Good afternoon, and welcome to the Aethlon Medical fourth quarter fiscal 2022 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 James Frakes, Chief Financial Officer. Please go ahead.
Thank you, operator, and good afternoon, everyone. Welcome to Aethlon Medical's fiscal year-end earnings conference call. My name is Jim Frakes, and I'm Aethlon's Chief Financial Officer. At 4:15 P.M. Eastern Time today, we released financial results for our fiscal year ended March 31, 2022. If you have not seen or received Aethlon Medical's earnings release, please visit the investors page at www.aethlonmedical.com. Following this introduction and the reading of our forward-looking statement, Aethlon CEO, Dr. Chuck Fisher, and our Chief Medical Officer, Dr. Steven LaRosa, will provide an overview of Aethlon's 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 I hand the call over to Dr. Fisher, 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 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, 2022, our most recent 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 will now turn the call over to Dr. Chuck Fisher, Aethlon's Chief Executive Officer.
Executive Officer.
Executive Officer.
Thanks, Jim, and thank all of you for joining and dialing in today. This is Chuck Fisher, and I'll make a few opening comments. It has been a busy four months since our last investor conference call on February fourteenth, 2022. Before I hand the call over to Dr. Steven LaRosa, our Chief Medical Officer, who will provide an update of our clinical trials in infectious diseases, I would like to make some brief remarks about the current monkeypox outbreak as we've received numerous inquiries about that outbreak from investors and reporters. We previously commissioned the Battelle Memorial Institute in 2008 to run a monkeypox virus, MPV, in vitro study using a miniature version of our Hemopurifier.
This study demonstrated that high concentrations of monkeypox virus, approximately 35,000 PFUs per ml, were rapidly depleted from cell culture fluids when circulated through the Hemopurifier. The study indicated that the Hemopurifier removed 44% of infectious monkeypox virus in the first hour of testing, 82% after 6 hours, and 98% after 20 hours. The studies were conducted in triplicate, and data verification was provided by real-time PCR. Given the recent outbreaks of monkeypox virus, we continue to monitor case load and disease severity. We've had recent communications with the FDA to discuss what process would be should we be reached out to by a hospital requesting a single-patient emergency use for our Hemopurifier. Monkeypox has not yet been declared an emergency by the Department of Health and Human Services secretary, and as such, there is not an emergency use authorization process in place.
However, the World Health Organization has described the outbreak as, quote, unusual, end quote, and said that the virus's continuing spread was worrying enough to convene its expert committee on Thursday, June 23, 2022, to decide whether the disease should be declared a public health emergency of international concern. The International Health Regulations Emergency Committee met on 23 June of this year regarding the multi-country monkeypox outbreak to advise the WHO Director-General on whether it should be constituted a public health emergency of international concern, a so-called PHEIC. The committee advised the WHO Director-General that the outbreak should not constitute a public health emergency of international concern at this present time. However, the committee acknowledged that the emergency nature of the event and that controlling the future spread of this outbreak requires intense response efforts.
They advised that the event should be closely monitored and reviewed after a few weeks, when additional information about the current unknowns, for instance, incubation period, the role of sexual transmission, et cetera, become available to determine if significant changes have occurred that may warrant a reconsideration of their advice. It is worth noting that the NPR wrote a piece expressing concern regarding the inadequate testing on 25 June 2022, inadequate testing for monkeypox virus. Additionally, Nature Medicine made the observation that there are far more mutations than would be expected in this particular outbreak, with double-stranded DNA mutation rates being significantly elevated. Now let me turn the call over to Steven LaRosa, our Chief Medical Officer.
Hello, everyone, and thanks for listening to our presentation. I'm Dr. Steven LaRosa, the Chief Medical Officer at Aethlon. First, I would like to give you an update on our U.S. clinical trial investigating the Hemopurifier for the treatment of patients with severe SARS-CoV-2 or COVID, known as COVID-19 infection. This trial is conducted under the open investigational device exemption, or IDE, for the Hemopurifier in life-threatening infections. The trial is designed to allow for up to 40 patients to be treated under an early feasibility study protocol at up to 20 clinical sites in the United States. As you may recall, we entered into an agreement with PPD, a leading global contract research organization, or CRO, to oversee our U.S. clinical studies investigating the Hemopurifier for critically ill COVID-19 patients.
We continued to make progress in our severe COVID trial during the March 2022 quarter under our open investigational device exemption for the Hemopurifier for life-threatening viral infections. We now have 9 hospitals activated for patient enrollment, and they are actively screening patients for the trial. These hospitals include LSU Shreveport, Valley Baptist Medical Center in Texas, Loma Linda University Medical Center, Hoag Hospital Irvine in Newport Beach in Southern California, University of California, Davis, University of Miami Health System, Cooper University Hospital, and Thomas Jefferson University Hospital. We are in the site activation process with additional US medical centers as well. In June 2022, LSU Shreveport enrolled the first patient in the clinical trial. The patient completed the Hemopurifier treatment phase of the study and is now in the 28-day follow-up period. The patient tolerated all the Hemopurifier treatments without adverse events.
Also on the COVID-19 front, during our recent earnings call, I noted that we had recently obtained ethics review board approval and entered into a clinical trial agreement with Medanta - The Medicity Hospital, a multi-super specialty hospital in Gurugram, India, for a COVID trial, COVID-19 clinical trial at that location. We have previously conducted multiple clinical trials with the principal investigator, as well as a previous clinical trial with Medanta - The Medicity Hospital in Hepatitis C patients. Our goal with this trial in India is to help COVID-19 patients there and also generate supporting patient data that we expect will be submitted to the FDA along with our U.S. clinical trial data. This site in India is now open for enrollment and has treated one patient and is actively screening for additional COVID-19 patients. We are also in the process of selecting additional clinical sites for this study.
Now let me turn the call back over to Chuck Fisher.
Thanks, Steve. I'd also like to give an update on our head and neck cancer trial. We've enrolled two patients in the trial to date. The team at the University of Pittsburgh Medical Center has continued to actively screen for additional patients for this trial. We are in the process of creating a protocol supplement to potentially increase the pool of subjects for the study. We are also in discussions with additional sites and are designing a basket trial to examine the effect of our Hemopurifier on exosomal removal in multiple tumor types. We have an active pre-clinical research program where we are conducting experiments on additional targets for our Hemopurifier, as well as the ones to further define exosome binding. With that, I'll turn it back over to Jim for the financial discussion and then open up for questions.
Thanks, Chuck, and good afternoon again, everyone. On March 31, 2022, we had a cash balance of approximately $17.1 million. Our current cash position sets us up very well for conducting our planned clinical trials, as Steven LaRosa just noted, and for the manufacturing of our Hemopurifier for those trials. During the fiscal year ended March 31, 2022, we raised approximately $17.5 million in net proceeds from the issuance of common stock in a combination of a registered direct financing and ATM sales. We recorded approximately $294,000 of revenue related to our government contracts with the NIH in the fiscal year ended March 31, 2022, compared to approximately $659,000 in the fiscal year ended March 31, 2021.
On March 31, 2022, we had approximately $345,000 of deferred revenue related to those contracts as a result of not achieving certain milestones on those contracts. Our consolidated operating expenses for the fiscal year ended March 31, 2022, were approximately $10.72 million, compared to approximately $8.55 million for the fiscal year ended March 31, 2021. An increase of approximately $2.17 million in the fiscal year ended March 31, 2022. The $2.17 million increase from the 2022 period was due to increases in payroll and related expenses of approximately $1.17 million, and in general and administrative expenses of approximately $1 million, which were partially offset by a decrease of approximately $4,000 in our professional fees.
The $1.17 million increase in the fiscal year ended March 31, 2022 in payroll and related expenses was due to an increase in cash-based compensation of approximately $1.2 million, which was partially offset by a decrease in stock-based compensation of approximately $29,000. The $1.2 million increase in cash-based compensation was primarily due to increases of approximately $826,000 and $721,000 in G&A payroll and in R&D payroll respectively, due to headcount increases and approximately $203,000 in relocation-related compensation to two senior executives that relocated to San Diego, California, as a condition of their employment.
Those increases were partially offset by the combination of a $452 thousand accrual in the 2021 period related to the separation agreement with our former CEO, with no comparable expense in the 2022 period, and a net decrease of approximately $135 thousand in cash bonuses. The $1 million increase from the fiscal year ended March 31, 2022 in G&A expenses primarily arose from increases of $453 thousand in clinical trial expenses, $209 thousand in rent expense, and $195 thousand in insurance expenses.
As a result of the changes in revenues and expenses I just described, our net loss before non-controlling interests increased to approximately $10.4 million for the fiscal year ended March 31, 2022, from approximately $7.9 million for the fiscal year ended March 31, 2021. 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, 2022, and the statements of operations for the fiscal years ended March 31, 2022, and 2021. 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, 2022, will coincide with the filing of our quarterly report on Form 10-Q in early August.
Now, Chuck, Steve, and I would be happy to take 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 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. The first question is from Marla Marin with Zacks. Please go ahead.
You've done a lot of work, you know, outside of the ongoing clinical trials that you're conducting now. A lot of work on researching the impact of the Hemopurifier. Can you give us any color on how that enters into some of your conversations or interactions with the regulators as you try to move forward?
All right. Marla, this is Steven LaRosa. Thank you for your question. We are-
We have a breakthrough designation in COVID-19 and viral infections with the FDA and are in close contact with them in terms of our current clinical trials. We noted we enrolled our first patient, so that data will be forthcoming. We don't have that currently, but we've had conversations with them about potential ways to adjust the study to so that we can continue the trial and enroll more patients. I don't know if that answers your question.
Well, I was thinking of some of the data that you're getting outside of the trials themselves.
The data we have, Marla Marin, outside the trial is data that are from patients we've treated as single patient emergency use criteria. These were published in a peer-reviewed journal in Frontiers in Medicine. The data is very interesting in that in one patient who was not viremic, we were able to show the removal of exosomes and exosomal microRNAs that are implicated in coagulopathy and acute lung injury. Those exosomal microRNAs decreased with Hemopurifier treatment at the same time the patient's oxygenation and coagulopathy were improving. In a second patient who was in fact viremic with COVID-19, we're able to show for the first time in vivo that the Hemopurifier decreased the COVID viral load by 58% during the first six-hour Hemopurifier treatment.
When you speak to or interact with the FDA, does any of that come into play given that, you know, it's not actually the outcome of an ongoing clinical trial?
They, yeah. Well, yes, they are aware of this data. But they want to see, obviously, safety and efficacy data in a larger number of patients enrolled in the clinical trial.
Okay. Thank you.
The next question is from Vernon Bernardino with H.C. Wainwright. Please go ahead.
Hi, Chuck, Jim, and Steve. Thanks for taking my question and good afternoon. I was wondering, we still have over 100,000, at least a seven-day average, of cases of, you know, COVID, recorded daily. A lot of them are not severe cases anymore. Just wondering, what are the key challenges you think you've identified for enrolling patients in the study? Perhaps a little differently, what have your clinical sites, activated hospitals, think may be the challenges or ways that they could perhaps enroll patients more quickly? Thank you.
As you, I think, you've picked up on, there are still a fairly large number of COVID-19 cases. What we've noted, as others have noted, is the vaccines have been quite good at preventing severe infections. What we're seeing is, although the cases are up, the number of the sites are telling us the number of hospitalizations and ICU admissions is still relatively low, although it has increased recently, the feedback we've received from hospitals. We still feel that the story is not over with COVID and that there will likely still be cases that are eligible. The challenge is to get into our current trial, you have to be on renal replacement therapy, and that has decreased.
The need for renal replacement due to COVID has decreased during the pandemic. We're also trying to work with the regulators to see if we can increase the potential pool of patients that would be eligible for the study.
Now, pardon me if I don't remember this, but as far as the patients are concerned, what is the length of treatment and as far as the design of the study is concerned, the original number of patients that you were targeting for a complete study?
We were granted approval to conduct a trial of up to 40 patients as a safety and feasibility type trial. That is still the plan. Could you repeat the second part of your question?
Just wondering if the length of the treatment is still the same as originally designed?
Right. The design is that a patient will receive a 4-6-hour Hemopurifier session once daily for 4 consecutive days, during which time there would be blood drawn for both COVID viral load measurements in the blood to see if the Hemopurifier decreases viral load, as well as biomarkers of inflammation and coagulation. Throughout the whole twenty-eight-day study period, we'd also be monitoring to see if a patient's organ failures improve and what their clinical outcome is at the end of that time period. Our design has stayed the same throughout the trial. We're not. We don't plan on making changes to that follow-up period or treatment period going forward.
Okay. Sorry to jump back to the first question. With the 40 patients, can you either describe or provide some kind of insight as to what the FDA thinks as to the number of patients that you plan to enroll in sessions? Are they open to a lower number of patients such that this study could be completed in a time in which perhaps the Hemopurifier could be considered sooner rather than later as a treatment option for severe COVID patients?
To answer your question, they gave us approval to treat up to 40 patients as part of this approval. A typical safety and feasibility study, however, typically is on the order of 10 to 15 patients. We would have the ability where this is an open label study, to review our data as it comes in, both safety and efficacy, and then revisit the time point, revisit that data with the FDA, especially given the breakthrough designation at any time. It's not a situation where we have to enroll 40 patients. There is the latitude to examine the data as it comes in and then discuss with the FDA.
Thank you for that. Last question for me, and sorry to keep on and on. Are the patients tested for, you know, for example, like PCR, the type of variant that they have? For example, if BA.4/5 is now comprising 50% of the patients, is that some kind of data that you'd be able to collect?
Yeah. We will have multiple viral measurements in the blood from every patient and have the ability then to determine exactly which variant it is. Yes.
Terrific. Thank you for taking my questions, and looking forward to more data.
Vernon, I think it's worth noting that to date, we also have demonstrated a binding of most known variants, and we anticipate that will continue.
No, exactly, and that's why I asked the question. Looking forward to more of that kind of data. Thank you.
Sure.
The next question is from Anthony Vendetti with Maxim Group. Please go ahead.
Yeah, thanks. Just following up on the KEYTRUDA trial. You have two patients so far. If I remember from the last call, Chuck, you mentioned about increasing the number of sites to try to increase enrollment to get up to 10-12. Have you been successful in recruiting physicians and patients at these other sites and it's just taking longer to sign up? Or, can you give us an update on the additional sites?
Sure. Good question. Thanks for calling. Obviously, the first patient went very smoothly, but that was at a time when the hospital was not hit by COVID. They subsequently were hit by COVID pretty badly, including overflowing running over to the cancer hospital, and that embargoed use of patients, or having patients which come in that could get our treatment for COVID. Subsequently, where we are now is the thing has tapered off a bit. They're not as severe, which Steve mentioned earlier, and less in the ICU. Sorry, the head neck patients are hard to come by at present, and there's been a lot of screening.
What we're working with the University of Pittsburgh as well is thinking more broadly than them to be adding other hospital sites with other physicians that specialize in head and neck to increase numbers in those trials.
Yeah. I would just comment that one of the challenges in head and neck is having patients who have enough reserves, enough strength to tolerate the Hemopurifier. There may be people who are eligible by their disease, but because of their functional status, that is, that's been a challenge as well as with COVID. We've had some recent discussions with the PI about some attempts that we can make in a protocol supplement to broaden the inclusion criteria, and we're gonna pursue those. Additionally, as Chuck said, we're also currently drafting a protocol for an additional trial, which is more of a basket trial where you're looking at the effect of the Hemopurifier up front before KEYTRUDA in a number of different tumor types where KEYTRUDA is indicated.
We're rapidly pursuing getting that protocol draft written so that we could get that trial going.
Right. 'Cause KEYTRUDA is used for a number of different cancers. What do you think would be the logical next cancer to look at after head and neck with KEYTRUDA?
In a basket trial, we would include a number of different tumor types, and what we would particularly be interested in looking at is can we restore responsiveness to KEYTRUDA in people who've had a run-in period and are showing signs that they're failing? 'Cause that is actually 70% of the people who get KEYTRUDA ultimately go on to fail. If we can actually restore their responsiveness in a number of tumor types, that would be the next strategy.
Okay, that makes sense. Just to Chuck's point that some patients are not strong enough to withstand the Hemopurifier, how do you measure that? How do you determine?
Yes.
Is it a number of factors?
Yeah.
Is there a specific determinant?
Yeah. There's a number of grading and scoring scales that describe someone's functional status, and you include those in your inclusion criteria to make sure that you have somebody who is not severely debilitated from their cancer. There are standard scoring-
Okay.
to grade that.
Okay. Thank you very much. I appreciate it. That was helpful.
Thanks, Anthony.
This concludes our question and answer session. I would like to turn the conference back over to Dr. Charles Fisher for any closing remarks.
We'd like to thank everybody for joining us on this call today, to discuss our fourth quarter results. We look forward to keeping you up to date on future calls, and thank you very much for joining, and have a good day. Goodbye.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.