SAN DIEGO, Nov. 10, 2016 /PRNewswire/ -- Aethlon Medical, Inc. (Nasdaq: AEMD), a developer of immunotherapeutic technologies to combat infectious disease and cancer, today announced results for its fiscal second quarter year ended September 30, 2016.
Aethlon's lead therapeutic candidate is the Aethlon Hemopurifier®, a first-in-class device that provides broad-spectrum elimination of infectious viruses and cancer-promoting exosomes from the circulatory system. In collaboration with its majority-owned Exosome Sciences, Inc. (ESI) subsidiary, the company is focused on the discovery of exosome-based biomarkers to diagnose and monitor a wide range of disease conditions.
Corporate activities during the quarter and the six months fiscal year to date include:
Continued clinical advancement of the Aethlon Hemopurifier®, which the Company believes to be the first and only medical device being advanced in FDA approved studies as a broad-spectrum treatment countermeasure against infectious viral pathogens.
The Company is advancing the Hemopurifier® to fulfill the broad-spectrum medical countermeasure goal of the U.S. Department of Health and Human Services 2015 Public Health Emergency Medical Countermeasure Enterprise (PHEMCE), which includes participation and support from the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the National Institutes of Health (NIH), the Department of Defense (DOD), the U.S. Department of Veterans Affairs (VA) and the Department of Homeland Security (DHS).
During the quarter, the Company completed in vitro studies that demonstrated the capture of Zika virus by the Aethlon Hemopurifier.
The Company further disclosed that it has completed in vitro studies that confirm the capture of Middle East Respiratory Syndrome Coronavirus (MERS-CoV) by the Hemopurifier. MERS-CoV was first reported in 2012, has spread to over 22 countries and has a mortality rate of 35%. Like Zika virus, there is no proven antiviral drug or vaccine to treat MERS-CoV.
The Company disclosed that the FDA approved Hemopurifier feasibility study being conducted at DaVita Med Center in Houston is moving toward completion. As a result, the Company provided guidance related to 2017 U.S. clinical progression objectives. The 2017 guidance included the submission of a pivotal study protocol to FDA, the submission of one or more Humanitarian Use Device applications to FDA and the pursuit of Emergency-Use Authorization pathways that result from emerging pandemic outbreaks or bioterror events that become declared a national emergency by the Secretary of Health and Human Services. The Company previously received and maintains such authorization to treat Ebola virus in the United States and Canada.
The Company achieved 29 of 29 milestone targets to complete a Department of Defense (DOD) Contract through the Defense Advanced Research Projects Agency (DARPA), which generated overall revenues of approximately $5.9 million.
The Company disclosed that it has submitted responses to two new DOD infectious disease contract solicitations and also has submitted a contract response to the National Cancer Institute related to tumor-derived exosomes.
Related to tumor-derived exosomes, the Company disclosed that the completion of the current Hemopurifier® feasibility study being conducted in Houston would be an impetus for discussions with FDA related to the potential first-in-human treatment of cancer patients with Hemopurifier therapy.
mor-derived exosomes represent a significant unmet need in oncology as they promote the spread of metastasis, suppress the immune system and contribute to chemotherapy and immuno-oncology drug resistance. Management believes that reducing the presence of tumor-derived exosomes in circulation could improve the benefit of established cancer therapies, including immuno-oncology drugs and chemotherapeutic regimens.
Future research endeavors includes the introduction of a prototype cerebral spinal fluid (CSF) therapeutic platform that leverages proprietary pathogen isolation techniques as a potential candidate to address CSF related viral, neurological and central nervous system disorders. The Company also indicated that it plans to introduce a study that would explore the potential use of Hemopurifier therapy in immune-suppressed sepsis and organ transplant patients.
Disclosed that reported institutional and mutual fund ownership in the company has increased to over 22% with more than 25 such holders.
The Company reported that it continues to maintain operational burn rates of approximately $300,000 per month and has more than $12 million of an original $12.5 million "At The Market" financing facility available, which provides access to capital at prevailing market prices.
Exosome Sciences (ESI) Subsidiary – The Company disclosed that the recruitment of former NFL players to participate in study supported by a $16 million NIH grant awarded to collaborators at the Boston University CTE Center has begun.
An objective of the study is to advance a test that could diagnose Chronic Traumatic Encephalopathy (CTE) in living individuals. ESI previously collaborated with the Boston University team to discover a TauSome biomarker, which is believed to be the first candidate biomarker to diagnose CTE in living individuals.
In a 94-subject study, ESI measured TauSome levels to be approximately 9x higher in former NFL players as compared to same-age control subjects. ESI has agreed to provide continued TauSome testing analysis in the new NIH supported study. The Company further disclosed that ESI is exploring TauSome studies in other neurological conditions.
Financial Results
At September 30, 2016, the Company had a cash balance of approximately $556 thousand. That cash position combined with capital generated under the $12.5 million At-The-Market financing agreement will continue to be used to fund our FDA-approved feasibility study in the U.S. and operations.
The Company recorded revenues of $387 thousand from its government contracts in the second quarter of fiscal 2017 compared to $188 thousand in the second quarter of fiscal 2016. The increase was due to the achievement of two milestones under our DARPA contract in 2017 period compared to achieving one milestone in the prior year period.
Consolidated operating expenses were $2.6 million in the second quarter of fiscal 2017 compared to $1.3 million in the prior year period. This increase of $1.3 million was due to increases in payroll and related expenses of $1.2 million and in professional fees of $122 thousand, which were partially offset by a reduction in general and administrative expenses of $36 thousand.
The $1.2 million increase in payroll and related expenses was due to a $1.5 million increase in non-cash stock-based compensation, which was partially offset by a $257 thousand decrease in cash-based compensation. The increase in stock-based compensation was the result of the RSU grants to our officers and directors in the three months ended September 30, 2016. The expense related to the RSU issuances was offset by an increase in our equity.
The Company had other expense of $37 thousand in the second quarter of fiscal 2017 compared to $127 thousand in the prior year period, a decrease of $90 thousand. All of our other expense in both periods was interest expense. The most significant factor in the $90 thousand decrease in interest expense was the $74 thousand decrease in the amortization of note discounts, which related to the amortization against the discount on the convertible notes that we issued in November 2014.
Other smaller factors in the change in our total interest were a $20 thousand decrease in the amortization of deferred financing costs and a $4 thousand increase in our contractual interest expense.
Overall, the net loss for the second quarter of fiscal 2017 was $2.3 million, or $0.29 per share, compared to a net loss of $1.2 million, or $0.16 per share in the prior year period.
The unaudited condensed consolidated balance sheet for September 30, 2016 and the unaudited condensed consolidated statements of operations for the three and six month periods ended September 30, 2016 and 2015 follow at the end of this release.
Conference Call
Aethlon will hold a conference call for investors on Thursday.
November 10, 2016. Investors may access the call by dialing 844-836-8741 (domestic) or 412-317-5442 (International). A live webcast of the call will be available from the Investor Relations section of www.aethlonmedical.com.
A recording of the call will also be available by calling 877-344-7529; access code 10096196 beginning approximately two hours after the call, and will be available for one week. A webcast replay from today's call will also be available from the Investor Relations section of www.aethlonmedical.com approximately one hour after the call and will be available for up to three months.
