this livestock, they have contracted bird flu. I know you've treated Ebola, but have you treated any bird flu cases? What do you think the potential opportunity is—if any current procedures are exhausted, you could be a backup—do you think that with bird flu, there's an opportunity to be, as far as I know, there's not any other way to treat it.

I'm not sure there is a first-line defense, but is there an opportunity for the Hemopurifier to be a first-line potential treatment?

Steven LaRosa (Chief Medical Officer)

That's a great question. First, I'd be remiss if I didn't say I misspoke about Marburg virus. I meant to say Tanzania. It's not Rwanda. It's Tanzania. I just want to clear up that. To answer your question about bird flu, the current treatment strategy for people who actually acquire—humans who acquire bird flu is oseltamivir, which is Tamiflu. However, there are some things that give one pause, right, about the long-term success there that things we're seeing. There's recently been identified viruses in humans and in cattle that have mammalian adaptations. That means the virus has mutated such that it's more apt to be transmitted to mammals, including humans. That's a concern. There have been previous reports of oseltamivir resistance, so that could be an evolving issue.

Most recently, there was actually a cattle-to-human transmission, which is the first time that has actually been described. There are some concerning things going on. I think currently, when you listen to CDC and IDSA webinars, the party line is still first-line treatment is oseltamivir. Particularly in people in the hospital, those who are not improving, is to send samples off for resistance testing. It is an evolving story. We will have to see where it goes. Do I see—as it currently stands, the Hemopurifier would not be a first-line treatment, but if things go south, it would be something that we would have to respond to what the regulatory agencies say about experimental therapies. You also asked, has anybody been treated with bird flu with the Hemopurifier? Any human? The answer is no. We only have in vitro studies.

Anthony Vendetti (Executive Managing Director)

Okay. Okay. Yeah. No, that's helpful. This is probably more for Jim, but you significantly brought down expenses versus last year, approximately cut in half. Definitely, even from earlier this year, they've gone down to this, and that's the question really. Is this $1.8 million sort of the new run rate we should look at in terms of OpEx? Or as you enroll more of these patients, should that tick up a little bit from here?

Jim Frakes (CEO and CFO)

This is Jim, Anthony. I do expect G&A expenses to increase, ramp up as the clinical trial in Australia and then in India continue progressing. It will go up. We're going to try to hold the line on professional fees and payroll to the extent we can. We may need to add a few people. I've really cut back the headcount here, and sooner or later, we're going to have to step up a bit.

Anthony Vendetti (Executive Managing Director)

Okay. It sounds like you brought it down to sort of a bare-bones level that you could, but as this trial moves on, obviously, there are some increased costs with that, and then you may have to add a few people. Okay. That is helpful.

Jim Frakes (CEO and CFO)

Yeah. I think that's fair. That's fair.

Anthony Vendetti (Executive Managing Director)

Okay. Great. I'll hop back in the queue. Appreciate it.

Jim Frakes (CEO and CFO)

Okay.

Operator (participant)

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Frakes for any closing remarks. Please go ahead, sir.

Jim Frakes (CEO and CFO)

Thank you again for joining us today to discuss our fiscal third-quarter results, and we look forward to keeping you up to date on future calls. Bye.

Operator (participant)

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.