Aethlon Medical Q2 2026 Earnings Call - Early Clinical Progress and Enrollment Challenges in Oncology Trial

Conference Operator: Today’s event is being recorded. I would now like to turn the conference over to Jim Frakes, CEO and CFO. Please go ahead.

Jim Frakes, CEO and CFO, Aethlon Medical: Thank you, Operator. Good afternoon, everyone. Welcome to Aethlon Medical’s fiscal second quarter 2026 earnings conference call. My name is Jim Frakes, and I’m the Chief Executive Officer and Chief Financial Officer of Aethlon Medical. At 4:15 P.M. Eastern Time today, Aethlon Medical released financial results for its fiscal second quarter ended September 30, 2025. If you have not seen or received Aethlon Medical’s earnings release, please visit the investors’ page at www.aethlonmedical.com to view it. Following this introduction and the reading of the company’s forward-looking statement disclaimer, Dr. Steven LaRosa, our Chief Medical Officer, and I 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 we start the business portion of the call, 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, 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. 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. I will turn the call over to Dr. Steven LaRosa, who will cover updates on the Australian oncology trial and on our R&D efforts. Steve?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Thank you, Jim. I’ll start off with a clinical update. Ongoing progress has been made in our Australian oncology trial of the chemopurifier in participants with solid tumors not responding to a regimen that includes immunotherapy with an anti-PD-1 agent. We’ve completed chemopurifier treatments in the three participants in cohort one. All three participants completed a single four-hour chemopurifier treatment without any device deficiencies or immediate complications. At the pre-specified seven-day safety follow-up, none of the three participants experienced a dose-limiting toxicity or a device-related serious adverse event. An independent data safety monitoring board that was convened on July 11, 2025, recommended advancing to the second cohort where participants will receive two chemopurifier treatments during a one-week treatment period. All three investigative sites in Australia have been busy pre-screening potential participants for the second cohort.

Potential participants have been identified by these screening efforts, and these participants are currently reviewing the informed consent document. In an attempt to accelerate enrollment, Aethlon has embarked on a three-pronged strategy. First, we held a virtual investigator meeting with the three Australian principal investigators and sites to share best practices for identifying potential participants and describing the trial to those participants. Two, we are working with our Australian CRO, Rescue, to identify one to two additional new sites. Three, we’ve engaged the company TrialFacts to perform clinical trial advertising, online pre-screenings, and referral of potential participants to the investigative sites. As a reminder, the primary endpoint of the approximate 9-18 patient safety, feasibility, and dose-finding trial is safety. Safety is determined by monitoring for the incidence of adverse events and clinically significant changes in blood tests following the chemopurifier treatments.

The trial involves patients who are not responding to a treatment regimen that includes an anti-PD-1 agent, and the participants will receive either one, two, or three chemopurifier treatments during a one-week treatment period. In addition to monitoring safety, the study is designed to examine the number of chemopurifier treatments needed to decrease the concentrations of extracellular vesicles, or EVs, and if changes in these EV concentrations improve the body’s own natural ability to attack tumor cells. These exploratory central laboratory analyses will inform the design of later efficacy and safety trials, including a pre-market approval study known as a PMA study required by the FDA and other regulatory agencies.

As described in our press release from October 7, 2025, the laboratory of Professor George Grow at the University of Sydney has performed analyses of extracellular vesicle EV number and lymphocyte counts on samples before and after the HP treatment in the three patients in the first cohort. EVs are nanoparticles that participate in cell-to-cell communication and are implicated in the spread of cancer, known as metastasis, the growth of new blood vessels to the tumor, known as angiogenesis, and also inhibit the body’s T cells, which are important for killing tumor cells. Two of the three participants in the trial showed decreases in large EVs known as microvesicles following the chemopurifier treatment. When examining the subsets of EVs, decreases were also noted in large and small platelet-derived EVs in two of the three patients.

We observed decreases in the subset of large EVs carrying the ligand PD-L1 in all three participants during the chemopurifier treatment. Persistently elevated counts of EVs with PD-L1 have been associated with a lack of response to anti-PD-1 agents. Following a single four-hour chemopurifier treatment, decreases were also observed in 7 out of 10 microRNAs examined in two of the three participants. MicroRNAs are about one component of the cargo of extracellular vesicles and have previously been reported to promote cancer growth and metastasis. After a single four-hour treatment, improvements in laboratory ratios associated with responses to immunotherapy were noted in two of the three participants. These ratios included the neutrophil-to-lymphocyte ratio, monocyte-to-lymphocyte, lymphocyte-to-albumin, and the systemic immune inflammation index. Increases were noted in total T cells, CD8 and CD4 T cell subsets, and tumor-specific CD137 positive T cells in participants following the chemopurifier treatment.

Heterogeneity was noted in the time to these changes in the three participants and the magnitude of the changes observed. Additional data from the subsequent two cohorts will help to determine whether these observations are reproducible and whether there is a dose response with additional chemopurifier treatments in terms of the magnitude and the duration of these changes. I’ll now switch to an update on the preclinical R&D activities. Aethlon Medical presented preclinical data on August 12, 2025, at the Keystone Symposium on Long COVID and other post-acute infection syndromes. Long-standing symptoms following acute COVID-19 infection, known as Long COVID, have been demonstrated to affect approximately 400 million individuals worldwide, with a global economic burden of $1 trillion per year. No treatment has been approved by a regulatory agency for the treatment of Long COVID. Extracellular vesicles have been implicated in the pathogenesis of Long COVID.

The data we presented demonstrated that large and small extracellular vesicles from Long COVID patients bound to the GNA lectin and the lectin affinity resin that’s present in the Aethlon chemopurifier. Following this presentation, Aethlon’s R&D lab has focused on studying the cargo of the extracellular vesicles removed from the Long COVID patient samples. We are currently preparing a manuscript for submission with these results, with plans on submitting to a preprint server and a peer-reviewed journal in a publication that’s being done with our collaborators at UCSF Medical Center. Recently, Aethlon Medical signed a material transfer agreement, an MTA, to study the compatibility of the Aethlon chemopurifier with a system that utilizes a single small lumen vascular catheter and a simplified blood pump.

Currently, operation of the chemopurifier requires a large double lumen dialysis catheter, a more complicated dialysis machine, as well as supervising nephrologists, dialysis nurses, and the requirement for a dialysis unit bed. The research done under this MTA could lead to a simplified system for performing chemopurifier treatments in oncology units in the future. With that, I’ll turn the call over to Jim for the financial discussion and questions.

Jim Frakes, CEO and CFO, Aethlon Medical: Thanks, Steve. Good afternoon again, everyone. Let’s touch briefly on the financials. As of September 30, 2025, we had a cash balance of approximately $5.8 million. Our consolidated operating expenses for the three months ended September 30, 2025, were approximately $1.5 million, down by approximately $1.4 million, or 48%, from $2.9 million in the same period of 2024. The decreases were reflected across our expense categories of payroll, general and administrative expenses, and professional fees. Our payroll and related expenses decreased by approximately $778,000, reflecting lower headcount, reduced bonus accruals, and absence of prior year severance charges. Our general and administrative expenses declined by approximately $437,000, driven by lower clinical trial costs, and in part due to a $218,000 R&D tax incentive credit from the Australian government, as well as reductions in supplies, insurance, and other operational costs.

Our professional fees decreased by approximately $177,000, mainly from reduced investor relations and contract labor expenses, partially offset by higher legal, tax, audit, and financial services costs. As a result of these factors, our operating loss for the quarter decreased to $1.5 million, again compared to $2.8 million in the prior year period, reflecting solid progress in aligning our resources with our strategic priorities. You can find more detail on these expense changes in our Form 10Q, which breaks down specific drivers by category. We included these earnings results and related commentary in our press release issued this afternoon. The release also included the balance sheet for September 30, 2025, and the statements of operations for the three and six-month periods ended September 30, 2025, and 2024. We will file our quarterly report on Form 10Q following this call.

Our next earnings call for the fiscal third quarter ending December 31, 2025, will coincide with the filing of our quarterly report on Form 10Q in February 2026. We would be happy to answer any questions that you may have. Operator, please open the call for questions.

Conference Operator: Thank you. 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’re using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you’d like to remove yourself from queue, please press star then two. Today’s first question comes from Marla Marin with Zacks. Please go ahead.

Marla Marin, Analyst, Zacks: Thank you. I just want to understand one thing in terms of the recruitment for cohort two. To what extent will potential participants understand that you’re moving forward and that there were some positive responses in cohort one, or that doesn’t come into play at all?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. Hi, Marla. Yeah. That’s a good question. When we had our virtual investigator meeting, we went over again with the investigators what we saw in terms of observations with the EVs and the T cells in the first cohort so that they would understand those and be able to explain them. We also had a very, I think, good discussion about how to describe this trial to the patients. There was a lot of good input from all three PIs. I think the investigator meeting had a lot of value from that perspective.

Marla Marin, Analyst, Zacks: Okay. Also, you had, as you have been explaining for a while, there was a follow-up with the cohort one participants, a seven-day follow-up. Is there any sense in terms of subsequently whether that group of those three people are still performing in the way that you would expect, or that would not be in any way statistically meaningful data to have?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: The observations were based on the labs that went out to eight weeks. We have all that data for those patients. There is no subsequent EV or T cell data that we expect from that group of patients. Although we are following them clinically, that is not an endpoint. This is an early safety and feasibility trial. We can’t make any comments about the clinical response.

Marla Marin, Analyst, Zacks: Okay. Right. That makes sense. With cohort two, can you just remind us in terms of you’re looking for this as a dosage finding study as well as safety study? What should we be thinking about down the road when you release top-line data, what you’ll be looking for?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. Great question. In cohort two, during a one-week period, the participant will get two HP treatments. Monday, Friday would be the schedule as opposed to a single treatment. What we would like to see, not only most importantly, can someone tolerate two treatments in a week? That’s the main objective. What we’d like to see is that the EV decreases that we observed in the first cohort would be more profound because they’re getting two treatments instead of one, and that the T cell changes would also increase over time. A dose response, even though it’s a device, not a drug, a dose response. Of course, reproducing what we saw in the first three patients. I think the next tranche of data will give us more information than we have right now.

Marla Marin, Analyst, Zacks: Yes. Okay. Yeah. That makes sense. As I think you’ve said in the past, you’re not walking away from some of the other indications where you think the hemopurifier can be effective. Given the realities of budgets and time constraints and all, you’re not investing a lot of time or money in some of these other indications. The paper that you wrote and then the presentation at the medical forum, are those the kind of things that we should think about for you going forward in the near term to try to keep people apprised of what’s going on with the hemopurifier?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. No, as we’ve talked about before, I think EV reductions are relevant in a large number of indications. We’ve got to focus our efforts because of our staff and amount of funding. I would expect in the near term that we will have a preprint on our Long COVID data. That is something to look forward to. That data will also simultaneously get submitted to a peer-reviewed journal, which, of course, gets a peer review. That would be the next. The Long COVID data. Then as we can, we will look at EVs in other diseases. Again, as you said, we have to be focused based on our resources.

Marla Marin, Analyst, Zacks: Right. Okay.

Jim Frakes, CEO and CFO, Aethlon Medical: We are monitoring other indications, but we’re trying to stay focused.

Marla Marin, Analyst, Zacks: Right. No, no. I get it. Jim, question for you in terms of you’re always looking for ways to stretch or optimize your spending. I’m guessing that at this point, there’s not a lot that you can do because you’ve pretty much optimized your spending. In terms of in the past, quite a long time ago, you had access to some sort of government funding that was non-dilutive. Have you thought about that again, or is that really not applicable now as you’re moving through clinical trials?

Jim Frakes, CEO and CFO, Aethlon Medical: If the government contract was aligned close to perfectly with our goals, we would be interested. If it was an excursion into a different field, especially with the current administration cutting overhead on these contracts, they were not all that profitable before. Now with the overhead reductions, I think it is probably break-even or close to break-even at best. It would have to dovetail really well with our goals to help us get to those goals more efficiently. We are not averse to doing it, but it has to be the right contract or grant.

Marla Marin, Analyst, Zacks: Okay. All right. Thank you very much. That’s it for me.

Jim Frakes, CEO and CFO, Aethlon Medical: Thank you, Marla.

Conference Operator: Thank you. Our next question today comes from Jeremy Perlman at Maxim Group. Please go ahead.

Jeremy Perlman, Analyst, Maxim Group: Okay. Thank you for taking my question. Good evening. You had approval to move on to the second cohort roughly four months ago. Maybe if you could explain or hypothesize why you think it’s taking so long to recruit patients.

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. As we’ve kind of said before, this is not an easy sell to patients. Cancer patients don’t usually get a large catheter put in and get their blood filtered over a machine. That takes some explaining. There are a lot of time points where patients have to get samples done. Explaining to a patient what, in a safety and feasibility trial, what the value would be to them. We had a lot of discussions at the investigator meeting. EV removal in cancer is a novel concept. Extracorporeal therapies for cancer patients is a novel concept, and that just requires some explaining to them. The slow enrollment, to me, is not all that unexpected.

Jeremy Perlman, Analyst, Maxim Group: Okay. Understood. Based on these new initiatives you’re instituting to try and accelerate enrollment, do you still think by a timeline for completion of the second cohort by the end of, let’s say, mid-2026? Is that reasonable? How should we look at the based on these timelines?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. I mean, we’ve tried to say that we would anticipate a patient per month. One of the things one must bear in mind is that it is now summer in Australia. People are going on vacation, and it’s the holidays. A slowdown during the holidays would not be unexpected. One patient a month is what we’re targeting. We do hope that we’re not standing pat. As I’ve said, we’ve engaged this company called TrialFacts. They’re actually doing digital marketing. They’re doing an online screening form, and then they’re referring potentially eligible patients to the sites. I think that will help. We’re actually looking for an additional one to two sites. We’re trying to exhaust every avenue to try to ramp things up.

Jeremy Perlman, Analyst, Maxim Group: Okay. That’s great. Just the last question related to some of the data that you talked about earlier on the call, and that was in the press release today. Does that fit in with your hypothesis that this could help extend the patient life or help improve patients who are going under immunotherapy as well? Or is it not enough of a decrease yet in the T cells and the EVs?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. So I’m always cautious because it’s three patients. That’s probably the most important thing. The more patients, the more confidence one would have. Directionally, EV decreases is what we want to see. We’re seeing that overall and in some subsets and some improvement in different lymphocyte populations that are involved in tumor killing. They’re going directionally in the right way. If we see that this is reproducible in the next cohort and that the magnitude of the changes is increased, that would give one more confidence. Yeah, at least what we’re seeing now, we’re seeing directional changes that we wanted to see.

Jeremy Perlman, Analyst, Maxim Group: Okay. Great. Thank you very much. I’m going to hop back into queue.

Jim Frakes, CEO and CFO, Aethlon Medical: Thank you, Jeremy.

Conference Operator: Thank you. Our next question today comes from Sean Lee at H.C. Wainwright & Co. Please go ahead.

Sean Lee, Analyst, H.C. Wainwright & Co.: Hey. Good afternoon, guys. This is Sean here for RFK, and thanks for taking my questions. I just have two quick ones. First, on the Australian study, regarding the lower EV levels that you saw, was that directly following treatment or after a period of time? Was that stable following that, or did the EV levels rebound after a while?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. So what we did is we got a sample before they went on the machine, before they went on the device, one at two hours into the treatment and one at four hours, so at the end of the treatment, and then subsequent weeks, one, two, three, four, and eight following treatment. We saw, again, particularly in the larger EV populations, decreases during the treatment, so at the two-hour and four-hour time point. Because EVs are being produced continuously, you do see a rebound usually over the course of a couple of weeks. Yes, they do start going back up. What you’d like to now examine, because this is a dose-finding study as well, is that with more treatments in a given week, the EVs will both go down further and stay down longer. We’ve only got the single treatment so far.

Yes, they go down during the treatment, and then they do start rising after a couple of weeks after the treatment, which was expected. That’s totally expected. Yeah.

Sean Lee, Analyst, H.C. Wainwright & Co.: Thanks for that. I think you mentioned that they’re followed up for eight weeks during cohort one. For cohort two, are you expected to follow them any longer, or are we still looking at the eight-week data in Maxell?

Dr. Steven LaRosa, Chief Medical Officer, Aethlon Medical: Yeah. The EV and T cell data only goes out to post-treatment week eight. We don’t go any further than that.

Sean Lee, Analyst, H.C. Wainwright & Co.: Okay. Got it. That’s all the questions I have. Thanks.

Jim Frakes, CEO and CFO, Aethlon Medical: Thank you, Sean.

Conference Operator: Thank you. That concludes our question-and-answer session. I’d like to turn the conference back over to Jim Frakes for the closing remarks.

Jim Frakes, CEO and CFO, Aethlon Medical: I’d like to thank you again for joining us today in our discussion of our fiscal second quarter results. We look forward to keeping you up to date on future calls. Thanks again. Goodbye.

Conference Operator: Thank you. That concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.