Aethlon Medical, Inc.

Good day and welcome to the Athlon Medical fiscal year end of 2024 earnings conference 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 touchtone phone. And 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. Michael Miller with RX Communications. Please go ahead, sir.

Thank you, operator. And good afternoon, everyone. Welcome to Athlon Medical's fiscal year-end 2024 earnings conference call. My name is Michael Miller with RX Communications. At 4.15 p.m. Eastern time today, Athlon Medical released financial results for its fiscal year-end March 31st, 2024. If you have not seen or received Athlon Medical's earnings release, please visit the investors page at www.athlonmedical.com. Following this introduction and the reading of the company's forward-looking statement, Athlon's Interim Chief Executive Officer and Chief Financial Officer, James Frakes, and Athlon's Chief Medical Officer, Dr. Stephen LaRosa, will provide an overview of Athlon's strategy and recent developments. Mr. Frakes will then make some brief remarks on Athlon's financials. We will then open up the call for the Q&A session. Before I hand the call over to Mr. Frakes, 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 and 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 end, March 31st, 2024, and 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, I'll now turn the call over to Mr. James Frakes, Athlon's interim chief executive officer and chief financial officer.

Thank you, Mike. And I would like to thank all of you for dialing in. This is Jim Frakes. Athlon Medical is continuing the research and clinical development of its single purifier, a therapeutic blood filtration system designed to bind and remove harmful exosomes and life-threatening viruses from blood and other biological fluids. These qualities of the hemopurifier have potential applications in oncology, where cancer-associated exosomes may promote immune suppression and metastases, and in life-threatening infectious diseases. Athlon is also investigating the use of the hemopurifier in the organ transplant setting, initially focusing on the potential removal of viruses and exosomes with harmful cargo from recovered kidneys. Dr. Steven LaRosa will give you an update on our efforts to date on the oncology front and on potential milestones that we hope to achieve later on this year. However, before I turn the call over to Dr. LaRosa, I want to note that we've received multiple inquiries regarding the current multi-state outbreak of H5N1 avian influenza virus in dairy cattle. While the hemopurifier has demonstrated the ability to capture prior iterations of the H5N1 bird flu virus in in vitro experiments, we have not tested the hemopurifier against the current strain, nor have there been many cases of the current strain infecting humans. The company will continue to monitor the situation and provide any potential updates as needed. It's also worth noting that in April 2024, the US Food and Drug Administration approved our internal manufacturing facility under our virology IDE. With that, I will now turn the call over to Dr. Steven LaRosa, Athlon's Chief Medical Officer.

Thank you, Jim. As announced on June 18, 2024, the Human Research Ethics Committee of the Central Adelaide Local Health Network granted full ethics approval for Athlon's safety, feasibility, and dose-finding clinical trial of the hemopurifier in cancer patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatments, such as Keytruda, Pembrolizumab, or Avivo, the volume out. This is known as the AEMV 2022-06 hemopurifier study. The approval is valid for three years until June 13, 2027. The trial will be conducted by Professor Michael Brown and his staff at the Cancer Clinical Trials Unit, Central Adelaide Local Health Network, Royal Adelaide Hospital, located in Adelaide, Australia. 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 cancers, as well as resistance to these anti-PD-1 therapies. The Apon hemopurifier has been designed to bind and remove these extracellular vesicles 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 exosomes from the plasma of cancer patient samples. During the fourth quarter and subsequent period, we have continued to make significant progress advancing towards our plans, safety, feasibility, and dose finding oncology trials in Australia and India, punctuated by the recent approval from the Human Research Ethics Committee at Central Adelaide Local Health Network. Upon submission to the Therapeutic Goods Administration, which is the National Health Regulatory Agency of Australia, obtaining approval from the Central Adelaide Local Health Research Governance Committee, and conducting a site initiation visit, we expect that we will be able to enroll and treat the first patient either in the September quarter or in the December quarter. We anticipate several upcoming potential value-creating milestones including submission to the ethics committees at two additional sites in Australia and one in India, with the expectation of possibly receiving approval from one or more of those three hospitals in the September quarter 2024, after which we expect to be able to enroll patients at these additional sites by the end of 2024. As a reminder, the primary endpoint of the approximate 18-patient safety, feasibility, and dose-finding trial is safety. The trial will monitor any adverse events and clinically significant changes in lab tests of hemopurified treated patients with solid tumors with progressive or stable disease after a two-month run-in period of anti-PD-1 antibodies, Keytruda or Opivo. Patients who do not respond to the PD-1 antibody therapy will be eligible to enter the hemopurifier period of the study, where sequential cohorts will receive 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 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 premarket approval, known as a PMA study, required by the FDA and other regulatory agencies. The company is also maintaining a position in the use of a chemo purifier as a treatment against life-threatening viral infections through its COVID-19 trial in India. There are two participating sites for this trial, Medanta MediCity Hospital and Malana Azad Medical College. One patient has been treated thus far. However, the company has been informed by its contract research organization that a new COVID-19 sub-variant was recently detected in India. The COVID-19 trial in India remains open in the event that there are COVID-19 admissions to the intensive care units at these two participating sites. With that, I'll turn the call back over to Jim for the financial discussion and then open up for questions.

Thank you, Steve. And good afternoon again, everyone. Before I turn to the financial matters, I just want to say after being in this position for about six months, I'm very pleased and excited that we are moving forward now with this clinical trial. And, you know, we're excited. On to the finances. As of March 31, 2024, Athlon Medical had a cash balance of approximately $5.4 million. And as of June 25, 2024, we had a cash balance of approximately $9.1 million. And as I've been previously encouraged not to cover our expenses on such a granular basis, like I had done previously, I'll try to keep my remarks at a higher level this quarter. You'll find detailed expense information on the financial statements attached to our earnings release. I just hit the wire or in our soon to be filed report on form 10 K. Our consolidated operating expenses for the fiscal year ended March 31, 2024 were approximately $12.6 million compared to approximately $12.5 million for the fiscal year ended March 31, 2023. An increase of approximately $164,000. This increase in the fiscal year ended March 31, 2024 was due to an increase in payroll and related expenses of approximately $763,000, partially offset by decreases in G&A expenses of approximately $578,000, and in professional fees of approximately $21,000. The approximate $763,000 increase in payroll and related expenses was primarily due to separation expenses for the company's former chief executive officer, of $862,000, and we had an increase of $127,000 associated with an increase in average headcount. And those were partially offset by a decrease in stock-based comp of $226,000. The approximate $578,000 decrease in general and administrative expenses was primarily driven by a decrease of $819,000 in clinical trial expenses related to the closed US COVID-19 clinical trial. A decrease of $280,000 in subcontract expense related to contracts and grants with the National Institutes of Health. A $99,000 decrease in rent expense associated with a mobile clean room leased in the prior year. A decrease of $30,000 in travel related expenses associated with a former remote employee. and a decrease of $22,000 in expenses related to various other general office and operating expenses. These decreases were partially offset by an increase of $405,000 in manufacturing and R&D supplies related to manufacturing hemopurifier devices and various R&D activities. And the approximate $21,000 decrease in professional fees was primarily due to a decrease in outside scientific product research and regulatory services of $303,000, a decrease of $60,000 in recruiting fees, and a $33,000 decrease in legal fees. These decreases were partially offset by increases in investor relations of $151,000, accounting fees of $137,000, and board of director fees of $34,000. and outside operational and administrative expenses of $53,000. As a result of the factors I just mentioned, Athlon's net loss increased to $12.2 million for the fiscal year ended March 31, 2024, from $12.0 million for the fiscal year ended March 31, 2023. We included these earnings results and related commentary in a press release issued earlier this afternoon. That release included the balance sheet for March 31, 2024 and the statements of operations for the fiscal years ended March 31, 2024 and 2023. 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, 2024 will coincide with the filing of our quarterly report on Form 10-Q in August 2024. And now, Steve and I would be happy to take any questions that you may have. Operator, please open the call for questions.

Yes, sir. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone 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 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Marla Marin with Zacks. Please go ahead. Thank you.

So good afternoon. Can you talk a little bit, obviously it was a, you know, pretty big announcement you had about the approval from the ethics board. Can you talk a little bit about how you see that possibly facilitating, you know, moving forward at additional venues?

Steve, do you want to take that?

Sure. Thanks, Marla. So in Australia, things work in a different fashion than in the U.S., where the primary gatekeeper for going forward with a clinical trial is the FDA. In Australia, you go first to the ethics board committee, ethics committees at the hospital. They're the primary gatekeeper where they... they follow the rules and the national statements for the scientific merit and the ethics of doing a study. So the approval from the central Adelaide local health network is an important milestone because now we can submit to the governance committee at the hospital, which looks at the logistics of the study, and we can inform the TGA, which is the FDA equivalent in the In Australia, we can inform them and notify them that we're going to go forward. So it really is a big lever that's pressed to initiate. As we said, we will submit to the TGA for a notification. We'll get governance. We'll seek governance approval from the hospital, and then we'll do a site training. But this is the first big step that sets everything else in motion. And the one thing I will say is the other hospitals that will be submitted to in Australia, it's important to them that an ethics committee at another site has already approved. That facilitates things in their review.

Thank you. That makes sense. And in terms of how this study is designed to include patients who are you know, who have various different types of tumors. Can you talk a little bit about how you see that potentially helping to facilitate patient enrollment?

Yes. So, the study that's going forward in Australia and India is what's called a basket trial, which means we're being agnostic to the tumor type that we may benefit. We're actually going to be able to enroll any patient who has a solid tumor type for which an anti-PD1 therapy is standard of care. And after a two-month period, those that aren't responding will go on. So the data from the trial will inform us about the effect in more than a single tumor type. It will include such very common tumors as non-small cell lung cancer, as well as melanoma, which is quite a problem in Australia. So we'll be able to get data from a variety of tumor types. It's also set up in touch away that we can examine the interval of dosing with the hemopurifier to determine how often would you need to administer the treatment to have a lasting effect on decreasing exosomes and improving the immune system. So it will provide a data set that will that it's the design of the efficacy trial that I mentioned, the PMA trial.

All right, thank you.

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

Hi, this is actually Jeremy on the line for Anthony. How are you doing? Just two quick questions. So hopefully if you get all these other approvals that you need to begin this clinical trial, When do you think, you know, you have 18 patients. What do you think the timeline for that would be? You mentioned that you hope to get the first patient enrolled either in the, let's say the third or fourth quarter of the calendar quarter. But then when do you think, how do you think the rest of the timeline plays out? And then when you could start the next, the PMA study. Steve, do you want to reply?

Yeah. So the way the study set up, we, we, specifically did feasibility assessments at the three sites that we mentioned in Australia as well as the site in India. So we know that these are high-quality, active cancer clinical trial units, and we've done due diligence that they have the patients who are getting the NPPD-1 therapies that we mentioned in the volume map and temporalism map. So I can't give you what the exact enrollment rates will be, but at least we've done our feasibility that these are sites that have a reasonably large patient population in which screening can take place. So we're anticipating based on our feasibility status that enrollment will proceed in a timely fashion.

Okay, understood. Thank you. And then just moving, I know it seems like oncology is your number one focus right now, but you have mentioned, you know, in the press release and in the past about an opportunity in Oregon transplant. And he did say that you had some publications. I think you may be working on is there, maybe you can give us some update on that. That'd be helpful. Thank you. Sure. Jeremy. Uh, this is Jim.

Uh, we do have most of a publication drafted I'm told, and we will, uh, get that published sooner rather than later. I think there's no date in mind. Um, um, Athlon perhaps has come across as a little schizophrenic in the past. I'm trying to really have a solid focus on oncology. But the paper's mostly written. Our technology appears to work well in that organ transplant setting in the perfusates. So we do want to get that information out. And there may be opportunities to hook up in some fashion with... organ procurement operations across the country or there are firms that, you know, are commercial firms that play in that industry and that might be a good opportunity to work with them instead of doing it on our own. But it's early days, but we will see how that works.

Okay, great. Thank you so much. Well, I'll have that in the queue. Thanks, Jeremy.

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.

Thank you again for joining us today to discuss our year-end results, and we look forward to keeping you up to date on future calls. Have a good day. Thanks. Bye.

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