Aethlon Medical - Earnings Call - Q4 2025

Executive Summary

• Fiscal Q4 2025 centered on clinical execution: three oncology patients completed single 4‑hour Hemopurifier treatments with no device deficiencies; DSMB review is imminent to advance to two‑treatment cohort.
• Operating discipline continued: FY25 operating expenses fell ~26% to ~$9.3M vs ~$12.6M in FY24; cash was ~$5.5M at Mar 31, 2025.
• EPS missed Wall Street in Q4: S&P Global consensus EPS was -$10.90 vs actual about -$37.00; prior quarter (Q3) was a beat (-$16.27 est. vs -$10.40 actual) (values with asterisk from S&P Global).
• Near‑term catalysts: DSMB decision in July and preliminary EV/T‑cell data from the first cohort expected ~three months post‑third patient; India regulator (CDSCO) approved similar oncology study at Medanta, positioning for faster enrollment.

What Went Well and What Went Wrong

What Went Well

• Treated first three oncology patients in Australia; all tolerated single 4‑hour Hemopurifier sessions “without device deficiencies or immediate complications,” triggering DSMB review to advance cohorts.
• Protocol expanded to include combination therapy with pembrolizumab/nivolumab to align with standard of care, broadening the eligible patient pool.
• Preclinical data showed 98.5% removal of platelet‑derived EVs in an ex vivo 4‑hour session, reinforcing mechanism and multi‑indication potential; management cited this as “the most forward progress in the clinic and in the lab since I joined the company”.

What Went Wrong

• Q4 EPS sharply missed consensus due to non‑cash warrant inducement charge (~$4.6M) and development‑stage losses; management highlighted the one‑time nature of executive separation/severance costs winding down (values with asterisk from S&P Global; warrant commentary cited).
• Enrollment pace has been deliberate; DSMB must meet between cohorts, potentially gating speed; management expects cohort‑to‑cohort DSMB reviews before advancing to 2‑ and 3‑treatment weeks.
• Ongoing need for external funding until grants/partnering are achieved; management explicitly noted additional equity financing may be required absent non‑dilutive awards.

Transcript

Operator (participant)

Afternoon, and welcome to the Aethlon Medical Fourth Quarter Fiscal 2025 Earnings and Corporate Update Conference Call. All participants will be in 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 telephone keypad. 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 Jim Frakes, Chief Executive Officer and Chief Financial Officer. Please go ahead.

Jim Frakes (CEO and CFO)

Thank you, Operator, and good afternoon, everyone. Welcome to Aethlon Medical's Fiscal Fourth Quarter 2025 Earnings Conference Call. My name is Jim Frakes, and I am the Chief Executive Officer and Chief Financial Officer of Aethlon Medical. Now, I have some bad news and some good news to report on this call. The bad news is, since Dr. Steven LaRosa, our Chief Medical Officer, is out on a family vacation, you'll have to listen to my soliloquy throughout this call. The good news is that we made more progress advancing in the clinic with our product this period than in any quarter since I've been with Aethlon. At 4:15 P.M. Eastern Time today, Aethlon Medical released financial results for its fiscal fourth quarter ended March 31st 2025. 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, I will provide an overview of our 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 this 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 captioned risk factors in the company's annual report on Form 10-K for the fiscal year ended March 31, 2025, 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 portion update of this call. Let me start by highlighting some key developments from fiscal year-end 2025 through today. We treated the first three patients in our oncology trial using the Hemopurifier at clinical sites in Australia. We received regulatory approval in India to initiate a similar oncology study.

We expanded our trial protocol to align with evolving standard of care in immunotherapy. Our preclinical data demonstrate 98.5% removal of platelet-derived extracellular vesicles, or EVs, in stimulated chemopurifier treatments. We're collaborating with the University of California, San Francisco, or UCSF, on long COVID research, with findings to be presented at the upcoming Keystone Symposium. Importantly, we significantly reduced our operating expenses through streamlined operations. Now, let me go into more detail on a few of these items, starting with the progress in our cancer trial in Australia. We've completed chemopurifier treatments in the first three participants enrolled in our safety, feasibility, and dose-finding study of patients with solid tumors unresponsive to anti-PD-1 agents. Participant number one was treated at Royal Adelaide Hospital in January 2025, while participants two and three received treatment at Royal North Shore Hospital in Sydney in June 2025.

Each participant received a single four-hour chemopurifier treatment without device deficiencies or immediate complications and have now completed the pre-specified seven-day safety follow-up. This milestone triggers the first meeting of an Independent Data Safety Monitoring Board, or DSMB, which will review safety data and determine whether we can advance to the next treatment cohort. If we get the go-ahead, the next group of patients will receive two chemopurifier treatments over the course of a one-week period. We expect to receive preliminary data from the first cohort in about three months. This will include insights into how the chemopurifier affected EV levels and anti-tumor T-cell activity. I, like all of you, am anxious to learn what the effects of our product are on EV removal and anti-tumor T-cell activity from these cancer patients that were treated with our chemopurifier.

We also amended the trial protocol to allow enrollment of patients receiving combination therapies with either pembrolizumab, better known as KEYTRUDA, or nivolumab, marketed as OPDIVO. That change reflects current treatment practices and should help us reach a broader patient pool. To put it in perspective, only about 30% of patients respond to these therapies long-term. Tumor-derived EVs are thought to play a role in resistance to these treatments. The chemopurifier is designed to bind and remove these EVs from the bloodstream, potentially improving the therapeutic response rates to anti-PD-1 antibodies. In our preclinical studies, we've already seen the chemopurifier reduce the number of EV levels in plasma samples from cancer patients. Just to reiterate, the primary endpoint of this study is safety. We're monitoring for any adverse events and clinically significant changes in lab tests following the chemopurifier treatments.

The study is designed to include between 9-18 participants, and the patients will receive between one and three chemopurifier treatments, depending on the cohort. We are also conducting exploratory analysis to understand how the number of chemopurifier treatments impacts EV levels and whether lowering EVs might help improve the body's own natural ability to attack tumor cells. Those insights may help us shape the design of future clinical trials, including a potential pre-market approval study. Turning to activities in India, on June 19th, we received formal approval from India's Central Drug Standard Control Organization, or CDSCO, India's regulatory authority to begin a similar oncology study at Medanta Medicity hospital. That approval followed a successful meeting with a Subject Expert Committee and prior Ethics Committee clearance. The trial will begin following a site initiation visit conducted by our India-based CRO, Qualtran.

I'd also like to share a quick update from our research lab. On May 12th, we published results of a preclinical ex vivo study in bioRxiv, and we have submitted a manuscript to a peer-reviewed journal for publication. In that study, we showed that the Hemopurifier, using our proprietary GNA affinity resin, removed 98.5% of platelet-derived extracellular vesicles, or PDEVs, from human plasma during a time point equivalent to a four-hour Hemopurifier treatment. Excessive levels of PDEVs have been implicated in many serious conditions beyond cancer, including lupus, systemic sclerosis, multiple sclerosis, Alzheimer's disease, sepsis, and both acute and long COVID. These results reinforce the rationale behind our current oncology work and point to possible additional therapeutic applications in the future. Next, I'd like to make a few remarks about our scientific collaboration in long COVID research.

Our collaboration with the UCSF Long COVID Clinic has been accepted for a poster presentation at the Keystone Symposium on Long COVID this August, specifically August 10th through 13th. The study analyzed blood samples from patients with Long COVID and compared them to recovered individuals to evaluate the binding of larger and smaller EVs to our lectin-affinity resin. These findings add to our growing body of evidence and support future further exploration of the Hemopurifier in addressing the significant and still unmet medical need impacting an estimated 44 million-48 million people in the U.S., with an estimated economic burden in the billions in those with symptoms lasting for at least a year. Finally, I want to highlight the work we did this past year to streamline our operations and significantly reduce our operating costs. This wasn't just about tightening the belt.

It was about focusing our resources where we have the greatest clinical and regulatory impact. So, in summary, I've worked at Aethlon Medical for a long time, and I've never seen this much forward progress in the clinic and in the lab since I joined the company. I'm very pleased with the progress. Now, let's touch briefly on the financials. As of March 31st 2025, we had a cash balance of approximately $5.5 million. Our operating expenses for the year came in at approximately $9.3 million. This was a reduction of approximately $3.3 million, or 26%, compared to the prior year. This decrease was largely due to lower payroll and related expenses, as well as reductions in professional fees and general and administrative expenses. We did record a non-cash charge that impacted the income statement.

Most notably, we recognized a $4.6 million non-cash charge related to a warrant inducement offer that we made in March 2025. We raised approximately $2.3 million in cash through this warrant inducement offer. This involved temporarily lowering the exercise price of existing warrants and the issuance of new warrants. Because it was a non-cash charge, it did not impact the net worth on our balance sheet. For those that want to take a deeper dive into the numbers, please refer to the earnings release that we just issued or the full Form 10-K annual report that we will issue following this call. Also, we recognized approximately $324,000 in other income related to the Employee Retention tax credit under the CARES Act and an additional $36,000 in related interest income from the IRS. The remaining expected credit was recorded as a receivable within current assets on our balance sheet.

No such amounts were recorded in the prior fiscal year. We included these earnings results and related commentary in our press release issued this afternoon. The release also included the balance sheet for March 31, 2025, and the statements of operations for the fiscal years ended March 31, 2025, and 2024. As I mentioned earlier, we will file our annual report on Form 10-K following this call. Our next earnings call for the fiscal first quarter ending June 30, 2025, will coincide with the filing of our quarterly report on Form 10-Q in August 2025. I would be happy to answer any questions that you may have. Operator, please open the call for questions.

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad.

If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Marla Marin with Zacks. Please go ahead.

Marla Marin (Analyst)

Thank you. There is a lot going on. Given that the company is involved now in conducting ongoing clinical study in Australia, upcoming in India, the Long COVID initiative, is it still right to think that the focus areas remain oncology, number one, followed by infectious disease or/ Long COVID, and then potentially organ transplantation?

Jim Frakes (CEO and CFO)

Hi, Marla. This is Jim. Our focus remains almost entirely on oncology. The upcoming trial in India is virtually parallel to the Australian trial. If we already have chemopurifiers stationed at the hospital, the PI is an expert using the chemopurifier. That remains our primary focus.

We took advantage of the relationship with UC San Francisco's Long COVID unit to obtain some precious but free samples that we analyzed once we were set up for the oncology trial. That is a cost-effective area that is potentially very valuable, but it is early. We are going to present at that conference in August, and if there is a possible grant situation, we will pursue that. Our main focus remains oncology.

Marla Marin (Analyst)

Okay. When you say it is cost-efficient, there was not significant, if any, capital outlay in order to conduct the collaboration. There is some potential for incoming non-dilutive funds. Is that the right way to think about that?

Jim Frakes (CEO and CFO)

If we can land such a non-dilutive grant or contract with the government, it is still very early, Marla. We are presenting some early data. That is interesting. We would have a lot of work to do. I do not want to overplay that.

Our history is in viruses. If there's another situation where we can help, we'll be poised to do that. I don't want to understate how much we're focused on oncology. It remains our primary.

Marla Marin (Analyst)

Right. Okay. One follow-up on that, and then one other last question. With the first three patients having been treated in Australia, could you please remind us again of—and you might have already said this in your prepared remarks, if you did, I apologize—could you remind us what the expected timeline is before you deliver some more robust data?

Jim Frakes (CEO and CFO)

Once there's an electronic data equivalent of the clipboard that used to be on patients from the old days, once that is finalized and the PIs have signed off on it, they'll be presented to the Data Safety Monitoring Committee. There's a tentative meeting set up in July.

If they like everything, they're going to give us a green light to proceed to the next cohort, which will be two treatments per week. At the same time, the blood samples that we've taken during the treatments and then afterwards have been sent by those hospitals to our lab at the University of Sydney, and they'll measure the changes in EVs and T-cells. We expect to receive that data later on in the summer. As I mentioned in my remarks, I can't wait. I don't know what they'll be. Hopefully, good. We've been waiting to see that kind of information for a long time.

Marla Marin (Analyst)

Right. Got it.

Jim Frakes (CEO and CFO)

Okay. That's our shareholders.

Marla Marin (Analyst)

Finally, my last question is you talked about in the press release about some non-recurring costs that were incurred in connection with some former executives.

Should we be thinking that the non-recurring expenses are, for the time being, finished? We will not be seeing additional one-off costs?

Jim Frakes (CEO and CFO)

We terminated three senior executives over a year. The former CEO, that ended just at the—there was a one-year payout for each of those. His ended in November of 2024. The second one ended—will end on Monday, June 30th. The third will end in September. I am not anticipating—I am not expecting any more. It would probably be me or our Chief Science Officer were the only ones left with contracts like that. I certainly hope that is not the case and do not expect it will be the case. Yeah, long-winded answer to your question. I am not expecting more of that.

Marla Marin (Analyst)

Okay. Great. Thank you.

Jim Frakes (CEO and CFO)

Thank you.

Operator (participant)

The next question is from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Thank you. Good afternoon, Jim. Thanks for doing this call. Sure. First of all, congratulations on getting the third patient through the trial. Based on what I heard so far, it looks like as soon as you get the okay from the DSMB review, you potentially could be starting the second cohort sometime in August or something like that. Does the diamonded protocol come into effect for the second cohort? Is it? Should we expect the enrollment, the next three patients, the enrollment of the next three patients to go much faster than the six-plus months that it took for the first three? How should we think about that? After that cohort, is there another DSMB look for safety before you start the third cohort where I think it is three chemopurifiers per week?

Jim Frakes (CEO and CFO)

The first cohort that we believe we finished is one treatment per week, just one treatment only in one week. The second cohort will be two treatments in one week. The third cohort will be three treatments in one week: Monday, Wednesday, Friday, or Tuesday, Thursday, Saturday. The DSMB will need to meet between each, so the one next month, about going to cohort number two. Then again, they'll need to meet before going to cohort number three to answer that question. In terms of recruitment, we now have three hospitals recruiting. The hospital that took the longest to get running because it's larger and more bureaucratic is Genesis Healthcare in Sydney. The population is just so much bigger in Sydney than Adelaide or Gold Coast. I think it's over 3 million people versus 1.2 or 1.3 million in Adelaide. Many more potential patients.

We see weekly updates on recruiting, and there's ongoing recruiting. We have a running start. We're not just waiting until the DSMB—we're not going to treat anybody until they've approved it. We're trying to line up patients to quickly move into that. There's a reason to think it should move much faster than the first cohort.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. Is there any potential for a third hospital to be joining in Australia, or is it just these two hospitals that are going to run the entire program?

Jim Frakes (CEO and CFO)

We have a third hospital in Gold Coast, which is north of Sydney, but they have not treated any patients yet. They could. I mean, they're still recruiting. I think it's a smaller hospital in a smaller population area. We're looking at potential other hospitals.

Again, we potentially only need six more patients best case for each of the remaining two cohorts. We have a running start. We're moving. They're screening. There's reason to think it should go faster.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. Switching geographies and going into India. My understanding is just one hospital, Medanta. What is the protocol there? Is the protocol there with the monotherapy or combination therapy? Because now that you know you have some safety in the first cohort, could you just go straight into combination therapies there, or how is the protocol approved there?

Jim Frakes (CEO and CFO)

That's a good question. Right now, it's the original protocol as a monotherapy. It was just approved. That's something to think about. The population that hospital is in Delhi, I don't know what the population is, but many millions of people.

It's a very high-end private hospital. I think their clientele should be able to afford these expensive drugs. I mean, we don't pay for them, but it's not a small public hospital out in the countryside. It's a big hospital in a big city.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Yeah. I know that.

Jim Frakes (CEO and CFO)

The doctor that's in charge of the renal treatment side of the equation is very familiar with our technology. She's done many, many chemopurifier treatments, albeit in FT patients, not oncology patients. They are comfortable with the device and the therapy.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. It's going to be the same, right? It'll be three patients per cohort?

Jim Frakes (CEO and CFO)

Yep. Same. Exactly the same. Same.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. Okay. All right. The same thing includes there too. There's a DSMB look after every cohort similar to what you're doing in Australia. Is that or that's not true?

Jim Frakes (CEO and CFO)

Yeah. I believe that's true.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. Okay. So now that at least you know you have both the geographies opened up, what are you thinking in terms of timing for this whole entire 9 or maybe 10 patients that you want to test for this study to get done?

Jim Frakes (CEO and CFO)

If we assume one patient a month for the remaining six in Australia, that would take us out year calendar year-end. There would be data collection after that, writing up a report, so another quarter or two. In terms of Australia, I think we're looking at about 9-12 months to be completely done, including writing up the report. India will have to see how fast it goes. We're just getting going there.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. Okay. So we should have a decent picture in a year from now, at least from the Australian side.

Jim Frakes (CEO and CFO)

Yeah. I would think so.

I would think so.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. All right. And then with your current cash and with your current runway, I mean, the expense runway, what is the total runway you could expect from this?

Jim Frakes (CEO and CFO)

Like all small life science companies that do not have revenues, we will need to keep raising money until we can take government grants or partner with a larger company. Eventually, we will need to do more equity financing, which is why your firm and other investment banks make a good business in the life science sector.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

In terms of getting a partner to the table, what sort of data do you think will help you get there?

Jim Frakes (CEO and CFO)

Hopefully, the data from this safety study will be sufficient to partner. Only time will tell. I do not think we have enough. I mean, we do not have any yet, really.

So it's all our hypothesis with a lot of safety data.

Swayampakula Ramakanth (Managing Director and Senior Healthcare Analyst)

Okay. All right. Thank you. Thanks for taking all my questions.

Jim Frakes (CEO and CFO)

Yeah. Thanks for your questions.

Operator (participant)

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

Anthony Vendetti (Executive Managing Director of Research)

Thank you. Hey, Jim. Thanks. Most of my questions have been answered. But maybe just following up because it was very recent that you received, I guess, June 19th, the approval in India. Obviously, a large population there. I know you said about one a month in Australia. Do you think once that gets up and running, the opportunity to do more than one per month there exists, or are you like, "Look, these are specialized patients. Shouldn't expect more than one per month"?

Jim Frakes (CEO and CFO)

It's very possible. We've observed the actual HP treatments in both Adelaide and Sydney. And they're basically done in the dialysis suites without dialysis cartridges.

Our cartridges are attached to a blood pumping machine. The nurses seem comfortable with it from what we've seen via Zoom. I don't think their ability to logistically treat the patients is a constraint. It's more the patient recruitment. If the oncologists begin to feel more comfortable, I would like to think more than one a month is possible. I can't.

Anthony Vendetti (Executive Managing Director of Research)

Yeah. No, no. I see.

Jim Frakes (CEO and CFO)

I mean, I can't promise you. I'll be happy if we can do one a month, but there's no reason why it couldn't be more.

Anthony Vendetti (Executive Managing Director of Research)

Yeah. I think just comparing the populations, I think it's 10x the population in India versus Australia. Larger patient pool is what I was thinking then.

Jim Frakes (CEO and CFO)

Right. Right. Right.

Anthony Vendetti (Executive Managing Director of Research)

You mentioned one of the ways, obviously, equity financing, but grant money too.

I think Aethlon has had grants before. I was wondering if you could just talk about the landscape for grant approval these days with all the changes going on. Is the government getting grants approved, A, taking longer, or B, is there just less grant money available and therefore more difficult to get grant money at this point?

Jim Frakes (CEO and CFO)

We haven't had any experience with the HHS on the grant side of things since the regime change. I still get emails, ticklers from people in that business. I know it is continuing. I mean, I basically ran our DARPA. It was like a $6 million five-year contract. We have had three or four smaller ones with HHS in the oncology area studying exosomes. They were small, $300,000 grants. We are familiar with them. If we can find one that aligns with our goals, I'm 100% for it.

If it does not align with our goals, they are not really all that profitable. I would think with the current regime, the overhead rates that could be charged might be lower than based on what has happened with the university's research overhead being cut. Not that that is really profit, but it is slimmer now than it was in those days. We will look. If we can find one that aligns, I think it would be fantastic.

Anthony Vendetti (Executive Managing Director of Research)

Okay. Just the last question on the expense side. I know you have cut expenses a couple of times here. It seems like you are pretty much at, I am not going to say a bare bones, but my guess is there is not much more to cut. What you have in terms of a staff is sort of what is necessary to continue to keep operating the company, correct?

Jim Frakes (CEO and CFO)

I think that is good insight. That is where we are. In fact, as activity ramps up with these oncology files, expenses in the GNA area might go up a bit. That is why I cut them back because I knew with success that would ramp up a bit.

Anthony Vendetti (Executive Managing Director of Research)

Okay. Great. Thank you so much. Appreciate you. Thanks for your help. I'll talk to you soon. Thanks for talking to you.

Operator (participant)

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

Jim Frakes (CEO and CFO)

I'd like to thank you all again for joining us today to discuss our fiscal fourth quarter results. We look forward to keeping you up to date on future calls. Thank you again. Goodbye.

Operator (participant)

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