Aethlon Medical, Inc. (AEMD) Q3 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Aethlon Medical Third Quarter Fiscal 2026 Earnings and Corporate Update Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to CEO and CFO, Jim Frakes. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Aethlon Medical's Fiscal Third 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 third quarter ended December 31, 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 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, 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. Now I would like to begin by highlighting progress during the December quarter and early calendar 2026 as we continue to execute against our strategy of advancing the Hemopurifier platform while maintaining disciplined cost control. Key developments include continued enrollment and treatment progress in our Australian oncology trial; ongoing expansion of our extracellular vesicle, or EV, research platform, supporting the Hemopurifier as a potential multi-indication therapeutic; advancement of work evaluating Hemopurifier compatibility with a simplified blood treatment system that could expand future clinical and commercial flexibility; and sustained operating expense reductions on a year-to-date basis compared to the prior year. And now I will turn the call over to Dr. LaRosa, who will cover updates on the Australian oncology trial and on our R&D efforts. Steve?

Thank you, Jim. Ongoing progress has been made in our Australian oncology trial of the Hemopurifier in participants with solid tumors not responding to a treatment regimen that includes immunotherapy with the anti-PD-1 agent, pembrolizumab, known as Keytruda, or nivolumab, known as Opdivo. We have previously reported the successful completion of the first cohort where 3 participants received a single Hemopurifier treatment without any device-related serious adverse events or dose-limiting toxicities. Favorable directional improvement in EV numbers and immune cell numbers were observed in this cohort with the HP treatment. We have now completed 2 HP treatments in 2 participants in the second cohort of the trial. We have also recently enrolled a third patient who has passed screening and is due to receive the 2 Hemopurifier treatments by the end of March -- excuse me, by the end of February. Once the 3 patients have completed treatment in Cohort 2, safety data will be presented to an independent Data Safety Monitoring Board. We are targeting late March for this meeting. The DSMB will provide Aethlon Medical with a recommendation to either advance to the third and final cohort of the trial where patients will get 3 Hemopurifier treatments in a given week or they may require 3 additional patients in the current cohort. Aethlon has noted an uptick in the number of interested potential participants in the study since we contracted the groups Trialfacts and Dedicated. Trialfacts performs online advertising of the trial, while Dedicated performs phone prescreening of interested participants. Participants who pass this initial screening are then referred on to the 3 investigative sites for informed consent and more detailed screening. This process has already resulted in HP treatment treated patients in the study and has provided a pool of potential future participants for Cohort 3 of the study. As a reminder, this 9 to 18-patient safety feasibility and dose-finding trial is in patients with solid tumors with stable or progressive disease while on a treatment regimen that includes either Keytruda or Opdivo. Patients who meet all exclusion -- all inclusion and no exclusion criteria are enrolled in sequential cohorts to receive 1, 2 or 3 Hemopurifier treatments during a treatment week. In addition to monitoring safety, the study is designed to examine the number of Hemopurifier treatments needed to decrease the concentration of extracellular vesicles and if these changes in EV concentrations improves the body's own natural ability to attack tumor cells. The scientific rationale and full design of this study have recently been published in the peer-reviewed journal, BMJ Open, and the link to this article could be found on the Aethlon Medical website. I'll now change gears and talk about the R&D update. Under a Material Transfer Agreement, Stavro is studying the compatibility of the Hemopurifier with their SLAMB system. This system utilizes a single small lumen vascular catheter and a simplified blood pump, compared to the large double-lumen vascular catheter and more complicated dialysis machines typically used for the treatment. This research could lead to a simplified system for performing Hemopurifier treatments in oncology units and in infusion centers in the future without the requirement to use a large double-lumen dialysis catheter, a bed in a dialysis unit, a dialysis machine or a supervising nephrologist. The Aethlon Medical R&D team continues to attempt to build on our preclinical data in Long COVID. We have previously shown that the GNA affinity resin in the Hemopurifier binds EVs in Long COVID patient samples and decreases microRNAs known to cause immune dysregulation. This data has been published in the preprint server bioRxiv and has been submitted for consideration in a peer-reviewed journal. We are now exploring possibilities of investigating other cargo within the EVs, such as viral particles, with our technology. Extracellular vesicles, including platelet-derived EVs, have been implicated in the pathogenesis of a myriad of indications in addition to cancer, including, but not limited to, lupus, rheumatoid arthritis, systemic sclerosis, multiple sclerosis, cardiovascular diseases, sepsis and ALS. Aethlon previously published data on the removal of platelet-derived EVs from healthy plasma by the Hemopurifier in the preprint server bioRxiv. We plan to further this work by examining platelet-derived EV and microRNA removal by Hemopurifier -- by the Hemopurifier in patients with some of these indications, so disease plasma, to further this work. This approach is in line with our thinking that the Aethlon Hemopurifier may provide a pipeline within a single device. With that, I'll turn the call back over to Jim for the financial discussion.

Thanks, Steve, and good afternoon again, everyone. Turning briefly to the financials. As of December 31, 2025, we had a cash balance of approximately $7 million. Our consolidated operating expenses for the 3 months ended December 31, 2025 were approximately $2.06 million, up $250,000 or 13.6% compared to the same period last year. This increase was primarily due to higher payroll and related costs, partially offset by lower clinical trial expenses and reduced professional fees, mainly from Investor Relations activities. As a result, the operating loss for the quarter increased to $2.06 million, compared to $1.81 million in the prior year period. Other income, primarily interest income earned on cash balances, was $44,000, slightly lower than the $60,000 recorded in the same quarter last year. Looking at the 9-month period, our operating expenses decreased significantly to $5.36 million, down $1.98 million or 27% from $7.34 million last year. This improvement reflects lower payroll, general and administrative costs and professional fees, highlighting the impact of our ongoing cost management initiatives. You can find more detail on these expense changes in our 10-Q, 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 December 31, 2025 and the statements of operations for the 3 and 9-month periods ended December 31, 2025 and 2024. We will file our quarterly report on Form 10-Q following this call. Our next earnings call for the fiscal fourth quarter ending March 31, 2026 will coincide with the filing of our annual report on Form 10-K in June 2026. And now we would be happy to answer any questions that you may have. Operator, please open the call for questions.

[Operator Instructions] The first question today comes from Marla Marin with Zacks.

So I just want to touch on some of the things that you mentioned in the prepared remarks. You've moved on in the trial to Cohort 2. And given that part of the trial's goal is to determine dosage or the number of Hemopurifier treatments and impact that they have on the trial participant, so now you will be administering the treatment twice instead of, with Cohort 1, the onetime treatment. But the participants are involved in the trial for the same length of time. Is that correct?

It's the same follow-up period. The difference, as you correctly stated, was, instead of getting 1 Hemopurifier treatment in Cohort 1 and Cohort 2, they get 2. So they get it typically on a Monday and Friday. So a number of days in between. And we'll be able to see the kinetics of how -- what the EV numbers do in between treatments. And then we'll also see if the 2 treatments lead to more long-lasting decreases in EVs and more long-lasting effects on T cells compared to what we saw in the first cohort.

Okay. Thank you for clarifying that. Okay. Did somebody -- okay. Then my next question is, if it turns out that the -- investigating the potential to connect the Hemopurifier to, I think you called it the SLAMB system, can you give us some indication of like what that would mean in terms of potentially opening new doors or facilitating your ability to get the Hemopurifier into different medical centers potentially down the road?

Yes, sure. Yes. So right now, Marla, you have to put in a dialysis catheter, which is a fairly -- we call it kind of in medicine circles, we call it a garden hose. It's a large-bore catheter with 2 lumens, one that you take blood out and then when you return the blood in. That's a pretty invasive device. The SLAMB system uses a much smaller single-lumen catheter that wouldn't have to be put in, in the neck. So in hospitals, there are these things called PICC lines that have pretty much become ubiquitous, that are these small, thin catheters that could be put in the crook of the arm. That's what I would envision. So that would be a big change in terms of the invasiveness of the catheter. Currently, for the Hemopurifier, we use a dialysis machine to run it. We're solely using really the blood pump mechanism of the machine. We're not using all the other bells and whistles that a dialysis machine has because we're not removing any fluids or electrolytes. So we're at the mercy of a dialysis machine securing a bed in a dialysis unit because that's the only place dialysis could be done in the hospital, and having a treating nephrologist because they're the ones who are skilled in using the dialysis machine. So with this SLAMB system, you'd have a single-lumen catheter with a simplified pump, which presumably would be much easier from an operator standpoint. So that opens the ability to do this potentially in an oncology unit where people get their chemotherapy infusions or even in infusion centers, which most hospitals have in their ambulatory centers. So it really opens the door to doing this in oncology units as well as in, say, if it was a patient with autoimmune disease that gets an infusion of whatever immunosuppressive, those kind of units. So it really kind of removes you from the dialysis space. Potentially.

So just to make sure I understand, it removes you from that dialysis space and makes it much simpler for the hospital staff to administer the treatment. But also from the patient's perspective, it makes it less invasive and probably less daunting to receive the treatment. Is that the right way to think about it?

Yes. Because as I say, these PICC lines, they're typically put in what we call the antecubital fossa. That's the space in between your forearm and your upper arm, right, in front of your elbow. Getting a thin catheter there is a lot less daunting to a patient than getting a large catheter placed up in their neck. And they're also easier to take care of as well. They tend to have less complications. So yes, I think that from a patient perspective, I'd much rather have one of these catheters than a dialysis catheter. And I'd much rather be able to stay in my therapeutic home, meaning I'm going to an oncology unit to get my immunotherapy, I'd like to get my EV removal treatment in the same place and not have to go to a dialysis unit to have that done, which is what has to happen now. So it just makes it more integrated into care.

Got it. Okay. Last question for me. Jim, I know that you are extremely cost conscious about just about everything that the company is doing, and trying to make sure you maximize your R&D spend and your operating costs, optimize the operating costs. So in the press release and in the prepared remarks, you did talk about building upon some of the preclinical research that you had done. Can you just talk a little bit about -- confirm that everything you're doing is consistent with that same very cost-effective approach you're taking generally, and how you're able to do some of what you're doing, like the Long COVID, in a cost-effective manner?

Right. Well, you're right, I can't escape my Scottish heritage, I guess, on the cost containment front. We're trying to keep costs down as much as we can, yet still advance. So we're trying to obtain samples just for shipping costs basically, to the extent we can. We're trying to do the work in-house with our in-house -- with our small scientific staff, trying to limit the work by outside labs. But yet still advance. So we're publishing articles. We are learning things. It's -- we have to make trade-offs, but we do feel like we're advancing it, Marla. While keeping the focus on the oncology trial. We're, again, delighted that we treated 2 out of the likely 3 patients in the second cohort after finishing the first cohort last quarter. So the progress is picking up on that front too.

No, that is very -- no, that's very apparent that things seem to really be moving forward at the pace that you are finally happy with or that is good to see rather.

Yes. That is true.

The next question comes from Jeremy Pearlman with Maxim Group.

Now first question, related to the oncology trial. You said that the -- more around the time line. Again, this is your best estimate. You said the third patient should be treated by the end of February and then you'll present the safety data by late March. How long do you think the board will respond back whether you can move on to the third cohort or you have to now, let's say, add additional patients into the second cohort? What do you think the time frame for that would be?

Great question. So yes, I had misspoke this, so I'm glad you caught my correction. That third patient will be treated at the end of this month, February. And then the Data Safety Monitoring Board will occur likely in late March. Last -- I can only go historically. Last time, following the open session, at the day of the meeting, they had a closed session. And they returned a signed document to me within a couple of hours after. So I would anticipate a decision same day or next business day.

Okay. Great. And then let's say, just assuming they move you on to the third and final cohort, how -- and you said also on your prepared remarks that you had a pool of applicants, you saw an uptick of interest of potential participants. How quick do you think you could turn those around to do the 3 Hemopurifier treatments and then -- and get to finalize the last cohort data and then push that through?

Yes. So that's a great question. So this is what's really exciting. So thanks to our Controller, Michele Bombardiere. She got this Trialfacts and Dedicated, these groups that Aethlon contracted with. They have been able to supply the site referrals. And so we have a number of these folks lined up. Once we get the -- with the current protocol, you can't enroll or sign a consent for a new patient until you advance to that next cohort. But once we do, those patients can then be approached. They're in the queue, so to speak. They can be approached for consent. There's then a screening period where they get some additional lab test and review. And then we have to line up the HP treatment around their next Hemopurifier treatment. But the really exciting thing is, and again, we can't count our chickens, but there's a queue of potential participants waiting, which is really exciting for me.

And they can roll into the third cohort.

They can roll into the third cohort, yes, without any -- yes. They'll sign consent and they'll just move on. And so as opposed to saying, "Now we got to go look," we at least have a pool to draw on.

No, that's great. It's really good to have that pool to draw on. And then maybe just -- this is just a theoretical question related to how do you decide on the time gap between the first treatment? Like, you said earlier, a Monday, and then you did the second treatment on a Friday. Is there a specific reason why you chose the 5 days? Or is it -- and is there a possibility where maybe extending the gap between the treatments would be more beneficial to the patient? Is this like the optimal time? I'm just curious.

Well, extracellular vesicles are produced by tumors -- people with active tumors continuously. So the turnover is quite rapid. So going in -- again, this is a safety feasibility and our first time in oncology, we said we have to start with a single treatment and see how they do. But we knew it's unlikely that that's going to keep EV numbers down long term, right? So we said, let's try 2 in a week and let's also try 3 in a week, meaning Monday, Wednesday, Friday. We thought anything more than that a patient won't tolerate because, for instance, in dialysis, it's very hard for people to do more than 3 times a week. So we thought that that was the most that somebody would be able to get during a week. And then the other part of the story, which I think you're getting at, is when we look, we'll say, how often do you have to repeat that whatever treatment regimen is? Do you have to do that every week? Do you have to do that every 2 weeks? Do you have to do that once a month? And the way we have our sampling of labs, we'll be able to ascertain that. Is it once a week and then x number of time in between? Is it twice a week with x number of time in, or is it 3 times a week? This was done with a little bit of background information from the plasma exchange trial at Mayo, where they ultimately thought that you needed at least 2 to 3x in a given week to keep EV numbers down. So it was -- the design was informed by what was in the literature in the plasma exchange space.

Got it. Understood. And then just last question, related also to this potential incorporating it into the SLAMB system. Is that -- is there going to be any -- would there be any regulatory hurdles from your end? Or since that device is, I'm assuming, is already approved, if it just is compatible, if you could get the Hemopurifier compatible with it, it's ready to go? Or is there some type of you would have to do some sort of a safety test or something related to that before you could use it into that system?

Yes. Well, they're submitting their -- they're working on their submission to the FDA. It's not already approved. So they'll have to do that. And then we would have to roll it in. I'm sure we would be expected to do a certain number of treatments with the 2 in place. So it's not -- that's the plan.

The next question comes from RK with H.C. Wainwright.

A couple of quick questions. With the Cohort 2, 2 out of 3 patients in, and if I understood it correctly, you are basically using the same patients who had -- who were in Cohort 1 into the Cohort 2? If that is true?

No. These are entirely new. These aren't the same patients that were in Cohort 1. These are entirely new patients.

Okay. So they're entirely new. Okay. Fine. So what -- you said the third patient is starting at the end of this month. So do you think in a couple of months down the line, we should be done with this Cohort 2? And the real question is, is there a real need to do Cohort 3? Or do you think with Cohort 2, you would be able to judge if 2 treatments with Hemopurifier is enough to get the benefit that they could get? Or you still think you would need to do Cohort 3?

Okay. So a bunch of questions there. One is, yes, you're right, the third patient is going to get their 2 HP treatments at the end of this month. Following that, the independent Data Safety Monitoring Board will decide if that's sufficient or whether -- because it's a 3 plus 3 safety study, they'll decide whether it's sufficient or whether we need to add 3 additional patients. So I can't know, wouldn't be appropriate for me to speak for them. But in the best possible scenario, by the time they meet at the end of March, we would have a directive to go ahead and begin in April with Cohort 3. To get to your next question about the need for Cohort 3, well, again, this is based on the Mayo Clinic data, which suggested that you needed 2 or 3. I think we would be really hamstringing ourselves to stop at 2 and not investigate 3 because I have every reason to believe 3 could potentially be superior to 2 in terms of EV removal or T cells. So I think we would be selling ourselves short to stop at 2. And I haven't seen any of the data from 2 to actually even prognosticate yet. So it's way premature to call on the efficacy of 2 right now.

It was a good question, but no, it's -- without knowing the data -- right.

Okay. So then I have a couple of questions on the SLAMB device, so -- integration. As you were stating, when you go from the dialysis machine to this machine, the tubing itself, the catheters itself are smaller in size, which makes the patient feel not so cumbersome. But on the other hand, the flow dynamics of the blood changes quite a bit between the larger tubing and the smaller tubing. So do you see that you might have to go through this rigmarole one more time with that machine because the flow dynamics have changed? The amount of capture of the EVs could be different because of the dynamics? What do you think?

Yes. Again, a lot of forward-looking questions there, but yes, so the first thing is -- the simple -- the first set of experiments is simply: is their pump compatible with the device, meaning does our device function without triggering alarms and clotting off, et cetera? They'll be using -- they'll be doing this, not on patients, but they'll be doing it in the lab with colored fluid and look at the pressures, et cetera. Then you're right, there probably would have to be some ex vivo experiments looking to see -- make sure the EV capture is similar, yes. So this is just the first step, is seeing the compatibility of the device -- of their pump with our device.

Okay. So basically, that's not going to really help us move this trial any faster at this point. So it's something in the future basically, correct?

Not the current trial and probably not even the next trial. I don't think it'd be done in time.

Okay. And then the last question from me is, at one point you were talking about India and then you kind of walked away from that idea. Do you still see a possibility of having the Indian hospital get back into doing a clinical trial so you can kind of speed up the progress here? Or is it first Australia and then we'll see what happens?

Yes. I think we're pretty highly focused on Australia, RK. We'd be -- while the PI is great there and the hospital is great, we're advancing at a very good pace right now in Australia. And we just want to finish executing and get this trial done and get the data out. I think there'll be some expense and some distraction. So the answer is no, we're not going to go back there.

It'd be hard to advance to a PMA trial if you had another safety feasibility trial going on somewhere else in the world.

Right. If there's an emergency, if there's a pandemic breaking out in India, we know them, the PI is very comfortable with our device, we certainly could do an emergency use situation there. I wouldn't hesitate to consider that. But in terms of going back and doing a safety trial, no.

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

In closing, we remain focused on advancing the Hemopurifier platform through disciplined clinical execution and careful capital management. We appreciate your continued interest and support. Have a good day. Goodbye.

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