Aethlon Medical Inc (AEMD)

[My 2 Cents]

Wow... great letter, IMO!

Aethlon Medical Inc. has added a news release to its Investor Relations website.

Title: Aethlon Medical Releases Shareholder Letter to Discuss the Treatment of Hepatitis-C Virus (HCV)
Date: 6/10/2009 7:47:00 AM

For a complete listing of our news releases, please click here


SAN DIEGO, June 10 /PRNewswire-FirstCall/ -- Aethlon Medical, Inc., (OTC
Bulletin Board: AEMD) disclosed today that its Chairman and CEO, James A.
Joyce has issued the following letter to shareholders.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090325/LA88762LOGO-b)

To our Shareholders:

On March 25th we announced a data driven strategy to improve Hepatitis-C
virus (HCV) cure rates by combining the benefit of our Hemopurifier(R) with
the interferon-ribavirin standard of care (SOC) administered to HCV-infected
patients. Since disclosing our strategy, a candidate business partner has
introduced us to clinical data that validates the mechanical removal of HCV
through blood filtration in combination with SOC therapy can increase HCV cure
rates by greater than 50%. Amazingly, the data also indicates that only small
levels of viral filtration administered at the outset of SOC therapy are
required to outperform the leading adjunct drug candidate, which represents a
significant value component of a publicly traded company whose market
capitalization exceeds $5 billion. If you are just learning about Aethlon
Medical, our Hemopurifier(R) is a first-in-class medical device that
selectively removes infectious viruses and immunosuppressive proteins from the
bloodstream. In HCV care, the Hemopurifier(R) inhibits viral replication
through selective adsorption of circulating HCV and augments the immune
response by removing toxic proteins shed from HCV to kill-off immune cells.
More than ever, I believe the scientific principles underlying our
Hemopurifier(R) will inevitably change the landscape for treating infectious
disease and cancer. As we transition beyond the research and development
phase of operations, our initial commercialization efforts related to
therapeutic Hemopurifier(R) applications will focus on delivering our
technology into India and other practitioner-driven medical device markets.
Pending the outbreak of a pandemic or bioterror threat, our primary focus in
these markets will be the treatment of HCV. Such focus is driven by previous
Hemopurifier(R) treatment outcomes, the validation that viral filtration
increases cure rates, and the magnitude of the HCV treatment opportunity.
Our goal in HCV care is to increase patient cure rates up to 90%. We
envision two pathways to reach this goal:
1. Our Hemopurifier(R) as an adjunct treatment to enhance the benefit of
SOC therapy; or
2. Our Hemopurifier(R) in combination with a candidate therapy to replace
SOC therapy.


The achievement of our goal would significantly impact the HCV treatment
industry as SOC therapy succeeds in providing sustained viral responses (SVR)
in only 30% to 50% of patients who initiate treatment. HCV infection is
considered cured when a SVR of undetectable viral load is maintained more than
six months after completing treatment. Prior to discussing the clinical
rationale supporting our treatment goals, I want to clarify the magnitude of
the HCV treatment opportunity.
It is estimated that nearly 180 million people worldwide, or approximately
3% of the world's population, are infected with HCV. To provide perspective,
this represents a patient population approximately 5-6 times larger than those
infected with HIV/AIDS and over 100 times larger than the population of end
stage renal disease (ESRD) patients who require kidney dialysis. However,
unlike kidney dialysis and HIV therapeutics, we actually have the opportunity
to participate in curing HCV-infected individuals. The global market for
therapies to treat HCV is projected to reach $9.1 billion by 2015, and in the
United States, the annual cost of advanced liver disease resulting from HCV
infection is anticipated to jump to $85 billion in the next two decades. As a
result, Medicare costs are anticipated to soar 500%, from $5 billion to $30
billion. As the stakes to treat HCV are high, the competition for new drugs
is intense with more than sixty treatment candidates reported to be in
development. As we target the use of our Hemopurifier(R) as a drug
enhancement device in HCV care, we are positioned to improve treatment
outcomes as an adjunct to both SOC therapy and new drug candidates that evolve
to challenge SOC therapy in the marketplace.
Significant challenges exist for drugs seeking to supplant SOC therapy, as
new candidates must demonstrate substantially greater patient benefit in order
for the medical community to consider discontinuing administration of the SOC
treatment regimen. As an example, Albuferon, an HCV treatment candidate from
Human Genome Sciences (HGSI), recently demonstrated phase III treatment
outcomes comparable to SOC therapy with half the number of required
injections. As a result, the value of HGSI shares was reduced by 57% the day
the study data was released. I can't help but wonder how Albuferon might have
performed in combination with our Hemopurifier(R)? Regardless, a drug
candidate wishing to supplant SOC therapy in the market will need to Bob
Beamon (surpassed world long jump record by almost two feet at the 1968
Olympics) beyond the capabilities of SOC therapy.
For this reason, the primary strategy for most HCV drug candidates is to
incrementally improve treatment outcomes as an adjunct to SOC therapy. The
challenge facing these candidates is the effect of stacking new drug toxicity
on top of established SOC toxicity, which is known to trigger fatigue, bone
marrow suppression, anemia and neuropsychiatric effects. Many patients fail
SOC therapy because they are unable to endure the toxicity of the 24-48 week
regimen on its own. Based on clinical data, Telaprevir, a 3x-day oral drug
from Vertex Pharmaceuticals is considered the leading adjunct candidate based
on outcomes of a recent phase II study, which documented that 51% of patients
that previously failed SOC had a sustained virologic response (SVR) when
retreated with SOC and Teleprevir in combination. When considering that only
14% of patients in the study control arm responded to SOC alone, there is
certainly valid justification for Telaprevir to be considered the lead adjunct
drug candidate by the medical and the financial community. This is reinforced
by the reality that Telaprevir represents a significant value component of
Vertex (VRTX), which as I write this letter is valued at more $5 billion in
the public markets. In regards to deal values in the HCV space, VRTX paid
almost $400 million in March to acquire ViroChem, a drug developer with two
experimental stage HCV drugs. TheStreet.com, who provides excellent HCV market
coverage, reports the following on the Telaprevir clinical outcome; "The data
keeps Telarevir ahead of its hepatitis C rivals because no other drug has yet
shown the ability to improve the cure rates for both patients new to therapy
as well as those who have failed prior therapy." The key phrase in that
statement is "no other drug".
I suspect most individuals following the HCV treatment industry are not
yet aware of a medical device study that demonstrated the mechanical removal
of HCV through blood filtration outperforms Telaprevir as an adjunct to SOC
therapy. The insight provided by this clinical validation should
significantly benefit our endeavors. In a 63 patient study conducted in
Japan, Asahi Kasei Kuraray Medical (Asahi) demonstrated that double filtration
plasmapheresis (DFPP) when administered at the outset of SOC therapy provided
a 77.8% SVR in HCV-infected patients. In patients who previously failed SOC,
DFPP treatment provided an average SVR of 71.4% versus the 51% previously
referenced in Telaprevir clinical studies. On average, each patient in the
Asahi study received three DFPP treatments each lasting 3.14 hours. In the
study, DFPP was administered once daily for three consecutive days at the
outset of SOC therapy and provided an average viral load reduction of 26.1%
during each treatment period. Amazingly, the 71.4% and 77.8% cures rates were
achieved without any additional DFPP during the remaining SOC treatment
regimen. As a result of DFPP treatment outcomes, Asahi has advanced DFPP
beyond treatment candidate status to actively marketing the treatment in Japan
as the V-RAD system, which Asahi derives from the phrase "Virus Removal and
Eradication by DFPP". Additional information can be accessed online at:
www.v-rad.jp/en/index.html. I shall keep my comments directed towards the
science underlying the V-RAD system and not the animation you will encounter
at this website. Regardless, the website is quite informative.
However, there are significant limitations for DFPP as compared to our
Hemopurifer(R). Like other approaches to therapeutic filtration, DFPP relies
on multiple pumps and filters to indiscriminately remove particles by molecule
size. For this reason, DFPP also extracts particles beyond HCV that are
required for patient health. The safety profile of DFPP can be further
diminished by the need for replacement fluids. In combination, these factors
limit the time an HCV-infected patient can be exposed to DFPP treatment.
The advantages of our Hemopurifier(R) as compared to DFPP include the
following:
1. The Hemopurifier(R) provides a greater reduction of HCV from
circulation during treatment. Our data resulting from over 20 HCV
treatments indicates an average viral load reduction of 41% during
four-hour treatment applications of the Hemopurifier(R).
2. The Hemopurifier(R) augments the immune response by removing toxic
proteins shed from HCV to kill-off immune cells. These proteins are too
small to be captured by DFPP.
3. The Hemopurifier(R) is designed to selectively capture HCV and
immunosuppressive proteins versus the indiscriminate removal of
particles by DFPP.
4. The Hemopurifier(R) is one single-use disposable cartridge versus the
requirement for two cartridges and multiple pumps with DFPP.
5. The selective ability of the Hemopurifier(R) to capture targeted
viruses and immunosuppressive proteins (versus the removal of needed
blood components) allows for a continuous Hemopurifier(R) treatment
strategy to rapidly reduce viral load to low to undetectable levels.
Thus, increasing the likelihood that HCV infected individual can be
cured by SOC therapy.


While we believe our Hemopurifier(R) has obvious advantages over the DFPP
system, I wish to expand on point #5 as it provides a foundation to support
our treatment goal of increasing HCV cure rates up to 90%. Based on published
treatment literature, it is well established that patients who initiate SOC
and achieve a rapid viral response (RVR) have significantly higher cure rates.
RVR is defined as undetectable viral load at day 30 of SOC treatment. In
fact, published literature indicates the small percentage of patients who do
achieve a RVR have cure rates that range from 86-92%. Based on our
Hemopurifier(R) data, we believe it is possible to achieve undetectable levels
of HCV in week one of SOC therapy, not day 30. Based on data analyzed from
four-hour Hemopurifier(R) treatments, we project that a patient with a high
viral load of 7 million iu/ml might be reduced to undetectable HCV levels
after approximately three days of continuous Hemopurifier(R) treatment. This
corresponds to a 4.06 log reduction or a 11,000-fold decrease in viral load.
An HCV patient with a moderate viral load of 2 million iu/ml would be
projected to reach undetectable levels in approximately 2.5 days of continuous
treatment. Such outcomes would position us to achieve our 90% cure rate goal
and may allow for decreased dosages and duration of SOC therapy.
To leverage our opportunity in HCV care, we are pursuing strategic
relationships that will broaden our ability to commercialize in practitioner
driven markets, or accelerate our clinical opportunities in the U.S. and
European Union. Additionally, we have responded to a grant opportunity to
advance a diagnostic based Hemopurifier(R) and have been working on a
candidate clinical protocol for a grant proposal related to the use of our
Hemopurifier(R) as an adjunct cancer treatment to remove tumor secreted
exosomes known to suppress the immune system of cancer patients. The data
from these cumulative activities, including recent HIV and HCV treatment
outcomes, will cause us to update the investigational device exemption (IDE)
we have previously filed with the FDA related to use of our Hemopurifier(R) as
a treatment countermeasure against bioterror and pandemic threats. In this
regard, we were recently advised that we were a candidate being considered for
a contract award from the Biomedical Advanced Research and Development
Authority (BARDA). This was related to a multi-agency contract solicitation
known as DMID-NIAID-NIHAI20080022BARDA. We have since been advised by BARDA
that they will not be granting awards under this solicitation. BARDA has
encouraged to update our data collected since our original submission and
resubmit a new proposal to a BARDA specific contract solicitation known as
BAA-BARDA-09-34. As we believe our Hemopurifier(R) represents the most
advanced broad-spectrum treatment strategy to protect our military and
civilian populations from viruses considered bioterror and pandemic threats,
we plan to provide BARDA our new submission no later than July 31st.
Regardless of these opportunities, our primary focus moving forward will be
the treatment of Hepatitis-C.
On behalf of our dedicated team at Aethlon Medical, I thank you for your
continued support.
Very truly yours,

James A. Joyce
Chairman, CEO