Aethlon Medical, Inc.

Good afternoon and welcome to the Athlon 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 far 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.

Thank you, Operator, and good afternoon, everyone. Welcome to Athlon Medical's Fiscal Fourth Quarter 2025 Earnings Conference Call. My name is Jim Frakes, and I am the Chief Executive Officer for and Chief Financial Officer of Athlon Medical. Now, I have some bad news and some good news to report on this call. The bad news is since Dr. Stephen LaRosa, our Chief Medical Officer, is out on a family vacation, you'll have to listen to my soliloquy throughout this call. But the good news is that we made more progress advancing in the clinic with our products this period than in any quarter since I've been with Athlon. At 4.15 p.m. Eastern Time today, Athlon Medical released financial results for its fiscal fourth quarter ended March 31, 2025. If you have not seen or received Athlon Medical's earnings release, please visit the investors page at www.athlonmedical.com to view it. Following this introduction and the reading of the company's forward-looking statement disclaimers, I will provide an overview of our strategy and recent developments. I will then make some brief remarks on Athlon'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 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 was amended. The company costings view 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, 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. Acceptance 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 Pistol URAN 2025 through today. We treated the first three patients in our oncology trial using the hemothorifier 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 the evolving standard of care in immunotherapy. Our preclinical data demonstrate 98.5% removal of platelets-derived extracellular vesicles, or EVs, in simulated hematurifier treatments. We're collaborating with University of California, San Francisco, or UCSF, on long COVID research with findings to be presented at the upcoming Keystone Symposium. And 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 hemoperifier treatments in the first three participants, enrolled in our safety feasibility and dose-finding study of patients with solid tumors and responsive 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 hemopurifier 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 DSMD, 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 hemopurifier 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 hemopurifier affected EE levels and anti-tumor T cell activity. I, like all of you, am anxious to learn what the effects of our product are on TB removal and anti-tumor T cell activity. from these cancer patients that were treated with a hemopurifier. We also amended the trial protocol to allow enrollment of patients receiving combination therapies with either Pemrolizumab, better known as Keyfruda, or Novolumab, 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 EDs are thought to play a role in resistance to these treatments. The hemopurifier is designed to bind and remove these EDs from the bloodstream, potentially improving the therapeutic response rate to anti-T1 antibodies. In our preclinical studies, we've already seen the hemopurifier reduce the number of of these ED levels in plasma samples in cancer patients. But just to reiterate, the primary endpoint of this study is Stacey. We're monitoring for any adverse events and clinically significant changes in lab tests following the hemopurifier treatments. The study is designed to include between 9 to 18 participants, and the patients will receive between one and three hemopurifier treatments, depending on the cohort. We are also conducting exploratory analysis to understand how the number of chemo-purifier treatments impact 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 CESCO, India's regulatory authority to begin a similar oncology study at Madhansan Medical City Hospital. That approval followed a successful meeting with the subject expert committee and prior ethics committee clearance. The trial will begin following a site initiation visit conducted by our India-based CRO, Qualtrans. 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 submitted a manuscript to a peer-reviewed journal for publication. In that study, we showed that the hemofurifier, using our proprietary GNA affinity resin, removed 98.5% of platelet-derived extracellular vesicles, or PDEDs, from human plasma during a time point equivalent to a four-hour hematurifier treatment. Excessive levels of PDEDs have been implicated in many serious conditions beyond cancer, including lupus, systematic 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 electron affinity resin. These findings add to our growing body of evidence and support future exploration, further exploration of the hemofurifier in addressing the significant and still unmet medical need impacting an estimated 44 to 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 they have the greatest clinical and regulatory impact. So in summary, I've worked at Athlon 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 31, 2025, we had a cash balance of approximately $5.5 million, and 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 in general and administrative expenses. We did record a non-cash charge that impacted the income statement. Most notably, we recognized the $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 to this warrant inducement offer. This involves 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 10K annual report that we will issue following this call. Also, we recognize 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 the 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. And now, I'd be happy to answer any questions that you may have. Operator, please open the call for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 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 2. At this time, we will pause momentarily to assemble our roster.

Our first question is from Marla Marin with Zach. Please go ahead.

Thank you. So there's a lot going on. Given that the company is involved now in conducting ongoing clinical study in Australia, upcoming in India, the long COVIDs, Is it still right to think that the focus areas remain oncology, number one, followed by infectious disease or slash long COVID, and then potentially organ transplantation?

Hi, Marla. This is Jim. Our focus remains almost entirely on oncology. The upcoming trial in India is virtually parallel to the Australian trial, so we obviously already have hemoperifiers stationed at the hospital. The PI is an expert using the hemoperifier. So 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. So that's a cost-effective area that's potentially very valuable, but it's early. We're going to present at that conference in August, and if there's a possible grant situation, we'll pursue that. But our main focus remains oncology. Okay.

Okay, and when you say it's cost-efficient, so there wasn't significant, if any, capital outlay in order to conduct the collaboration, and there is some potential for incoming non-dilutive funds. Is that the right way to think about that?

If we can land such a non-diluted grant or contract with the government, it's still very early, Marla. We're designing some early data. That's interesting. But we would have a lot of work to do. So I don't want to overplay that. Our history is in viruses. If there's another situation where we can help, you know, we'll be poised to do that, but I don't want to understate how much we're focused on oncology if it remains our primary.

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

Well, once the, you know, there's an electronic data equivalent of the clipboard that used to be on stations. As from the old days, Once that is finalized and the CIs are 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. And 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 University of Sydney, and they'll measure the changes in EVs and T cells, and 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 it's good that we've been waiting to see that kind of information for a long time.

Right. Got it. Okay.

We have to have our shareholders.

Right. And then 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. Yes. So, should we be thinking that the non-recurring expenses are, for the time being, are finished? We won't be seeing additional one-off costs?

So, we terminated three senior executives over, like, a year, and... The former CEO ended, 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. And the third will end in September. And I'm not anticipating, I'm not expecting anything worse. It was probably to me or our chief finance officer, we're the only ones left with contracts like that. And I certainly hope That's not the case, and don't expect it will be the case. So, yeah, long-winded answer to your question. I'm not expecting more of that.

Okay, great. Thank you.

Thank you.

The next question is from Swy Impatual Ramakant with H.C. Wainwright. Please go ahead.

Thank you. Good afternoon, Jim, and thanks for doing this call. Sure. successful congratulations on getting you know the third patient through the trial so based on what I heard so far it looks like as soon as you just be okay from the DSMD review you potentially could be starting the second cohort you know sometime in August or something like that so and does does you know the diamond that protocol comes in the effect for the second cohort is it so should we expect um the the enrollment you know the next three patients the enrollment of the next situation go much faster than the six plus that another for the first three how should we think about that and then Will, after that cohort, is there another DSMB look how safe he is before you start the third cohort that I think it's 300? Sure. He must be unified per week?

So the first cohort that we believe we finished is one treatment per week. There's one treatment only in one week. The second cohort will be two treatments in one week. And 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, and 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 San Francisco Healthcare in Sydney. And the population is just somewhat bigger in Sydney than Adelaide or Gold Coast. I think it's over 3 million people versus 1.2 or 3 in Adelaide. So many more potential patients and we see weekly updates on recruiting and there's ongoing recruiting. So we're we have a running start. We're not just waiting until the DFMD, we're not going to treat anybody until they approve it, but we're trying to line up patients to quickly move into that. So there's reason to think it should move much faster than the first cohort.

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

Well, we have a third hospital in Gold Coast, which is north of Sydney, but they have not treated any patients yet. I mean, they're still recruiting. I think it's a smaller hospital in a smaller population area. And we're looking at potential other hospitals. But, again, we potentially only need six more patients, in that case, three in each. Okay. So we have a running start. We're moving. They're screening. So there's reason to think it should go faster.

Okay. And then switching geographies and going into India. So this is my understanding is it's just one hospital, Medanta. For what? what is the protocol there is the protocol there with the monotherapy or combination therapy or because now that you know you have some safety in the first cohort so could you just go straight into combination therapies there or what how is the protocol approved there that's a good question um right now it's the original protocol as a monotherapy and it was just approved so

That's something to think about, but the population, that hospital is in Delhi. I don't know what the population is, but many millions of people. And it's a very high-end private hospital, so 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. And 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 hematuria fire treatments, albeit in Epstein patients, not oncology patients. So they are comfortable with...

the device and the therapy.

Okay. But it's going to be the same, right? So it will be three patients per cohort? Yep, same. Okay. Okay. All right. And then the same thing includes there too, like there's a DSMV look after every cohort similar to what you're doing in Australia. Is that or that's not true?

I believe that's true.

Okay. Okay, so now that at least you know you have both the biographies opened up, what are you thinking in terms of timing for this whole entire nine or 18 patients that you want to test for the study to get done?

Well, 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, you know, another quarter or two.

But in terms of Australia, I think we're looking at about nine to 12 months. To be completely clear. Including writing up the report.

India, we'll have to see how fast it goes. I know we're shifting going there.

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

Yes, I would think so. Okay.

All right. And then, so with your current cache and with your current run rate, I mean, the expense on that. So what is the total runway you could expect from this?

Well, like all small life science companies that doesn't have revenues, we will need to keep raising money until we can take government grants or partner with a larger company. So eventually we will need to do more equity financing. This is why your firm would make a good business in the life science sector.

So in terms of getting your partner to the table, what sort of data do you think will help you get there?

Well, hopefully the data from this safety study will be sufficient to partner. But only time will tell. I don't think we have it up. We don't have any of that, really. So it's all our hypothesis with a lot of safety data.

Okay. All right. Thank you. Thanks for taking the time. Yeah, thanks for your question.

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

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, 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. I shouldn't expect more than one per month.

It's very possible. We've observed the actual HP treatments in both Adelaide and Sydney. They're basically done in the dialysis suites without dialysis cartridges. Our cartridges are attached to a blood pumping machine. The nursing team is comfortable with it from what we've seen. So I don't think their ability to logistically treat the patients is a constraint. It's more the patient recruitment. If an oncologist begins to feel more comfortable, I would like to think more than one a month is possible. I can't.

Yeah, no, no, I can't promise.

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

Yeah, because I think, I mean, I think just comparing populations, I think there's 10x the population in India versus Australia, so. Oh, yeah. You know, larger patient pool is what I was thinking. Right, right. Right? And then, you know, you mentioned, you know, one of the ways, obviously, equity financing, but grants. grant money too, and I think you, Athlon, have 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, is getting grants approved, A, taking longer, or B, is there just less of, you know, less, grant money available and therefore more difficult to get grant money at this point?

Well, we haven't had any experience with the HHS on the grant side of things since the regime changed. I still get emails, ticklers from people in that business. So I know it is continuing. I mean, I... basically ran our DARPA, which is like a $6 million five-year contract. And we've had three or four smaller ones with HHS in the oncology area studying exosomes. They were small $300,000 grants. So we are familiar with them. If we can find one that aligns with our goals, I'm 100% for it. But if it doesn't align with our goals, they're not really all that profitable. And I would think with the current regime that the overhead rate that could be charged might be lower than, based on what's happened with the university's research, what overhead seems to be, not that that's really profit, but it's slimmer now than it was in those days. So, well, look, if we can find the middle lines, I think it would be fantastic.

Okay, and then just one question on the expense side. I know you've cut expenses a couple times here. It seems like you're pretty much at, I'm not going to say a pair of bones, but my guess is there's not much more to cut. You know, what you have in terms of a staff is sort of what's necessary to continue to keep operating the company, correct?

I think that's a good insight. That is where we are. In fact, as activity ramps up with these oncology files, expenses in the DNA area might go up a bit. Right. So that's why I cut them back, because I knew with success, you know, that would ramp up a bit. Okay, great. Thank you so much. Appreciate it. Thanks for your help. Thanks for talking to me. Thanks for talking to you.

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

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

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