Aethlon Medical Releases Shareholder Letter

SAN DIEGO, Nov. 16, 2011 /PRNewswire/ -- Aethlon Medical, Inc., (OTCBB:AEMD) disclosed today that its Chairman and CEO, James A. Joyce, has issued the following letter to shareholders.

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To our Shareholders:

Earlier this year, we introduced and began marketing the Aethlon ADAPT™ system, a technology platform that intersects the medical device and drug world to establish a new class of therapeutics that allow for the selective subtraction of disease-enhancing particles from patient circulation without adding drug toxicity. Not long ago, the medical community consensus was that it would not be possible for a medical device to remove harmful particles from circulation without also stripping out essential elements required for health.  Well, as Walt Disney once stated, "Its kind of fun to do the impossible."  I would add immensely challenging as well.  Therapies that evolve from our platform hold the potential to alter the healthcare industry by unlocking the ability to attack disease survival mechanisms that are beyond the reach of drugs.  Today, we are advancing ADAPT-based endeavors to address unmet medical needs in cancer, infectious disease, and now sepsis.

On October 3rd, we proudly disclosed that the first sale of our Aethlon ADAPT™ system occurred when we signed a $6.8 million contract with the United States of America. The contract resulted from our response to a "Dialysis-Like Therapeutics" (DLT) program offered through the Defense Advanced Projects Agency (DARPA).  DARPA is a primary engine for innovation in our country and we are honored to be working with them on a project whose mission includes saving the lives of wounded soldiers.  Under the DLT program, the Aethlon ADAPT™ system will be tested as a core technology component of a therapeutic device that would prevent sepsis, a fatal bloodstream infection that is often the cause of death in combat-injured soldiers.  In this application, the open architecture of our technology platform provides a therapeutic template to immobilize a combination of affinity compounds to selectively target sepsis-enabling factors in circulation.  

DARPA estimates the successful development of this device would save thousands of lives and billions of dollars in the United States each year.  In regards to the global opportunity, more than 18 million cases of sepsis are reported each year, with more than six million resulting in death. We have also been tasked by DARPA to advance a novel blood pump design that seamlessly integrates with therapeutic devices, yet reduces or eliminates the systemic administration of anticoagulants normally required during extracorporeal therapies.

Last week, we received our first milestone payment under the DARPA award, which officially transitioned our corporate status from development-stage to revenue stage organization. Now that we are contract proven, we plan to increase our efforts to market the Aethlon ADAPT™ system to government health and military agencies that seek innovative strategies to address life-threatening or debilitating disease conditions.

With each subsequent sale of the Aethlon ADAPT™ system, we reinforce the value of our therapeutic vision, reduce our reliance on the capital markets, and further establish a unique business model that allows us to generate revenue as we clinically advance pipeline therapies to market. Our technology platform also provides a basis to establish collaborative business relationships with biotechnology and pharmaceutical organizations that might have interest in pursuing a medical device regulatory and commercialization pathway for their affinity drug agents.   As toxicity eliminates a majority of affinity drug agents from entering the market, we provide the opportunity to repurpose clinical stage affinity drugs as well as previous clinical dropouts.

On September 21st, we again leveraged the Aethlon ADAPT™ system to introduce a targeted breast cancer therapy known as HER2osome™ and enlisted clinical support from thought leaders in the cancer field.  In this application, HER2osome™ provides a therapeutic strategy to maximize the ability of the immune system and established drug therapies to combat HER2+ breast cancer, which is characterized by aggressive growth and poor prognosis resulting from the over-expression of HER2 protein.  Our therapeutic goal is to inhibit HER2+ breast cancer progression by reducing the circulatory presence of HER2 protein and tumor-secreted exosomes that contribute to the development and progression of breast cancer.

When we first initiated research into tumor-secreted exosomes, the consensus thought was that exosomes were nothing more than cellular garbage bags having no meaningful function.  Today, exosomes have emerged to become an important new therapeutic target in cancer care, yet remain unaddressed with drug therapy.  In a forthcoming disclosure, we will discuss some of our other exosome related endeavors.  However, as it relates to breast cancer, research publications indicate that breast cancer exosomes suppress the immune response, stimulate angiogenesis, contribute to the spread of metastasis, and inhibit the therapeutic benefit of Herceptin®, a leading monoclonal antibody treatment against the HER2+ breast cancer. Quite simply, we are developing HER2osome™ because we believe the resulting device will enhance the benefit of Herceptin® and standard of care chemotherapies without adding drug toxicity or interaction risks.  In this regard, the Aethlon ADAPT™ system provides a therapeutic template to immobilize both an anti-HER2 antibody and an exosome targeted affinity agent as a basis to simultaneously clear both targets from the circulatory system of HER2+ breast cancer patients.  Like all Aethlon ADAPT™ derived therapies, HER2osome™ is designed for utilization on dialysis machines or CRRT systems already located in hospitals and clinics worldwide.

While this is certainly an exciting time for our organization, there is something else I want to address before concluding my letter.  That is the treatment of Hepatitis C  (HCV) infected individuals with our Hemopurifier®, which is the lead product in our ADAPT product pipeline.  Our Hemopurifier® has demonstrated broad-spectrum capabilities against viral pathogens, including HCV, the human immunodeficiency virus (HIV), and a variety of tested bioterror and pandemic threats. Specific to treating HCV, we previously conducted studies that demonstrated the safe administration of our Hemopurifier® in HCV-infected dialysis patients whose average viral load reductions exceeded 50% during each four-hour treatment.  These results were obtained in the absence of any drug therapy.

Our HCV treatment results led us to ask the question, what if we administered Hemopurifier® therapy to non-dialysis patients when they initiated HCV drug therapy?  To find the answer, we initiated our first clinical study in non-dialysis patients at the Medanta Medicity Institute in India.   We already knew that rapid viral load depletion in the first few days of therapy correlated with patients who achieve a sustained viral response, the clinical definition for cure.  Confidence in our study plan was further driven by knowledge that the Japanese Ministry of Health and Welfare had approved a non-specific dual plasmapheresis configuration that was shown to improve patient outcomes when administered in the first three days of HCV drug therapy.  Based on these factors, our prior treatment outcomes, and the magnitude of HCV opportunity, we believed the Medanta study would contribute to improving shareholder value.  We were wrong.  Study delays, including protocol changes, patient recruitment challenges, and other mishaps instead contributed to an erosion of shareholder value. That said, I want to reinforce that there has been no indication that our Hemopurifier® isn't performing in the manner we had expected.

Certain delays may prove to be beneficial.  On July 19^th, we met with FDA to discuss a proposal to initiate Hemopurifier® clinical studies in the U.S.  During our meeting, we were asked if it was possible to measure the quantity of virus captured within the Hemopurifier® during treatment?  Our answer was yes, as our science team had measured this data point on three previous occasions.  Normally, our focus is to measure viral load changes in patient blood to quantify the potential for benefit.  In response to FDA's question, we modified our Medanta study protocol so that we could incorporate this secondary data point in a revised IDE submission to FDA.  With this change in place, our protocol is now being administered to enrolled patients at the Medanta Medicity Institute.  Our primary endpoint goal remains to demonstrate that our Hemopurifier® improves both immediate and rapid viral response rates when combined with interferon versus interferon alone.  We remain convinced that our Hemopurifier® will offer an enduring opportunity to improve current and future iterations of HCV drug therapies.  However, with the advent of the Aethlon ADAPT™ system, we have transitioned to being revenue stage organization whose value should no longer be attributed to one product application.  On behalf of our dedicated team at Aethlon Medical, I thank you for your continued support.

Very truly yours,

James A. Joyce
Chairman, CEO

Certain of the statements herein may be forward-looking and involve risks and uncertainties. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Aethlon Medical, Inc. to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.  Such potential risks and uncertainties include, without limitation, the ability for the Company to derive business partnerships or future revenue streams using the Aethlon ADAPT™ system including the ability to introduce a targeted breast cancer therapy known as HER2osome™, there is no assurance that FDA will approve the initiation of the company’s clinical programs or provide market clearance of the company’s products, the ability to achieve the goals set out in the DARPA contract, future human studies of the Aethlon Hemopurifier® as an adjunct therapy to improve patient responsiveness to established cancer therapies, the Hemopurifier’s® ability to capture exosomes and the impact it may have on disease conditions, the ability to successfully complete the Medanta HCV study and achieve positive results, the company’s ability to raise capital when needed, the Company’s ability to complete the development of its planned products, the Company’s ability to manufacture its products either internally or through outside companies and provide its services, the impact of government regulations, patent protection on the Company’s proprietary technology, product liability exposure, uncertainty of market acceptance, competition, technological change, and other risk factors. In such instances, actual results could differ materially as a result of a variety of factors, including the risks associated with the effect of changing economic conditions and other risk factors detailed in the Company’s Securities and Exchange Commission filings.

Contacts:

James A. Joyce
Chairman and CEO
858.459.7800 x301
[email protected]

Jody Cain
Senior Vice President, Lippert/Heilshorn & Associates
310.691.7100
[email protected]

Jim Frakes
Chief Financial Officer
858.459.7800 x300
[email protected]

John P. Salvador
Director, Communications & Investor Relations
858.459.7800 x307
[email protected]

SOURCE Aethlon Medical, Inc.