Aethlon Medical: One Device – One Country – $1 Billion

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Dec 4, 2014 Featured: Home Page, MARKET 13 5014 Views

Before I get into where this investment may be headed, it is important to detail what has happened in the past weeks and months. Aethlon Medical has been around for some time but has really only come to prominence on the tide of the recent Ebola epidemic. Ironically, while AEMD’s Hemopurifier device provides a best-in-practice leg up to anyone fighting that dreaded virus, it also provides a leg up in fighting potentially dozens of other more commonplace diseases-those which affect tens of millions of patients the world over. When I first began writing about Aethlon it was trading at about twenty cents. That was before the results detailing what their Hemopurifier device removed from the blood of Dr. Mawanda (a Ugandan doctor who was treating Ebola patients in Sierra Leone and contracted the disease himself) were announced at the American Society of Nephrology’s annual meeting in Philadelphia last month. We know now that having entered University Hospital in Frankfurt Germany unconscious and with multiple organ failure in early October, Dr. Mawanda walked out of that hospital Ebola-free over one week ago.

The FDA has approved the Hemopurifier for “expanded access-emergency use,” which means that doctors in the United States who wish to utilize the Hemopurifier on any future Ebola patients don’t have to jump through regulatory hoops to do so. For those unfamiliar, this is a very big deal and a level of recognition/authorization that most companies offering experimental treatments for Ebola have not been given. In no small way this designation is a direct result of Aethlon being able to show both efficacy and safety not only in relation to the treatment of Dr. Mawanda but also through the human studies that it has performed in India on both Hepatitis C and HIV patients. The company has begun to attract the kind of attention it has gone without for more than a decade. It has received coverage in major publications, on network and cable television and perhaps most notably, the Hemopurifier was named one of Time Magazine’s top 25 best inventions for 2014. The release of the “final” Medanta Medicity HCV study results Tuesday were to some extent simply confirmation of what we already knew and while some may have expected a significant price move with those results, we submit that there are other announcements that the market is and should be looking for from AEMD to more clearly articulate its underlying value (we’ll get to what these are later in this article…promise).

We think it is important to mention that some of the recent $3.3M raised by the company is likely to go toward its Exosome Sciences subsidiary (a valuable aspect of Aethlon’s pipeline though this article focuses on the Hemopurifier) where they are doing groundbreaking work such as a liquid biopsy test to confirm conditions like Chronic Encephalopathy (brain condition often seen with repetitive concussions which has been much discussed of late especially with respect to Football). This funding was done through “one institutional healthcare focused investor” and we suspect that while that investor got a pretty good deal, they also have a solid understanding of where this company is going. For Aethlon’s part should their burn rate remain relatively consistent, reported at the See Thru Equity conference on November 12 by CEO Jim Joyce to be a very low $220,000 per month, this funding should put them in a secure position for the next twelve months especially considering that any orders for the Hemopurifier would likely be funded by a governmental or health agency here or abroad.  

For those new to this investment or for those who may have done only cursory level research, it should be comforting to know that the Hemopurifier has been on the radar of some pretty important health and governmental agencies for some time. It is our hope and belief that as Aethlon continues to be able to provide safety and efficacy data for patients that it has (Dr. Mawanda) and will likely treat with the Hemopurifier during the course of this Ebola epidemic, combined with the human studies that it plans to launch in Houston and those completed in India, they will be fast-tracked for approval by the FDA and gain market clearance by early 2016 for broad spectrum use (more than one indication). It is clearly within the purview of the Agency to do this and on some level it may even be irresponsible not to as positive evidence continues to mount.

On October 17th, 2007, Dr. Laura Barrientos at the United States (US) Centers for Disease Control and Prevention (CDC), published a report entitled: “The Aethlon Hemopurifier, A Novel Strategy to Address ebola and Marburg Haemorrhagic Fevers.” The report discussed the potential of the Aethlon Hemopurifier as a treatment countermeasure against ebola and other filoviruses.  An excerpt from the report follows: 

The Hemopurifier is an extracorporeal device which converges hollow-fiber filtration technology with immobilized affinity agents to allow for the rapid physical removal of virus and soluble viral glycoproteins from the blood. The device basically mimics the natural immune response for clearance of circulating virus and viral toxins. Initial collaborative efforts between the CDC and Aethlon Medical have demonstrated rapid clearance of viral particles from cell culture supernatants (t1/2 20-120 min). The Hemopurifier was also effective in removing soluble viral glycoproteins (t1/2 30 min). This knowledge represents the basis to further investigate in vivo the potential of the Hemopurifier as a fast-acting post-exposure intervention to delay disease progression and, possibly, to improve survival. The data resulting from the CDC-Aethlon collaboration has led to further studies through a collaborative research and development agreement with the United States Army Medical Research Institute for Infectious Diseases (USAMRIID).”

It was also announced Tuesday that 35 hospitals in the United States have been designated to care for Ebola patients. We do not think it would be a leap to hear that some or all will be equipped with AEMD’s Hemopurifier. An excerpt from the Washington Post article on the subject provides some justification for our thinking:

“The hospitals were chosen by state health officials and hospital executives and assessed by infection control teams from the Centers for Disease Control and Prevention to make sure they have adequate staff, equipment, training and resources “to provide the extensive treatment necessary to care for an Ebola patient,” according to a senior administration official.”  

We note too that Congress is expected to approve a spending bill prior to the current one running out December 11 so it seems a distinct possibility that Aethlon may be more concerned with being able to manufacture needed units than with kicking off studies or basking in the light of its new found fame. The Obama Administration is hoping that its Ebola funding request is part of the upcoming funding equation and there seems little partisan bickering regarding the need for it. At the very least we see the hospital preparedness and support funds as something of a no-brainer since they only involve application in the United States. Another excerpt from the Post story discusses this:

“The Obama administration’s $6.2 billion emergency funding request for Ebola, which includes $154 million for hospital preparedness and support, envisions at least one designated facility in every state, and additional ones in New York, the District, Chicago, Los Angeles and Puerto Rico. The White House wants Congress to approve the request by Dec. 11, when current government funding runs out.”

The FDA authorized study of HCV patients in the United States is due to kick off soon at a DaVita MedCenter in Houston and once they commence we will surely hear from the company. That study is due to wrap mid-next year with results likely out in July. You can follow the study and view its various endpoints here.

What many of us may be turning our heads to now (given hard to ignore efficacy and safety demonstration), and what the company has surely been thinking about for years, is commercialization of its Hemopurifier treatment. Only the company can enlighten us but we submit that this will begin to be known in the near future. While it seems conceivable that the Hemopurifier could receive marketing approval as soon as early 2016 we think that they may now begin selling their product to hard hit areas in West Africa still ensconced in the Ebola battle as well as to governments (here and elsewhere) around the world who want to stockpile it as part of their own preparedness efforts. While this would be the beginning of revenue traction for the company (in addition to significant and continuing publicity) a far bigger and vastly more dependable revenue stream exists in India as soon as the company is able to market its Hemopurifier treatment to any Hepatitis C patients (and their doctors) who want it. There are currently about 12 Million patients living with Hepatitis C in India. Healthcare coverage is expected to be close to 50% of the population by sometime next year according to estimates. If Hemopurifier treatment is used on just 2% of the population at prevailing rates (estimated to be about $7,400-this fee included hospital care at the Medicity in India as well) assumiong a discount of 25% for costs and fees, which we think is conservative, it would look something like the following:

12,000,000 X .02 = 240,000 patients

Published cost of one, 3-day treatment with 25% reduction = $5,550 

Hemopurifier Treatment revenue = $1.33 billion annually

Keep in mind that India contains about 1/14 of the world’s Hepititis C population (latest estimates are approximately 170 Million worldwide). Any signal that Aethlon has approval to market to all corners of the Indian State would be an enormous development. The process of approval in India requires completion of successful clinical trials and now that those are complete we are anxious to hear what the company’s next steps are. While this is but one example it should show investors the incredible potential of this company. We look forward to an update on their commercialization efforts and more information about product manufacturing in the coming year. As more news and information becomes available about Aethlon we will continue to offer our perspective.

Disclaimer: Please do your own due diligence or consult with a trusted financial advisor before investing in this or any other equity. 

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13 Comments for "Aethlon Medical: One Device – One Country – $1 Billion"


John B. Cooper

Posted on Thursday 4th December, 2014, 7:35pm

Reply

If market cap is based on 7-12 forward revenue and if we aren’t even able to predict worldwide demand. This could be the next apple. I made a huge mistake in 2002 I was going to buy priceline at 1.26 10,000 shares and got cold feet. Since then I have made quite a bit of money. I have 200k shares of aemd. Bought from .25-………….42 it is not for sale. Thank you for your great work.

    edvapatent

    Posted on Thursday 4th December, 2014, 10:04pm

    Reply

    Can’t disagree John but of course most looking at it by where it sits today have a hard time grasping that. The main thing is that the company keep producing results, raise awareness and gain market access as soon as possible. Thanks for your comments.

Melvin

Posted on Thursday 4th December, 2014, 8:02pm

Reply

Thank you for the insightful article…

    edvapatent

    Posted on Thursday 4th December, 2014, 10:01pm

    Reply

    I’m glad you got something out of it Melvin and I appreciate you reaching out.

Norman S. Heyman

Posted on Thursday 4th December, 2014, 8:04pm

Reply

I am a former analyst for a large investment firm, a chemical engineer and a serial entrepreneur. I noticed this device over the last six months, and have ended up over time with a substantial number of shares.
I am also involved with a small very unique highly ruggedized large volume pump company that has sold over 10,000 pumps to a blue chip customer base. It has been used in Chad by Doctors without borders, three shipments to Egypt and had a favorable review the Homeland Security in 2012.
Since we are a well established rugged outside-the-hospital pump, and IV hydration is important in Ebola, I have been pushing to incorporate this proved remote site pump into all of the major agencies involved with Ebola. It is currently under review by them.
I have gotten to know Aethlon well; I have high regards for them; as a health care analyst I am also interested in the other disease states they can deal with (as is also the case with the IV pump company).
I recently increased my position in Aethlon, and consider myself a strategic investor. Their Exasome technology seems to be engendering a lot of interest in the investment community.
I wish Aethlon well for the sake of society and the investors who believe in them.
Norman S. Heyman

    edvapatent

    Posted on Thursday 4th December, 2014, 10:00pm

    Reply

    Great comments Norman. Thanks for checking in.

Poson

Posted on Friday 5th December, 2014, 5:14am

Reply

I will buy one million more shares of AEMD to bet its long future.

Please follow me at http://twitter.com/chinese

cm

Posted on Wednesday 10th December, 2014, 9:39pm

Reply

Thanks for the article; I am a long-time holder, have met with the CEO twice in person but still have these two questions: 1) Whether Hep C or some other viral condition, would your number of patients hold up if a pill is the alternative? That is, in your numbers are some not treating themselves at all right now and others just using drugs? If so, would they really go through a dialysis-like process? I’m sure some will but wonder if all of them would…2) Do you foresee Exosome Sciences being funded differently, perhaps a PE investment or Big Pharma investment and boost the value of the parent AEMD that way? I objected at the time to the 20% sale although I acknowledge some debt had to be paid. Bottom line: Mr. Joyce talks about Vertex-like valuations but funds much, much lower. This has to change but the leap is a big one. I have never sold a share but time is a wastin’…

    edvapatent

    Posted on Thursday 11th December, 2014, 3:37am

    Reply

    Logical question and that is why my penetration number was so low. A certain percentage of the Hep C population anywhere is drug resistant. Sometimes that number is quite high and genotype 3 which is most prevalent in India may make it between 15-30% there so alternative therapies are critically needed. When I say 2% of the entire Hep C population in India that appears to be a target that is more than achievable. When you say “or some other viral condition” then we aren’t talking about Hep C at all and of course that would theoretically offer an additional revenue stream at some future point. What people need to understand is that this treatment is not necessarily an either/or equation. Sure, some of the population is drug resistant so that decision is made for them but in many cases you would have Hemopurifier therapy accompanying a drug. As to your second question they have set it up as a subsidiary so it certainly could work out that way but I’m not sure whether that is the company’s goal or not. It may be simply to see which horse shows the most life first (scientific method acceptance, trials, regulatory approval) and respond accordingly. My back of the napkin snapshot view of India was simply to wake people up to the possibilities inherent there. As I have said recently we need more information from the company about its view of commercialization and we need to more accurately be able to pencil in some numbers. My hope is that they will begin to share some of this with us soon. It is not critical that they do more than give us some ranges. Financing’s are never pleasant but they can be put quickly in the rear view mirror if some of the cash raised is used toward some imminent progression. Not sure what you mean by 20% sale? In any case thanks for your comments.

cm

Posted on Friday 12th December, 2014, 7:50pm

Reply

I should have been more clear. Aethlon sold 20% of Exosome Sciences this year to help clear up some debt. They sold it for $1.4 million, giving it an overall valuation of $7 million. Given that I expect cancer to be a major contibutor to the portfolio, the company has a climb ahead of it if they really feel it alone is worth a lot of money.

My major issue has been dilution (not a new story). Mr. Joyce has in the past compared the company many times to Vertex Pharmaceutical and in once sense it is sad that Aethlon does not receive similar valuations given the product has worked and is likely closer to market (somewhere, even the US) than many billion-dollar valuations for drugs in Phase 1. However, financing it at the levels they do, right now he can’t have it both ways; either it’s worth a lot and should be valued that way or comparing it to drugs with unproven but significant potential is not the right comparison. Let’s see how it unfolds.

    edvapatent

    Posted on Friday 12th December, 2014, 8:16pm

    Reply

    Again, I’m not sure I can offer much insight on the Exosome Science subsidiary plans. As to your other issue, I do understand and I would have preferred that they raise $$ on better terms as well. I see two reasons why they may have done what they did. First, a generous average price of the stock prior to mid-October was .20. So through that lens it may be seen a little differently. The warrant coverage was perhaps inadvisable but there is much we do not know, for example whether that institutional healthcare focused investor may be able to help in some other areas to advance the company. Second, is what that money will be used for. If a sizable portion has gone toward production in anticipation of orders that may come as a result of the congressional ebola allocation, then no one will be feeling badly about that once we hear about it. It always comes down to what they are actually doing. But as you say, let’s see how it unfolds. Thank you for your comments!

william Olson

Posted on Thursday 8th January, 2015, 12:17am

Reply

Very impressive telling of the real story of aemd.Had 555000 shares@ .24 when it hit.42. Made 60000$ one day,lost 30000 next.put in stop loss with limit @.38-Made 100,00. Got back in @.26 with 444000 shares. Only thing that i see can stop this stock is fear from all the people that will lose income from this disruptive tech devise. would like to talk to you .

    edvapatent

    Posted on Thursday 8th January, 2015, 12:33am

    Reply

    Hello William,

    Thanks for your thoughts and for reaching out to me. I think the company has to be judicious about the way the Hemopurifier is utilized until it is able to be sold without restriction. There is too much room for error and even a remark like a doctor stating that viral load was moving down in the patient when the Hemopurifier was administered in Frankfurt can translate to “we’re really not sure how much that device had to do with saving the patient.” At this point Jim Joyce and his team need to be on alert for situations which may be mishandled and therefore misinterpreted. It does seem apparent now, after the past few weeks, that there are interests which may not want to see a fast rise of Aethlon and its Hempopurifier.

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