Aethlon Medical, Inc.
Q4 2017 Earnings Call Transcript

Published: 29 Jun 2017

[Operator:]

Good afternoon and welcome to the Aethlon Medical Earnings Conference Call for the year ended March 31, 2017. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately one hour after the end of the call through July 5, 2017. I would now like to turn the conference over to Scott Gordon, President of CoreIR, the Company’s Investor Relations firm. Please go ahead, sir.

[Scott Gordon:]

Thank you, Nicole. And thank you for joining today’s conference call to discuss Aethlon Medical's corporate development and financial results for the year ended March 31, 2017. With us today are Jim Joyce, the Company’s CEO and Jim Frakes, CFO. At 4

[James Joyce:]

Thank you Scott for that very frightening disclaimer language. I appreciate everyone’s participation today as many of you should know our primary focus is to address unmet needs in global health and biodefense, our global opportunity is the treatment of life threatening viruses that are not addressed with antiviral drugs and this is a significant unmet need in global health especially as there is approximately 300 viruses that are infectious to man and only nine of those are addressed with an antiviral drug agent. There is three or four new human viruses discovered each year and we have this perfect storm of global warming, urban crowding and transcontinental travel that are fueling an increased emergence of pandemic viral outbreaks. And then finally there is one other factor I want you to think of, and that is that there is no antiviral strategy to address emerging unknown threats including viruses that could be engineered by man as agents of bioterrorism and two months ago Bill Gates pointed out at the Munich Security Conference that the one threat that could kill more than 10 million people and one of that beyond nuclear war was a genetically engineered viral pathogen. So our solution is the first in class therapy that’s being advanced through FDA approved studies, that is known as the Hemopurifier. It’s a broad spectrum viral treatment candidate and it’s designed for the single use for mobile of viral pathogens from blood. For those that have been following the company you know that we’ve taken this from a theoretical concept to a clinical reality. We’ve worked with leading government and non-government researches to validate the capture of more than 16 high threat viruses. We’ve conducted four investigational studies outside of the U.S. and this included in patients infected with Hepatitis C virus, HIV and then we had a remarkable treatment outcome in Ebola-infected physician who was Comatose with multiple organ failure at the time of treatment that we were able to treat and effectively was cured went home to his family. Most important to us was on March 13, we announced the conclusion of an FDA approved feasibility study and this was our first study conducted off under the auspice of FDA and our primary objective was to demonstrate safety of our device in a very health comprise patient population infected with a viral pathogen. More specifically FDA asked us to treat end-stage renal disease subjects [ph] these are dialysis patients infected with Hepatitis C because this is the most prevalent virus in that patient population. The goal for this study was to serve as a model to advance our Hemopurifiers of broad spectrum viral counter measure, it was conducted at DaVita Med Center Dialysis in Houston. And I want to point out that this study was extremely important and perhaps under estimated in its importance because as it relates to viral pathogens, safety is the sole human challenge against these pathogens that do not permit for controlled clinical studies to be conducted in humans. The study is also important in the fact that it provides us a pathway to conduct pivotal studies against viruses that allow for pivotal study, so it’s a modular study that allows us to bridge off of this study in the follow on pivotal study for approval in the mainstream disease conditions beyond virulent viruses. So as we reported, we achieved our primary safety objective the Hemopurifier was well tolerated with no device related adverse events reported in this study and subject that met the inclusion, exclusion criteria and we also reported to date that we saw an average capture of 154 million viruses in the Hemopurifier per each four hour treatment. And I cannot tell you how important that illusion assay is that allows to quantify viral capture, because again our label indication for the Hemopurifier is single use removal of viral pathogens from blood and instead of relying on observational clinical data, the illusion assay that allows us to quantify viruses lines up in an absolute manner with our label indication single use removal of viral pathogens from blood. So we have since disclosed that our next step with FDA is to submit an expedited access pathway application, we call this EAP application and the first year of the EAP program was in 2016. This was a program that evolved out of the innovation pathway which we had a good fortune in working under through two DoDEA [ph] programs with DARPA and I can tell you this is a program that allows you to collaborate directly with FDA to help advance the product on a more expedited basis. We are also seeking to break through technology designation under the 21st Century Cures Act, which was signed into law towards the end of last year. But these programs are designed to speed the advancement of devices for unmet needs against life threatening disease conditions for which there is no approved treatment, and there is a number of indications we can pursue under those programs. We are also launching our biodefense and pandemic threat treatment initiatives with both the U.S. and foreign governments, and this is specific fact to virulent viruses that do not permit for controlled human studies and whose capture by the Hemopurifier is already been validated and we believe our device fulfils current U.S. government objectives to protect citizens from bioterror and pandemic threats and our goal for the Hemopurifier is to have it in the strategic national stockpile. And these programs are overseen by Department of Health in Human Service through the 2016 Public Health Emergency Medical counter measure enterprise known PHEMCE. And PHEMCE is a multi agency initiative with the FDA, the CDC and IH Department of Homeland Security by the Department of Veterans Affairs and the Department of Defense. And this is our country’s mandate for treating infectious viral pathogens and other bioterror and pandemic threats. It’s the mandate that protects citizens against these threats and we believe the Hemopurifier aligns to meet these goals and objectives outlined in the 2016 census. Now some of you might recall that a number of years ago, I testified before Congress talking about the use of our device as a counter measure against the bioterror and pandemic threat. And at the time I had three primary points that I presented. One, you needed to change the definition of counter measure and all legislation from being specifically a drug and a vaccine to including a device that counter measure should be defined as a drug vaccine in medical device, number two, it was our belief at the time that broad spectrum counter measures were the only way you could address the breath of pathogens that could emerge naturally through mother nature or be genetically engineered as agents of bioterror by man. We did not think it was possible to align a disease specific drug or vaccine with each and every threat and then we also pointed out that because a therapy could be broad spectrum that it would also be – it also should have commercial viability and mainstream application thus making a stockpiled counter measure useful and not letting stockpiles expire and having it to be repurchased and replenished on a regular basis. So I’m excited to share that in recent years. There’s been a shift to broad spectrum therapies that medical devices are inclusive of the definition of counter measure and that the current protocol is to procure countermeasures under PHEMCE for this strategic national stockpile seem to be quite favourable. PHEMCE is now seeking broad spectrum medical counter measures that address high priority threats and also have commercial viability. We address many high priority threats and we believe our product also has a commercial viability and other applications. I want to point out the Category A threats, these are 13 viruses that are considered to be the highest threat level viruses of which just one of these has a counter measure in the strategic national stockpile and these are threats that also threaten to cause civil unrest. These are the types of threats that we feel we can address effectively with the Hemopurifier. PHEMCE is also looking for broad spectrum approaches to address both known and unknown threats as it relates to emerging unknown threats or threats genetically engineered as an agent of bioterrorism. We are not aware of any other strategy beyond our approach for treating infectious viral pathogens. PHEMCE is also looking for broad spectrum medical counter measures against emerging threats including Ebola, Zika and MERS, again in Ebola we had a remarkable treatment outcome and we have captured data in both Zika and MERS Coronavirus. Another aspect is PHEMCE is looking for medical counter measures against pandemic influenza including as their language states non-pharmaceutical medical counter measure again from a treatment standpoint I don’t know of another company that could be attributed to. And the last point that people generally don’t recognize is that PHEMCE is looking for medical counter measures to treat at-risk populations. At-risk populations are the large population of children, pregnant women, older adults and other immune compromised individuals for whom first line counter measures in the strategic national stockpile are not indicated. And the rational for this is that many of these counter measures in the stockpile got there based on demonstrating safety in humans but not effectiveness. And when you have a counter measure that has not been demonstrated safe and effective in humans, it cannot be addressed or indicated for these at-risk populations which is a very significant population. We believe the demonstration of safety, the fact that our devices and extracorporeal device that doesn’t introduce biological elements into the body puts us at an advantage to meeting that objective of the U.S. government. So beyond our human treatment experience is which are now pretty significant. I want to tell you why we think we are leading broad spectrum counter measure. We’ve conducted viral validations with against leading government and non-government research institutes and it really reinforces our capability as a leading broad spectrum counter measure. We’ve demonstrated as it relates to chronic and leading viruses, the capture of HIV, Hepatitis C, Cytomegalovirus, Epstein-Barr, and Herpes Simplex Virus. Those last three viruses are viruses that are often activated during periods of immune suppression. There is very significant problem in organ transplant patients who are given immune suppressive drugs, they become activated and can increase morbidity, mortality and the increased incidence of organ transplant rejection. We validated those viruses during two of our department of defense studies related to Sepsis. And as we’ve learnt in Sepsis, one of the primary cause is mortality in Sepsis is immune suppression and during this immune suppression phase we see the same activation of latent viruses and there is a very significant need for – means to deal a broad spectrum against the deal with activated latent viruses in immune suppressed individuals. As it relates to pandemic influenza viruses, we’ve worked with Battelle Memorial Research Institute to validate capture of H1N1 swine flu, H5N1 bird flu virus and in the reconstructed Spanish flu of 1918 which killed approximately 50 million people worldwide. Mosquito borne viruses, we validated the capture of Chikungunya, Dengue, West Nile and Zika virus and our bioterror and pandemic threats. As we know, Ebola we first started those studies with researches from CDC and [Indiscernible] which is our primary lab for study. This type of threat in the United States, loss of haemorrhagic virus, most corroded [ph] virus and small parts based on monkey parts and vaccine models. So we think we are very well positioned to advance the Hemopurifier clinically, to continue our clinical progression model in the U.S. through FDA and then to also advance it not just through our government agencies based on favourable new legislation pathways, but this is initiated, it’s not just the problem for our nation, its an issue and a challenge for all nations around the world. I want to briefly touch before I turn it over to our CFO Jim Frakes. I want to briefly touch on our Exosome Sciences subsidiary of which we own 80% of this subsidiary. It’s focussed on diagnosing disease conditions that are either current or future therapeutic targets for Aethlon Medical. And one of the areas that we’ve been focussed is looking at Exosome biomarkers underlying neurological tauopathy. We do neurological disorders that involve an abnormal accumulation of tau protein in the brain. There is 21 different tauopathy diseases, the best known is Alzheimer’s disease but we are also looking at Alzheimer’s and Chronic Traumatic Encephalopathy, which is a disease condition that’s often found in individuals that participate in activities that involve repetitive head trauma. It’s best known for being found in [Indiscernible] and in recent year’s very high incidence in former NFL players and this is based on autopsy which at present is the only way to diagnose CTE in the living. So previously in a collaboration with the Boston University CTE Center. We’ve looked at Tausome levels in 78 former NFL players. This is a high risk CTE group. And this by the way, the study was the first NIH funded study for Chronic Traumatic Encephalopathy. And then we looked at 16 athlete controls. This is what we consider to be the low risk CTE group, but both groups were between the age of 40 and 65 and the athlete controls participated in sports that didn’t involve repetitive head trauma. And we saw that the Tausome levels were significantly higher in the NFL group. On average, nine times higher than the control group. And we also then looked at the correlated other tauopathy. We had the opportunity to look at 33 Alzheimer’s patients, who we saw as compared to the same control group. These diagnosed Alzheimer’s patients were ten times higher on average than the control group, so just slightly higher than what we saw in the NFL group. We also identified the Tausome levels in the NFL group correlated with cognitive declines. So, the higher the Tausome levels, generally the worse the subjects performed in cognitive decline test which involve psychomotor and memory test and much of this was published in the Journal of Alzheimer’s disease. But we are currently preparing to launch a new study to continue to advance this biomarker as a means to potentially diagnose and then monitor disease progression or monitor response to therapies in the future and we are looking to do this both in current and former NFL players. We want to look at younger players. We’d expect their Tausome levels to be lower, but at present such information doesn’t exist. We are looking to enrol upto 200 subjects which would be the largest study to date. The initial site location is with the transitional genomics research institute. There was an article in the Arizona Republic in the Sunday edition. They talked about a study being kicked off, then Monday this story was also picked up in the USA Today. But we are trying to focus on further validation of our Tausome biomarker and we are also looking for demonstrating the correlation of levels of this biomarker in high risk NFL subjects and again Alzheimer’s patients as a means to include NFL subjects for potential participation in the emerging anti-tau drug studies which are the new class of drugs clinically being advanced in studies in diagnosed Alzheimer’s patients and we think that this type of data clearly perhaps qualify individuals that normally would be precluded from participating in these studies which we think would be a very important factor and potentially establish significant relationships for us with pharmaceutical companies advancing these studies. So, I just want to kind of reinforce some near term inflection points, the one being initiation of our CTE related study in NFL players. We expect that to kick off in the near future. The submission of our expedited access, pathway submission, breakthrough device application to FDA. Our expectation upon submission which should happen in the coming weeks that we have a response back from FDA in 30 days. There is no assurance that we’ll get this designation, but we certainly think we meet the objective of being able to address life threatening disease conditions with a device and conditions that are not addressed with approved products and there’s a multitude of those that we think we can address. And then the launch of our biodefense and pandemic threat treatment initiatives with U.S. and foreign governments, we are actually underway already and working with our U.S. counterparts. So, before I pass it off to Jim Frakes, our CFO, again our focus is to address unmet needs in global health and biodefense. And our global opportunity is the treatment of life-threatening viruses that are not addressed with the antiviral drug agents and this is one of the most significant unmet needs in global health. So with that I want to turn it over to our CFO, Jim Frakes.

[James Frakes:]

Thanks, Jim. At March 31, 2017 the Company had a cash balance of approximately $1.6 million. That cash position will continue to be used to fund our future clinical studies and operations. The Company recorded revenues of $392,000 from its government contracts in fiscal 2017 compared to $887,000 in [Indiscernible] 2016. Those revenues were from work performed under the government contract with the DARPA, and the related subcontract with Battelle Memorial Institute, both of those contracts were completed during the past fiscal year. Our consolidated operating expenses were $6.5 million in fiscal 2017 compared to $5.3 million in fiscal 2016, an increase of approximately $1.2 million. That increase was due to an increase in payroll and related expenses of approximately $1.4 million. However, the increase in payroll and related expenses was caused by a $2.0 million increase in our noncash stock-based compensation due to the vesting of restricted stock units granted during the fiscal year. Excluding that non-cash increase, our overall cash operating expenses actually decreased by approximately $800,000 from reductions in our cash payroll expenses, professional fees and general and administrative expenses, specifically our cash-based payroll decline by approximately $587,000, our professional fees decreased by approximately $97,000 and our general and administrative expenses declined by approximately $80,000. The Company had other expense of $1.2 million in fiscal 2017 compared to $573,000 in fiscal 2016, an increase of $627,000. That increase was largely due to a $358,000 charge for a loss on debt extinguishment and a $346,000 charge for warrant repricing expense in fiscal 2017 with no comparable expense in 2016, both of those were non-cash expenses. And our actual interest and debt expenses were $304,000 in fiscal 2017 compared to $574,000 in fiscal 2016. Overall, the net loss for fiscal 2017 was $7.3 million, or $0.94 per share compared to a net loss for fiscal 2016 of $4.9 million, or $0.66 per share. We will file our Form 10-K annual report later on this afternoon. In the statements of cash flows in that annual report you will see that we reduced our cash used in operating activities by approximately $823,000 as a result continued focus on keeping our cash burn rates while we go through our clinical progression. That number is consistent with the $800,000 decrease in our cash-based operating expenses that I previously noted. And I’d also like to mention that there will be some 10-K related filings over the next week or so as we update our S-1 related registration statements with the information from the 10-K. And now Jim Joyce and I would be happy to take any questions that you may have. Nicole, please open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Brian Marckx of Zacks Investment Research. Please go ahead.

[Brian Marckx:]

Hi, Jim and Jim. And we can talk a little about the EAP pathway, and I guess in the context of what your goals are in terms of an indicated use there. And I guess initially in terms of the feasibility study and that data it has -- is that data -- is all of that data going to be part of the initial EAP submission?

[James Joyce:]

Brian, this is Jim Joyce. No. All of that data is not part of the EAP submission. The EAP submission is abbreviated submission. I will include much of the high level data that was already included back to FDA in our preliminary report in our feasibility study. But it will be more inclusive of the bigger picture of our historic operations or validations against different viral pathogens as well as previous clinical studies and abbreviation of those different studies, and more or less the submission outlines, the rationale of what the EAP pathway is and how you meet those objectives. And we think as a medical device we clearly meet the objective. There is no assurance that we’ll get that designation, but if we do we look forward to it because it puts you in a position to actively communicate with FDA and it could be -- we have the reviewers that have their own ideas on clinical design for mainstream viral pathogens. And if you can engage directly in the design of protocols for a variety of different pathogens threats I think that could be a very effective means to push the technology forward into the marketplace.

[Brian Marckx:]

Jim, what are your thoughts today in terms of, I guess an indicated use under the EAP pathway. We’ve talked recently and you said that the initial submission doesn't need to have indicated use I believe, but what are your thoughts in terms of how that proceeds if you get the EAP and breakthrough device designation what's kind of the next steps in terms of developing a clinical study? Is something like an HCV ESRD a larger study? Is that potentially in the game plan or kind of how should we think about what is essentially a PMA pathway and expedite PMA pathway. How would that -- what are your thoughts I guess in terms of what the next steps would be?

[James Joyce:]

No, I appreciate the question because every time we move forward FDA establishes a new president because we’re the first device of its kind to move forward through FDA studies. So, we really have to distinguish the pathogen threats that we address that are virulent threats where you can’t run controlled human studies. And these are the threats where we believe we can continue to advance those in discussions with government agencies based on the broad-spectrum countermeasures focus of the U.S. government as dictated through the 2016 PHEMCE initiative. And again there is many countermeasures in the strategic national stockpile that are not FDA approved, they are because they’ve been demonstrated to be safe and offer the possibility of being effective in humans to protect them against bioterror and pandemic threats. So that's one pathway. On the EAP pathway the continued progression through FDA where we have the opportunity to obtain label indications specific to a virus, I first want to point out that the program that we just ran the feasibility study was originally a protocol designed by FDA. We have previously run the protocol in India with success and again we feel we replicated that here in the U.S., but that protocol was designed to advance our product as a broad-spectrum countermeasure against viral pathogens in the United States, it was a protocol designed by FDA. So, it’s a feasibility study that’s modular, now allows us to branch out in the pivotal studies. And the pivotal studies, we have a number of different opportunities. You referenced ESRD patients potentially infected with Hepatitis C as continued studies. We have an interest in amongst more in hepatitis space, amongst more than just hepatitis C. We think there are opportunities in Hep B, Hep A. One of the things that we find to be of interest in Hep C is related to one of the inverse of a study we previously ran overseas where we demonstrated that we could eliminate or accelerate viral load depletion in Hep C patients who were not dialysis patient, who were initiating interferon-ribavirin therapy and in those patients we demonstrated that we could effectively get them to undetectable viral load at day 30 which is called the rapid virologic response and consistently get them there whereas generally only 11% of patients on the interferon-ribavirin along would achieve that that rapid virologic response endpoint. But if you're there undetectable at day 30 you actually have about 86.2% likelihood of a sustained virologic response with the clinical definition of cure. We actually demonstrated just with a brief inclusion of our device at the front end of that therapy. We actually had two patients. They were hard to treat Genotype 1 patients undetectable at day seven. So that opportunity always exist to change the early viral kinetic response, but today with the emergence of all antiviral drug therapies there’s a different challenge. These therapies are very effective in Hep C patients that are really changing the landscape but as in all antiviral therapy you would expect them to get patients undetectable relatively quickly. But if a patient has a mutant strain that’s underlying treatment then all of a sudden you see a viral rebound. You will see the kind of a blip [ph] for all of a sudden viral load become detectable again. And then all of a sudden you have an 80,000, $100,000 drug regimen that the patients is going to have to come off of because there is no treatment for viral rebound. Basically the patient is going to fail that regimen and that occurs in a reasonable portion of patients. So inversely to the study we ran to accelerate viral load depletion it could be that the ability to reset viral load again to combine in a synergistic manner with these drug agents to bring viral load back down to undetectable levels where just the ability to salvage a very expensive drug regimen could be very important. We also have interest and these are driven by – these interest are not is driven by us, but driven by outside researchers, collaborators, supporters. There’s also an interest in latent viral pathogens where there is a multitude of latent viral pathogens. We talk about the best-known latent viral pathogens being Epstein-Barr, Herpes Simplex, cytomegalovirus which we’ve validated the capture of, but these are very problematic in expensive organ transplant procedures where the patients are on immune suppressant and one of the biggest challenges for transplant docs is the ability to address any latent viral pathogen that gets activated. And it's not just those three viruses. There is a large multitude of latent viruses that can be quite dangerous in organ transplant patients who are immune-suppressed with immunosuppressive drugs and these are generally $0.25 million procedures. The patients are on bypass in many cases where the cartridge can be included right in series with the bypass during the procedure to reduce the circulating levels of latent viral pathogens. So those are just examples of different indications that we can pursue. What we really want to talk through, the reason why we are really hoping for the breakthrough device designation in the expedited access pathway is we’d like to have these discussions directly with FDA to kind of conclude on protocol design, do not submit an IDE, wait for an extended period of time for comments back we submit documentation. We'd like to collaborate in real-time basis and have FDA participate and helping us design clinical protocol designs. So that’s the goal and objective. And there's a number of different indications that we believe we could pursue better mainstream indications beyond our efforts to advance the devices that countermeasure against bioterror and pandemic threats where you can run controlled studies.

[Brian Marckx:]

Okay. And so in terms of the countermeasure pathway, potential pathway related to PHEMCE. I think as you mentioned on a prior call that you’d expected to meet with the BARDA regarding that. Has that meeting taken place?

[James Joyce:]

That meeting -- we previously met with BARDA a number of years ago when the focus was -- the focus was driven towards disease specific drugs not broad-spectrum drugs and the definition of countermeasure was much more limited. And we're actually a finalist for an award but funds got re-appropriated. The fact today is we've resubmitted for meetings with BARDA and not just the typical what they call a TechWatch [ph] meeting. It kind of a one-on-one meeting with new leadership, BARDA’s leadership has shifted and this is not just leadership as BARDA that shifted. As you probably know we have new leadership at FDA that’s expected to be very progressive in treating advancing therapies against disease conditions where there is no approved treatment, but we expect to meet with BARDA in the near future. But we’re already navigating forward with some established companies in the space. They have done a very good job in navigating themselves through biodefense initiatives and have products in the counter -- in the strategic national stockpile as well as relationships with individuals we work with originally that were instrumental in the creation of project BioShield that have been involved in stockpile procurements for other companies. So, we’re building a team that kind of take the new PHEMCE initiatives and leverage those to advance our product with the U.S. government and U.S. government is also kind of established the template. There’s been upwards of $100 billion spent on biodefense initiatives since 2001 and so money has been spent, time has gone by, it’s kind of really understand how it is you can potentially combat these threats, in this template that the US is really kind of develop is something that we believe other nations are going to pursue as well as I said previously these threats they are not just an issue for the United States and how to protect this, it’s an issue for every nation.

[Brian Marckx:]

Okay. Thanks Jim. Appreciate it. That’s all I had.

[James Joyce:]

Okay Brian. Thank you.

[Operator:]

Our next question comes from Yi Chen of H.C. Wainwright. Please go ahead.

[Yi Chen:]

Hi. Thank you for taking my questions, and congratulations on successfully completing the feasibility study. So my first question is assuming that you successfully get the Expedited Access Pathway designation from the FDA, what is the timeframe we should expect from -- for you to run further studies and the -- so and what's the potential cost of that?

[James Frakes:]

Yes. So, what I can tell you is upon submission our expectation is we should have a response whether our application is accepted or not in about 30 days related to the EAP breakthrough device designation. In terms of cost of follow-on studies, but one thing that that we don't have an understanding of yet will be the size of the patient population we know it’s a medical device's who oversight and governed by CDRH, the Center for Devices and Radiological Health at FDA. We’re not a biologic. We know that traditional studies go through CDRH. They're not studies where you’re treating patients, thousands of patients as you would expect in a phase 1, phase 2, phase 3 drug study. For us it's a feasibility study which we just completed and that a pivotal study. In historically all I can say is that CDRH studies with extra extracorporeal devices. Typically we’ve seen pivotal studies range between 48 to a little more than 300 subjects of which usually 50% of those subjects are control subjects. So, the cost going forward and running the studies is really going to be driven by size of the requested patient population. This is where it becomes very important to leverage our allusion assay that quantifies virus capture in the cartridge and no longer circulating in the patient as if more absolute data point. So it eliminates some data analysis and determining whether or not you’re hitting you label indication which in our case a single-use removal viral pathogens from blood. But we can’t make a projection on cost at this time until we concluded with FDA what specific indication we would first pursue. We’re not limited to pursuing any single indication through a pivotal study. This could be one or more multiple indications and we think there's a number of promising indications beyond the bioterror and pandemics threat that you could pursue in pivotal studies but we just – we’re not to the point where we could project the cost of those studies.

[Yi Chen:]

Got it. So if I understand it correctly, it seems like in the near future you may run three studies in parallel. One is a study targeting specific infectious disease and go through the probably FDA PNA passway but expedite it. Another study is pandemic treatment study working with the U.S. government and such study could be the CTE studying NFL players is that is at the right concept?

[James Joyce:]

Yes. But the point I would make in the pandemic threats, based on viruses that we validated the capture of insight and we’ve since demonstrated the safety of our device, we’re not sure to what extent additional studies need to be conducted specific to FDA. We know that FDA products approved products are not the basis of countermeasures being put into the strategic national stockpile. But one of the things that will be seeking is a designation from FDA, the kind of answers to questions in terms of an FDA approval, this is not related to stockpiling alert technology, but to request a designation as to what if any other studies need to be conducted and counter against bioterror or pandemics threats where we validated capture the virus, we’ve demonstrated safety through our feasibility study and there is no ability to conduct control, controlled studies in humans. So that something that we’re going need to get a kind of ruling on again kind of new president ruling. But one thing that we've already addressed previously that in these bioterror and pandemic threats as a medical device we don't fall under the rule provision for a drug or vaccine which requires that if you can't address demonstrate efficacy in humans because it’s not possible to run studies for obvious humanitarian standpoint you can affect individuals with virulent pathogens to run studies that there is a what’s was called the animal rule that you need to demonstrate effectiveness into animal models, different animal models, for many of these pathogen there is no animal model that exists. In our cases, the device we don’t fall under that rule. So we believe that as it relates to FDA demonstration of safety and capture the actual form of the virus infectious to man is a pathway for the disease indication.

[Yi Chen:]

Got it. So is it reasonable to expect that the bioterrorism and pandemic treatment study without human beings involved could be the first pathway to generate could be the initial pathway to generate first revenue from product sales potentially?

[James Joyce:]

No. I think that’s fair to say and I think there's also an alarming amount of the interest right now inside of the beltway [ph] related to submitting a strategy in place that could potentially address newly emerging pandemic threats or genetically engineered viral pathogens. There is no strategy to address those at this point in time. And our mechanism of capturing viruses by the glycan shield that they coat themselves with as a means to -- immune surveillance and this is also an impediment to vaccine and drug development. That mechanisms which provides us broad spectrum capability and unfortunately the strategy to-date has been – there’s an outbreak of a new pathogen or pathogen, many cases where we’ve known about it for decades, but there’s just no treatment countermeasures. There’s an outbreak of a sudden, there’s a fire drill to develop an antiviral drug or a vaccine. There’s discussion of promising vaccines, but all these things take years to develop. And there’s really not enough participants to develop these countermeasures. Normally as you know you’d expect the large – you need a large candidate pool of treatment countermeasures to a specific disease to expect one to be approved and demonstrated to be effective. So in essence what I’m saying is, there’s a very little likelihood that any of these threats can be addressed on a timely basis when there’s an outbreak. You can’t start your research programs when an outbreak occurs. You can’t start your research programs when there’s a newly emerged pathogen, you can’t start it when there is a new genetically engineered pathogen threat that’s been released. So the problem historically has been, there’s no net [ph], it’s either people are going to die, people are going to die until there is a traditional drug or vaccine [ph] counter measure and we think in this area we represent the net that we are the backdrop to be able to address this multitude of threat related to viral pathogen of which most viral pathogens are not addressed with a drug or vaccine. So we think we are re-thinking the feel of how to address these different threat and we believe that the work we’ve been finding a way on for more than a decade, the shift in regulatory landscape in FDA and major shift in the landscape for the federal government on what they are thinking to put in a strategic national stockpile we think these are all favourable trends for us.

[Yi Chen:]

So during the rest of 2017 can we expect more clarity regarding what additional work needs to be done by Aethlon Medical to satisfy the government’s needs to be a kind of measure for both threat and pandemic?

[James Joyce:]

I believe that’s fair to say and that’s driven by we are going to get feedback whether or not our application on our expited access breakthrough technology application whether or not that’s accepted and that will be a trigger for a next absolute FDA if it’s accepted, that will expedite the pathway of communicating what we are going to be doing beyond outside of the bioterror and pandemic threat indications moving forward in the pivotal studies.

[Yi Chen:]

Okay. Thank you very much.

[James Joyce:]

Thank you, Yi.

[Operator:]

We have now reached our allotted time for questions. This concludes our question and answer session. I would like to turn the conference back over to Jim Joyce for closing remarks.

[James Joyce:]

Okay, thank you operator. I wish to thank everyone again for your time today. We will ofcourse continue to update you on our upcoming developments in our participation both in industry and investor conference and other events in the near future. Thank you again for your time and continued support.

[Operator:]

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