Good afternoon, and welcome to the Aethlon Medical second quarter fiscal 2022 earnings and corporate update conference call. 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 meeting is being recorded. I would now like to turn the conference over to Jim Frakes, CFO. Please go ahead.
Thank you, operator, and good afternoon, everyone. Welcome to Aethlon Medical's second quarter earnings conference call. My name is Jim Frakes, and I'm Aethlon's Chief Financial Officer. At 4:15 P.M. Eastern Time today, Aethlon Medical released financial results for its second quarter ending September 30, 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, our Chief Medical and Chief Scientific Officer, Dr. Steven LaRosa, and our Chief Business Officer, Guy Cipriani, 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 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 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.
Thank you, Jim, and thank all of you for dialing in. My name is Chuck Fisher. I'm the CEO of Aethlon Medical. It's been a busy three months since our last investor conference call on August 9, 2022. We've had to make some important business decisions during that timeframe. Due to the scarcity of COVID-19 patients in intensive care units eligible for enrollment into our US COVID trial, we recently decided to terminate the agreement with our contract research organization or CRO. As a result, while our investigational device exemption related to severe viral diseases remains open, we are discontinuing the US COVID clinical trial activity at this time. We intend to remain optimistic about viral diseases, and we will evaluate viral epidemics when they occur. Making this decision, we expect it's.
We expect this decision to save the company up to $5 million over the next 12 months, which we intend to allocate toward advancing the study of our Hemopurifier in oncology. Similarly, due to a lack of patient enrollment by the University of Pittsburgh Medical Center in our head and neck cancer safety trial, we and the University of Pittsburgh Medical Center, UPMC, have terminated this study. As a result of internal discussions and recognition of the evolving significance of immuno-oncology, we are emphasizing our role and opportunity in oncology with our novel therapy for which we have an FDA breakthrough designation. We are planning a new clinical trial in oncology that will include more tumor types with the goal of enabling us to build our safety database in oncology and provide data to help direct the development of our Hemopurifier as a treatment option in oncology.
We're in the later stages of selecting a new CRO to supervise its planned oncology study in the US and in Australia, which my colleagues will discuss shortly. The addition of a second supplier of Galanthus nivalis agglutinin or GNA, which is used in the resin of our Hemopurifier, is delayed in the US, pending approval by the U.S. Food and Drug Administration of the supplement to our IDE required to enact this manufacturing addition and change. In our opinion, the FDA has mandated unexpectedly high testing requirements for a product in the early safety and feasibility stage of development. The additional data requested by the FDA may take us several months to obtain. We are escalating our concerns with the FDA decision by engaging the FDA's ombudsman. However, there can be no assurances that this escalation will accelerate our development timelines.
Now I'd like to hand the call over to Dr. Steven LaRosa, Aethlon's Chief Medical and Chief Scientific Officer, who will provide an update of our current clinical trial in infectious disease in India and our planned trial in cancer. Steve?
Hi, everyone, and thanks for listening in to our presentation. I'm Dr. Steven LaRosa, the Chief Medical and Chief Scientific Officer at Aethlon. The regulatory authorities in India have accepted our manufacturing change that Chuck just noted, and as a result, we will ship cartridges to our site in India for use in our COVID-19 trial. To refresh our memories about this trial, Medanta Medicity Hospital, a multi-specialty hospital in Delhi, India, has enrolled one patient in our COVID-19 trial in India and continues to actively screen patients. Our CRO, Qualtran LLC, has identified additional potential sites for the trial in India and is currently assessing feasibility. Qualtran is also interviewing sites to hold an oncology trial with our Hemopurifier in India.
As Chuck just noted, we are planning a new clinical trial in oncology that will include more tumor types with the goal of enabling us to build our safety database in oncology and provide data to help direct the development of our Hemopurifier as a treatment option in oncology. We are in the later stages of selecting a new CRO to supervise this planned oncology study. In October 2022, we launched a wholly owned subsidiary in Australia formed to conduct clinical research, seek regulatory approval, and commercialize our Hemopurifier in that country. The subsidiary will initially focus on the oncology market in Australia. Once selected, it is likely that our new CRO will oversee planned oncology studies in both the U.S. and Australia. Now, I would like to introduce Guy Cipriani, our Chief Business Officer.
Guy worked with Chuck and me at Eli Lilly as a member of Lilly's Corporate Business Development unit, where he completed multiple in-licensing and out-licensing transactions for commercial, clinical, and pre-clinical assets. He also worked with Chuck as VP of Business Development at Cardiopharma Corporation, where Guy and Chuck led the negotiation of an $800 million global development and co-commercialization licensing deal with Merck & Company in 2009 around that company's lead phase III cardiovascular program.
Thank you, Steve, and good afternoon. I'm pleased to share that we have recently established an Aethlon subsidiary in Australia to take advantage of the relatively favorable development environment in that country and the R&D tax incentive program offered by the Australian government. Australia's research and development tax incentive program allows companies to receive a tax rebate of up to 43.5% on clinical trial-related R&D costs. This program offers companies the opportunity to significantly reduce costs, lower risk, and accelerate time to market. Australia provides a globally competitive research landscape, including in oncology. Historically, data generated in Australia is typically accepted by the FDA. The quality of the science, clinical infrastructure, availability of patients, and favorable economic incentives make conducting clinical trials in Australia very attractive to Aethlon. We hope to share more developments over time as we execute on this strategy.
With that, I'll turn the call back over to Jim for the financial discussion and then open up for questions.
Thanks, Guy, and good afternoon again, everyone. As of September 30, 2022, Aethlon Medical had a cash balance of approximately $19.6 million. Our consolidated operating expenses for the three months ended September 30, 2022, were approximately $3.67 million, compared to $2.14 million for the three months ended September 30, 2021. This increase of $1.53 million, or 71%, in the 2022 period was due to increases in our general and administrative expenses of $863,000, in our professional fees of $354,000, and in our payroll and related expenses of $307,000. The $863,000 increase in our general and administrative expenses is primarily due to the combination of a $384,000 increase in our clinical trial expenses.
A $258 thousand dollar increase in supplies, primarily for manufacturing Hemopurifiers. A $140 thousand dollar increase in subcontract expenses related to our government contracts. A $50 thousand dollar increase in our rent expense, and a $32 thousand dollar increase in our insurance expense. The $354 thousand dollar increase in our professional fees was primarily due to a combination of a $152 thousand dollar increase in our contract labor expense associated with product development and analytical services, a $136 thousand dollar increase in our legal fees, and a $61 thousand dollar increase in our investor relations expenses, primarily related to solicitation expenses associated with our 2022 annual meeting of stockholders.
The $307,000 increase in our payroll and related expenses was in part due to an increase in our stock-based compensation expense of $112,000, and our cash-based compensation expense increased by $195,000 due to our increased headcount. In September 2022, the board of directors of Exosome Sciences Inc, or ESI, and Aethlon as the majority shareholder of ESI, approved the dissolution of ESI, our former subsidiary. As a result of this dissolution, we recorded a non-cash charge of approximately $142,000 as other expense in the three months ended September 30, 2022.
Aethlon did not report any revenue related to our government contract with the NIH in the three months ended September 30, 2022, compared to approximately $132,000 in the three months ended September 30, 2021. As of September 30, 2022, the company had approximately $574,000 of deferred revenue related to those contracts as a result of not achieving certain milestones in those contracts. The NIH award contract ended on September 15, 2022, and we presented the required final report to the NCI. Once the NCI completes the closeout review of the contract, we expect to recognize as revenue the $574,000 currently recorded as deferred revenue on our September 30, 2022 balance sheet.
As a result of the changes in revenues and expenses I just noted, our net loss increased to approximately $3.8 million in the three months ended September 30, 2022, from approximately $2 million in the three months ended September 30, 2021. During the six months ended September 30, 2022, we raised approximately $8.9 million in net proceeds under our ATM Agreement with H.C. Wainwright pursuant to sales of our common stock. We included these earnings results and related commentary in a press release issued earlier this afternoon. That release included the balance sheet for September 30, 2022, and the statements of operations for the three and six months ended September 30, 2022 and 2021. We will file a quarterly report on Form 10-Q following this call.
Our next earnings call for the fiscal third quarter ending December 31, 2022, will coincide with the filing of our quarterly report on Form 10-Q in early February 2023. Now Chuck, Steve, Guy, 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 key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assess our progress. Our first question comes from Marla Marin with Zacks. Please go ahead.
Thank you. A lot going on. I guess, you know, you've expanded the oncology area. You did that quite a while ago. I guess that, you know, helps you pivot now. Are you thinking that any of the data from some of the preclinical studies will form some part of that database as you move forward in that area?
Thanks, Marla. If I understand the question, you're asking about preclinical data informing studies. What we can say is that there are a number of solid tumor types in which checkpoint inhibitors are used and which there is not a lasting response. The data would suggest a hypothesis that if you remove exosomes associated with that decreased response, you might improve outcomes. I think the scientific basis is largely driven by the data of solid tumors and their response to immunotherapy.
Okay. Thank you. When you know, start moving forward in Australia, you know, can you give us any sense of what the timeline there might be?
Well, based on what we're hearing from our different CROs that we're interviewing the process for sole approval and getting up and running, you know, it's a different process in Australia. You start with site ethics approval, and then you work backwards to the company's regulatory approval, but it's usually on the order of four to six months.
Okay. Thanks very much.
The next question is from Thomas McGovern with Maxim Group. Please go ahead.
Hey, guys. My first question is on the upcoming oncology trial, and I just wanted to know if there would be patients involved in the trial that are on Keytruda.
Yes. The planned study is that all patients will have a lead-in period of either nivolumab or pembrolizumab, which is Keytruda. The patients who do not have a response after two months will then go to the, what we call the Hemopurifier phase of the study, where they would undergo different courses of Hemopurifier treatment. What this study allows you to do is have each patient serve as their own control. You can see the additive benefit of the Hemopurifier. All the patients, in this upcoming study, will have had a checkpoint, an anti-PD-1 antibody prior.
Okay, great. Thanks for that insight. Sorry, my call was kind of cutting out a little bit when you guys were discussing your decision to go into Australia. I heard that there was a rebate. Could you just repeat, you know, maybe just real quick, like high level, why you chose Australia again and then specifically what that rebate was?
Sure thing. This is Guy. Thanks for the question. In Australia, the Australian industry and the tax authority, they both have combined to offer up this R&D tax rebate program. It's essentially 43.5% rebate. For every AUD 1 you spend, you get about AUD 0.435 back. It's applied to research around clinical development and they of course want you to commercialize the products in that country. There's a lot of reasons for picking Australia besides just the rebate. You know, one, it's kind of a very significant center for cancer studies. There's a lot of thought leaders and patients in Australia.
We think for the tumor types that we're looking at, we should be able to find and enroll the patients at very reputable centers in Australia. I should point out that it's a rebate that you receive at the end of the fiscal year, that you filed for that rebate. It's not just a tax credit. It's actually spreading our research dollars longer, if you will.
Great. My final question is, could you guys just, you know, if at all possible, could you guys provide some type of timeline for our understanding on the NIH review?
This is Jim, by the way, Thomas. In previous contracts we have had with the NIH, they've taken a quarter or two, or maybe even three quarters to close our documentation. I understand why you'd want the question to build your model, but the revenue into your model. I don't have the impression they're overstaffed right now. I think they've had, they've lost some people and that they're all straining, so it might be three quarters rather than one. You know, that's just a guess.
Okay. Thanks for taking the time to answer my question. I appreciate it, guys.
Okay. Thank you.
This concludes the question and answer session. I would like to turn the conference back over to Dr. Chuck Fisher , CEO, for any closing remarks.
I wanna thank everybody who joined us today, to discuss our Q2 results, and our communications, of course, and announcing it to you. We look forward to keeping you up to date on our future calls. Thank you very much for joining us. With that, we'll end the call.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.