Investing in an emerging biotechnology company requires, perhaps more than any other quality, the patience to hang on through months and years of research, clinical trials, and FDA approval applications. While the winding path to commercialization may not produce major material developments every week, that doesn’t mean there’s a lack of activity behind the scenes at emerging biotechs. In fact, the reality is often quite the opposite.
Take Aethlon Medical (OTC BB: AEMD), a San Diego-based medical device company. As detailed in a recent series of shareholder letters, Aethlon has been busy advancing its Hemopurifier, a blood filtration device aimed at removing harmful viral and bacterial particles from the bloodstream. The first three and a half months of 2011 brought a number of significant developments for Aethlon that could move the Hemopurifier closer to commercialization:
Advancing hepatitis C studies in India: Aethlon is currently conducting a clinical trial in India that will evaluate the use of the Hemopurifier in combination with standard hepatitis C drug therapy. Often referred to as the “silent killer,” the hepatitis C virus (HCV) may lie dormant in a patient’s body for years, even decades. By the time patients show signs of the inflammatory liver disease, treating it is difficult. Less than 50% of patients ultimately respond to standard of care HCV drug therapy.
Aethlon’s clinical trial program took an important step forward in early 2011 when the Company initiated treatment of its first patient. India provides Aethlon with an early commercialization opportunity, as it is estimated that 20 million of the 180 million people infected with HCV worldwide reside in India. Furthermore, achieving commercialization in India would enable Aethlon to capitalize upon the country’s emergence as a medical tourism hub. According to market intelligence firm Research and Markets, approximately 570,000 patients visited India to receive medical care in 2008, contributing $880 million to the Indian economy. Aethlon is ramping up patient enrollment and is seeking to open up its clinical trial to patients who live outside India.
The clinical trial also plays a significant role in Aethlon’s U.S. commercialization strategy. Aethlon is close to submitting an updated Investigational New Device application to the FDA, which would allow the Company to run parallel studies in the U.S. The study in India will expand Aethlon’s collection of data and also provide a backdrop for Aethlon to move toward studies in cancer.
Showcasing Hemopurifier for U.S. government officials: In January, Aethlon was invited by the Department of Health and Human Services (HHS) to present its Hemopurifier technology platform before multi-agency health officials. This presentation led to follow-on meetings and presentations, including a formal presentation to the Biomedical Advanced Research and Development Authority (BARDA) in February.
If recent data is any indication, Aethlon has ample opportunities to participate in government-funded biodefense programs. Freemind Group, a consultancy firm focused on governmental grant identification and application assistance for the biotechnology industry, recently reported that there has been a dramatic surge in biodefense and infectious disease funding opportunities from the U.S. government. They forecast that funding applications submitted during the months of May, June and July will result in cumulative awards of approximately $500 million. The Hemopurifier has potential applications across a wide range of infectious diseases, giving Aethlon a unique advantage over biotechnology companies whose technology platforms are designed to treat only a single disease.
Applying for DARPA initiative: The Defense Advanced Research Projects Agency (DARPA), the government agency that “fathered the Internet,” released a broad agency announcement in early February titled Dialysis Like Therapeutics (DLT). The program aims to develop a portable device that removes “dirty” blood from the body, separates harmful agents, and returns “clean” blood to the body in a manner similar to dialysis treatment. The target application for the device is blood poisoning, although the device could have other medical applications. Aethlon submitted its proposal on April 1 and expects a decision in the next four months. Several organizations and industry thought leaders have agreed to partner with Aethlon if it is awarded a DARPA grant.
Validation of ELLSA: More recently, Aethlon announced on April 12 that its wholly owned subsidiary, Exosome Sciences, Inc. (ESI), had its Enzyme Linked Lectin Specific Assay (ELLSA) validated by a well-regarded research institution. ELLSA will be used to identify the presence of immunosuppressive exosomes underlying the HIV virus, tuberculosis, and various forms of cancer, including ovarian, melanoma, breast, lymphoma and colorectal. In addition to research opportunities, Aethlon Medical plans to test ELLSA as a diagnostic to quantify the therapeutic capabilities of the Hemopurifier to remove exosomes from the circulatory system of those afflicted with cancer.
ESI is now preparing a market survey that will be provided to researchers to determine market demand and pricing for ELLSA as a research tool. As FDA approval is not required to commercialize assays for the research markets, the Company anticipates that ELLSA could be a source of near-term revenues.
RedChip Research recently published a 3QFY11 update on Aethlon, available for download here. Aethlon is gaining momentum with its HCV, biodefense and cancer programs, making AEMD an attractive early-stage opportunity for biotech investors.
Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.