Aethlon Medical Releases Shareholder Update

SAN DIEGO, Jan. 7 /PRNewswire-FirstCall/ -- Aethlon Medical, Inc., (OTC Bulletin Board: AEMD) disclosed today that its Chairman and CEO, James A. Joyce has issued the following letter to shareholders.

(Logo: http://www.newscom.com/cgi-bin/prnh/20090325/LA88762LOGO-b)

To our Shareholders:

The scientific accomplishments of your Aethlon Medical team in 2009 have set the stage for the initial commercialization of our Hemopurifier® as an adjunct therapy targeted to improve Hepatitis-C virus (HCV) cure rates. In addition, we strategically cultivated principles underlying our core Hemopurifier® platform technology to create an expansive yet cohesive medical product pipeline beyond infectious disease. In this regard, we positioned ourselves to advance new therapeutic and diagnostic paradigms in cancer, and also executed a collaboration that allowed us to enter the biomarker discovery marketplace. Among our reported events in 2009, we:

1. Initiated a collaborative biomarker discovery program with the Center for the Study of Traumatic Encephalopathy (CSTE) at the Boston University School of Medicine and the Sports Legacy Institute (SLI). The goal of this collaboration is to apply our proprietary techniques for selectively capturing viruses and other particles as a means to discover biomarkers that could identify athletes likely to have an increased susceptibility to Chronic Traumatic Encephalopathy (CTE) and related issues resulting from repetitive head trauma. The identification of such biomarkers could provide the basis for a test to distinguish those individuals who should be precluded from participating in football and other activities with a high risk for head trauma. CTE has recently been identified in ten deceased National Football League (NFL) players, of which most died before the age of 50. Since the announcement of our research collaboration, the NFL has established a formal relationship with the CSTE and will provide $1 million to support research. The NFL is also encouraging current and retired players to participate in CSTE brain research programs. We have subsequently received brain samples of former players identified with CTE during autopsy and have initiated our testing program. It is possible that our research becomes the story behind a story now being played out before congress and covered by major media outlets. Click here for a recent New York Times article on the topic.

2. Established Exosome Sciences, Inc. (ESI) as a wholly owned subsidiary of Aethlon Medical to leverage the discovery that our Hemopurifier® captures exosomes known to suppress the immune system in cancer patients. Inhibiting the destructive immunosuppressive activity caused by exosomes is an unmet medical need that could improve the lives of cancer patients worldwide. Addressing this need may increase patient responsiveness to chemotherapy and other treatment strategies. From a business perspective, it provides us the potential to enter the $43+ billion market for cancer therapies. While there is still much research and clinical work to be accomplished, our established collection of human Hemopurifier® data provides an advantage that could accelerate our therapeutic objectives. ESI also has the prospect of advancing exosome diagnostic and research services, and exploring recently discovered opportunities to address exosomes in disease conditions beyond cancer. Scientific publications reveal that exosomes may also have implications in inflammatory conditions including Sepsis, bacterial infections including Tuberculosis (TB), autoimmune conditions such as Rheumatoid Arthritis, and neurological and neurodegenerative diseases such as Alzheimer's disease. Regardless, the formation of ESI allows us to leverage value from a previously unrecognized asset into an entity not burdened with the status of being a publicly traded organization.

3. Completed and reported on the "first-in-man" study of a medical device to treat the Human Immunodeficiency Virus (HIV), which demonstrated a 92% reduction of viral load and improved immune function resulting from short-term intermittent application of our Hemopurifier® in the absence of any antiviral drug therapy. Similar to our treatment strategy in HCV, we believe the Hemopurifier® could significantly enhance and extend the benefit of both established and candidate drug therapies. The Hemopurifier® also offers a potential new treatment strategy for HIV-infected individuals that become fully resistant to antiviral drug regimens.

4. Entered into an agreement that extends studies of our Hemopurifier® with the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) under a cooperative research and development agreement. The objectives of the USAMRIID agreement include determining the therapeutic efficacy of our Hemopurifier(R) in non-human primate studies against hemorrhagic fever viruses, including the highly virulent Zaire strain of Ebola (ZEBOV). We also disclosed that studies previously conducted by USAMRIID documented our Hemopurifier® captured approximately 50% of both wild type and mutant strains of ZEBOV from fluids during one hour in vitro studies. ZEBOV, which is untreatable with drug therapies, has the highest known virus fatality rate, up to 90% in some epidemics, with an average case fatality rate of approximately 83% in outbreaks.

5. Documented our Hemopurifier® effectively captures the current pandemic strain of the H1N1 Swine Flu Virus. During invitro studies, the Hemopurifier® removed 68% of H1N1 virus from blood plasma in 30 minutes, 80% of the virus in two hours, and a 96% reduction of H1N1 was observed at six hours. The studies were performed by third party researchers approved by the United States Department of Health and Human Services (HHS) to house and conduct research with pandemic strains of H1N1 virus. Beyond the H1N1 Swine Flu Virus data, third party researchers have now validated the ability of our Hemopurifier® to capture Dengue Hemorrhagic Virus, Ebola Hemorrhagic Virus, Lassa Hemorrhagic Virus, West Nile Virus, H5N1 Avian Influenza Virus, the reconstructed Spanish Flu of 1918 Virus, and Monkeypox Virus, which serves as a model for human Smallpox infection. In addition to being the first-in-class medical device to selectively capture infectious viruses, the breadth of our collected data reinforces my belief that our Hemopurifier® is the leading and perhaps only true broad-spectrum countermeasure against drug resistant bioterror and pandemic threats.

6. Reported compelling human clinical outcomes against Hepatitis-C virus (HCV) infection; then disclosed a data supported strategy to improve HCV cure rates; and subsequently discovered a clinical validation by Asahi Kasei Kuraray Medical (Asahi) that confirms moderate levels of viral filtration at the outset of standard of care (SOC) therapy can dramatically impact HCV cure rates. Asahi reported 71.4% cure rates in patients who previously failed SOC, by applying their V-RAD filtration system (Click Here for V-RAD Website) once daily for three consecutive days at the outset of the 48-week SOC drug regimen. Cure rates of HCV patients who previously fail and then reinitiate SOC are generally reported below 20%. Viral load reductions of 26.1% were documented during each V-RAD treatment period, which averaged 3 1/4 hours in duration. These results do not bode well for drug candidates vying to become a component of SOC therapy. Especially if viral filtration achieves such results without needing to be administered during the remaining 47-weeks of SOC therapy and without stacking additional drug toxicity on top of the known toxicity of SOC therapy. However, this is good news for 180 million individuals infected with HCV worldwide. Regardless, we believe the viral filtration capabilities of our Hemopurifier® will provide even better treatment outcomes. This sentiment is reflected in the following paragraph extracted from my December 8th shareholder letter:

On October 30th, we reported HCV treatment outcomes at the 42nd Annual American Society of Nephrology (ASN) Conference. When analyzing Hemopurifier® treatment data from all of our HCV human studies, we documented average per-treatment viral load reductions of 29-42%. While the length of each Hemopurifier® treatment was similar in duration to V-RAD, the Hemopurifier® did not benefit from SOC associated viral load reductions as our results were achieved in the absence of SOC therapy. We acknowledge and appreciate that V-RAD has indeed documented that viral filtration improves HCV treatment outcomes. However, we believe the Hemopurifier® delivers the necessary capabilities to establish broad-market acceptance of a medical device in infectious disease care. Foremost of these capabilities is our ability to selectively capture infectious viruses and immunosuppressive proteins not addressed by V-RAD. The selective capture of deleterious agents from circulation establishes an environment that permits continuous or aggressive intermittent treatment strategies that can truly optimize patient outcomes. Whereas historic therapeutic filtration approaches, including V-RAD, are restricted in scope as they indiscriminately remove particles from blood by molecule size. As a result, the safe application of such treatments remains limited as beneficial blood components required for health are removed along with the deleterious target.

7. Initiated a relationship with Kentucky Bioprocessing LLC (KBP) to establish the processes necessary to support large-scale production of the active affinity agents we immobilize inside our Hemopurifier®. Such affinity agents allow our Hemopurifier® to selectively capture viruses and immunosuppressive proteins from blood and other fluids. The KBP relationship represents an important step towards establishing the long-term commercial feasibility of our Hemopurifier® in the marketplace.

8. Executed a non-exclusive agreement with NextPharma Technologies (Click Here for Website) to establish manufacturing of our Hemopurifier® under good manufacturing practice (GMP) requirements set forth in quality system (QS) regulations for medical device commercialization. As the result of a lengthy and dedicated effort, we established our GMP manufacturing processes and initiated our first Hemopurifier® production run. Consequently, we are primed to initiate commercialization in India and have established a manufacturing standard that exceeds the requirements for human clinical studies in the United States and the European Union. For a complete news summary of our activities in 2009, please "click here".

The productivity of our team, as referenced by our scientific advances and achievements last year are a source of great pride. I also note that in the face of one of the most challenging capital markets on record, we didn't need to put our hands out to Wall Street as both established and new shareholders stepped forth to provide sufficient investment to fund our operations. As a result, we were able to invest meaningful time into advancing potential strategic relationships that could accelerate the pace of our efforts and maximize long-term economic value for Aethlon Medical shareholders. However, until definitive agreements underlying such relationships are executed, we will continue our adherence to minimizing operating expenses.

I am challenged when authoring a shareholder letter as my passion for our endeavors often becomes muffled by the many regulatory implications of being a publicly traded company that creates medical products. However, I will confess frustration with the value assigned to our organization by the public markets. In the therapeutic world, the perception of value is often steeped in the redundancies of known and accepted treatment strategies, which in many cases are nothing more than me-too drug mechanisms that largely duplicate the action of existing drugs. These redundancies, while not scientifically meaningful, can be economically rewarding as they provide analysts and investors with a comparable guideline to judge public market value based on previously awarded values to like organizations. As we are pioneering a therapeutic device strategy to address infectious disease and potentially cancer, we don't have the collective benefit of comparable organizations as a basis for our value to be judged. However, I do believe our scientific advances will blossom into medical products that save lives.

In the HCV treatment world, considerable value is placed upon promising drug candidates. At present, there are a reported 65 drug candidates competing to become a component of standard of care (SOC) drug therapy. Yet, we are uniquely positioned to enhance the benefit of SOC therapy even if the drug combination underlying SOC becomes redefined. Thus, we have an enduring market opportunity that positions us to be an ally with drug developers, not a competitor. The most advanced HCV drug candidate is Telaprevir, which represents a significant value component of the $7+ Billion market valuation enjoyed by Vertex Pharmaceuticals (VRTX). Among the deep pipeline of HCV drug candidates, I am not aware that any has proven to reduce viral load in an HIV-infected individual. Nor am I aware that any candidate has established broad-spectrum activity against bioterror and pandemic threats. Certainly, none of these candidates represent a platform technology that can be leveraged to participate in the cancer marketplace. 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 in the above Shareholder Letter 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 capability of the Hemopurifier® to reduce viral loads and other disease conditions or to identify disease conditions such as cancer, including the ability to capture exosomes and the impact that potential ability may have on disease conditions, the Company's ability to raise capital when needed, the Company's ability to complete the development of its planned products, the ability of the Company to obtain FDA and other regulatory approvals permitting the sale of its products, the Company's ability to manufacture its products 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:

        RedChip Companies, Inc.
        Jon Cunningham
        1-800-733-2447, Ext. 107
        [email protected]

        Jim Joyce
        Chairman, CEO
        858.459.7800 x301
        [email protected]

        Jim Frakes
        Senior VP Finance
        858.459.7800 x300
        [email protected]

SOURCE Aethlon Medical, Inc.